Pakistan’s carbon trading plan raises alarm over potential policy manipulation

Pakistan’s Ministry of Climate Change and Environmental Coordination (MoCC&EC) has established a committee to review draft regulations for the country’s carbon market, raising concerns about potential policy manipulation and foreign influence.

A document seen byNuktaoutlines that the newly formed committee is led by the ministry’s joint secretary and includes economists and consultants from multilateral organizations and private firms.

Members include Ahsan Kamran, Senior Technical Consultant at SPARC; Bilal Khalid of the World Bank; Farzana Noshaba, Senior Economic Officer at the Asian Development Bank; Soren Enden Lutken Madsen, Senior Economist at UNEP-CCC; Xianli Zhu, Senior Economist at UNEP; Salar Hasan, CEO of Ayha; Khurram Lalani, Principal Resources Officer; Syed Bulant Sohail of Standard and Poor Global; Bushra Gul, Climate Finance Officer; and Sana Rasool Carbon, a market specialist.

Concerns over conflicts of interest

Sources said the committee, predominantly comprising private-sector representatives, was established following the federal cabinet’s approval of ambitious carbon market policy guidelines late last year. However, questions have been raised over potential conflicts of interest and the involvement of foreign entities.

Some committee members are reportedly pursuing independent consultancy projects rather than ensuring institutional-level private sector involvement. This situation has sparked fears of policy manipulation and concerns over the protection of Pakistan’s sovereignty.

One of the primary issues centers on the involvement of a UAE-based firm linked to Ahsan Kamran, an advisor to the MoCC&EC.

The firm has gained significant traction in Pakistan’s carbon market through an Asian Development Bank (ADB) project and a SPARC initiative. Critics argue that such arrangements disproportionately benefit foreign entities while limiting opportunities for local businesses and communities.

Further concerns have been raised over Kamran’s dual role, as he reportedly operates privately under the name "SK Group" while holding multiple government advisory contracts. His participation in international climate negotiations—including meetings with the Singaporean government during COP29—has fueled suspicions of a conflict of interest.

Insiders also allege that officials within the MoCC&EC have steered contracts toward a well-funded think tank supported by Denmark and Germany, instead of bolstering Pakistan’s climate capacity.

Changes in policy provisions spark worries

Additional concerns have emerged over alterations to key provisions of the carbon market policy.

The original policy mandated that 5 percent of emissions reductions be directly counted toward Pakistan’s Nationally Determined Contributions (NDCs) to strengthen climate commitments. However, recent revisions have changed the language to state that these reductions would “preferably” contribute to NDCs, creating potential loopholes for exploitation.

Sources stressed the importance of maintaining mandatory percentage requirements to uphold Pakistan’s credibility in the carbon market and demonstrate its commitment to climate targets.

Critics also caution that individuals involved in the review committee might later seek approvals for their own projects, potentially profiting at unreasonable levels while undermining the system’s integrity.

Government defends policy

Despite the growing skepticism, the government has defended the policy and the composition of the review committee.

Prime Minister’s Coordinator on Climate Change, Romina Khurshid Alam, told Nukta that the rules are being formulated with input from relevant ministries, provincial governments, academia, and climate experts. The regulations will require federal cabinet approval before implementation.

“The committee is headed by the MoCC&EC, and no private member has access to any data related to the carbon market,” Alam said. “They are only providing input on best international practices.”

Alam further asserted that the 5 percent carbon credit allocation remains committed to fulfilling Pakistan’s NDC obligations, a provision approved by all provinces and the federal cabinet. To enhance transparency, she noted that the policy would be implemented through a digital dashboard using a faceless system to minimize bureaucratic influence and red tape.

Despite these assurances, questions persist about whether the carbon market will serve Pakistan’s broader interests or primarily benefit select private and foreign entities.

If structured effectively, the market could provide economic incentives for businesses to adopt cleaner technologies, invest in renewable energy, and improve efficiency. This could lead to job creation, reduced air pollution, and enhanced climate resilience.

However, without stringent oversight and accountability, critics warn that the system may be vulnerable to exploitation, undermining its intended impact on emissions reduction and sustainable development.