Powerful Progress: Pakistan Carbon Market Framework Takes a Major Leap in 2025 (Updated Report)

Pakistan carbon market framework development has accelerated as the government moves to operationalise the National Policy Guidelines for Trading in Carbon Markets, approved in 2024. On December 09, 2025, officials, experts, and civil-society leaders gathered in Islamabad to underscore the importance of a transparent, well-regulated carbon-trading ecosystem that aligns with international standards under the Paris Agreement.

The initiative signals Pakistan’s determination to transform climate commitments into credible, investment-ready systems capable of attracting global climate finance.

Workshop Highlights and New Transparency Commitments

The turning point came during a workshop organised by Transparency International Pakistan (TIP) in Islamabad. The event coincided with the launch of TIP’s detailed study titled “Carbon Markets Readiness in Pakistan: Addressing Governance Gaps and Safeguarding Against Integrity Risks.”

Romina Khurshid Alam, Coordinator to the Prime Minister on Climate Change, said the Pakistan carbon market framework marks a major shift in national climate-finance strategy—one that opens pathways into both voluntary and compliance carbon markets.

She stressed that Pakistan cannot afford weak governance structures, especially after observing the failures and fraud scandals that damaged certain international carbon-trading systems. Strong safeguards, she noted, will be essential for stability, market trust, and investor confidence.

Government Efforts to Build the Pakistan Carbon Market Framework

Ms. Alam highlighted several ongoing initiatives designed to convert policy commitments into a functioning Pakistan carbon market framework:

Regulatory Mechanisms for Carbon Credits

The Ministry of Climate Change is finalising:

• Procedures for generating carbon credits
• Rules for approving carbon-reduction methodologies
• A transparent system for transferring and trading carbon credits

This regulatory foundation aims to ensure market integrity and reduce risks of manipulation or double counting.

Institutional Coordination

Provincial and federal governments are being connected through new coordination platforms. Better communication between ministries, climate units, and provincial departments is expected to streamline approval processes for renewable energy, forestry, and adaptation projects.

Developing MRV Systems and National Carbon Registry

A core requirement of any credible carbon market is a robust Monitoring, Reporting and Verification (MRV) system. According to Romina Alam, Pakistan is close to finalising:

• A national MRV architecture
• Advanced data systems for emissions measurement
• Compliance protocols aligned with Article 6 of the Paris Agreement

National Carbon Registry Under Development

Work is underway on Pakistan’s first-ever National Carbon Registry—a digital platform designed to:

• Record projects
• Track the issuance of credits
• Prevent double counting
• Enable transparent transactions
• Build investor trust

A strong registry is one of the most critical components of the Pakistan carbon market framework and will help Pakistan avoid the governance issues that plagued early-generation carbon markets around the world.

Pilot Projects and Capacity-Building Efforts

The government is partnering with development organisations and climate-finance institutions to build technical capacity in key sectors:

• Renewable energy
• Forestry
• Community-based adaptation projects
• Nature-based solutions

Pilot projects will serve as test models, demonstrating Pakistan’s ability to produce high-quality, verifiable carbon credits. These pilots will also help policymakers refine rules, identify loopholes, and adopt global best practices.

Transparency International’s Recommendations

Transparency International Pakistan’s new study provides a roadmap for strengthening the Pakistan carbon market framework. The report strongly recommends:

• Clearer institutional mandates for agencies
• Mandatory public disclosure requirements
• Enhanced data governance systems
• Integrity safeguards to protect communities
• International-style audit mechanisms

The study also pushes for strong input from civil society and local communities so that carbon-reduction projects do not compromise community land rights, livelihoods, or environmental justice.

Why Strong Governance Matters

Participants at the Islamabad workshop—including policymakers, academics, private-sector leaders, civil-society representatives, and international partners—warned that poorly governed carbon markets often fail to deliver real emission reductions.

Countries such as India, Brazil, and Kenya have already faced market credibility issues, leading to project suspensions, credit devaluation, and negative international press.

To avoid such pitfalls, experts insisted that:

• Pakistan must embed transparency from day one
• A trusted MRV system is essential
• All carbon credits must represent real, measurable, and verifiable reductions
• The carbon market must remain fair for communities involved in projects

Without strong governance, the Pakistan carbon market framework risks repeating mistakes witnessed across Europe and Africa in earlier decades.

Global Context and Opportunities for Pakistan

The global carbon-trading landscape is rapidly expanding, with carbon markets reaching over $900 billion in annual value according to recent international assessments. Pakistan, with its vast potential in renewable energy, reforestation, and nature-based solutions, stands to benefit significantly.

External Links

To understand the global carbon-market context, readers can refer to:

• UNFCCC Article 6 Overview
• World Bank Carbon Pricing Dashboard

Conclusion

The Islamabad workshop concluded with broad agreement: The Pakistan carbon market framework represents a transformative opportunity, but its success hinges on transparency, strong regulation, and coordinated governance.

Pakistan is moving rapidly to build a credible, internationally aligned carbon-trading system—complete with MRV mechanisms, a national carbon registry, pilot projects, and cross-provincial coordination. If these efforts continue at their current pace, Pakistan could position itself as a responsible, trustworthy, and competitive player in the global carbon-finance arena.

By strengthening governance and embracing best practices, Pakistan is laying the foundation for a climate-resilient future where environmental protection and economic opportunity can advance together.