The Pakistan Pavilion at COP29 was a pivotal venue for discussing climate resilience, energy transition, and the importance of climate finance. On November 14th, 2024, during the session ‘Acumen’s Climate Action Fund for Pakistan’, global leaders gathered to discuss how private sector solutions, especially in agriculture and agribusiness, could address Pakistan’s climate vulnerability. The event featured influential speakers such as Muhammad Aurangzeb, Pakistan’s finance minister, Jacqueline Novogratz, Founder of Acumen, Henry Gonzalez, Chief Investment Officer of the Green Climate Fund (GCF), and Kristen Sarri from USAID, who all emphasized the urgent need for innovative climate action in frontier markets like Pakistan.

Dr. Ayesha, Pakistan’s Country Director at Acumen, announced the launch of the Acumen Climate Action Pakistan Fund (ACAP), the country’s first climate fund. The fund is designed to improve climate resilience for vulnerable agricultural communities, particularly smallholder farmers who make up 90% of the country’s agricultural workforce. The fund aims to provide patient capital to agribusinesses, building climate adaptation solutions to mitigate the impacts of extreme weather events and rising temperatures. This initiative, with a $80 million goal, is supported by technical assistance (of $10 million) from the Green Climate Fund (GCF) and partnerships with USAID. It is expected to directly benefit 13 million lives, including farmers, by providing critical resources and financial support to increase resilience to climate change.

Henry Gonzalez from the GCF highlighted the international funding body’s role in supporting such ventures. Over the past years, GCF has invested more than $13 billion into over 240 projects worldwide, with a focus on strengthening the resilience of vulnerable countries. The GCF’s investment in Pakistan includes the ACAP Fund, marking a significant milestone in Pakistan’s climate finance journey. The GCF aims to increase its financial mobilization to $50 billion by 2030, involving more private sector partnerships to address the structural solutions needed for climate adaptation.

A key theme during this session was the collaboration between public and private sectors to leverage financial resources for climate action. Kristen Sarri, Acting Chief Climate Officer at USAID, discussed how USAID’s Climate Finance for Development Accelerator (CFDA) is accelerating climate investments. With a target of mobilizing $2.5 billion by 2030, CFDA’s initiative aims to connect investors, donors, and communities to generate large-scale capital flows for climate projects in countries like Pakistan.

The dialogue between Jacqueline Novogratz and Pakistan’s Finance Minister also explored the catalytic role of private sector investments in Pakistan’s energy transition and climate resilience efforts. As one of the top ten countries most vulnerable to climate change, Pakistan faces significant challenges in adapting to environmental shocks, with agriculture being particularly susceptible. However, through strategic investments, including solar irrigation systems and innovative agribusiness models, the country can not only build resilience but also unlock sustainable economic opportunities for the private sector to capitalize on.

In line with these efforts, the ‘Catalyzing Pakistan’s Energy Transition’ session on November 15, 2024, focused on transforming Pakistan’s energy sector, which is heavily reliant on fossil fuels. Pakistan’s energy sector struggles with load shedding, high capacity costs from costly power purchase agreements, and circular debt, which hampers efficiency and financial stability. Dr. Khalid Waleed from SDPI highlighted the urgent need to transition from coal to renewable energy in order to reduce reliance on imported fossil fuels and mitigate environmental harm. Furthermore, Pakistan’s carbon-intensive energy grid could face significant consequences under the European Union’s Carbon Border Adjustment Mechanism (CBAM). This policy imposes carbon tariffs on imports from countries with high emissions, meaning that Pakistan’s exports could become less competitive in the global market unless the country reduces its reliance on fossil fuels. Pakistan’s grid is 1.4 times more carbon-intensive than the EU’s, putting key sectors like cement, iron & steel, and fertilizers at risk of higher tariffs. To address these issues, Pakistan must accelerate its energy transition, focusing on export-led growth, renewable energy adoption, and reducing reliance on carbon-heavy industries.

Experts, including Dr. Rishikesh Bhandary from Boston University, discussed the early retirement of coal plants as a key strategy, which could also generate carbon credits. These credits, through the global carbon market, could fund clean energy projects, helping Pakistan meet its Paris Agreement goals. This presents an opportunity for Pakistan to reduce its carbon footprint and embrace a sustainable energy future. The country’s young fleet of coal plants, which continue to incur high operational costs due to underutilization, could be repurposed for renewable energy investments. This strategy aligns with the broader regional goal of reducing emissions, as seen in the Green Climate Fund’s support for initiatives in South Asia. Pakistan’s growing renewable energy potential, coupled with carbon credit incentives, offers a unique opportunity to integrate climate action with economic development.

Sardar from the National Energy Efficiency and Conservation Authority (NEECA) introduced the Prime Minister’s Fan Replacement Program, aimed at replacing outdated, energy-inefficient fans with high-efficiency models in both industrial and residential sectors. Fans are major electricity consumers, especially during peak summer months, and upgrading to more efficient models will help reduce consumption and alleviate pressure on the national grid. The program features an innovative On-Bill Financing Mechanism, allowing consumers to pay for new fans through their electricity bills. This trade-off, where payments previously spent on high energy bills are redirected to repaying the loan for fans, offers long-term benefits. The initiative aligns with NEECA’s 2030 goals of saving 9 MTOE in energy and reducing 35 MTCO2 in emissions, contributing to significant financial and environmental benefits for Pakistan’s energy efficiency targets.

A way forward includes strategies like the ‘Just Energy Transition Working Group’, the development of a ‘National Integrated Energy-Economics Plan’, and ‘P2X Alliances’ to drive industrial growth powered by renewable energy. By adopting cleaner energy solutions and reducing carbon emissions, Pakistan can not only enhance its global competitiveness but also contribute to long-term economic sustainability.

Ultimately, Pakistan’s climate agenda at COP29 underscored the interconnectedness of climate finance, energy transition, and resilience building. The discussions highlighted the country’s potential to lead the way in climate adaptation and sustainable development, while addressing the urgent challenges of energy inefficiency and environmental degradation. Through continued partnerships, financial innovations, and a focus on long-term solutions, Pakistan can pave the way for a more resilient, sustainable, and climate-resilient future.