ISLAMABAD: Experts and stakeholders have called for a more enabling financial and policy ecosystem to accelerate Pakistan’s industrial energy transition, particularly for small and medium-sized enterprises (SMEs) facing barriers in accessing finance, preparing viable projects and adopting clean energy technologies.The call was made during a consultative discussion hosted by the Sustainable Development Policy Institute (SDPI) under its Pakistan Industrial Decarbonization Program (PIDP) and Network for Clean Energy Transition (NCET), in collaboration with the International Network of Energy Transition Think Tanks (INETTT), on “Making the Industrial Energy Transition Investable: Mobilizing Capital for Renewable Energy.”Participants stressed that the challenge goes beyond the availability of capital, requiring an integrated ecosystem capable of making clean energy investments commercially viable, financially bankable and accessible to a wider range of industrial consumers.
Ms. Saleha Qureshi, Lead of the Pakistan Industrial Decarbonization Program at SDPI, emphasized the need for appropriate financing mechanisms, including de-risking instruments, guarantees and concessional finance, particularly for industries shifting towards cleaner technologies.She noted that Pakistan’s estimated financing requirement of around $565 billion under NDCs 3.0 represents the overall economy and does not specifically identify the financing needs of the industrial sector. She stressed that climate and energy financing therefore requires a sector-specific approach reflecting the realities of industrial businesses.Saleha Qureshi further highlighted uncertainty surrounding energy costs, policies and broader economic conditions as factors affecting industrial investment decisions. She called for consistent policy signals and financing instruments tailored to Pakistan’s circumstances, while emphasizing project-preparation support for smaller industries that lack the resources to convert viable energy-transition opportunities into investment-ready projects.She also highlighted solar-as-a-service and RESCO models as potential avenues for reducing the upfront capital burden on industrial consumers.Ms. Kajol, Project Lead at Agora Industry, said businesses primarily evaluate clean-energy investments on the basis of profitability, payback periods, policy predictability and the ease of navigating regulatory requirements.She observed that many SMEs lack the financial and technical capacity to independently develop clean-energy projects, making it difficult for them to attract developers and financiers.
She suggested demand aggregation among SMEs operating in industrial clusters as a way to combine smaller energy requirements into larger, more investable projects while reducing transaction costs.She also stressed the need for simpler approvals, single-window mechanisms and clear commercial frameworks covering open access, power purchase agreements and other market-based arrangements.Mr. Mekaeel Malik, Founder of Climate Finance Pakistan, highlighted broader constraints in Pakistan’s financing landscape, including limited private-sector credit, risk aversion within the financial sector and difficulties faced by entrepreneurs and clean-technology businesses in raising capital.He emphasized that financing must be accompanied by stronger technical capacity to transform promising ideas into scalable and commercially viable ventures. He also underlined the importance of policy consistency in attracting investment, noting that Pakistan’s experience with solar energy and electric mobility demonstrated that consumers and businesses can respond rapidly when technologies become economically attractive and are supported by appropriate policy frameworks.
Mr. Muhammad Sheraz Aamir, Associate (Energy and Climate) at Renewables First, highlighted the challenges faced by SMEs operating with limited working capital, insufficient collateral and restricted access to conventional bank financing.He identified credit guarantees and concessional finance as important tools for enabling smaller industrial consumers to participate in the energy transition. He also discussed asset securitization, co-lending and aggregation of distributed energy-resource projects as potential mechanisms for overcoming the limitations associated with small individual projects.He noted that solar and battery energy-storage projects could be structured and combined to make them more attractive to financiers, allowing businesses to access clean energy without bearing the full upfront investment burden. He also stressed the importance of predictable policy signals for building confidence among industries and investors.Mr. Mashhood Urfi, Energy Transition Officer at Alternate Development Services, said many of the elements required for industrial climate finance already exist but need greater prioritization to ensure that available instruments reach businesses, particularly SMEs and MSMEs in sectors such as textiles.He also pointed to an information and trust deficit between industrial consumers and financing institutions, saying improved access to reliable information, stronger institutional coordination and greater awareness of available transaction structures would help build a stronger pipeline of investable industrial transition projects.
Participants also highlighted the importance of coordination among institutions involved in addressing industrial financing challenges, including the State Bank of Pakistan, Securities and Exchange Commission of Pakistan, development finance institutions, government agencies, chambers and industry associations.In concluding the discussion, Arfa Ijaz, Researcher at SDPI’s Energy Unit, said the conversation had expanded from challenges faced by individual SMEs to broader reforms required to support industrial energy transition at scale.She highlighted demand aggregation, de-risking instruments, policy predictability and stronger coordination among financing institutions as key areas emerging from the discussion. She noted that Pakistan’s industrial energy transition would depend not on a single intervention but on better connecting existing financial tools, institutions and policy mechanisms.
The discussion concluded that Pakistan does not necessarily need an entirely new financing architecture. Instead, participants emphasized the need to better connect existing financial instruments, institutions and policy mechanisms through project-preparation support, demand aggregation, risk-sharing mechanisms, appropriate financing products, predictable policies and stronger institutional coordination.
