A-1: Rewiring Economic and Fiscal Planning for Climate Prosperity
By embedding climate risk assessments and green budgeting tools at the core of public finance management, Pakistan can link growth with sustainability and fiscal stability:
- Make climate risk and opportunity assessment mandatory in every Planning Commission Form-I/II (PC-I/II), Medium-Term Budgetary Framework (MTBF), and Public Sector Development Programme/Annual Development Programme (PSDP/ADP) submission, with a decarbonisation and resilience line included in cost-benefit analyses.
- Introduce a system to tag all expenditures as adaptation, mitigation, or dual-purpose, and publish a “Green Annex” alongside the FY26 budget.
- Establish a single platform to consolidate climate projects, pipelines, and investors, with monthly investment reviews and a shared data room.
- Rank and prioritise public projects by their climate Net Present Value (NPV)
- Earmark petroleum carbon levy for a “Climate Prosperity Fund” and dedicate a fixed share of carbon levy receipts (30-40%) to co-finance adaptation, disaster risk reduction, and energy transition investments, with quarterly public expenditure reports.
- Create an annual issuance plan/ Sukuk & SDG Bond Program for sovereign and SOE green bonds using partial guarantees and political-risk wraps to reduce borrowing costs.
- Introduce Viability-Gap Funding (VGF) mechanisms for off-grid agricultural solar, SME power systems, and energy storage, with standardised rules and eligibility.
- Design parametric insurance products, contingent credit lines, and catastrophe bonds for provincial level disaster resilience.
- Reduce fiscal leakages to create climate fiscal space. Cut T&D losses by 2 percentage points, retarget electricity subsidies to lifeline consumers, and digitalise fertilizer support for climate-smart inputs.
- Link the Climate Prosperity Plan (CPP) to sectoral roadmaps (textiles, agriculture, mobility, construction) with quantifiable export, job, and resilience targets.
- Establish a permanent CPP Steering Committee comprising Finance, Planning, Energy, Water, Commerce, and provincial representatives with a Delivery Unit tracking progress.
- Modernise grid codes for renewable integration, enable time-of-use markets, bankable PPAs for storage, and open access for industries.
- Aggregate rooftop solar and storage procurement for industrial clusters, with concessional green finance lines and export branding for low-carbon products.
- Update provincial ADPs with climate-risk overlays prioritising watershed protection, resilient roads, and urban drainage.
- Pilot large-scale energy storage tenders, concessional finance lines for BESS, and local assembly incentives for clean technology.
- Integrate climate shocks into debt sustainability analysis; develop SBP guidance on climate-risk disclosures and green-lending ratios.
- Develop a central registry for climate-tagged spending, emissions data, and resilience metrics with open dashboards and independent verification.
- Communicate tangible benefits like lower energy bills, jobs, and flood protection through public campaigns and civic partnerships.
- Deploy solar-powered efficient pumps, pilot water pricing, and expand digital vouchers for climate-smart seeds and inputs.
- Rehabilitate drainage in high-risk districts, implement heat early-warning systems, and retrofit public buildings with cool roofs.
- Restore mangroves and riverine buffers using results-based financing and community stewardship.