Pakistan could potentially generate between $400 million and $2.25 billion annually by trading carbon credits, according to a new report released by Transparency International Pakistan on Tuesday. The report highlights both the opportunities and risks associated with tapping into global carbon markets, stressing the urgent need for governance reforms and robust institutional frameworks.
The report, titled Carbon Markets Readiness in Pakistan: Addressing Governance Gaps and Safeguarding Against Integrity Risks, estimates that the country could produce between 40 million and 75 million tons of tradable carbon credits each year. These credits could be monetized in voluntary markets, provided Pakistan addresses the governance and technical barriers currently holding back progress.
According to the assessment, if just 10 to 15 percent of Pakistan’s annual greenhouse gas emissions were reduced through carbon projects, the country could unlock a significant and recurring revenue stream. However, the absence of a consolidated national emissions baseline remains a key obstacle to building a credible and trustworthy carbon trading system.
The report warns that despite broad policy frameworks, Pakistan still lacks the technical infrastructure and institutional readiness to implement advanced mechanisms such as emissions accounting, monitoring and verification systems, carbon ownership legislation, and digital registries. Without these elements, the credibility of Pakistan’s participation in international carbon markets could be undermined.
To address these gaps, Transparency International Pakistan has called for the establishment of a dedicated carbon markets team within the Ministry of Climate Change, supported by provincial departments. The proposed structure would oversee the creation of strong data systems, a national carbon market law, and institutional safeguards to ensure equity and participation in carbon trading activities.
Kashif Ali, Executive Director of TI Pakistan, underscored that transparency will be the defining challenge. “Without clear and accessible information on decision-making, benefit allocation, and safeguards for affected communities, trust in these mechanisms risks being undermined,” he said. Ali emphasized the need for transparent reporting standards, benefit-sharing frameworks, and mechanisms that guarantee community involvement in carbon projects.
The report outlines 10 key recommendations, ranging from the establishment of a National Carbon Coordination Council to the rollout of pilot projects and the launch of training programs for officials at all levels of government. It also stresses the importance of building international linkages to improve Pakistan’s credibility in carbon trading while enhancing access to global climate finance.
Justice (retd) Zia Perwez, Chairman of TI Pakistan, said the findings should serve as a guide for federal and provincial governments, international partners, and civil society. He noted that carbon markets could become a central pillar of Pakistan’s climate finance strategy, enabling the country to mobilize resources for sustainable development while addressing the growing risks of climate change.
With a population of over 236 million and high vulnerability to extreme weather events, Pakistan faces mounting challenges from climate change. By leveraging carbon markets effectively, the country could not only access billions in financing but also create a pathway for low-carbon development and resilience-building.
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