Pakistan Could Earn Over $2 Billion Annually Via Carbon Trading

Pakistan could generate up to $2.25 billion each year by selling 10–15% of its greenhouse gas emissions as verified carbon credits on global markets. The estimate comes from a new report by Transparency International Pakistan (TI Pakistan).

The report notes that Pakistan contributes less than 0.8% of global emissions but remains one of the most climate-vulnerable countries. A structured carbon market could unlock crucial climate finance to help the nation fight floods, glacier melt, and extreme weather.

Weak Governance in Pakistan Slows Progress

According to TI Pakistan, weak governance is the main barrier. The report cites an unclear legal status of carbon as an asset, overlapping mandates between federal and provincial authorities, poor emissions data, and limited technical capacity for verification.

The organisation recommends creating a central carbon registry, passing a clear law defining ownership and revenue-sharing rights, and ensuring transparent public reporting.

Local Projects Show Early Success

Some projects already show potential. The Delta Blue Carbon Project in Sindh has generated over $40 million through mangrove restoration. Other approved initiatives include the Lakhodair Landfill Gas Recovery and Jhimpir Wind Farm projects.

In early 2025, the Ministry of Climate Change approved Pakistan’s first market-eligible carbon-credit projects. The clean-water project by Korean firm ATR Inc. received the first Host Country Approval under “Article 6.4” of the Paris Agreement. Meanwhile, the Mehmood Booti Dumpsite Rehabilitation Project by the Ravi Urban Development Authority got the first Letter of Intent under “Article 6.2” and voluntary market rules.

What Is Carbon Trading?

Carbon trading is a market-based system where companies buy and sell permits or credits that allow them to emit carbon dioxide. Governments set an overall cap on emissions. Firms emitting less than their allowance sell excess credits to those exceeding limits. This creates a financial incentive to reduce emissions.

There are two types of carbon markets:

• Compliance markets, regulated by governments.
• Voluntary markets, where companies offset emissions through environmental projects.