Boosting Pakistan’s Climate Finance: Government Officials Receive Carbon Market Training

As signatories to the Paris Agreement have to fulfill their international pledges in their Nationally Determined Contributions by 2030, it is imperative that all policy and financing instruments and international cooperation opportunities be utilized effectively and timely. Pakistan has set an ambitious target of an overall 50% reduction of its projected emissions by 2030, with a 15% reduction from the country’s own resources and another 35% reduction conditional to the provision of international finance.

Under Article 6 of the Paris Agreement, a new generation of international carbon market has been created, for voluntary international cooperation and carbon credit generation and transaction. Pakistan can potentially leverage anywhere between $2 billion and $5 billion from carbon markets by 2030 if it properly manages and develops the nascent market, creates a conducive regulatory and policy framework to ensure benefits reach communities affected by the impacts of climate change.

In order to bolster expertise and governmental awareness and will towards strengthening carbon markets in the country, the Supporting Preparedness for Article 6 Cooperation (SPAR6C) programme has held seven capacity building trainings with relevant government officials and potential project owners and investors since 2022.

Step-by-step through Article 6 carbon markets

The five-year SPAR6C programme, funded by the German Federal Ministry for Economic Affairs and Climate Action, supports Colombia, Pakistan, Thailand, and Zambia to get ready to engage in the international carbon market cooperation under Article 6 of the Paris Agreement. SPAR6C provides policy advice support to government agencies, technical assistance to identify and prepare potential mitigation activities, and capacity building for various stakeholders in partner countries.

SPAR6C, in collaboration with the Ministry of Climate Change and Environmental Coordination and the Ministry of Planning, Development and Special Initiatives, organized a two-day Carbon Market Training Workshop for Federal and Provincial Planning and Development Officials from 30^th September to 1^st October 2024 at the Serena Hotel, Islamabad.

The training brought together over 50 officials in charge of public investment project appraisal and approval, and interactively introduced to participants on the basics and overview of international carbon market, the international requirements for Article 6 activity implementation, the formulation of national strategies and rules for Article 6 project approval, the steps of Article 6 project designing and implementation, as well as how the participants can screen the government investment project pipeline for carbon market opportunities and integrate carbon market considerations in government project development to enhance their greenhouse gas emission reductions and benefit from carbon market.

Why do carbon markets matter?

The Ministry of Climate Change and Environmental Coordination’s Secretary, Aisha Humera delivered encouragement to participants to make the best out of the workshop by stating in the opening remarks that, “This is a golden opportunity for all of you to learn a cutting-edge approach to PC 1-5 Process and how to claim carbon credits. Very few people in Pakistan have this opportunity and if you learn this new skill, you can truly be a leader and make a difference in your job”.

She further stressed that traditional climate finance tools and resources alone cannot help Pakistan make the clean energy transition a reality and achieve its NDC targets. She exalted carbon credit as a resource for the country’s transformation and competitiveness in the global emerging green markets.

Janine Rohwer, First Secretary of the German Embassy in Islamabad, echoed the Secretary’s sentiments and lauded SPAR6C’s to support developing countries like Pakistan in benefiting from the international carbon market. “I have been following SPAR6C’s work for a year and am very impressed by the work being done by project partners in Pakistan. Why do carbon markets matter to Pakistan and Germany? Carbon markets are an integral part of our commitment to climate mitigation; we prioritize this and it is part of our development programme. We are here to support Pakistan’s compliance market especially since aligning with international carbon market standards will make private investment more attractive for Pakistan”. She further urged participants to learn how to view voluntary emissions trading as a valuable co-financing source to tackle multiple challenges in industries such as construction, transport and energy.

A pivotal role in low-carbon development

The training agenda kicked off with Dr. Xianli Zhu, Senior Economist, UNEP Copenhagen Climate Centre, presenting on Carbon Market and Article 6’s relevance for Pakistan and how they can be effectively integrated within the country. She stressed that Planning and Development officials have a pivotal role to play in this implementation.  She reiterated that Planning and Development officials can steer the public investment towards low-emission activities, showcase and leverage private investment in greenhouse agas emission reduction activities.

Building a critical mass of governmental and private expertise on carbon markets is one of SPAR6C’s leading aim and to this effect, it was shared that best-performing participants from the workshop will be identified for further comprehensive training by the project.

Tariq Javed, Chief Energy, Planning and Development Punjab, welcomed this move and noted that he looked forward to taking the knowledge acquired in these two days to more practical implementation in the next sessions. “I am happy that a cohort will be formed so that we can practice cases and use the tools that we have learned about. Building this expertise will be transformative on how we conceive, build, appraise and implement projects,” Javed added.

Afrasiyab Khattak, Chief Secretary, Planning and Development Department, Khyber Pakhtunkhwa, shared that almost 50% of Pakistan’s forest cover resides in the province he represents and that the workshop has made him understand how carbon credits for mitigation through forestation can be a transformative opportunity. He further noted that the Climate Financing Strategy in KPK has a missing link of carbon markets and he is looking forward to extend the knowledge shared to alter the strategy to include this untapped resource.

Untapped carbon market potential

While the role of provincial officials in helping bring carbon credit projects to the fore was cemented, participants noted that buy-in from senior political leadership was needed as well.  “In AJK [Azad Jammu and Kashmir region] we don’t have carbon market understanding through-out the board, which is a missed opportunity because we have a lot of potential for carbon credits within certain projects such as hydropower and forestry. I would suggest SPAR6C to hold such workshops for officials in decision-making authorities such as minsters so they can have a solid understanding of carbon markets and can take active steps to setting up these markets and such projects in Pakistan,” said Mehnaz Kant, Chief, Agricultural Planning and Development, Azad Jammu and Kashmir.

The workshop concluded with surveys conducted from participants so that all feedback and recommendations can be inculcated in future interventions and workshops organized by SPAR6C. It was posited by all speakers and participants that the untapped potential of the carbon market to transform Pakistan’s economy and address climate challenges, particularly to mitigate its carbon footprint but also generate substantial revenue for sustainable development projects, cannot be overlooked.