Pakistan’s Finance Minister Mohammad Aurangzeb, in his budget 2024-25 speech, said Pakistan faces dangers due to the effects of climate change and therefore in an effort for climate mitigation, “the government has taken several measures”.
However, climate experts are skeptical and say there may be some measures but they aren’t enough to achieve climate change mitigation and adaptation goals.
“Although there are plenty of chapters and claims in the Annual Plan 24-25 and the budget statement, it doesn’t look like it is in line with climate change goals,” said Sadya Siddiqui, policy researcher at The Citizenry.
The Citizenry is an investigative-research platform that aims to bring about awareness of policies that critically affect the lives of ordinary citizens, but are often ignored.
“It’s odd that there’s no mention of carbon tax. There were reports that it was going to be levied to placate the International Monetary Fund (IMF).”
Sadya said the heatwave has been mentioned in the document but there is no strategy or plan.
“There is also mention of climate change mitigation in the budget statement that if we don’t take measures, it will negatively affect economic activity due to disaster.
“But there is no clarity or any plans on how this will be achieved.”
The finance minister, in the budget speech, announced zero import duty on the raw materials for solar panels, inverters and allied equipment, a government effort to localise the commodity.
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Muhammad Basit Ghauri, Manager Research & Networks at Renewable First, a think-tank for energy and environment, said removal of custom duties and taxes will not be enough to entice companies to come and establish plants to produce solar panels in Pakistan.
Instead, a more holistic approach is needed to incentivise industries through ensuring stable and certain demand for PV through consistent policies.
“There will be immense competition with China, which makes cheap panels,” he said.
The finance minister also mentioned that the government hoped to reduce the reliance on imports of solar panels, save precious foreign exchange, fulfill local requirements, and export panels as well.
However, expert said Pakistan will have to put heavy duties on imported solar panels so that locally manufactured panels could compete.
“But it will increase the price of panels in the market, therefore negatively affecting demand,” Basit said.
He pointed out that subsidising local production of panels through cheaper electricity could also help lower prices of local production.
“It has been seen in the past that initially the government promoted wind power in 2011, where financing saw annual growth of more than 50% growth till 2015 before the government started focusing on thermal plants under CPEC, after which a shift towards wind power dropped and has yet to see that growth again,” he added.
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He further stated that the allocation of Rs4 billion for e-bikes is also insufficient to adequately address the reduction of emissions from the transport sector, which is a crucial aspect of achieving the 2030 climate change mitigation goals.
Dr Khalid Waleed, a PhD in Energy Economics and a Research Fellow at the Sustainable Development Policy Institute (SDPI), highlighted some positive aspects from the budget from a climate change perspective.
“The finance minister’s speech mentioned structural reforms and the government’s priority on climate resilience, which is heartening to note,” Dr. Waleed remarked.
He highlighted that the IMF has updated its framework to include climate change considerations.
“Previously known as PIMA (Public Investment Management Assessment), it is now CPIMA (Climate Public Investment Management Assessment). This means about 20% of public sector investments should be dedicated to climate-supporting and climate-resilient projects.”
Dr Waleed noted that the climate change division has been allocated Rs6.25 billion for the upcoming fiscal year.
“This is an increase from the current fiscal year’s Rs4 billion, but still less than the Rs14.327 billion allocated in fiscal year 2022 when Pakistan faced devastating super floods,” he explained.
“For the first time in budget history, the government has tagged projects worth Rs53 billion under climate change adaptation and Rs225 billion under climate change mitigation,” Dr Waleed pointed out.
He emphasised that these are not specifically climate change projects but have been tagged for their climate benefits, such as a bridge project that also offers climate resilience.
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The finance minister’s speech included several initiatives to attract climate finance.
“A Climate Finance and Data Dashboard has been developed, and by October 2024, a national climate finance strategy will be formulated,” Dr Waleed mentioned.
Additionally, a national digital climate finance monitoring dashboard is being developed.
Dr Waleed pointed out the budget’s increased allocation for emergencies and disasters.
“This year, Rs313 billion have been allocated, up from Rs250 billion last year, in anticipation of potential monsoon floods.”
The budget also includes financing for Jamshoro coal power plants.
“Investing in coal contradicts Pakistan’s climate vulnerability stance. The government should not invest in coal, as it negates the climate narrative,” Dr Waleed warned.
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