The Hidden Price Tag of Fossil Fuels in Pakistan
When we fill our cars with petrol or pay the electricity bill, it feels like we’re already paying enough for energy. But the reality is that fossil fuels in Pakistan come with a hidden price tag — one that shows up in hospital bills, destroyed crops, flooded homes, and billions spent on energy imports.
Pakistan has already started to recognize this hidden cost through a carbon tax on fuel, officially called the Climate Support Levy. The real question now is: where should this money go to make the biggest difference?
The True Cost of Fossil Fuels in Pakistan
Smog and Public Health
Every winter, Lahore and Karachi disappear under a blanket of smog. This isn’t just an inconvenience — it’s deadly. According to the World Bank, air pollution costs Pakistan around 6.5% of GDP annually through healthcare costs and lost productivity.
Floods Made Worse by Climate Change
Pakistan emits less than 1% of global greenhouse gases, yet we are among the most climate-vulnerable nations. The 2022 floods devastated communities with over $30 billion in damages. And here we are in 2025, still facing ongoing floods in KPK and Punjab, where families remain displaced and farmlands are under water. Weak infrastructure, deforestation, and climate change all combine to make floods worse every year.
Importing Our Energy Problems
In 2022 alone, Pakistan spent over $23 billion importing oil, LNG, and coal. That’s money that could have been invested in renewable energy, hospitals, or schools — instead, it drained our foreign reserves.
The Carbon Tax: Turning Pollution Into Progress
To its credit, Pakistan introduced the Climate Support Levy in July 2025 — a charge of Rs. 2.5 per liter on petrol, diesel, and furnace oil (set to rise to Rs. 5 per liter in 2026). This tax is expected to raise nearly Rs. 48 billion in its first year and double by 2026.
That’s a huge opportunity. But only if the money is used wisely.
Where Should Pakistan Spend the Carbon Tax?
Plantation Drives: Greening Pakistan’s Future
Pakistan has already shown the world what’s possible with KP’s Billion Tree Tsunami and Sindh’s mangrove restoration — two massive success stories in reforestation. These projects didn’t just plant trees; they rebuilt ecosystems, protected coastlines, and gave communities a shield against floods.
Trees are silent warriors:
- They absorb carbon, slowing down global warming.
- They cool cities, easing the brutal summer heat.
- They clean the air, reducing smog and respiratory diseases.
- They hold soil and water, cutting flood risks.
Dedicating part of Pakistan’s carbon tax revenue to urban forests, mangroves, and rural plantations could transform both cities and villages — while creating green jobs.
Climate-Resilient Infrastructure: Building to Withstand the Storm
Every year, floods in Pakistan wash away homes, roads, schools, and dreams. The ongoing flood conditions in KPK and Punjab are yet another reminder: we cannot keep rebuilding the same way and expect different results.What Pakistan needs is climate-proof infrastructure — stronger flood defenses, smarter drainage systems in cities, and raised critical roads in flood-prone areas. When designed with climate risks in mind, infrastructure becomes an investment that saves lives and money for decades.
Allocating fuel tax revenue here ensures that future monsoons don’t destroy years of progress overnight.
Clean Energy Transition: Powering Pakistan the Right Way
Pakistan spends billions every year importing fossil fuels. This makes energy expensive and the economy fragile. But what if that money was redirected into production of green fuels, wind farms, and utility-scale renewable projects across the country?A clean energy shift would:
- Reduce costly fuel imports.
- Save households money on electricity.
- Create thousands of jobs in renewable industries.
- Cut down deadly air pollution.
Using carbon tax revenue to expand renewable energy isn’t just good for the planet — it’s smart economics.
Public Health Programs: Cleaner Air, Healthier Lives
Air pollution silently kills more Pakistanis every year than traffic accidents or terrorism. Smog in Lahore, industrial smoke in Karachi, and diesel fumes on highways all add up to lung disease, heart problems, and billions in healthcare costs.Investing in healthcare for pollution-related diseases and creating “clean air zones” in major cities could change this. These zones would enforce stricter standards on vehicles and industries while promoting cleaner alternatives.
Carbon tax revenue can directly improve public health — saving lives while reducing long-term medical expenses.
Green Jobs & Training: A Just Transition
As the world shifts away from fossil fuels, workers in oil, coal, and polluting industries face uncertainty. But instead of being left behind, they can lead the change.By retraining workers for roles in clean energy, plantation projects, and climate-resilient infrastructure, Pakistan can create a new green workforce. This not only reduces unemployment but also ensures that communities depending on polluting jobs find a sustainable future.
The Bottom Line
Fossil fuels are far more expensive than we realize. We pay for them not only at the pump, but also through polluted air, repeated floods, and an economy weighed down by imports.
With the Climate Support Levy, Pakistan finally has a tool to make polluters pay. But success depends on where that money goes.
If we invest in plantation drives, climate-proof infrastructure, renewable energy, and public health, then this small tax on fuel could build a stronger, greener, and safer Pakistan.
It’s not just about protecting the planet — it’s about protecting ourselves.
References
- World Bank (2019). Pakistan Country Environmental Analysis. Washington, DC.
- Government of Pakistan, Finance Act 2025. Climate Support Levy Notification.
- Dawn News (2025, July). Pakistan introduces carbon tax on fuels to raise Rs48bn.
- Asian Development Bank (2023). Pakistan Floods 2022: Recovery Needs Assessment.
- Pakistan Bureau of Statistics (2023). Import Statistics 2022.
- UNEP (2021). Pakistan’s Billion Tree Afforestation Project.
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