Effective Implementation of Carbon Markets in Pakistan for Equitable Development and Climate Actions

Effective Implementation of Carbon Markets in Pakistan for Equitable Development and Climate Actions

Foacal Person: Dr. Khalid Waleed, Ubaid ur Rehman Zia, Saleha Qureshi

Partener:  Embassy of Denmark

Overview

Building on the foundation laid by SDPI’s earlier collaboration with the Embassy of Denmark on “Unlocking the Potential of Carbon Markets in Pakistan”, this project represents the second phase of a broader initiative to strengthen Pakistan’s readiness for carbon market participation.

The project focuses on enhancing the technical and institutional capacity of the private sector, fostering inter-ministerial coordination, and initiating a national dialogue on carbon trading mechanisms. It aims to enable small and medium enterprises (SMEs) and Chambers of Commerce and Industry (CCIs) to participate effectively in carbon trading, while aligning public sector strategies with emerging market opportunities for climate action and equitable growth.

Background

Pakistan’s transition toward a low-carbon economy is constrained by limited technical knowledge, fragmented governance structures, and insufficient stakeholder coordination. Although the first phase of SDPI’s collaboration with Denmark successfully built awareness and laid the groundwork for a national carbon market framework, significant capacity and implementation gaps remain.

This project seeks to address these gaps by focusing on both institutional strengthening and market preparedness. It will support key government ministries, including the Ministry of Climate Change, Ministry of Commerce, and Ministry of Finance, harmonizing their policy approaches, while equipping the private sector with the technical expertise and knowledge needed to participate in carbon markets.

By drawing upon Danish best practices and integrating lessons from global carbon trading experiences, the project aims to create a robust, inclusive, and knowledge-driven pathway for Pakistan’s engagement in international carbon markets.

Key Activities

1.    Capacity Building of Private Sector Stakeholders

•    Conduct four regional workshops (in Sindh, Punjab, KP, and Islamabad Capital Territory) with Chambers of Commerce and Industry.

•    Deliver tailored technical assistance to SMEs for developing carbon trading projects aligned with international standards.

2.    Technical Assistance and Project Development

•    Support at least 12 SMEs in preparing and evaluating low-carbon projects for participation in voluntary or compliance carbon markets.

•    Facilitate hand-holding support for feasibility assessment and alignment with market protocols.

3.    Policy Dialogues and Stakeholder Engagement

•    Convene policy dialogues and consultations involving federal and provincial governments, private sector representatives, and Danish experts.

•    Organize a national dialogue on “Carbon Markets: Opportunities, Options, and the Way Forward for Pakistan”, and a policy discussion on “Charting the Course of Carbon Markets for COP29.”

4.    Showcasing of Climate Mitigation Projects

•    Feature 12 developed projects at SDPI’s Annual Sustainability Expo 2025, highlighting innovative private-sector-led low-carbon initiatives.

5.    Communication and Awareness Campaign

•    Launch a national communications strategy including podcasts, social media reels, and audio events to promote awareness and understanding of carbon markets.

•    Produce accessible educational content to engage diverse audiences across sectors.

Expected Outcomes

•    Enhanced Private Sector Readiness:

Improved understanding and technical capacity among SMEs and Chambers of Commerce to engage in carbon trading.

•    Strengthened Policy Coherence:

Better alignment and coordination among federal ministries, provincial departments, and regulatory authorities for carbon market governance.

•    Empowered SMEs:

At least 12 enterprises receive technical support to develop viable carbon trading projects.

•    Increased Public Awareness:

Broader national discourse and media engagement on carbon markets, climate finance, and green economic transitions.

•    Knowledge Exchange with Denmark:

Adoption of best practices and lessons from Danish experience in carbon trading for Pakistan’s national implementation framework.