Pakistan to Establish Rs1 Billion Climate Fund to Tackle Climate Risks | A Bold Step Toward Resilience

Pakistan Climate Change Fund — a transformative Rs1 billion national mechanism — is being established by the Ministry of Climate Change to address the country’s growing climate vulnerabilities. This bold and visionary initiative aims to finance projects focused on climate adaptation, mitigation, and sustainability, reinforcing Pakistan’s commitment to a greener and safer future.

The proposal, forwarded to the Finance Division, seeks seed capital of Rs1 billion to operationalize the Fund, a move that reflects the government’s strong determination to build resilience against extreme weather events, floods, droughts, and rising temperatures.

This initiative aligns with Pakistan’s commitments under the Paris Agreement and the National Climate Change Policy, setting a clear path for a sustainable and low-carbon economy.

Legal Foundation Under the 2017 Climate Change Act

The Pakistan Climate Change Fund is being created under Section 12 of the Pakistan Climate Change Act, 2017, which empowers the state to mobilize financial resources for environmental protection and climate resilience.

This legal foundation ensures that the Fund operates as a credible and transparent financing mechanism, capable of managing large-scale climate investments from both domestic and international sources.

Officials at the Ministry of Climate Change confirmed that Draft Climate Fund Rules, which define the Fund’s structure and governance model, are awaiting final ministerial approval. Once cleared, the Fund will begin its operational phase under the Pakistan Climate Change Authority (PCCA).

Structure and Governance of the Climate Fund

The Pakistan Climate Change Authority will oversee the Fund through a multi-tiered governance structure to ensure accountability, transparency, and technical efficiency.

The Fund will be guided by three primary committees:

• Fund Management Committee (FMC): Responsible for decision-making, approvals, and oversight.
• Fund Technical Committee (FTC): Handles project evaluation, monitoring, and reporting.
• Fund Investment Committee (FIC): Develops and manages the Fund’s financial and investment strategy.

This governance framework will ensure that projects are carefully vetted, scientifically validated, and aligned with national climate priorities.

Funding Sources and Investment Strategy

The Pakistan Climate Change Fund will pool financial resources from multiple sources to ensure long-term sustainability and independence. These include:

• Annual government budget allocations
• Endowments and donations from philanthropies
• Investment profits from fund reserves
• Receipts from carbon markets and revenue-generating projects under the PCCA
• International climate finance, including Green Climate Fund and development partners

Once the initial Rs1 billion seed capital is secured, the Ministry expects the Fund to attract private sector investment and global climate finance institutions, leveraging Pakistan’s growing role in regional sustainability initiatives.

Allocation Plan for Climate Adaptation and Mitigation

According to the proposed disbursement plan, the Fund’s financial resources will be distributed strategically:

• 40% for Climate Adaptation Projects: To strengthen communities against floods, droughts, and water scarcity.
• 30% for Climate Mitigation Initiatives: To reduce greenhouse gas emissions through renewable energy, reforestation, and waste management.
• 20% for Capacity Building, Research, and Communication: To train institutions, raise awareness, and enhance climate data systems.
• 10% for Administrative and Operational Expenses: To maintain efficiency and transparency.

This balanced approach ensures both immediate climate resilience and long-term sustainable transformation.

Empowering Local Action Through Tiered Grants

To ensure inclusivity, the Pakistan Climate Change Fund will adopt a tiered grant system, supporting projects at multiple scales:

1. Small Grants (up to Rs5 million): For local NGOs, community-based organizations, and grassroots adaptation projects.
2. Medium Grants (Rs5–50 million): For scalable public-private ventures in renewable energy, agriculture, and urban resilience.
3. Large Grants (over Rs50 million): For national or multi-sectoral projects with long-term climate and socio-economic impacts.

This design allows communities, institutions, and innovators to participate directly in Pakistan’s green transformation journey, ensuring climate justice and inclusivity.

Private Sector and Global Participation

A co-financing mechanism will be introduced, enabling private sector participation at a 1:2 ratio — meaning every rupee of private investment will attract two rupees from the Fund.

This public-private collaboration model is expected to boost green entrepreneurship, support low-carbon technologies, and foster innovation across energy, agriculture, transport, and waste sectors.

The Fund will also align with international development partners like the World Bank, UNDP, and Green Climate Fund, enhancing Pakistan’s access to global climate finance networks.

According to the Ministry, “The Pakistan Climate Change Fund will serve as the country’s cornerstone for sustainable growth, unlocking new opportunities for jobs, innovation, and resilience.”

Long-Term Vision and National Impact

Once operational, the Pakistan Climate Change Fund will become the central financing vehicle for climate-related projects across the country.

The Fund aims to:

• Support provincial climate resilience programs.
• Finance renewable energy expansion and carbon offset projects.
• Promote nature-based solutions such as reforestation and mangrove restoration.
• Strengthen institutional capacity in climate science, disaster risk management, and environmental governance.

By mobilizing domestic and international capital, the Fund is expected to transform Pakistan’s climate finance landscape and make sustainability a core part of economic policy.

Conclusion: Paving the Path to Climate Resilience

The creation of the Pakistan Climate Change Fund marks a powerful and positive turning point in Pakistan’s fight against climate change.

With a Rs1 billion seed fund, strong governance, and a clear strategy, Pakistan is preparing to lead by example in climate finance innovation. This initiative not only reinforces the nation’s resilience but also signals a new era of green investment and sustainable development.

As the world watches, Pakistan’s proactive approach could inspire other developing nations to establish their own climate funds, turning ambition into action and hope into tangible impact.

External Links :

• UNDP Climate Finance Resources
• Paris Agreement Overview – UNFCCC

Internal Link :

• Pakistan’s Green Energy Transition Strategy