Carbon Credit

Carbon Crediting Mechanisms in Pakistan

Participation in the carbon crediting processes like Clean Development Mechanism (‘CDM’), voluntary carbon mechanisms as such is voluntary for a country. Pakistan has decided to participate in the mechanism based on its own assessment of potential benefits. Expected advantages coming along with participation in carbon crediting mechanisms in Pakistan may include:

· Introduction of advanced techniques, technologies and processes

· Training and introduction of new skills to local entities

· Influx of additional foreign investment

· Channeling of carbon revenues to investment priorities

· Concentration on cleaner and more sustainable development

· Reduction of greenhouse gas (‘GHG’) emissions and increase in environmental awareness.

Carbon crediting mechanisms aim at increasing the profitability of eligible alternative and Renewable Energy (‘ARE’) projects. These also incentivize local communities to self-manage qualifying projects and thus strengthening their livelihood, since its conceptualization is bases on sustainable development principles.

The Policy for Development of Renewable Energy for Power Generation, 2006 (‘RE Policy’) of Government of Pakistan (‘GoP’) encourages the project proponents to apply for earning carbon credits. At time when the RE Policy was announced, CDM was the potential carbon market option available for developing countries like Pakistan. Because of which the RE Policy captured this concept only. However, as the time passes, new market mechanisms got evolved and several lucrative options in the voluntary markets become available where option of selling carbon credits at lucrative prices could be explored. Owing to this, the Designated National Authority (‘DNA’) established at Ministry of Environment at that time and now shifted to Climate Change Division (‘CCD’), encouraged the project proponents to get benefit from these market options as well.