8% of Development Budget Allocated for Climate Change Initiatives

ISLAMABAD (Web Desk) —  The federal government has allocated a significant portion of the 2025-26 budget to tackle climate change. In total, 6.9% of the current budget and 8.2% of the development budget will be directed towards climate-related initiatives.

As part of these efforts, the finance minister announced a new carbon levy of Rs2.5 per litre on petrol, high-speed diesel, and furnace oil. This levy will increase to Rs5 per litre starting next year. The government also plans to impose a petroleum levy on furnace oil.

The budget includes a shift towards climate-resilient planning, with 0.2% of the budget focused on climate-responsive grants and nearly half of all subsidies dedicated to climate goals. These measures are designed to help the government make better decisions in response to climate risks.

Key Allocations for Climate Change:

• Rs85.43 billion for adaptation measures to increase climate resilience.

• Rs603 billion for mitigation efforts to reduce emissions and promote cleaner technologies.

• Rs28.33 billion for supporting areas like capacity building, research, and institutional development.

The budget also introduces the Climate Budget Tagging (CBT) tool, which helps track and classify climate-related spending. This will improve transparency and guide future policies. Over 5,000 cost centres across various climate-sensitive categories have been tagged to ensure effective monitoring.

Other Climate Initiatives:

• Rs2.76 billion has been allocated for environmental programs, including Rs2.25 billion for the Green Pakistan Programme.

• Rs325 million will be used to strengthen the Ministry of Climate Change’s capacity.

These moves are part of Pakistan’s effort to integrate climate considerations into national development plans and ensure that economic growth is aligned with sustainability and climate resilience.