The devastating floods of 2022 in Pakistan thrust the country into the global spotlight as an urgent example of climate vulnerability. These floods affected millions – with an estimated half the victims being children– and submerged a third of the country. From 1992 to 2021, Pakistan experienced $31.6 billion in economic losses due to extreme climate events. With the increasing frequency and intensity of such events, the losses in both livelihoods and human lives are expected to rise.

This crisis isn’t happening in isolation; as global temperatures increase, the impacts of climate change reverberate across all nations. However, Pakistan’s struggle with climate disasters also offers a unique opportunity for global and national actors to test climate-resilient solutions that could set a global precedent. With COP29 having just taken place, international focus on Pakistan is crucial—not just for recovery, but to explore solutions that can mitigate future climate risks globally.

Ironically, the ticking clock of climate disasters is matched in this instance by the substantial gap in climate finance in the country. The country is estimated to require $350 billion in investment by 2030 to build resilience and reduce greenhouse gas (GHG) emissions. But current climate finance inflows are far below this level. In 2021 Pakistan received only $4 billion, while its annual needs are estimated at $30 to $60 billion.  How can Pakistan mobilise this additional US$348 billion needed by 2030? This is a massive challenge for the country.

Several factors, including macroeconomic instability, limited fiscal capacity, and regional political realities, have deepened this challenge. Recognising the complexity of the situation, it’s essential to identify where climate finance shortages exist and how best to address them.

ASI’s climate resilience programmes in Pakistan aim to address these gaps through two key sets of interventions.

First, REMIT (Revenue Mobilisation, Investment and Trade Programme), funded by the UK’s Foreign, Commonwealth & Development Office (FCDO) provides the upstream anchor by focusing on strengthening the macroeconomic stability necessary to enable climate finance. Since 2022, we have been working to establish a strong institutional framework for climate finance governance, enabling the government to access the global pool of climate funding.

Important elements in this work have been advising on the climate finance roles and responsibilities of the Ministry of Finance (MoF), Ministry of Climate Change (MoCC), Planning Commission and Economic Affairs Commission; and establishing the Climate Finance Facilitation Unit (CFFU) in the MoF and strengthening the Climate Finance Unit in the MoCC. These initiatives attempt to address coordination between ministries by building a cohesive governance structure. This builds on our work of mapping climate finance mandates and structures, advising key ministries on how to plan, coordinate, and deliver climate finance.

REMIT also aims to diversify Pakistan’s sources of climate finance. Currently, nearly half of the country’s climate finance comes from multilateral development banks, such as the Green Climate Fund (GCF), which has committed $304.2  million for four projects in Pakistan.  However, to meet its climate commitments, Pakistan must tap into more varied and innovative sources, notably multilateral development banks (MDBs), commercial banks, equity providers, and capital markets. On-lending from MDBs to national development banks could for example accelerate investment where it is needed most. Since much of Pakistan’s Nationally Determined Contribution (NDC) and National Adaptation Plan commitment is contingent on international financial support, REMIT is working to secure financing for climate mitigation, adaptation, and disaster risk management. To that end the programme has supported the MoCC and World Bank in crafting a climate investment strategy that targets development and private finance to fill funding gaps. By enhancing engagement with MDBs and development partners, REMIT aims to build a robust pool of capital from a range of sources. 

Finally, REMIT is supporting governance structures for climate finance, developing a national climate, disaster and gender budget tagging (CBT) approach, and engaging with the National Disaster Risk Management Fund (NDRMF) to strengthen fund architecture. CBT will enable the government to track and report climate mitigation and adaptation, disaster risk and gender-related expenditures, align budgets with these objectives, and demonstrate commitment to international partners, unlocking further support.

With insufficient public funds available, creating favourable conditions for private finance—through incentives and concessions—is crucial. The current lack of confidence in climate projects is partly due to low capacity by public and private sector investors, as well as the absence of clear opportunities with well-quantified returns. Climate projects are perceived as risky, partly because of the absence of green investment infrastructure, and also because it is a relatively new idea.

For these reasons, it is essential to advocate for greening the financial sector, because domestic investors is where the bulk of the funding will come from. The UK Government’s Climate Investment Fund for Pakistan (CIFPAK)  is an example of programmes that steer domestic and global capital towards climate-focused funding, which is essential for long-term success.

REMIT is thus engaged in providing the infrastructure for climate finance. The impact of this work on communities can be gauged from the downstream impact of our Sustainable Energy and Economic Development (SEED) programme.

Working with the provincial government in Khyber Pakhtunkhwa (KP), SEED has taken up initiatives to mobilise climate finance, like a Climate Smart Agriculture proposal for the GCF. The project seeks to work holistically, using data related to climate  in conjunction with information regarding production and storage of fruits and vegetables in the province. The benefit will be felt by farmers, through reduced post-harvest losses and an increase in their incomes. At the same time, low-income consumers living in the region will be able to buy good quality produce at competitive prices.

At a structural level, SEED works with selected government officials to build their capacity with Public-Private Partnerships (PPP) pipelines, ensuring they have the skills to monitor and implement projects independently, and improving their understanding of the legal framework of these projects. This capacity building with individual officials is aimed at creating a robust PPP pipeline , that in turn could serve to attract private financing, helping to bridge the US$348 billion funding gap faced by Pakistan. This support is exemplified in projects like the solarization of economic zones in KP, where SEED’s advocacy, capacity-building, and coordination efforts strengthen institutional frameworks for sustainable financing. The project aims to deliver proof of concept for providing cheap electricity to local industries, with success potentially paving the way for replication across other economic zones in the provin ce.

Though REMIT and SEED are at two separate ends of the spectrum, together they leverage climate finance in Pakistan towards improving the lives and livelihoods of vulnerable communities.

They are also reminders that international and domestic actions taken today in Pakistan will shape not only the future of the country but global climate efforts. The time to act is now.