ISLAMABAD: Pakistan has moved to the implementation phase of its national carbon market under a German-funded initiative, the climate ministry said on Monday, as the country seeks to strengthen its climate governance and attract international investment for low-carbon development.

The partnership, under the Supporting Preparedness for Article 6 Cooperation (SPAR6C) program funded by the German Federal Government, aims to help Pakistan transition from policy readiness to practical implementation of market-based climate mechanisms in line with global standards.

Carbon markets allow countries and companies to buy and sell credits that represent reductions in greenhouse gas emissions, creating a financial incentive to cut carbon output. Under Article 6 of the Paris Agreement, nations can trade these credits internationally to help meet their climate targets while funding low-carbon projects in developing countries.

Pakistan faces intensifying climate challenges, from record-breaking heatwaves and glacial melt to catastrophic flooding that has killed over a 1,000 people this monsoon season and displaced millions. Ranked among the world’s most climate-vulnerable nations, Pakistan has been under growing pressure to build resilient, transparent frameworks that can unlock global climate finance and support its transition to a sustainable economy.

“Carbon markets are not just about trading credits, they’re about valuing climate action fairly and ensuring that every ton reduced translates into real benefits for our people and our economy,” Federal Minister for Climate Change and Environmental Coordination Senator Dr. Musadik Malik said followed a meeting with Helene Paust, Deputy Head of Cooperation at the German Embassy in Islamabad, along with representatives from the Global Green Growth Institute (GGGI) and the UN Environment Programme Copenhagen Climate Center (UNEP-CCC).

Officials said the SPAR6C initiative will support Pakistan in developing transparent, high-integrity carbon pricing and trading systems, helping the country achieve its Nationally Determined Contributions (NDCs) under the Paris Agreement. 

The effort also seeks to mobilize new streams of climate finance, foster green innovation, and integrate Pakistan’s emissions reductions into international carbon markets.