# **Detailed SUMMARY of the Article "Climate Revenue & Investments," by Ali Tauqeer Sheikh, Dawn, January 30th, 2025**: The article emphasizes the critical role of Pakistan’s private sector in addressing the country’s climate and economic challenges. It highlights the need for robust public-private partnerships (PPPs) to attract domestic and international climate finance, expand fiscal space, and support climate adaptation and mitigation efforts. Pakistan’s private sector, though sizable and capable, lacks a coherent framework to mobilize revenue and investments for climate action. The article suggests integrating climate-related tax provisions, carbon taxation mechanisms, and climate-proof subsidies, alongside adopting innovative financing instruments like emissions trading systems (ETS). Public finance alone is insufficient to meet the $348 billion climate finance requirement by 2030, as estimated by the World Bank. Without immediate action, Pakistan could face $380 billion in losses by 2050 due to infrastructure damage, agricultural losses, and population displacement. The private sector’s engagement is pivotal, particularly in energy, transport, and industrial sectors, to achieve 60% of Pakistan’s Nationally Determined Contributions (NDCs) under the Paris Agreement. The State Bank of Pakistan (SBP) estimates that private sector climate finance could add 1.5% to GDP annually, while the Asian Development Bank (ADB) suggests it could reduce public borrowing needs by $3 billion annually. The article calls for strengthening domestic resource bases through carbon taxes, reforming subsidies, promoting climate-smart manufacturing, and enhancing PPP frameworks. It also stresses the importance of developing carbon markets, improving regulatory environments, and leveraging Pakistan’s renewable natural capital, valued at $474 billion. The article concludes that while the private sector cannot solve all problems, its innovation and efficiency are essential for sustainable development. # **Easy/Short SUMMARY**: Pakistan needs its private sector to help fight climate change and boost the economy. The private sector can bring money and new ideas, but there’s no clear plan yet. Pakistan needs $348 billion by 2030 for climate action, and without action, it could lose $380 billion by 2050. The private sector can help in areas like energy, transport, and industry. The government should work with businesses to create carbon taxes, improve subsidies, and build carbon markets. This will help Pakistan meet its climate goals and grow its economy. # **SOLUTIONS of The Problem**: ## **1. Strengthening Domestic Resource Base** Introduce carbon taxes and climate-related tax provisions to raise $2-3 billion annually. Restructure the petroleum development levy into a carbon tax to reduce emissions and generate revenue. ## **2. Subsidy Reform & Climate-Smart Manufacturing** Reform $7 billion in annual subsidies to promote climate-resilient practices. Focus on electric vehicles and cleaner energy sources like Euro V oil products. ## **3. Public-Private Partnerships (PPPs)** Develop PPP frameworks that integrate climate costs. Create a dedicated climate finance unit within the federal PPP authority to accelerate projects, similar to India’s $10 billion climate-resilient infrastructure model. ## **4. Carbon Market Development** Establish a domestic emissions trading system (ETS) under Article 6 of the Paris Agreement. Leverage Pakistan’s renewable natural capital ($474 billion) to generate $1.5 billion annually from carbon credits. ## **5. Regulatory Enhancement** Strengthen green banking guidelines and environmental risk management frameworks. The SBP should set green financing targets and mandate ESG (environmental, social, and governance) reporting to unlock $5 billion in private climate finance. ## **6. Promoting Renewable Energy** Invest in renewable energy projects, particularly in agriculture and waste management, to generate carbon credits and reduce emissions. ## **7. Climate-Proofing Industries** Recognize polluting industries as potential drivers of innovation and sustainability. Provide incentives for transitioning to low-carbon practices. ## **8. Enhancing Public Consultations** Involve stakeholders in budget preparation and policy-making to ensure transparency and inclusivity in climate finance decisions. ## **9. Leveraging International Support** Seek international climate finance through innovative instruments like concessional loans and technical support, rather than relying solely on small-scale grants. ## **10. Building Institutional Capacity** Train government and private sector officials on climate finance mechanisms and sustainable development practices to ensure effective implementation. # **IMPORTANT Facts and Figures Given in the Article**: - Pakistan’s climate finance requirement: $348 billion by 2030 (World Bank). - Potential losses by 2050: $380 billion (British FCDO). - Private sector climate finance could add 1.5% to GDP annually (SBP). - Climate-smart private investment could reduce public borrowing by $3 billion annually (ADB). - Carbon tax restructuring could raise $2-3 billion annually. - Subsidies cost $7 billion annually; reforms could save $2 billion. - Pakistan’s renewable natural capital is valued at $474 billion (13.6% of national wealth). - Potential annual revenue from carbon credits: $1.5 billion. - India’s PPP policy mobilized $10 billion for climate-resilient infrastructure. # **IMPORTANT Facts and Figures out of the Article**: - Pakistan’s NDC targets under the Paris Agreement require 60% private sector engagement. - The Finance Division has initiated the FY 2025-26 budget preparation cycle. - The Overseas Investors Chamber of Commerce & Industries organized the Third Pakistan Climate Conference 2025. # **MCQs from the Article**: ### 1. **What is Pakistan’s climate finance requirement by 2030, according to the World Bank?** A. $200 billion B. $250 billion **C. $348 billion** D. $400 billion ### 2. **What is the estimated potential loss for Pakistan by 2050 without climate action?** A. $200 billion B. $300 billion **C. $380 billion** D. $500 billion ### 3. **Which sector has the potential to add 1.5% to Pakistan’s GDP annually through climate finance?** A. Public sector **B. Private sector** C. Agricultural sector D. Industrial sector ### 4. **What is the estimated annual revenue potential from carbon credits in Pakistan?** A. $500 million B. $1 billion **C. $1.5 billion** D. $2 billion ### 5. **Which country’s PPP policy mobilized $10 billion for climate-resilient infrastructure?** A. China **B. India** C. Bangladesh D. Sri Lanka # **VOCABULARY**: 1. **Resilience** (noun) (مضبوطی): The ability to recover quickly from difficulties. 2. **Mitigation** (noun) (کمی): The action of reducing the severity of something. 3. **Concessional** (adjective) (رعایتی): Referring to loans given at lower interest rates than market rates. 4. **Vulnerabilities** (noun) (کمزوریاں): Weaknesses that make something susceptible to harm. 5. **Innovative** (adjective) (جدت پسند): Featuring new methods; advanced and original. 6. **Ecosystem** (noun) (نظام): A complex network or interconnected system. 7. **Emissions** (noun) (اخراج): The production and discharge of gases, especially carbon dioxide. 8. **Transparency** (noun) (شفافیت): The quality of being open and honest. 9. **Sustainability** (noun) (پائیداری): The ability to maintain ecological balance. 10. **Regulatory** (adjective) (ضابطہ جاتی): Relating to rules or laws. 11. **Incentives** (noun) (ترغیبات): Something that motivates or encourages action. 12. **Displacement** (noun) (بے دخلی): The forced movement of people from their homes. 13. **Infrastructure** (noun) (بنیادی ڈھانچہ): The basic physical systems of a country or organization. 14. **Competitiveness** (noun) (مسابقت): The ability to compete effectively. 15. **Transition** (noun) (منتقلی): The process of changing from one state to another. 16. **Carbon Credits** (noun) (کاربن کریڈٹ): Permits allowing a country or organization to produce a certain amount of carbon emissions. 17. **Subsidies** (noun) (سبسڈی): Financial assistance provided by the government. 18. **Green Banking** (noun) (گرین بینکنگ): Banking practices that promote environmental sustainability. 19. **ESG** (noun) (ماحولیاتی، سماجی، اور گورننس): Environmental, Social, and Governance criteria for investments. 20. **Renewable** (adjective) (قابل تجدید): Capable of being replenished naturally. --- 📢 *Attention Please!* We appreciate your commitment to acquiring knowledge through our summaries. Please be reminded not to remove the attribution label affixed to this article. It is crucial to acknowledge the source and the effort invested in creating this summary. We discourage any unauthorized distribution without proper credit. Thank you for your understanding and cooperation. 🔍 ⚡ *Explore More Summaries, Solutions, and Vocabulary Meanings!* 💡 Join our WhatsApp Channel for timely and comprehensive summaries of the latest articles, along with well-crafted solutions and helpful vocabulary meanings. Click the link below to join now: 🔗 [Dawn Article Summaries](https://cssmcqs.com/dawn-editorials-articles-summary-for-students-pdf-download/) *WhatsApp Channel Link* https://whatsapp.com/channel/0029Va7tT3o35fLnJeFbpS2y dawn.com Climate revenue & investments Ali Tauqeer Sheikh 8–9 minutes PAKISTAN’S economic and climate turnaround hinges on the active participation of the private sector. A web of robust partnerships with it can be leveraged to attract both domestic and international climate finance and investments and increase fiscal space for climate action while supporting climate adaptation and mitigation. Pakistan’s private sector is sizeable and has str­o­­­­ng potential to spearhead the country’s transit­i­­on to resilience and sustainability. But we have yet to develop a coherent framework to help mobilise domestic revenue and investments, as well as an ecosystem to expand climate-related tax provisi­ons, introduce carbon taxation mechanisms and cli­­mate-proof subsidies, integrate climate-smart ma­­nufacturing, and adopt innovative financing ins­­truments, which include public-private partnerships (PPPs) and emissions trading systems (ETS). Public finance alone cannot meet climate fin­a­nce needs to achieve the Paris Agreement targets. The Pakistan Business Council in its quarterly ac­­t­­ivity reports has lamented private sector exclusion despite demonstrated capacity. The private se­­ctor has significant potential to expand its inve­s­­tments in Pakistan’s NDC (Nationally Deter­mi­n­­ed Contri­butions) sectors. By enhancing incenti­v­­es, the cou­ntry could attract more climate-related domestic and foreign direct investment, and activate PPPs to play a more proactive role in climate initiatives. Pakistan faces an unprecedented climate finan­­ce requirement: $348 billion through 2030, according to the World Bank’s Country Climate Develop­m­ent Report. Recurrent losses can make it even wor­se. Britain’s Foreign, Commonwealth and Deve­lo­p­­ment Office projects that without immediate acti-­on, Pakistan will face $380bn in combined los­­ses by 2050 through infrastructure damage, agricultural losses, and population displacement. Pu­­b­lic sector financing cannot address the scale. Inte­r­­na­tional climate finance has shifted from grants to more complicated instruments, while Pakistan’s ac­­­cess remains skewed towards traditional small-scale grants, concessional loans, and technical support. The private sector has strong potential to spearhead the transition to resilience and sustainability. Rethinking partnerships: Pakistan’s NDC, submitted to the secretariat of the Paris Agreement, commits to several emissions reduction targets by 2030. The Planning Commission has acknowledged that over 60 per cent of these targets could be achieved through private sector engagement, particularly in the energy, transport, and industrial sectors. Yet, the present implementation fra­meworks remain overwhelmingly public sector-oriented. The State Bank of Pakistan (SBP) estimates that private sector climate finance could potentially add 1.5pc to GDP annually, whereas an assessment by ADB suggests that climate-smart private investment could reduce public borrowing needs by $3bn annually while accelerating low-carbon development. This calls for rethinking partnerships for NDC implementation. The timing is particularly crucial. Recently, the Finance Division released a budget call circular to initiate the formal budget preparation cycle for FY 2025-26 proposals. It is a critical opportunity to revisit domestic revenue and investment policies through public consultations rather than closed-door meetings and negotiations with interest groups. FBR, finance, planning, economic affairs and other ministries concerned should review four propositions: Strengthening domestic resource base: The implementation of climate-related tax provisions represents a critical mechanism for enhancing financial resources for climate action. Our experience with the petroleum development levy provides a foundation for implementing carbon taxes. It is estimated that its restructuring as a carbon tax could potentially raise $2-3bn annually. It is argued that strategic carbon pricing presents a dual opportunity: revenue generation and emissions reduction in key sectors including power, transport, and industry. Neither the FBR nor leading business councils in the country have presented options for climate-aligned taxation. Challenges persist regarding industrial competitiveness, particularly in sectors such as textiles, garments, and sugar production. Yet, carbon taxation could potentially mitigate risks associated with looming trade barriers like the carbon border adjustment mechanisms. Subsidy reform & climate-smart manufacturing: The subsidies in various sectors are presently costing about $7bn annually. This requires climate-proofing to prevent unintended consequen­­ces that accentuate climate vulnerabilities. The FBR has still not adjusted its frameworks to reflect climate considerations in annual budget allocations. Instead of viewing industries solely as emission sources, the polluting industries should be recognised for their potential role in driving innovation and sustainability in growth and development. Estimates suggest that structured reform could save $2bn while promoting climate-resilient practices. It has been recommended that reforms focus on promoting electric vehicles on the one hand, and transitioning to Euro V oil products on the other. Moving the subsidy for energy transition of two- and three-wheelers will support energy transition to cleaner air in our cities. Public-private partnerships: PPP frameworks need to integrate the climate costs. PPPs can potentially play a crucial role in establishing formal institutional mechanisms for climate finance initiatives. India’s PPP policy has mobilised $10bn for climate-resilient infrastructure. Its Pakistani counterpart requires a similar transformation. The ADB recommends the creation of a dedicated climate finance unit within the federal PPP authority to accelerate project development. Carbon market development: Carbon markets offer Pakistan substantial opportunities for accelerating its low-carbon transition under Article 6 of the Paris Agreement. An assessment by the climate ministry has identified potential for 121 trading facilities in a domestic ETS. The private sector views carbon trading as a key opportunity, with potential annual revenues of $1.5bn from forestry and renewable energy projects. Pakistan’s renewable natural capital is valued at $474bn (13.6pc of its national wealth) and remains largely underutilised. Renewable energy, agriculture, and waste management sectors offer immediate potential for generating carbon credits but wait for a robust and transparent operational system at the federal and provincial levels. Regulatory enhancement: The regulatory environment requires strengthening green banking guidelines and environmental and social risk management frameworks. According to the Pakistan Banking Association, improved regulation could help unlock $5bn in private climate finance. The SBP’s role in setting green financing targets and incentivising financial institutions is critical for the creation of robust finance mechanisms. Its guidelines need augmenting of mandatory ESG (environmental, social, and governance) reporting requirements and the Securities and Exchange Commission of Pakistan’s proposed sustainability reporting framework. Generating domestic revenue and investments can be promising for promoting climate action. The private sector cannot always deliver the promised moon, but the public sector has much to gain from its innovation, efficiency, energy, and drive for sustainability. The writer is a climate change and sustainable development expert. This column is based on his keynote address at the Third Pakistan Climate Conference 2025, organised by the Overseas Investors Chamber of Commerce & Industries, Karachi. Published in Dawn, January 30th, 2025