Net-zero waves | The path to building a trusted voluntary carbon market in Pakistan

This Issue Brief, authored in collaboration with KPMG in Pakistan and Haidermota & Co., covers eleven (11) key sections that can help navigate the complexities of Voluntary Carbon Markets (VCM) in Pakistan:

1. Key concepts and distinctions in carbon markets - explains the foundational concepts of carbon credits, differentiating between compliance markets (CERs) and voluntary markets (VERs), highlighting their unique roles in achieving emissions reduction goals.
2. Global demand and supply trends - demand for carbon credits to grow 15x by 2030, reaching 1.5–2 GtCO₂e annually, and 100x by 2050. Highlights the supply-side challenges for high-quality credits, with Nature-based Solutions (NBS) and Technology-based Carbon Capture and Storage (TCCS) in high demand.
3. Accreditation processes of carbon registries - rigorous steps for project accreditation by global registries such as Verra and Gold Standard, ensuring transparency, integrity, and compliance with international standards.
4. Quality metrics for assessing carbon projects - 3 key quality metrics—additionality, permanence, and environmental impact—critical for determining the authenticity and effectiveness of carbon credit projects.
5. The role of carbon rating agencies - agencies like Sylvera and BeZero provide independent assessments, enhancing market transparency by evaluating project quality and mitigating risks for investors.
6. Case studies from carbon market initiatives in KSA, UAE, UK, EU, and Australia - successful carbon market models, such as Saudi Arabia's Regional VCM, UAE's regulated exchange, and Australia's Clean Energy Regulator framework.
7. Developments in Pakistan’s VCM - Pakistan has 27 projects registered with carbon registries, with initiatives like DBC-1 generating 3.1 million carbon credits worth $40 million.
8. 11 targeted recommendations for Pakistan's Carbon Market Policy Guidelines - actionable steps for building a robust carbon market framework, including tax incentives, MRV systems and building a national carbon registry, to align with global standards.
9. A four-step framework to ensure integrity in VCMs - a phased approach for corporations, emphasizing transparency, rigorous accounting, adherence to quality metrics, and third-party validation to maintain market credibility.
10. Way forward for the government, regulators, and corporations - capacity-building programs, enhanced technology transfer, and incentivized private sector involvement to streamline carbon market operations and attract investments.

Empowering private sector leadership in the VCM landscape - creating accessible digital marketplaces for trading carbon credits and empowering enterprises with tools to offset emissions through verified projects.