Pakistan is at a crucial juncture in its battle against climate change, with the potential to turn its renewable energy sector into a significant revenue-generating powerhouse. Dr. Nadeem Javaid, Vice Chancellor of the Pakistan Institute of Development Economics (PIDE), has called for immediate and decisive action to integrate renewable energy with carbon credit markets, emphasizing that climate finance is both an environmental necessity and an economic imperative.

“Climate change is no longer a distant threat but a present reality,” stated Dr. Javaid. He highlighted the recent climate-induced disasters in Pakistan, which underscore the direct link between environmental security and economic resilience. He urged the adoption of bold policies and strategic investments to harness the country’s vast renewable energy potential.

In support of this vision, PIDE has released a groundbreaking knowledge brief titled “Unlocking Climate Finance: Potential Carbon Credits from Renewable Energy,” authored by Muhammad Faisal Ali, Research Fellow at PIDE, and Usama Abdul Rauf, Research Associate at RASTA. The brief outlines how Pakistan can generate revenue while addressing 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 heightened the importance of carbon markets, where corporations and countries offset their emissions by purchasing credits from nations investing in green projects. Despite its abundant solar and wind resources, Pakistan has yet to fully capitalize on this opportunity.

Currently, only 4.58 percent of Pakistan’s electricity is generated from renewable sources, a stark contrast to the country’s untapped potential. According to the knowledge brief, 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 are already exporting approximately 481,863 MWh of solar electricity to the national grid. With an emission rate of 1 ton of CO₂ per MWh, this translates to 475,840 tons of CO₂ avoided annually, representing 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 exponentially.

The knowledge brief urges policymakers, investors, and energy stakeholders to accelerate the adoption of renewable energy to maximize carbon credit revenues. It also calls for strengthening carbon credit verification systems to meet international standards and aligning 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. As Dr. Javaid reaffirmed, “PIDE remains committed to providing data-driven policy solutions that align with sustainable development goals and secure Pakistan’s energy future.”