Policy Brief 24/02/2025
Pakistan’s Policy Guidelines for Carbon Markets – 2024 are a critical step towards the application of carbon credits and emissions trading to fulfil the country’s climate goals and achieve sustainable development objectives. The policy is consistent with the Paris Agreement and seeks to create an integrated regulatory framework for voluntary and compliance-based carbon markets, with a focus on environmental integrity, economic growth, and private sector engagement. The guidelines emphasise institutional coordination, legal frameworks, and financial mechanisms to increase market scalability.
While its strengths are notable, the policy has numerous challenges, including institutional inefficiencies, regulatory over-complication, absence of private sector incentives, and gaps in implementation. Bureaucratic barriers, uncertain fund allocation procedures, and ineffective enforcement mechanisms can undermine its effectiveness. To address these issues, it is necessary to streamline regulatory procedures, improve inter-agency coordination, and develop transparent financial arrangements. Moreover, offering incentives like tax exemptions, subsidies, and grants can encourage private sector involvement and encourage long-term investment in low-carbon activities.
To ensure effective implementation, Pakistan should adopt international best practices, as utilised by the EU Emission Trading System, and create strong monitoring, reporting, and verification (MRV) systems to avoid double counting and ensure compliance. Capacity-building programs should also prioritise developing local expertise to minimise dependence on foreign consultants. With well-planned reforms and policy reforms, Pakistan’s carbon market policy has the potential to generate economic opportunities, attract investments, and contribute to international efforts in climate change mitigation.
