ISLAMABAD – Imposition of a carbon levy on petroleum products has been proposed in the federal budget for the fiscal year 2025-26.
Carbon levy of Rs 2.5 per liter is expected to generate around Rs 48 billion in the next financial year.
The levy on motor spirit and high-speed diesel will be doubled to Rs 5 per liter in the following fiscal year which will generate Rs96 billion in 2026-27.
In addition to the existing petroleum levy, a carbon levy of Rs 2 per liter (Rs 2,665 per metric ton) will be imposed on furnace oil. It will be enhanced to Rs 5 per liter in the following financial year.
For imposing carbon levy, the federal government will amend the Petroleum Products (Petroleum Levy) Ordinance 1961. It will boost revenue while addressing environmental concerns linked to fossil fuel consumption.
