Pakistan’s export-oriented industries are facing an immediate and severe challenge from the European Union’s newly enforced carbon regulations, which threaten to make local goods uncompetitive in a key market, a prominent business leader warned on Monday.
Mian Zahid Hussain, President of the Pakistan Businessmen and Intellectuals Forum, stated that European buyers have effectively begun demanding “Carbon Passports” from Pakistani suppliers to future-proof their supply chains against the new levies.
Speaking to the business community, he highlighted that Karachi’s industrial centres, including Korangi and SITE, are particularly vulnerable as many units rely on captive power generation using gas or furnace oil. These energy sources carry a high “carbon intensity” rating under the EU”s Carbon Border Adjustment Mechanism (CBAM), which officially came into force on January 1, 2026.
The veteran business leader cautioned that the new rules could make Pakistani goods prohibitively expensive compared to competitors in Vietnam or Bangladesh who utilise greener grid electricity. He warned that without verified emission data, EU authorities will apply punitive “default values” to Pakistani exports, a move he described as potentially disastrous for the textile and manufacturing sectors.
As an urgent solution, Hussain called on the Ministry of Energy and K-Electric to immediately designate specific industrial feeders as Green Energy Zones. He explained this would involve certifying that electricity supplied to these zones originates from renewable sources such as hydro, wind, or solar.
Such a certification, he argued, would permit exporters to claim near-zero emissions for their products without the need for individual businesses to install their own solar plants, thereby protecting Pakistan’s hard-won export orders from being lost to carbon taxes.
The warning came as Hussain simultaneously commended the government’s accelerated privatisation drive, which he termed a “historic milestone” toward economic stabilisation. He welcomed the Privatization Commission”s decision to issue Expressions of Interest this month for the profitable power distribution companies (DISCOs) IESCO, FESCO, and GEPCO.
He noted that the reported interest from foreign consortiums, particularly Turkish investors advised by Raiffeisen Investment, validates the improved investment climate in the country. He also lauded the expansion of the privatisation active list to include Saindak Metals, Pakistan Mineral Development Corporation, and the National Insurance Company Limited as a strategic decision to unlock the potential of underperforming assets.
However, he concluded that while shedding state-owned losses through privatisation is essential for fiscal health, protecting the nation”s export lifeline requires immediate regulatory innovation. He urged the government to prioritise the “Green Grid” certification to ensure that recent economic gains are not neutralised by the new European regulations.