emissions trading system

Emissions Trading System in Pakistan

Climate change is no longer solely an environmental concern, it has become one of the defining economic and trade challenges of the twenty-first century. Around the world, governments are increasingly using market-based mechanisms to reduce greenhouse gas (GHG) emissions while maintaining industrial competitiveness and economic growth. Among these mechanisms, the Emissions Trading System (ETS) has emerged as one of the most effective policy instruments. According to the World Bank’s State and Trends of Carbon Pricing 2026, there are now 87 carbon pricing instruments operating globally, including emissions trading systems and carbon taxes, covering nearly 30 percent of global greenhouse gas emissions. These instruments generated over US$107 billion in public revenues in 2025, demonstrating that carbon pricing has evolved from an environmental policy into an important pillar of economic and fiscal governance.

In the case of Pakistan, one that is most vulnerable to climate change, the discourse & discussion on emissions trading has become increasingly pertinent. While Pakistan contributes less than one percent of global greenhouse gas emissions, it remains among the nation’s most severely affected by climate-induced disasters. The catastrophic floods of 2022 alone caused economic losses estimated at more than US$30 billion, highlighting the enormous economic costs of climate vulnerability. As Pakistan seeks to achieve sustainable economic growth while fulfilling its commitments under the Paris Agreement, an Emissions Trading System offers an opportunity to integrate climate action with industrial competitiveness, investment promotion, and long-term economic resilience.

An Emissions Trading System, commonly referred to as a cap-and-trade mechanism, establishes a limit on the total amount of greenhouse gas emissions that regulated industries are permitted to emit. Within this overall cap, companies receive or purchase emission allowances that authorize them to emit a specified quantity of carbon dioxide or its equivalent. Firms that reduce their emissions below their allocated limits can sell their unused allowances to companies that exceed their emission caps. This market-based approach creates a financial incentive for industries to invest in cleaner technologies, improve energy efficiency, and reduce emissions while allowing businesses the flexibility to determine the most cost-effective compliance strategy.

The success of emissions trading systems across the world demonstrates the growing importance of carbon markets in modern economic management. The European Union Emissions Trading System (EU ETS), launched in 2005, remains the world’s largest multinational carbon market and has significantly reduced emissions from power generation, manufacturing, and aviation. China now operates the world’s largest ETS by emissions covered, initially focusing on the power sector and gradually expanding to additional industries. South Korea, New Zealand, Switzerland, the United Kingdom, Kazakhstan, and several states in the United States and Canada have also established operational emissions trading systems tailored to their economic structures. Collectively, jurisdictions accounting for almost two-thirds of global GDP have either implemented or are actively developing direct carbon pricing mechanisms, signalling that carbon markets are rapidly becoming mainstream economic policy rather than experimental environmental initiatives.

Across South Asia, governments are increasingly recognising carbon markets as instruments of economic competitiveness rather than solely environmental regulation. India has initiated the Carbon Credit Trading Scheme (CCTS) while expanding its long-standing Perform, Achieve and Trade (PAT) programme to improve industrial energy efficiency. Bangladesh is developing the institutional and regulatory foundations needed to participate in voluntary carbon markets and future compliance mechanisms. Together, these developments indicate a gradual regional shift towards integrating climate policy with industrial development, trade competitiveness, and sustainable economic growth.

Pakistan has also begun laying the foundations for a future carbon market, although the country remains at an early stage of development. The National Climate Change Policy, Pakistan’s updated Nationally Determined Contributions (NDCs), and the National Adaptation Plan recognise the importance of market-based mechanisms for reducing emissions. The Ministry of Climate Change and Environmental Coordination, together with development partners including the World Bank, GIZ, UNDP, and the Asian Development Bank, has initiated policy dialogue and capacity-building initiatives aimed at strengthening Pakistan’s carbon market readiness.

At the provincial level, Punjab has emerged as the frontrunner in preparing for emissions trading. With technical support from GIZ, the Environment Protection and Climate Change Department and the Planning and Development Board have initiated collaborative efforts to develop the institutional architecture necessary for an Emissions Trading System. These initiatives include the development of emissions inventories, digital Monitoring, Reporting and Verification (MRV) systems, the Green Credit Initiative, and the strengthening of Punjab’s Climate Watch platform to improve emissions monitoring and support evidence-based climate decision-making. Although these initiatives do not yet constitute a formal ETS, they represent important building blocks for a future provincial pilot that could eventually inform the development of a national emissions trading framework.

Despite these encouraging developments, Pakistan faces several institutional and technical challenges before an operational ETS can be introduced. Reliable emissions inventories remain incomplete across many industrial sectors, while comprehensive Monitoring, Reporting and Verification systems are still evolving. Institutional responsibilities for climate policy, industrial regulation, energy management, and environmental protection remain fragmented across multiple federal and provincial agencies, requiring stronger coordination. Furthermore, many industries and institutions have limited experience with greenhouse gas accounting, carbon pricing & reporting, emissions verification that highlight the need for substantial technical capacity building.

Nevertheless the opportunities created by ETS are significant, not only due to environmental benefits but formulates holistic markets that contribute to the world economy. Carbon market revenues have already crossed the threshold of almost US$30 billion in 2016 to over US$107 billion in 2025, representing the rapid and robust growth of climate finance and green investments worldwide. The European Union’s Carbon Border Adjustment Mechanism (CBAM) signals a new era where carbon compliance is becoming integral to international trade. Although Pakistan’s textile exports are not yet covered, global buyers increasingly demand transparent emissions reporting and low-carbon production. Developing an Emissions Trading System (ETS) and robust Monitoring, Reporting and Verification (MRV) systems will help Pakistani industries strengthen compliance and safeguard export competitiveness.

Pakistan stands at a crossroads in its climate and economic development. With an estimated greenhouse gas emissions of around 500 million tonnes of CO2 equivalent (MtCO2e) per year, of which nearly 50 percent are assumed to be  generated by the energy sector, Pakistan has both the need and the opportunity to decarbonize its economy. As carbon pricing mechanisms around the world gain traction, with 87 carbon pricing mechanisms now in place globally and the potential to generate over US$107 billion in revenues in 2025, carbon markets are rapidly becoming integral to international trade, investment, and industrial competitiveness. At the same time, the International Finance Corporation (IFC) estimates that Pakistan could unlock over US$348 billion in climate-related investments by 2030 across renewable energy, climate-resilient infrastructure, sustainable transport, green buildings, and climate-smart agriculture, an Emissions Trading System (ETS) can play a critical role in stimulating these investments while also helping to improve energy efficiency, reduce emissions from industry, enhance export competitiveness, and meet international carbon regulations. The transition to a low-carbon economy has already begun. The key question is not whether Pakistan needs an Emissions Trading System, but rather how soon the country can build the institutional, regulatory, and market foundations to shape a new era of sustainable economic growth and competitiveness in the global green economy.

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  • The Teachings of Hazrat Ali Hajveri (R.A)

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Daily visitation peaks on Thursdays, and the institution of perpetual langar  the provision of free meals  operationalizes his teaching on social welfare and continues to serve thousands of people each day.   The epistemological and ethical framework of Hazrat Data Sahib’s thought may be summarized under four interrelated principles.   First, he posited love of Allah and His Messenger ﷺ as the teleological basis of human existence. In Kashf-ul-Mahjoob, he argues that worship should proceed not from instrumental motives of fear or expectation of reward, but from authentic love and sincerity. He further contends that the spiritually realized individual maintains constant consciousness of Allah in all states of being.   Second, he advanced service to humanity as a form of worship. Rejecting ascetic withdrawal, he advocated an engaged ethic in which the pursuit of knowledge is coupled with service to the marginalized. His designation as “Ganj Bakhsh” reflects this commitment to the distribution of both material and spiritual resources. Third, he emphasized Tazkiya-e-Nafs, or the purification of the self, as a prerequisite for moral agency. He enjoined his disciples to abstain from vices such as greed, envy, wrath, slander, and pride, and to cultivate virtues including patience (sabr), gratitude (shukr), veracity (sidq), and contentment (qana‘at). For him, authentic knowledge was manifest not merely in textual erudition but in ethical conduct (akhlaq). Fourth, he articulated Sufism as the inward dimension of Shariah. He maintained that observance of ritual obligations  prayer, fasting, and lawful livelihood  must be complemented by dhikr, the remembrance of Allah, to ensure spiritual vitality. He further stressed the necessity of authoritative pedagogy and virtuous companionship as conduits for moral and spiritual development. 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  • We Grew the Wheat. We Chose to Import It.

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Within this post-colonial framework, the coercive control mechanisms of the British Raj have been preserved intact, where the primary objective of the state remains the extraction of resources and the concentration of power rather than public welfare. When political expression is stifled, electoral outcomes are systematically engineered, and parliament is reduced to a rubber stamp, the resulting paralysis is entirely inevitable. The crisis of governance is, at its core, a profound crisis of legitimacy. No administrative superstructure can endure without the genuine, uncoerced mandate of the people. When state policy-makers declare that the system has collapsed, they are essentially confessing to their own fiscal insolvency and administrative bankruptcy. Yet, the tragedy of this confession lies in its utility: rather than diagnosing the foundational causes, they weaponize this failure as a pretext to tighten their grip on power. 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State resources are routinely sacrificed at the altar of corporate privileges, elite exemptions, and inflated administrative expenditures, while foundational human rights—education, health, and justice—are systematically withheld from the masses. History offers a relentless warning: states are not experimental laboratories where arbitrary political models can be tested on a whim. From Ayub Khan’s Basic Democracies to Zia-ul-Haq’s Majlis-e-Shoora, and Pervez Musharraf’s devolution experiments, every single top-down engineering project ended exclusively in national fragmentation and internal turmoil. Each time, a new savior arrives claiming to smash the system, only to leave the country deeper in the mire before exiting the stage. Should the interior minister’s declaration be used this time to midwife yet another hybrid experiment or authoritarian arrangement, it will prove fatal to the nation’s remaining political existence. 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  • The Euphemism of Integration: Kashmir Seven Years …

    By Ahmad Hassan “The convoluted wording of legalisms grew up around the necessity to hide from ourselves the violence we intend toward each other… Elaborate euphemisms may conceal your intent to kill, but behind any use of power over another the ultimate assumption remains: ‘I feed on your energy.’” When Frank Herbert wrote those words in his novel Dune Messiah, he observed that elaborate euphemisms are often used by the state to conceal the raw mechanics of power. In Pakistan, August 5 is observed as Youm-e-Istehsal to condemn the 2019 revocation of Article 370 and its supplementary provision, Article 35A. This act of the Indian government removed Kashmir’s separate constitution, its flag and its control over its own affairs. Last week marked seven years since that day. What began as a dramatic constitutional rupture has now, by design, become quietly normalized. Jammu and Kashmir joined India in 1947 on defined terms. The Maharaja handed over defence, foreign affairs and communications. Everything else stayed with the state. The United Nations later called for a plebiscite. It never happened. Instead, over decades, the protections that were supposed to stand in its place were worn down piece by piece, until August 5, 2019, when the government removed what remained in a single stroke. The method deserves more attention than it usually gets. Article 370 was not directly changed. First, the government reached for Article 367, which was intended to aid in the interpretation of the Constitution, and used it to redefine one phrase: “Constituent Assembly” became “Legislative Assembly.” Kashmir had no sitting assembly at the time, and the state was under President’s Rule. So, the government’s own appointee, the Governor, signed off on the change. India’s Supreme Court had already ruled, in 1959 and again in 1969, that Kashmir’s constitutional status could only be changed after the approval of the Constituent Assembly of Kashmir. When that body no longer existed, no institution had the standing to give that consent on Kashmir’s behalf. New Delhi decided that its own Governor could stand in for the people he had not been elected by. That is not consent. It is a government consenting to itself. The Indian government argued that Kashmiris had lived for decades under an insurgency that killed tens of thousands and emptied the Valley of its Pandit community in 1990. It left the region isolated from the investment and policing coordination. That argument would carry more weight if the method had matched it. What followed the revocation was not the language of integration. It was a total communications blackout, landlines and mobile networks and the internet all cut at once. Independent estimates put the troop presence at 600,000 to 800,000, roughly one soldier for every ten Kashmiris. Even pro-India politicians, former chief ministers among them, were placed under detention. Perhaps a security argument can justify counter-insurgency operations. It cannot by itself justify dissolving a state’s constitutional status, its legislature and its statehood in one move. That too with no elected Kashmiri voice given the chance to object. Jawaharlal Nehru warned Parliament about exactly this shortcut in 1952, while Article 370 was still being drafted. No clause in a constitution, he said, could substitute for the will of the Kashmiri people. Real integration, in his words, comes from the mind and the heart, not from a clause imposed from outside. Actually, there is a longer, quieter project behind the legal manoeuvre. Article 35A once barred outsiders from buying land or settling permanently in Kashmir. Since its removal, more than 3.2 million domicile certificates have gone to outsiders, most of them non-Kashmiri Hindus. This alarming thing is that wherever a disputed territory’s demographics are reshaped before its people are asked what they want, the eventual vote, if one ever comes, no longer reflects the population whose future was originally in question. None of this required an invading army, or an open declaration of intent. It required a redefined word, a signature from an appointee, and a great deal of time. The convoluted legalisms that Herbert warned about have become policy in Kashmir: development, integration, correction. Each euphemism has quietly done the work that an honest admission of purpose could never have achieved. Seven years on, Kashmir’s assembly has voted decisively against the BJP that carried out the revocation, and passed its own resolution demanding the restoration of its special status. New Delhi can easily ignore them. Yet, that very power to ignore an elected legislature proves, beyond any doubt, that the “consent” obtained seven years ago was always a legal fiction

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