Home / This Week / Cover Stories / Green financing: a plan for sustainable future

Green financing: a plan for sustainable future

Pakistan is a country which is blessed with enormous reserves of natural resources. The economy of Pakistan is growing at the rate of 5.7 percent and consequently the growth demands higher energy consumption. The major energy sources of Pakistan are oil, gas and hydel energy which are backbone of the country. Apart from all these resources, Pakistan is mainly an agricultural country and has a strong potential to produce energy through biomass and agriculture waste. Also, Pakistan has an edge in solar energy and can produce 2.3 million megawatts per annum. Pakistan could also produce energy from biofuels using its own land and resources for cultivation. But despite possessing all these resources, Pakistan is still lacking in fulfilling energy demand due to several reasons. One of the reasons is less exploration and production. Other reasonsare improper channelizing of energy, inappropriate distribution of resources, poor management, law and order situation and bad governance. Pakistan can overcome the energy crisis which it is facing by optimizing the indigenous resources, adopting alternate energy technologies, focusing on the renewable energy and improving the government policy to grab the foreign investments.

Besides the conventional energy resources, Pakistan has the capability to produce energy through different alternate energy resources. Pakistan produces two million tons molasses per year that is a reasonable amount to produce ethanol fuels for transport sector. Also, by the cultivation of Jatropha curcas plants, a large amount of biodiesel for automobiles could be produced. Further, by allocating biogas units in rural areas and at grid levels, adopting fuel cell technology and through biomass to energy production, energy crisis could be overcome by utilizing local re

Green financing is becoming both a viable and ethically desirable area of growth in the world of finance. Green finance is the linking of funds raised by banks to specific climate-friendly, carbon-reducing projects and according to its proponents, has the potential to revolutionize the way that financial institutions operate. The funding of green projects is also essential for the creation and maintenance of environmentally sustainable infrastructures, while banks’ support and promotion of sustainable finance products can give out an important message about their commitment to environmental issues.


The potential benefits to banks for offering competitive green finance products, particularly those relating to large-scale infrastructure products, are huge. With global populations growing rapidly and people becoming increasingly conscious of the environmental impact of their behaviors, banks have an unprecedented opportunity to play a vital role in the delivery of sustainable, eco-friendly projects. Green loans are different from other loans in that the proceeds are specifically allocated to a particular carbon-reducing project which is then monitored on an ongoing basis.

One of the issues is the lack of comprehensive, up-to-date qualifications to educate internal staff on the benefits and processes required to integrate a solid, scalable green finance model in our financial system in the same way we have integrated buying of cars and homes. Qualifications and other programs of study could play a valuable role here in helping people to understand what green finance is and why it can be so important for the future of the world. Financing green projects is both potentially profitable and essential for the future health of our country. The challenge lies in educating our institutions on the integration of the necessary systems and breaking long-term payback period into intermittent intervals.

The writer is a Karachi based freelance columnist and is a banker by profession. He could be reached on Twitter @ReluctantAhsan

Check Also

Credit risk of Pakistan - myth and reality

Credit risk of Pakistan – myth and reality

There has been a constant debate about Pakistan’s credit risk lately and all sorts of …

Leave a Reply