The ‘Baku to Belem roadmap’ highlights the urgent need to mobilise both public and private capital to address climate change impacts and disasters.
A robust public-private dialogue is essential to advance blended finance instruments, particularly for vulnerable countries like Pakistan, which require strong frameworks to attract private investment through partnerships.
However, global momentum on climate finance appears to be waning. There has been a troubling decline in climate adaptation and mitigation policies – from over 300 between 2019–2021 to fewer than 80 in 2024. This signals a disturbing global retreat from climate action.
The proposed New Collective Quantified Goal (NCQG) targets $1.3 trillion annually by 2035, nearly half of which (about $650 billion) must come from the private sector. This makes blended finance not just useful, but essential, to mobilise private capital for climate solutions.
Yet, negotiations around climate finance remain one of the most difficult since the adoption of the UN Framework Convention on Climate Change (UNFCCC) in 1992. Developed countries must play their part by contributing at least $300 billion annually to help bridge the financing gap for developing economies.
The legacy of climate inaction, exacerbated by policies such as the Trump administration’s withdrawal from the Paris Agreement, has deepened this crisis. If we are to meet global climate goals, especially those outlined in the Paris Agreement, the private sector must now be placed at the center of climate finance strategies. Blended finance is one of the most viable ways to unlock this essential support.
There is an emergency in the making. Climate disasters are occurring worldwide. They are severely impacting humans and human lives. Droughts, cyclones, hurricanes, flooding, hailstorms and heatwaves have become the deadliest enemies of humans on Earth. The current year has proven to be, so far, the hottest year in the world's history. Europeans, Americans, Africans, Australians and Asians are all equally affected by climate change. Even Antarctica is not spared by the extreme heatwaves, as the glaciers have started melting, raising sea levels. Climate disasters have become a new normal for developing countries. Climate funding has become increasingly critical for these countries.
The scale and certainty of climate disasters have increased in recent years. Climatic emergencies are so rampant and common that insurance companies are reluctant to insure farms and properties. Further, they have started increasing their premium for insurance, looking at the uncertain climate changes and weather patterns.
Climate-vulnerable countries like Pakistan are in distress and pain about how to deal with current climate vulnerabilities. One way to address this is to ensure and insure farms and products through general insurance companies. Actually, the climate risk has spurred the need for insurance more than at any time in the past to mitigate losses. The private sector needs to be involved to cater to the needs of farmers.
Pakistan is one of the most vulnerable countries affected by climate change. Climate financing needs are also increasing. It is one of the reasons Pakistan applied for the Resilience and Sustainability Financing (RSF) facility and received approval of approximately $1.2 billion from the IMF Executive Board for climate financing. The World Bank Country Partnership programme also covers climate financing. The Asian Development Bank (ADB) is further extending its climate financing facility to Pakistan to help mitigate climate impacts.
The private sector in Pakistan is still not ready to contribute to the mitigation efforts. There is an immediate need to involve private sector financing, as the government has already approved a climate support law of Rs2.5 per litre in the current budget, effective from July 1, 2025. Likewise, the need of the hour is to involve private financing for the adaptation and mitigation policy framework.
Clean energy transition is the most important step to help combat climate change. Pakistan is actually an under-resourced country, even though it is one of the most climate-vulnerable countries. The transition needs funding and financing for clean energy goals including renewable solar, wind and hydel power projects. Pakistan has a lot of potential to get clean energy from all these abundant resources, and the government needs to activate and advance its efforts to make it possible.
The electric vehicle (EV) policy needs to be rationalised by prioritising and incentivising the EV sector for the ultimate goal of achieving a clean and sustainable environment. The charging stations need to be prioritised to promote EVs for the green energy transition. The private sector can contribute significantly to prioritising by incentivising them to invest more in this sector. A public-private partnership would be the best model to adopt in achieving clean energy goals.
Pakistan has been effectively contributing to the COPs to counter the worst effects of climate change in the world. The historic Loss and Damage Fund proposal was from Pakistan being successful in the COP27 held in Sharm el-Sheikh, Egypt in 2022. Pakistan also introduced its first National Climate Finance Strategy (NCFS) framework in COP29 to mobilise climate finance for adaptation and mitigation. The framework outlines climate-related investments, international financing and mobilisation of domestic resources to face the challenges of climate change.
The IMF has already consented to extend RSF facility worth of $1.2 billion to Pakistan to deal with climate emergencies in the next three years. The Economic Affairs Division has also signed an agreement to receive $500 million as climate finance from the Asian Development Bank (ADB). The irony of the situation is that the government is doing nothing to enhance the capacity of its institutions to tackle climate damage. The climate authority is yet to be fully functional what to talk of other disaster management authorities. There is an immediate need of capacity building of the climate related management authorities to effectively tackle this menace of immense magnitude looming large to disturb the people and economy.
Pakistan needs to adopt a green policy and make concerted efforts to mitigate the worst of the climatic impacts. Capital investment needs to be enhanced in both the public and private sectors for clean energy initiatives. The natural solar surge, owing to high electricity prices, is a boon that does not need to be discouraged through additional taxation measures.
Electric vehicles are another area of potential priority that needs to be incentivised through a policy framework. There is a lot of potential for private investment in this area, which needs to be prioritised. Renewable energy initiatives and dams are absolutely necessary, where again, the public and private sectors need to collaborate for a successful model. Projects like the Billion Tree Tsunami and Green Pakistan initiatives need to be prioritised for better climatic impacts.
The public-private partnership model can provide the best of the climate solutions if properly utilised through a policy framework agreement for capital investment.
The writer is a formeradditional secretary and canbe reached at: [email protected]
