Pakistan introduces country’s first carbon market policy

Pakistan’s Coordinator to the Prime Minister on Climate Change Romina Khurshid Alam (8L) gestures for a group photograph at the Pakistan Pavilion in Baku on November 16, 2024, on the sidelines of COP29 climate conference. (Photo courtesy: X/@ClimateChangePK/File)

• New guidelines will establish regulatory framework for governing both voluntary and compliance carbon market activities in Pakistan
• Carbon markets are carbon pricing mechanisms enabling governments and non-state actors to trade greenhouse gas emission credits

ISLAMABAD: Pakistan has introduced the country’s first carbon market policy, Radio Pakistan reported on Monday, with the aim to achieve climate targets and implement action costs effectively.
To cement Pakistan’s commitment to participation in the new global carbon market, the country’s Ministry of Climate Change and Environmental Coordination (MoCC&EC) marked Nov. 16 as the Pakistan Pavillion’s “Carbon Market Day” and also organized a high-level event on carbon markets at the UN COP29 climate summit. Nearly 200 governments agreed on the framework that sets up a centralized global mechanism with clear rules and procedures for countries and companies involved in carbon credit transactions.
Carbon markets are carbon pricing mechanisms enabling governments and non-state actors to trade greenhouse gas emission credits. 
There are two types of carbon markets, compliance and voluntary. In compliance markets such as national or regional emissions trading schemes, participants act in response to an obligation established by a regulatory body. In voluntary carbon markets, participants are under no formal obligation to achieve a specific target. Instead, non-state actors such as companies, cities or regions seek to voluntarily offset their emissions, for example, to achieve mitigation targets such as climate neutral, net zero emissions.
“The policy aims to foster investments in the energy, agriculture and forestry sectors,” Radio Pakistan said. “Through these carbon markets, businesses will be encouraged to adopt eco-friendly technologies and reduce greenhouse gas emissions.”
Global investors and organizations have been invited to collaborate in Pakistan’s carbon market, the report added.
Under Article 6 of the Paris Agreement Crediting Mechanism (PACM), developing countries can host emissions reduction and removal projects and trade the resulting carbon credits internationally as a means to generate new revenue streams and unlock investment in ambitious climate action.
“Adopting this policy is only part of the many ongoing carbon market readiness efforts. With the support from the USAID, World Bank, the German government, the , UN Environment Program, and Global Green Growth Institute, we are developing carbon market regulations, integrating carbon market in our new NDC, assessing new sectoral potential, and developing a pipeline of carbon market projects,” Aisha Humaira, Secretary, MoCC&EC, said in a statement.
The new guidelines aim to establish a clear regulatory framework for governing both voluntary and compliance carbon market activities in Pakistan, following international requirements and good practices.
As per the website of the UN Environment Program, Pakistan’s “Carbon Market Policy Guidelines” outline a cohesive strategy and authorization criteria, which prioritizes investment in resilience and climate change adaptation, and works closely with provincial governments. 
“While these guidelines offer cultural and geographical nuance for each province’s differential needs, they set stringent quality control criteria, thus ensuring high-quality project development with substantial co-benefits. Finally, countries will experience a competitive and cost-efficient framework that emphasizes fairness in benefit distribution,” the document says. 
A number of project opportunities have already been identified on the basis of which the government of Pakistan intends to initiate dialogues on Article 6 collaboration, the UN added.