It is imperative to mobilize multiple green finance options, especially private sector finances, to support Pakistan in achieving the Nationally Determined Contributions (NDCs) in terms of reduction in carbon emissions by 2030, said the experts at a workshop for Implementation of Green Financing Mechanisms in Pakistan. The capacity-building workshop was organized by Sustainable Development Policy Institute in partnership with German Cooperation.
Speaking at the workshop, Special Assistant to the Prime Minister and Convenor Parliamentary Task Force on SDGs, Romina Khursheed Alam said that although the COVID-19 emerged as an unprecedented challenge for the international community but it also opened a window of opportunity for green recovery and green financing and realigned the commitment to Sustainable Development Goals. She further said that Pakistan’s progress towards clean energy transition is relatively slow especially in context of the unsustainable high fuel import prices. She urged the need for research support for parliamentarians so they can take up informed deliberations and debates to positively influence the policy making process.
Antonia Peters from the Germany Embassy in her welcome remarks expressed that Germany is keen on supporting Pakistan in achieving the Nationally Determined Contributions by mobilizing resources as Pakistan only has 50% of the required financing capacity. She pointed out the immense potential and interest in green financing investments in Pakistan as the green bond issued by Pakistan is oversubscribed in the global market.
Dr Abid Suleri, Executive Director Sustainable Development Policy Institute, in his welcome remarks said that in the midst of the economic meltdown, green financing is a viable mid to long-term investment opportunity to support economic growth in the country. He also pointed out the challenges of capacity of carbon reporting and accounting in Pakistan which are preventing exploring the true potential of green financing and clean energy transition in the country.
Dr. Murtaza Syed, Acting Governor, State Bank of Pakistan said that the central bank is actively trying to explore the international financing opportunities like Sustainable Banking and Finance Network and Network for Green Financing System. At the domestic level, SBP is promoting green financing by providing financing guidelines and regulatory frameworks. Moreover, SBP is also providing technical assistance and capacity building to commercial banks, and issued a clean energy financing scheme in 2019 which has financed 1500 projects with the capacity of 50 MW power generation and the validity of this scheme has been extended till 2024.
Sebastian Jacobi, the Country Director KfW urged to adopt just transition policy in Pakistan as practiced in Germany and to tax import of fossil fuels to reduce reliance on carbon intensive energy. He pointed out that Germany, GIZ and KfW are providing 400 Million euros to Pakistan to support the clean energy transition.
Achim Deuchert, Green Finance Advisor, GIZ said that Asia has become the largest economic zone with 80% of infrastructure responsible for 54% of the global carbon emissions. He highlighted the significance of private sector funds by saying that private sector has five times more funds available and the green assets make up 35% of the global assets.
Speaking at the technical session, Roberto Aparicio from EU Delegation to Pakistan said that the EU is decreasing the imports from carbon intensive markets by increasing taxation compared to green manufacturing markets. He said that the EU delegation has earmarked 53 million euros to counter the risks associated with green investment in Pakistan and provided guarantees so foreign investments can be attracted in this sector.
Dr. Barbara Berkel from KfW Headquarters said that they are closely collaborating with Pakistan Microfinance Investment Company to reach 200,000 clients by offering micro loans for homebased solar energy. The corporation is providing high quality products through certified vendors and is developing the capacity of the local partners as well.
Mushtaq Ahmed Memon, Project Manager, UNEP Finance Initiative expressed that Pakistan lacks clarity on the concept of green financing and challenges in sustainable consumption and utilization of finances as a crucial product. He was of the view that we must stabilize the human resource capacity, policy and agenda setting so this sector’s true potential can be explored.
Najia Ubaid, Additional Director, SECP said that they have articulated green financing guidelines for issuance of green bonds as a debt management tool. These bonds can be issued for any project that aims to improve the environmental performance or aims to work towards SDGs. She stressed the need for critical appraisal and evaluation of the projects for which green bonds have been applied. This will ensure effective use of financial resources to support better environmental performance.
Ahmed Saeed, Head Social and Environmental Policy, HBL said that the bank is no longer financing new coal powered projects and aims to go net zero by 2030. He further said that like SBP, HBL is also developing its financial green taxonomy. Syed Ali Hasan, Head of Sustainable Initiative, JS Bank said that there are immense opportunities for commercial banks in green energy transition and the international green financing forums are keen to invest in Pakistan.
Responding to a question Dr. Murtaza Syed, Acting Governor, State Bank of Pakistan said that renewable Energy Policy encourages commercial banks to provide small loans to facilitate solarization of SMEs, cottage industries and domestic consumers. Dr Barbara Berkel expressed that currently KfW is financing small scale green energy projects. However, they are keen on exploring bigger investment opportunities. Moderator of the session Dr. Shafqat Munir Ahmad suggested that the SBP should guide commercial banks to offer soft loans to domestic consumers to promote clean energy by installing solar energy system connecting to net-metering.
Dr. Sajid Amin, Deputy Executive Director, SDPI addressed the challenges in mainstreaming green financing in Pakistan by sensitizing the policy makers about the untapped potential of this sector as an environmental and economic tool. There is a need to rethink the packaging of green financing in terms of its scale and economic gains it can offer. In order to make sustainable transition to green financing, the associated risks should be understood and identified and minimized and converted into incentives in the local context.
Waqar Ahmed, CEO Core Alliance, Head of Corporate Affairs & Sustainability Nestle said that the ultimate goal of the alliance is to collaborate with the government to support circular economy by encouraging collection of 30 million tons of plastic waste annually, segregation and recycling. He said the government must give attention to waste recycle industry through policy measures, such as low data financing, tax holidays and low tariffs on import of machinery so the private sector can play a productive part.
Prof. Dr. Fakhara Rizwan, Company Secretary, Chief legal & Corporate Affairs Office, Pakistan Stock Exchange said that Pakistan Stock Exchange has formulated ESG taskforce to help establish the standards for reporting practices and procedures. Mr. Ghazil Jabbar, Deputy Chief of the Party Pakistan Private Sector Energy project (PPSE), said that the corporations generally offer their services to SMEs with green projects and not limited to clean energy. He said there is a major potential in carbon credits and climate specific products and projects if the products are restructured and made more market competitive. He said that there is a need for the development of infrastructure and verified unified carbon registry so Pakistan can move forward towards carbon credit trade.
Bilal Anwar, CEO National Disaster & Risk Management Fund highlighted the importance of role of climate risk insurances and said despite that the financial resources are mobilized and made available for mobilization, the international community is struggling to meet the commitments made in the Paris Agreement. This makes green financing very crucial need of the hour to bridge the financing gaps. In the context of Pakistan, climate change brings the factor of uncertainty in the economy and financial industry which makes it pertinent that green financing is promoted.
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