On 10 December 2019 Pakistan announced the launch of a committee responsible for assessing the country’s potential for implementing domestic and international carbon markets. The announcement from the Pakistani Ministry of Climate Change (MoCC) at COP25 in Madrid signals the government is entering a new phase in its climate strategy by determining approaches to tap into low-cost abatement opportunities and leverage low-carbon investment.

The National Committee on Carbon Markets will be tasked with assessing the role and scope of carbon markets in delivering Pakistan’s climate ambitions and identifying opportunities and challenges to improving emissions data.

The announcement follows the recent publication of an UNFCCC/IGES study – developed in collaboration with the MoCC – underlining the potential for emissions trading in Pakistan. The study recommends implementing a domestic ETS in Pakistan that would initially cover large emitters from the power and industry sectors accounting for 168 Mt of CO2e emissions. In parallel to efforts aimed at taking steps toward establishing a domestic ETS, Pakistan outlined its strategy to develop credit-based trading mechanisms that could supply Chinese carbon markets with offsets.

Developing such mechanisms would support Pakistan’s conditional climate target of reducing emissions with up to 20% below BAU by 2030.  An offset scheme would furthermore reinforce Pakistan’s five-point green agenda, including the “Billion Tree Tsunami” initiative aimed at increasing forest cover by planting 10 billion trees across the country.

Pakistan’s emissions more than doubled between 1994 and 2015 and are projected to increase fourfold between 2015 and 2030, mostly driven by growth in energy demand. In 2017, the government enacted the Pakistan Climate Change Act, which created a legal framework for climate action. The launch of the National Committee on Carbon Markets is the latest step in this direction, and will be represented by ministries, provinces, and private-sector stakeholders.