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Opportunities in emission trading
Mohammad Shehzad, Dawn, Sunday Magazine (13 Mar 2005)

PAKISTAN: With the advent of Kyoto, Pakistan stands to gain a lot, if only we can utilize our resources properly.

Malik Amin Aslam is the Minister of State for Environment. For a country like Pakistan, whose credentials in environment and sustainable development are highly unimpressive, a professional minister like him is really an asset.

Aslam is an engineer with an MBA from McGill University, Canada and a Master's in Environment Management from Oxford. He is also an expert on climate change. However, when very few people were aware of the consequences of climate change and the Kyoto Protocol was the hottest issue around the world, Aslam was one of the activists to orchestrate an awareness campaign about it.

Using the network of Leadership for Environment And Development, he worked assiduously on the issue of climate change. He wrote a paper, Climate Change and Opportunities for Pakistan that was published by LEAD that initiated the debate on the issue in 1999. He was not a minister at that time. His paper played enormous role in making the policymakers aware about the emission trading.

Till recently though, Pakistan was not willing to ratify the Kyoto Protocol. It was Aslam who used his clout and convinced Shaukat Aziz's cabinet to give him a go-ahead for the ratification. Pakistan has now ratified the Kyoto Treaty and is eligible to benefit from it. In an exclusive interview with Dawn Magazine he enlightened us about the various aspects of the Kyoto Protocol. The excerpts are as follows:

Q: Pakistan has acceded to the Kyoto Protocol. How far are we from ratifying it?

A: Pakistan has ratified the Kyoto Protocol. I announced it in Argentina in December 2004. We submitted the instrument of accession to the UN on January 11, 2005. The cabinet had decided to ratify it in 2001 but it was delayed due to international circumstances. When I came to the ministry, I got that file moving. We have now gone through the process of ratification with the cabinet's approval.

Q: Have you initiated dialogue in this effect with the corporate sector and other stakeholders?

A: We are already late in this respect. You can see that the cabinet's decision has been implemented after three years, so, Pakistan is quite stagnant on this issue. We are done with the first step that is ratification. We could not have done anything without ratification. The second step is to make a policy-framework for the private sector to come in. I am currently working on this policy. We hope to finish our internal draft soon. Then, we will have a stakeholder meeting. We will invite the private sector and all the legitimate stakeholders who could be involved in this process. By the end of March, we will announce our policy on the Kyoto Protocol.

Q: How the proposed policy would address the issue of Clean Development Mechanism (CDM)?

A: It will be a policy on the Kyoto Protocol as well as the CDM - a mechanism under which various projects in Pakistan can get assistance. The primary areas are energy and forestry. In energy, we have the renewable energy potential. The President of Pakistan has announced an energy policy in which there is a renewed trust in the renewable energy. The cabinet has granted the Alternate Energy Development Board (AEDB), a legal status. So, the government is very committed to the renewable energy and exploring its potential in Pakistan.

Q: What will be the benefits of this policy?

A: This policy will assist the renewable energy projects and subsidize them because all the renewable energy projects have got the aspects of saving carbon dioxide emissions. This aspect of saving does not get financially recognized because there is no instrument to do that. But under Kyoto, the carbon emissions are getting internalized, which means they are going to get a financial value. Through this policy, the people who are doing such projects can apply for those carbon savings and the money that they get out of them. So, we are going to open the carbon market in Pakistan through this policy.

Q: How big a polluter is Pakistan?

A: As a country, we are not polluting at all. We are one of the countries that have been affected by climate change. You have seen the freak weather pattern we have. However, we are definitely not one of the countries that are biggest polluters of environment. On the per capita basis, I think we are the lowest in the world that means, our energy usage per person is one of the lowest in the world and the total emissions of Pakistan are also very low. But we are partners in reducing the carbon emissions globally.

Q: What is the level of awareness and understanding in Pakistan, about the Kyoto Protocol?

A: It is not enough. It is a new concept. People in Pakistan don't know a lot of things about Kyoto. It came as a surprise to me recently when I came to know that India and China are not a part of the Kyoto Treaty. India and China are very much part of the Treaty. They are signatories of the protocol. The only thing that they are not part of it is, they are not part of the regime which enforces carbon emission limits on them. And there is a philosophy behind it. The Kyoto Protocol - when it was signed - the philosophy was, the emission cuts are going to be placed only on those countries who are responsible for making this problem. And they are the industrialized countries. The second principle was giving room for the development to the developing countries i.e. China, India and Pakistan. That's the philosophy of the Kyoto Protocol that has been signed by 140 countries, except the biggest polluter, which is the US.

Q: Is there any hope that the US will ratify it?

A: With the change of administration in the US (in 2000), a lot of things changed. The Clinton administration was pro-Kyoto. It tabled the Kyoto Protocol's draft in front of the world. The agreement that we have ratified today was tabled by the US. The Clinton administration was really pushing others for the Kyoto Protocol because it wanted to use the concept of 'emissions-trading'. This was a concept new to the world. It had been used only in the US. There is always a hope that with the change in administration (in 2008), the US might ratify the Kyoto Protocol.

Q: What are your expectations from the civil society on the issue of the Kyoto Protocol?

A: Our civil society should accept the fact that we are not one of the big polluters. But we also don't want to be so. The civil society should recognize the fact that people who have gone on the path of high carbon emissions have made a crisis for the world. We should not follow that path. We at the ministry are doing our best to come up with such policies that could help reduce the carbon emissions. But we also need the technologies to come from the West. We need the capacity of our institutions to be strengthened. And we also need the funding to be available from the West.

Civil society organizations can always exert pressure on the government to make sure that our policies remain in line with the global environmental objectives that the Koyto Treaty has laid out.

Q: Do industrialists have any apprehensions about this Protocol?

A: No, industrialists have no apprehensions because Pakistan is not a country that could be imposed with the carbon limits in near future. We are a country that could get opportunities from this treaty. You will internalize the carbon benefits. Take the example of a tree. Previously, its utility was for timber purpose; you would cut it and have wood. After the Kyoto, it will be considered a 'carbon-sink' that means the tree is absorbing carbon dioxide emissions. To keep the tree in place, you will get seven to eight dollars for every ton of carbon that the tree absorbs. For renewable energy, if you want to put a hydro project that saves carbon emissions, you will get money for the amount of carbon emissions that it saves. You will get the certificates issued from this ministry saying that this much carbon emissions have been saved. These certificates could be sold in the global carbon market at the rate of around $7 per ton of carbon.

Q: Pakistan has already ratified several multi-lateral environmental agreements (MEAs). Kyoto is another addition. Do we have the capacity to implement all of them?

A: The performance has been low because the MEAs are the agreement in which the world is a signatory. So, when the opportunities come out, the entire world is competing for them. Only those countries benefit, that have focused policies and are aggressively marketing their opportunities. On Kyoto, by March, we will have a policy in place. Then we will market it to the world saying that we are a country that is looking for investments in carbon deduction.

Q: Who is making this policy?

A: I am overseeing the policymaking. We have a team working in the ministry on this issue. We have also instituted a special cell in the ministry to work for this. The first draft is being prepared by the ministry. We will put this draft in front of the stakeholders and have a few more meetings. We will have a widespread circulation of this draft policy so that we have everybody's ownership.

Q: This carbon credit seems to be a complex issue?

A: This carbon credit is not a complex issue. It is just like any other commodity like wheat, cotton, lentil - everything that is sold in the international market. The carbon commodity comes into place in economics when you have the scarcity value. Or when you say that something has a finite value. Previously, there was nothing like carbon commodity. But now after you have put on limits on the developed countries and you have crossed the limits, you have to go out and buy some tons from the market. When you limit something, that thing gets a value.

Q: You think Pakistan could attract clients?

A: Pakistan has got a lot of opportunities. The potential is there for the wind, hydro, solar, forest and waste management - all of them produce carbon credits. Moreover, the benefit is, we produce the carbon credit at low cost. I am very hopeful that once we are in the market, we will have investors and benefit from Pakistan's carbon potential.

Kyoto protocol, cdm, pakistan, emissions trading, greenhouse gas, ghg, carbon credit
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