As one of the top ten countries most severely impacted by climate change, Pakistan has experienced devastating floods and heatwaves in recent years. A prolonged decline in annual rainfall characterised the early 20th century, but since 1960, a slight increasing trend has prevailed.
This overall trend hides considerable sub-national variation. Mean rainfall in the arid plains of Pakistan and the coastal belt has decreased by 10 to 15 per cent since 1960, contributing to the ongoing degradation of the country’s wetlands and mangrove ecosystems. Most other regions have experienced a slight increase in both monsoon and dry seasons.
Heavy rainfall events have increased since 1960, and the nine heaviest rains recorded in 24 hours were recorded in 2010. Recent evidence suggests the glaciers in the headwaters of the Indus Basin may be expanding due to increased winter precipitation over the Himalayan region in the last 40 years.
Since the early 2000s, the World Bank Group, USAID, and the United Nations have been working with various stakeholders in Pakistan to reduce vulnerability, improve readiness, and achieve low-carbon green growth and resilient development. This would involve (1) supporting preparedness towards disasters and climate-related emergencies, (2) modernising irrigation networks and installing high-efficiency irrigation systems, and (3) efforts for low-carbon development, particularly in energy (renewables) and industries.
Signs of progress
Thirteen years after the State Bank of Pakistan's (SBP) initial recognition of the potential of carbon trading within the country, the Ministry of Climate Change is poised to introduce the inaugural policy draft.
In the current fiscal year alone, the federal government has granted Sindh the opportunity to accrue $200-220 million from carbon credits over the ensuing two decades. Remarkably, within less than a month, Singapore-based carbon exchange Climate Impact X disclosed that the demand for carbon-removal credits emanating from a mangrove restoration project in Pakistan surpassed the available supply by more than 50per cent.
Against a funding downturn in Pakistan, a proposition emerged suggesting that AgriTech entities should incentivise farming practices conducive to carbon capture. The measurement of such capture could be facilitated through collaborations with companies like TPL Maps, subsequently allowing for the sale of carbon credits, thereby creating new revenue streams for both parties involved.
This innovative approach became feasible following the issuance of the Green Banking Guidelines by the SBP in 2017 and the subsequent release of the Environmental & Social Risk Management Manual in 2022.
By providing these regulatory frameworks before the monetisation of carbon credits in Pakistan, the central bank actively engaged with the international discourse on climate change, advocating for sustainable economic development.
This strategic intervention also acknowledged the pressing issue of frequent and devastating natural disasters within the region, leading to human tragedies and substantial monetary losses. In doing so, the SBP underscored the imperative of aligning financial practices with environmental and climate considerations to address global challenges and foster resilient economic growth.
“These guidelines have elevated environmental protection on the global agenda,” said Moin Iqbal, head of business origination at InfraZamin Pakistan, which derives its approach from thePrivate Infrastructure Development Group, a pioneer in commercially viable sustainable financing. “These guidelines acknowledge the financial sector's responsibility to support policy initiatives that transition a country's economy toward a low-carbon and climate-resilient model.”
Iqbal added that the SBP guidelines have instilled environmental consciousness within the organisational culture and realigned banking products, services, and operations to minimise the ecological impact of banks and the economy.
“The central bank’s objective is to reduce banks' vulnerability to environmental risks, fulfill their ecological protection responsibilities, and provide financial support for transforming the economy into a resource-efficient and climate-resilient one,” said Iqbal.
The State Bank of Pakistan (SBP) has instituted a Renewable Energy Scheme to promote green banking practices. This initiative encourages businesses to leverage discounted financing to install energy-efficient equipment and implement renewable energy projects, with the overarching goal of diminishing carbon emissions.
Through this scheme, the SBP seeks to foster an environmentally conscious banking sector by incentivising and supporting enterprises in adopting sustainable measures. The discounted financing options provided by the SBP aim to facilitate the integration of eco-friendly technologies, making strides towards a more sustainable and low-carbon business landscape.
“While renewable energy remains foundational, the fusion of energy efficiency, equipment modernisation, power loss reduction strategies, and a dedicated focus on green housing within financing mechanisms positions Pakistan as a trailblazer in comprehensive climate mitigation,” wrote Abdul Waheed Bhutto, Pro Vice-Chancellor at Dawood University of Engineering and Technology.
Before implementing these guidelines, financial institutions lacked substantive sustainable financing policies. Introducing these policies has facilitated cohesive discussions with co-financiers, aligning shared objectives without substantially disrupting operational processes and decision-making frameworks.
“The shift towards environmental considerations in decision-making for all financiers has led to increased environmentally sustainable projects being proposed to banks for IZP's guarantee,” said Iqbal. “This has resulted in a robust pipeline of projects currently undergoing evaluation and has facilitated more straightforward conversations with customers as the environmental sustainability agenda gains momentum.”
Establishing sustainable financing guidelines has markedly enhanced the investment climate for various projects. Presently, institutions prioritise impact investing, preferring projects with substantial developmental impact. This shift in focus has resulted in a noticeable upswing in initiatives related to recycling, energy efficiency, and climate change mitigation, among other sustainability objectives.
Local examples
A noteworthy illustration of this paradigm shift is evident in the collaborative efforts of the World Wide Fund for Nature (WWF) and corporate entities like TPL Group, which aim to restore Karachi's coastal ecosystem. Adopting a hands-on approach to shoreline cleanliness, this collaboration involves the removal of debris and plastic waste.
Furthermore, on the technological front, a venture accelerator is actively contributing to emissions reduction by addressing the environmental impact of servers and infrastructure supporting AI products. This multifaceted approach exemplifies the transformative influence of sustainable financing guidelines in steering investments toward projects with a positive environmental and developmental footprint.
Fariha Rizwan, the former chief information officer of Z2C Limited, emphasised that reducing the number of computational tasks directly correlates with a decrease in overall power consumption and the associated emissions.
This perspective underscores the significance of optimising computational processes to mitigate environmental impact and promote sustainability in the context of information technology and venture acceleration.
“By removing layers of hierarchy and revising how tasks are designed and delivered, we were able to decrease the operational time of tasks by one-tenth in the aggregate, from nearly 20 minutes per task, for example, to less than two minutes,” she said.
Under Fariha Rizwan's leadership, an initiative was implemented to curtail the usage of traditional printers and paper, offering card scan alternatives instead. These tools leverage optical character recognition technology to scan, automatically save, and provide access to documents without printing.
In a separate endeavor, the World Wide Fund for Nature (WWF), in collaboration with Green Earth Recycling and PepsiCo Pakistan, is actively engaged in a large-scale initiative to collect and recycle nearly five thousand tons of plastic waste. This initiative addresses a significant challenge, considering Pakistan's need for formal waste collection and recycling infrastructure.
Money talks
In early 2021, the United States government officially partnered with the United Nations Industrial Development Organisation (UNIDO) to launch the Pakistan Private Sector Energy Project (PPSE). Supported by USAID, the PPSE is focused on expanding the portfolio of commercially viable clean energy projects in Pakistan and providing support to enable them to access financing and reach financial close.
The effort is the next stage in USAID’s efforts to reduce costs for energy distribution companies. Since 2010, the agency has partnered with the Government of Pakistan to add more than 3,900 MW to the national grid, benefitting more than 47 million Pakistanis, reducing costs by $429 million, and leveraging more than $2.8 billion in private investment.
Furthermore, USAID has supported the construction of new transmission lines and substations to evacuate power from wind power projects to the national grid and rehabilitated thermal and hydroelectric power plants.
In late 2021, Habib Bank Limited made agritech solutions much more affordable for farmers by partnering with BaKhabar Kissan, which is building farmers' capacity. It does this through agro-met and livestock advisory, weather forecasts, disaster alerts, crop health monitoring through satellite imagery, and an automatic weather station. The bank, however, benefits by using the technology provided to ensure agronomic advisory to the participating farmers.
Similarly, female-led EcoEnergy provides monthly installments for solar-powered electricity to off-grid rural areas across Pakistan. The pay-as-you-go nature of the revenue plan addresses the growing energy deficit by delivering affordable solar technology to all.
Besides providing solar power for homes and businesses across Pakistan, EcoEnergy has been electrifying schools, health clinics, and non-profit institutes that support women and the disabled by providing training for income generation and financial independence.
“Installing solar allows for more reliable power and generates countless savings every month, so more money can be put towards valuable training programmemes,” said Shazia Khan, CEO of EcoEnergy, which was part of PPSE’s first accelerator cohort. “Both of these projects have been supported by Power One For One Solar Foundation and Janine Voigt. We are proud to work with partners like these who are creating a positive social impact in these communities.”
Other notable examples include:
1. Farmdar - which uses satellite technology to collect farmland data and uses AI to analyze the collected information and deliver actionable insights. Farmers can keep track of plant count and yield, harvest monitoring, crop classification, nitrogen report, and plant health report.
2. Tazah - which is transforming the agriculture and food value chains to create a world with lasting dividends for farmers and retailers.
3. Khalis Fertilizers - which reduces land pollution by turning rotten fruits, vegetables, and crop residue into organic fertiliser.
4. Farmestor - which connects farmers to potential retail investors.
5. Humming Hyve - which is used by beekeepers to monitor the condition of a hive and ensure the quality of honey produced.
It is essential to underscore the urgency of such initiatives, given Pakistan's notable contribution of 0.50 per cent to global carbon emissions.
These innovative initiatives contribute to environmental conservation and are anticipated to generate the necessary funds for combating climate change in a region grappling with its profound consequences.
Ali Asad Sabir is a political economist and senior research assistant at the Institute of Development and Economics Alternatives (IDEAS)
All facts and information are the sole responsibility of the writer
1713862885-0/Untitled-design-(11)1713862885-0-270x192.webp)
COMMENTS
Comments are moderated and generally will be posted if they are on-topic and not abusive.
For more information, please see our Comments FAQ