#Author:Er Arun Tamang, Eleotronices Engieering NIT Sikkim India https://nitsikkim.ac.in/
CT (Carbon Trading) is a market-based mechanism for dropping Green House Gas (GHG) concentration through reducing carbon dioxide emission in the atmosphere. Under Clean Development Mechanism (CDM), carbon trading takes place through the exchange of Certified Emission Reduction (CER) units. 5 Specifically, the developed countries help developing countries in carrying emission reduction/removal projects and in exchange, earn CERs from developing countries. Purchasing one unit of CER allows developed country to emit one tonne of carbon dioxide in addition to its limit. These CERs are actually traded internationally through carbon exchanges.6 To facilitate the settlement of transactions and funding, banks and investment companies are extending services.
IPCC has identified Pakistan as one of the countries that can be hit hardly by climate change. This is mainly due to the dependency of the economy on agriculture and its low forest cover with a high rate of deforestation at around 0.2-0.4 every year. Though government has allocated funds to compensate for the
estimated annual loss of US $1.8 billion due to climate change; ministry of environment (MoE) has indicated the gap of 67 million rupees in the allocated budget. Realizing the vital role of climate change for sustainable development, Pakistan has started participating in the international arena of environment. For instance, Pakistan has been signatory to all significant international declarations of environment, including, Kyoto Treaty, Millennium Declaration; however, the relatively active participation of the country at international level started with the acceptance of KP in January 2005. KP has provided the country an entry avenue in the form of carbon trading to the international environment market. For CDM projects, Ministry of Environment has been declared a focal point while its National Operational Strategy was approved in 2006.
Another critical factor for Pakistan to participate in carbon trading can be the fear of exclusion. Fear of exclusion refers to the larger opportunity cost of nonparticipation for any country when other countries are participating. This opportunity cost can be huge for Pakistan as not only its peer countries are participating but one of its biggest export markets- Europe, has got serious concerns about Pakistan’s environment standards. The concern of Europe may result in restricting exports to the region thus adversely affecting the export earnings and BoP of the country. The country’s current ranking on Environment Performance Index (EPI); 124th among 149 countries, is not satisfactory as well. An active participation at international level towards environment sustainability can not only improve the environment status of the country, but may also enable the country to enhance its credibility internationally in this regard.
Pakistan at present possesses a very small share (0.4 percent) of the CT market. One possible explanation for this small share can be that a country having significant population below poverty line cannot afford to allocate significant resources for monitoring climate change. That said, climate uncertainties can have more devastating impact on poor and vulnerable societies. The inclusion of sustainable environment in millennium development goals is an indication of universal consensus on the linkage between poverty reduction and environment sustainability. Acknowledging the relationship, the government has included environment not only as an important aspect of Poverty Reduction Strategy Paper (PRSP) but has also made it part of the Public Sector Development Program (PSDP); 38.39 million rupees have been allocated for CT. The government is also responsive to the needs of capacity building and mass awareness to increase market participation in carbon trading. In this regard, the ministry has not only arranged many workshops and seminars but has also initiated few joint ventures with donors
References:-
https://www.sbp.org.pk/reports
