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Green financing in Pakistan’s transportation

“Green finance incorporates extensive sustainability 4.3.3. Financial instruments
objectives, but climate finance exclusively deals The utilization of green financial instruments, such
with climate change response initiatives.” (SR, oral as green bonds, carbon credits, and blended finance
communication, [January] [22], [2024]) models, has emerged as a key strategy for attracting
“The difference between green and climate finance international investment in sustainable transportation.
is often misunderstood, leading to challenges in However, Pakistan’s financial sector has been slow to
aligning international funding opportunities with adopt these mechanisms due to regulatory gaps, a lack
national priorities.” (BW, oral communication, of investor confidence, and underdeveloped capital
[June] [11], [2024]) markets. Green bonds – widely used in countries

These insights underscore the need to distinguish like China, the United States, and members of the
between climate-specific and broader green finance European Union – could provide a significant funding
mechanisms in policy frameworks, particularly when avenue for transport decarbonization if effectively
engaging with international donors and designing introduced and regulated in Pakistan. Similarly,
national financial strategies. carbon trading markets remain underdeveloped,
preventing the country from leveraging carbon credit
4.3.2. Multilateral partnerships financing for transport electrification and low-carbon
Collaboration with multilateral financial institutions mobility projects. Expanding PPPs within the green
and bilateral agreements with foreign governments finance sector could enhance investor confidence and
play a crucial role in expanding access to green encourage international financial institutions to support
finance. Organizations such as the World Bank, Pakistan’s sustainable transport transformation. This
Asian Development Bank, and International Finance theme is supported by the perspectives of interviewees
Corporation provide technical assistance and financial as follows:
support for sustainable transport projects. However, “Pakistan should explore successful case studies
Pakistan has not fully optimized these partnerships like India’s use of green bonds for urban mobility as
due to weak institutional linkages, bureaucratic a model for financing sustainable transport.” (YD,
inefficiencies, and policy misalignment. In addition, oral communication, [June] [11], [2024])
bilateral agreements with countries leading in “Our financial sector lacks the necessary
sustainable transport financing (such as Germany, China, mechanisms to effectively utilize green bonds,
and Norway) can provide concessional loans, technical carbon credits, and blended finance models, leaving
expertise, and financial grants. Yet, Pakistan lacks a us behind in attracting international investments.”
structured approach to negotiating and securing these (DB, oral communication, [May] [2], [2024])
partnerships. Strengthening government-to-government “The slow adoption of carbon credit financing
engagements and fostering long-term partnerships with is a missed opportunity that could provide
global financial institutions can significantly enhance additional resources for transport electrification
green transport investments. This theme is supported by and infrastructure decarbonization.” (AK, oral
the perspectives of interviewees as follows: communication, [July] [3], [2024])
“Multilateral development banks have been
instrumental in sparking the co-financing of projects 4.4. Limitations
and providing technical assistance to green finance While this study offers valuable insights through
initiatives.” (HJ, oral communication, [January] qualitative methods, it is limited by the small sample
[11], [2024]) size of 14 participants, which may not fully capture the
“Bilateral agreements with developed countries diversity of perspectives across all provinces or sectors.
help in the technology transfer and funding of green In addition, purposive and convenience sampling may
initiatives.” (YD, oral communication, [February] introduce bias, as participants were selected based on
[15], [2024]) accessibility and known expertise, potentially excluding
“These things can move faster through government- dissenting or peripheral views. The findings, therefore,
to-government agreements and develop trust among reflect perceptions of actively engaged stakeholders
the stakeholders.” (SL, oral communication, [May] and may not be fully generalizable across the broader
[23], [2024]) institutional landscape.

Volume 22 Issue 4 (2025) 119 doi: 10.36922/AJWEP025160121