Pakistan, despite being a tech resource-constraint country, demonstrates its climate commitment by pledging a 15% cut in projected CO2 emissions through domestic resources and up to 35% cut with international support by 2030. Ambitious though, these targets are not impossible to achieve. They constitute comprehensive, economy-wide aspirations with no binding, sector-specific roadmaps, specifically for the country’s most CO2-intensive and export-dependent industries like textiles, cement and steel.
This is the most significant gap in county’s green industrial journey. The urgency is not just environmental, it is economic. Our major export markets, the EU, which covers 30% of total exports, are tightening climate regulations by implementing Carbon Border Adjustment Mechanism (CBAM), which will levy carbon costs on imports from the year 2026. Therefore, in the absence of clear domestic decarbonisation objectives and support mechanisms, Pakistani exporters risk losing price competitiveness in markets worth billions of dollars. However, there is no integrated strategy that can bridge the gap between climate ambition and industrial reality.
Pakistan’s green policy landscape is not synchronised. The Ministry of Climate Change owns the climate agenda, the Ministry of Industries and Production focuses on industrial growth, the Ministry of Commerce oversees trade policy, and the Ministry of Energy drives energy reforms – thus lacking coordination. Besides this, the environmental regulations, for instance the Pakistan Environmental Protection Act (PEPA) and the National Environmental Quality Standards (NEQS), address only waste and contaminations and are silent on carbon intensity per unit of industrial output. Moreover, Financing instruments, such as the SBP’s renewable energy facilities and the Alternative & Renewable Energy Policy 2019, support clean power adoption but do not embed a sector-wide industrial transition plan.
Meanwhile, the world is moving fast. Competitors like Vietnam and Morocco are integrating sector-specific carbon goals into industrial strategy and linking them to export incentives and green finance. Bangladesh is piloting CBAMaligned MRV systems to ensure the EU compliance and secure buyer’s confidence.
However, Pakistan is at the brink of locking itself into high-carbon infrastructure for the next decade, making future transitions costly and risking its presence in EU market. In this context, the solution lies in legislating a National Industrial Green Transition Act, a ten-year roadmap that translates our NDCs into enforceable, sector-specific requirements. This Act should set a clear decarbonisation target (starting from high-impact sectors) like a 30% cut by 2030 from a 2022 baseline, and align MRV systems with international trade requirements. To engage the industry and increase the compliance, the government should provide quantifiable incentives like introducing output-based rebates for top performers, time-bound investment tax credits for energy efficiency upgrades, concessional finance for renewable-powered industrial processes, and a domestic carbon credit mechanism that rewards verifiable reductions.
This Act should be backed by a Green Industrial Council chaired by the PM and bringing ministries as well as industry, trade, energy and finance stakeholders on the table. This body must own a single registry of sectoral targets, eligibility for green financing and reporting protocols.
To fund the transition, a Pakistan Green Industrial Fund should blend public capital, multilateral climate finance and export-credit resources to deliver affordable loans for digitalisation and technology upgrades.
The time line should be very ambitious yet attainable. By Q1 of 2026, Pakistan should publish sector baselines and 2030 emission-reduction curves. By Q2 of 2026, parliament must pass the Act, launch the Fund and designate “CBAM-ready” exporter group in exporting industries. By 2027, government procurement rules should favour low-carbon materials, generating demand for sustainable products.
A comprehensive Green Industrial Policy is no longer a matter of climate virtue, but industrial survival strategy.
