ABSTRACT

This thesis analyses potential opportunities and challenges in the creation of a carbon market in Pakistan with a focus on the industrial and transport sectors. The research based on the qualitative case study design is conducted on the basis of the semi-structured interviews with policymakers, experts, representatives of industry, and transport and including the review of relevant policy documents and international best practices. The paper evaluates the policy, institutional, and financial preparedness of Pakistan to engage in the market context, especially in the face of the Carbon Market Policy Guidelines (2024).

Results indicate that there is a weak level of awareness and knowledge concerning carbon credit trading amongst the major stakeholders, minimal technical potential, and preparedness in the sectors. The industrial sector demonstrates some willingness, but the transport one, in spite of the attempts towards the electric car, displays no effective emission reduction plans or programs that can be credited. Financial restrictions, the existence of unreliable Monitoring, Reporting, and Verification (MRV) strategies, and a lack of legal establishments are the major obstacles.

Based on the international experience, the study lists the actions that will be vital factors to success: the clear legal framework development, design of sector-specific MRV methodologies, the improvement of capacity building, and presentation of specific incentives, including tax relief and green finance. The PPPs become a very important dynamo for investment mobilization and stakeholder active engagements.

This thesis finds that Pakistan has immense mitigation potential, but that it seeks to carry out an effective carbon credit market by filling institutional gaps, aligning national policies to international specifications, and also by leveraging cross-sector cooperation to pique both local and foreign investment.