Pakistan stands amongst the world’s top most affected countries due to global warming. Pakistan has been under the devastation of floods and heatwaves in recent times. The persistent decline of annual rainfall has contributed significantly towards continuous devastation.
An innovative approach to tackling climate insurgency is adopting revenue recycling methods in Carbon markets. The carbon credit is offshore of a cap-and-trade program. Companies that cause pollution are issued fixed credits that permit them to continue to pollute up to a certain limit that’s intermittently decreased. The carbon emitting company can sell any unneeded credits to other companies that require them so private companies are doubly incentivized to decrease greenhouse emissions.
The government must spend money on extra credits if their emissions exceed the cap. And second, they can make money by reducing their emissions and selling their excess allowances.
Pakistan being an agricultural state should authorize agriTech entities to incentivize farming practices that are advantageous to carbon capture. The stakeholder engagement of major agricultural companies can prove vital for the measurement of carbon capture. This collaborative approach can facilitate carbon credit sales, subsequently allowing for new revenue influx for the parties involved.
Pakistan has leverage in implementing carbon credits mechanism before monetization given the issuance of regulatory frameworks. For instance; The Green Bank guidelines by the State Bank of Pakistan (SBP) and the Environmental and Social Risk Management Manual.
Another pressing phenomenon is captivating Global attention to promote sustainable economic growth through international discourse. In addressing the concerns of environmental tragedies and substantial monetary losses it is critical to align financial practices with environmental considerations.
These guidelines stress the financial sector’s liability to uphold policy initiatives that could shift Pakistan’s economy toward a low-carbon and climate-resilient model.
Pakistan faces a setback in its way of implementing carbon credits and promoting green growth in shape of absence key sustainable financing policies. Introducing such policies should include cohesive discussions with co-financiers, aligning shared goals without substantially interrupting operational frameworks and decision-making processes.
Companies and investors can trade carbon offsets and credits at the same time on a carbon market. This creates new market opportunities and lessens the environmental crisis. New markets are almost usually because of new difficulties, and the current climate catastrophe and the growing global emissions are no different.
It’s not too late to pay attention to carbon markets again. Although there have been international carbon trading markets since the signing of the Kyoto Protocols of 1997, a recent surge in investment has been sparked by the establishment of emerging regional markets.
Carbon allowances also known as carbon credits, function similarly to emission permit slips. A corporation is authorized to produce one tonne of CO2 emissions when it purchases some carbon credits, which are provided by the government. Carbon revenue is transferred vertically through carbon credits from businesses to regulators; however, businesses that have extra credits at the end of the process can sell them to other companies.
Companies should buy carbon offsets voluntarily through the introduction of new obligatory emissions trading programs and mounting consumer demand. A further motivation for public policy should be introduced by shifting public perceptions of carbon emissions and climate change. Despite the constantly changing landscape of state, federal, and international legislation, businesses and investors now more than ever need to comprehend carbon credits.
The idea behind carbon credits was to lower greenhouse gas emissions. As the world is having an unprecedented environmental crisis, the concerted effort to transition toward a sustainable future is more serious than before.
The carbon credits will function as a type of environmental currency for Pakistan, which will permit companies to release a specific amount of greenhouse gases. This system enables companies to monitor their carbon footprint while incorporating a financial incentive for eco-friendly practices.
However, there is a risk of greenwashing as carbon credit companies may prioritize profit over environmental sustainability, leading to greenwashing or false claims of environmental sustainability. However, this risk can be mitigated through Implementing robust certification standards and independent verification mechanisms which can ensure the credibility of carbon credits.
To fully comprehend the potential of carbon credits against climate change, it’s significant to understand their potential benefits. Carbon credits enhance clean technologies in companies that promote significant greenhouse gas emissions. As the demand for clean energy sources increases, so does the motivation to innovate and develop sustainable alternatives
Furthermore, carbon credits facilitate companies to ambitiously pursue their environmental commitments. Incorporating carbon credits into integrating sustainability efforts has a ripple effect, transforming businesses into drivers of positive environmental change. This approach shows a systematic mechanism fostering global synergy in tackling climate change, enabling the pursuit of a sustainable future as an achievable reality.
In such times, the most immediate goal of Pakistan should be reducing vulnerability, improving readiness, and pursuing low-carbon green growth and resilient development.
The writer is a student of “BS IR” at “International Islamic University, Islamabad” and a member of PYDIR.
