Pakistan can earn up to $2.25 billion a year from carbon trading, if only 10 to 15 percent of its emissions are sold as verified credits on global carbon markets. This projection comes from a new report by Transparency International Pakistan on strengthening carbon market governance.
Low Emissions, High Climate Risk
The anti-corruption watchdog said Pakistan contributes less than 0.8 percent of global emissions but remains among the most climate-exposed nations.
Unlocking Climate Finance Through Carbon Trading
It added that a robust carbon trading system could unlock critical climate finance to help fight rising floods, melting glaciers and extreme weather. However, TI Pakistan warned that weak governance remains the biggest barrier to developing a transparent and effective carbon trading framework. The report cited unclear legal status of carbon as an asset, overlapping mandates between federal and provincial authorities, poor emissions data, and limited technical capacity for monitoring and verification.
Governance Gaps and Legal Uncertainty
The organization called for a central carbon registry, transparent public reporting, and a clear law to determine ownership rights and revenue sharing.
Exclusion of Local Communities in Conservation Efforts
It also stressed that communities managing forests and wetlands are often excluded from benefits despite playing a frontline role in conservation. Pakistan has already demonstrated success in selective projects. The Delta Blue Carbon initiative in Sindh has generated more than 40 million dollars from mangrove restoration. Other approved projects include landfill gas recovery at Lakhodair and a wind farm in Jhimpir.
Aligning with Global Standards for Carbon Trading
The report urged the government to align rules with global quality standards such as ICVCM and VCMI, and ensure fair revenue distribution so carbon markets become a reliable and equitable source of climate finance.
First Carbon Credit Approvals Under Paris Agreement
Early in 2025, the Ministry of Climate Change issued Pakistan’s first approvals for market-eligible carbon-credit projects. It included a clean-water project developed by Korean firm ATR Inc which became the first to secure Host Country Approval under Article 6.4 of the Paris Agreement. Meanwhile, the Mehmood Booti Dumpsite Rehabilitation Project by the Ravi Urban Development Authority also received the country’s first Letter of Intent under Article 6.2 and voluntary market rules.
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