Exposed: The Flawed Climate Change Budget Undermining Pakistan’s Green Future
Pakistan’s FY26 climate change budget is under fire for prioritizing taxation over true climate adaptation. Explore how greenwashing tactics mask real vulnerabilities.
The Pakistani government has marketed the FY26 fiscal package as its first-ever climate change budget. On paper, it aligns with environmental progress. But in reality, experts warn that it’s riddled with contradictions, prioritizing taxation over genuine sustainability.
Far from offering real climate resilience, the budget—crafted under the pressure of the International Monetary Fund’s (IMF) Extended Fund Facility (EFF)—has been labeled as a textbook case of greenwashing. The reality: it repackages indirect taxes as climate initiatives, sidestepping much-needed climate adaptation.
The IMF Dilemma: Conflicting Commitments
Pakistan is juggling dual commitments to the IMF:
- EFF: Emphasizes austerity and revenue generation
- RSF (Resilience and Sustainability Facility): Demands climate adaptation
Instead of harmonizing these goals, the FY26 climate change budget reflects a compromise—favoring the EFF’s fiscal targets while minimally checking the RSF boxes. This contradiction has drawn sharp criticism from climate and energy finance experts.
“The government has masked taxation levies as climate mitigation efforts,” explains Ahtasam Ahmad, Climate Tech and Energy Finance Lead at Renewables First.
Greenwashing and the Carbon Levy
A major critique is the Rs2.5 per litre carbon levy on petroleum products and the 10% tax on imported solar panels. Framed as green measures, they’re essentially revenue tools.
“If the government really wanted to curb fossil fuel use, it wouldn’t keep investing in coal-based power,” adds Mr. Ahmad.
These taxes disproportionately hurt low-income households—especially motorcycle users, who account for nearly half of petrol consumption in Pakistan. Instead of systemic solutions, the budget leans on demand-inelastic products for easy revenue, sidelining equity and climate impact.
Methane, Emissions, and Missed Priorities
While Pakistan ranks low in CO₂ emissions (156th), it’s among the top 10 methane emitters globally. A significant chunk of this comes from:
- Agriculture
- Oil and gas fugitive emissions
- Transport
Despite this, the climate change budget does little to address methane through administrative reforms or industry accountability.
“Fugitive emissions are the second-largest contributor to methane in Pakistan. Fixing these would mean holding oil companies accountable—not taxing petrol,” says Aftab Alam Khan, a climate resilience consultant.
Too Much Mitigation, Too Little Adaptation
Pakistan is a low emitter but highly vulnerable to climate change impacts like floods, droughts, and glacial melt. In such cases, adaptation—not mitigation—should be the top priority.
Shockingly:
- 87% of the climate change budget is focused on mitigation
- Disaster preparedness saw a 30% budget cut
- Post-disaster rehabilitation rose by 157%
This reactive approach indicates poor foresight and planning. It’s like spending more on ambulances than preventing accidents.
In his podcast Front Seat to Climate Change, Dawar Butt notes that most of this so-called climate finance is relabeled spending on dam projects—not new, targeted investments.
Where’s Agriculture and Forestry in the Budget?
Agriculture is Pakistan’s most climate-exposed sector, yet receives minimal attention in this year’s climate change budget. While token grants exist for crop resilience, broader challenges—like shifting rainfall patterns and soil degradation—remain unaddressed.
Similarly, forestry, a natural carbon sink, has seen its budget slashed drastically:
- Billion Tree Tsunami-era funding: Rs14 billion
- FY26 forestry allocation: Rs2.4 billion
With record deforestation rates and urban expansion, this funding cut represents a grave oversight.
The Global Context: Why Pakistan Must Act Alone
Globally, climate momentum is faltering. Under a potential Donald Trump presidency, the US is set to roll back climate initiatives—delaying solar and wind development, reducing EV sales, and possibly adding 7 billion tonnes of emissions by 2030.
For Pakistan—a climate-vulnerable, low-emission country—this means it cannot wait for international leadership. COP29’s weak climate finance goals underscore that reliance on the West won’t work.
The deaths of 18 tourists in Swat’s flash floods serve as a tragic reminder: Without adaptation, the human toll of climate inaction will only rise.
Conclusion: Green Goals Demand Honest Governance
The FY26 climate change budget, while labeled as visionary, reveals a concerning pattern of greenwashing. Rather than offering real solutions to climate vulnerabilities, it taxes the poor, avoids hard reforms, and repackages old projects as new.
If Pakistan truly wants climate resilience, it must:
- Prioritize adaptation over mitigation
- Regulate methane and fugitive emissions
- Reinvest in forests and sustainable agriculture
- Ensure climate spending transparency under RSF
Until then, the climate change budget remains more of a branding exercise than a blueprint for survival.