ISLAMABAD – Pakistan has the opportunity to transform its renewable energy sector into a revenue-generating powerhouse.
There is a need to take measures to integrate renewable energy with carbon credit markets, positioning climate finance as both an environmental necessity and an economic imperative.
“Climate change is no longer a distant threat but a present reality. The recent climate-induced disasters in Pakistan highlight the direct link between environmental security and economic resilience. There is a need of strategic investments to harness our vast renewable energy potential,” said Pakistan Institute of Development Economics (PIDE) Vice Chancellor Dr. Nadeem Javaid.
PIDE has released a groundbreaking knowledge brief, “Unlocking Climate Finance: Potential Carbon Credits from Renewable Energ”. The brief highlights how Pakistan can generate revenue while combating climate change by tapping into global carbon credit markets.
At COP-29, developed nations pledged to increase climate finance to $300 billion annually, yet this still falls $1 trillion short of what is needed. This financing gap has amplified the significance of carbon markets—a mechanism where corporations and countries offset their emissions by purchasing credits from nations investing in green projects.
Pakistan, with its abundant solar and wind resources, has yet to fully capitalize on this opportunity. Despite policy guidelines for carbon trading, only 4.58% of Pakistan’s electricity currently comes from renewables—a stark contrast to the country’s untapped potential.
Pakistan’s solar energy potential exceeds 100,000 MW annually, particularly in the Sunny Belt regions. Expanding renewable energy and net metering could not only reduce reliance on imported energy but also unlock millions of dollars in carbon credit revenues.
Consumers in Pakistan already export approximately 481,863 MWh of solar electricity to the national grid. Given an emission rate of 1 ton of CO₂ per MWh, this equates to 475,840 tons of CO₂ avoided annually—a potential revenue of $6.1 million at a conservative carbon price of $12.90 per ton.
Future projections suggest that expanding off-grid renewable energy could increase earnings to between $21.5 million and $43 million, depending on market pricing mechanisms. With scaled-up investments, these figures could grow considerably.
The knowledge brief urges policymakers, investors, and energy stakeholders to accelerate renewable energy adoption to maximize carbon credit revenues, strengthen carbon credit verification systems to meet international standards, and align with global carbon trading frameworks to secure Pakistan’s position in the international carbon market.
With the right policies, Pakistan can transform its energy landscape, attract climate finance, and ensure long-term economic resilience.
