EU carbon tax: Green Grid certification essential to save exports: PBIF

KARACHI: Mian Zahid Hussain, President Pakistan Businessmen and Intellectuals Forum & All Karachi Industrial Alliance, Chairman National Business Group Pakistan and Chairman Policy Advisory Board FPCCI, said that the survival of Pakistan’s export sector hinges on two critical policy shifts: the immediate introduction of “Green Grid” certification for industrial estates to bypass European carbon taxes, and the strategic utilisation of the newly deregulated sugar sector to launch a bio-energy export revolution.

He warned that while the EU’s Carbon Border Adjustment Mechanism (CBAM) is technically in a transitional phase for textiles, European buyers have already begun demanding “Carbon Passports” from Pakistani suppliers.

He stated that because Pakistan’s national grid relies heavily on fossil fuels, local exporters are being assigned high carbon-intensity scores that make their products uncompetitive compared to rivals in Vietnam and Bangladesh.

Mian Zahid Hussain proposed a practical solution, urging the Ministry of Energy to designate specific industrial feeders in Karachi, Faisalabad, and Sialkot as “Green Energy Zones.”

He explained that by legally certifying that the electricity supplied to these specific lines is sourced from renewable hydel, wind, or solar projects, the government can allow thousands of SMEs to claim near-zero emissions for their production without needing to install expensive individual solar plants.

He emphasised that without this “Green Grid” certification, the country’s textile sector faces an existential threat, as the upcoming carbon levies will effectively neutralise the advantages of GSP Plus status.

The veteran business leader also warmly welcomed the government’s decision to fully deregulate the sugar sector by June 2026, terming it a long-overdue reform that could unlock a new industrial frontier.

He highlighted that beyond the production of sweetener, this deregulation clears the path for a massive expansion in the production of fuel-grade ethanol.

He noted that with the removal of export quotas and price controls, the industry can now utilise its surplus molasses and sugarcane bagasse to generate over USD 1 billion in annual ethanol exports, while also contributing to the national energy mix through bio-power generation.

Mian Zahid Hussain advised the government to view sugar deregulation not just as an agricultural policy, but as an industrial energy strategy.

He pointed out that countries like Brazil and India have successfully used deregulated sugar sectors to fuel their transport industries and reduce oil import bills, a model Pakistan must now replicate.

He concluded that if the government can provide “Green Grid” certification to protect traditional textile exports and simultaneously facilitate the ethanol industry to capture new markets, the country can successfully pivot from a stabilisation mode to a high-growth export trajectory in 2026.

Copyright Business Recorder, 2026