19 January 2018: Pakistan is exploring ways to price carbon, in order to induce investment and domestic action on climate change. Following a national consultation on the topic, the Ministry of Climate Change will launch a technical study on a possible carbon pricing instrument.

The national consultation took place in Islamabad, Pakistan, organized by Pakistan’s Ministry of Climate Change and the Collaborative Instruments for Ambitious Climate Action (CI-ACA) project, which the UNFCCC Secretariat runs through its five Regional Collaboration Centres. Approximately 60 public- and private-sector representatives agreed that carbon pricing is worth exploring as a way to reduce emissions and increase green investment. However, they cautioned that any carbon-pricing scenario must be compatible with Pakistan’s economic development objectives, poverty reduction, and increased access to sustainable energy, among other goals.

Participants agreed that Pakistan could draw on the experiences of other countries in developing and implementing carbon pricing instruments, such as a tax on greenhouse gas (GHG) emissions or an emissions cap-and-trade system. They emphasized the importance of transparency, clear institutional arrangements, awareness-raising, capacity building, and robust monitoring, and reporting and verification systems.

Approximately 42 national and 25 subnational jurisdictions are pricing carbon. The EU Emissions Trading System, currently the largest carbon market, covers about 1.75 billion tonnes of emissions. China has launched a process to create a national carbon emissions trading system, which will eventually cover about 3.5 billion tonnes of carbon dioxide (CO2) emissions within the country’s electrical power sector alone. [UNFCCC News Story] [SDG Knowledge Hub story on China Announcement]