Stakeholders make case for carbon trading

Pakistan has substantial potential for emission reductions in energy, transport, industry and agriculture, which makes its marginal abatement cost “considerably lower” than that of many other countries. Speaking at a seminar on Tuesday about “Leveraging carbon markets to enable private investment,” National Disaster Risk Management Fund CEO Bilal Anwar said stakeholders should identify potential sectors for carbon trading. Pakistan has committed to reducing 50 per cent of its overall projected emissions by 2030, a task that requires heavy financing. “Article 6.4 can translate the financing through transactions of untapped emission reductions,” he said while referring to a part of the Paris Agreement that provides a structure for a carbon credit market through which greenhouse gas (GHG) emission reductions — or removals — can be transferred internationally. “Pakistan needs to set up institutional and procedural frameworks,” he added. In a world that’s becoming increasingly aware of the effects of climate change, governments around the world have been using different carbon pricing mechanisms to limit CO2 emissions. These mechanisms include carbon tax, emissions trading system, carbon offsetting, results-based climate finance and internal carbon pricing. Carbon markets are either voluntary carbon markets (VCMs) or compliance carbon markets (CCMs). The first category consists of decentralised markets where private actors voluntarily buy and sell carbon credits that represent certified removals or reductions of GHGs. In contrast, CCMs are governed by “cap-and-trade” regulations where carbon emission certificates for domestic firms and sectors are issued by government organisations or international bodies like the United Nations.