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Carbon levy, water pricing & the green tax puzzle

19 1
02.05.2025

It began with a bang—quite literally. On April 16, Islamabad was hammered by a freak hailstorm that turned the capital into a scene from a disaster flick. Hailstones the size of golf balls smashed car windscreens, tore through trees, and wreaked havoc on rooftop solar panels across the city.

The very icons of our green aspirations — solar carports, residential panels — were left in ruins, with estimates suggesting damage worth tens of millions of rupees. Climate change had arrived. Not through a long, boring UN report, but via a dented Honda Civic and a broken inverter.

Events like this are no longer flukes. From unprecedented monsoon floods to suffocating heatwaves, from melting glaciers to disappearing groundwater tables, Pakistan’s weather patterns are becoming more erratic — and more expensive. In this climate reality, the conversation has finally shifted from “if” to “how much longer can we afford to ignore it?”

Enter the IMF — and with it, a set of fiscal policies that attempt to put a price on pollution and depletion. The upcoming carbon levy, expected to be imposed at Rs 3-5 per litre on petroleum products and coal starting July 2025, is part of Pakistan’s commitment under the Resilience and Sustainability Facility. The stated aim: raise revenue to fund climate adaptation. But more than that, it’s a wake-up call — a signal that business-as-usual now carries a cost.

That cost, however, is not just carbon. If there’s one crisis that looms even larger, it’s water.

Let’s call it what it is: Pakistan is on the brink of a water collapse. According to the IMF and the PCRWR (Pakistan Council of Research in Water Resources), we may become a water-scarce country as early as this year — 2025. Per capita availability has dropped below 1,000 cubic meters, the........

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