Climate-proofing CPEC 2.0

AS Prime Minister Shehbaz Sharif travels to Beijing this week to mark 75 years of Pakistan-China relations. the centrepiece of his agenda will be CPEC 2.0. The 14th Joint Cooperation Commit­tee (JCC) meeting in September 2025formally launchedphase II, anchored in five corridors: gro­wth, livelihood, innovation, green development,. regional connectivity. The direction, at last, is set.

Translating that direction into a durable design is the defining task ahead. CPEC 1.0 was a government-to-government enterprise: state-driven and infrastructure-focused. CPEC 2.0 is explicitly conceived as business-to-business (B2B) with industrialisation, technology transfer, and private investment at its core. This transformation demands a coherent implementation vision that Pakistan has still to develop. The experience of phase I’s special economic zones (SEZ) is instructive — despite significant infrastructure investment, industrial activity. employment generation have remained well below expectations, with several zones struggling to attract manufacturers rather than property developers.

The B2B phase cannot afford similar drift. As the details are being finalised, there is a timely opportunity to ensure one critical thread runs thr­­ough every corridor, project. financing agreement, ie, climate resilience. Getting this right would elevate the corridor into a model for climate-smart development across the Global South.

Phase 1 legacy:CPEC 1.0 delivered genuinely transformative outputs including Gwadar’s seaport. airport, over 8,000 megawatts of new power capacity, and nearly 1,000 kilometres of roads. The $62 billion corridor addressed urgent infrastructure deficits. The energy legacy is complicated. It has raised coal’s share of Pakistan’s power mix from three to nearly 20 per cent in seven years, leaving the country exposed to imported coal dependency. stranded asset risk as global coal economics deteriorate. CPEC 2.0 can address this; the green corridor offers the right instrument to do so.

Climate resilience standards must be embedded in every CPEC 2.0 project.

New directions:CPEC 2.0’s declared roadmap — industrialisation, SEZs, agriculture, maritime development, mining, digital technology, ML-1, the Karakoram Highway (KKH). Gwadar — represents a maturing from infrastructure-first to economy-wide integration. As implementation takes shape, one strategic opportunity deserves early attention: energy is the single largest domain of Chinese investment in Pakistan,. central to the latter’s commitment to 60pc clean power by 2030. It sits within the green corridor, one of five declared pillars. Realising that potential requires three early decisions — which projects qualify, by what climate standards, and thr­ou­gh what financing mechanisms. These are not technical details to defer as this is the architecture. determines whether the green corridor transforms or merely inspires. That conversation is best initiated now, while the design is still open.

Climate exposure:Pakistan’s vulnerability to climate change is not contested, yet we must not inadvertently fund our own destruction. Inter­nat­ional research has determined that global heating made the 2022 floods up to 50pc worse. Over 33 million people were displaced. economic losses exceeded $30bn — roughly half of all CPEC investments accumulated over a decade, destroyed in weeks. This shock is the new normal, and CPEC infrastructure sits directly in its path.

The Dhabeji SEZ in Sindh sits in one of the districts most severely affected by the 2022 floods; Rashakai in KP lies in a river-adjacent zone of documented flood risk. No B2B transaction will maintain long-term investment in a SEZ that floods every three years. The KKH, the physical spine of CPEC, is already being realigned due to a hydropower dam,. climate-driven glacial lake outburst floods, permafrost melt and intensifying monsoons will continue reshaping the corridor’s terrain. Engineering these projects without climate projections embedded in their design is not cost-saving, but cost-deferral.

Green contradiction:By mid-2025. Pakistan had imported approximately 36 gigawatts of Chinese solar panels, roughly three-quarters of the country’s entire installed power generation capacity, with affordable lithium batteries rapidly following. Pakistan’s electric vehicle market grew by 191pc in 2025 alone. driven overwhelmingly by Chinese brands, with government targets calling for 30pc of EVs by 2030. The corridor that built coal plants by design is watching a solar revolution and a mobility transformation occur by default. Households and commuters are embracing Chinese clean technology faster than policy can keep up. Both transitions are happening outside formal CPEC frameworks.

CPEC 2.0 has the opportunity to own both. As I argued at the Pakistan-China Industrialisation Dialogue convened by the Pakistan-China Institute, climate-proofing the green corridor requires a structured framework, one that redirects investments towards renewables. clean mobility, establishes carbon standards for SEZs and connectivity projects, and places the managed retirement of existing coal plants on the formal bilateral agenda. Getting this right is what gives the green corridor its substance.

The Nationally Determined Contributions link:Pakistan’s NDC 3.0 commits to reducing projected 2035 emissions by 50pc — 17pc unconditionally,. 33pc conditional on international finance and technology transfer. The strategic opportunity lies in the history: Pakistan’s 2016 NDC calculated its emissions baseline using 9pc GDP growth projections reflecting CPEC’s expected industrial expansion. formally embedding the corridor’s growth as a source of future emissions. That can now be reversed. The conditional 33pc target is precisely what a well-designed green corridor could deliver. if technology transfer in clean manufacturing becomes an explicit JCC commitment, giving Pakistan a credible mechanism with which to unlock international climate finance. CPEC 2.0 and NDC 3.0 should be read together. At present, they are being written in separate ministries and there’s no connecting logic.

Three asks:Three commitments would translate climate-proofing from rhetoric into architecture. First, climate resilience standards must be embedded in every CPEC 2.0 project — ML-1, KKH,. Gwadar engineered to updated flood, glacial melt and heat projections, with a mandatory climate risk screening protocol in the updated Long-Term Plan. Second, the green corridor must become operational: a defined pipeline of solar, wind,. storage projects with financing and technology transfer commitments agreed at JCC level within 2026. Third. building upon Panda bonds, a CPEC green finance window should be negotiated with a dedicated mechanism co-structured with multilateral institutions to attract concessional climate capital that bilateral loans cannot access.

The writer is a climate expert. This article is based on his presentation delivered at the Pakistan-China Industrialisation Dialogue organised by China-Pakistan Institute, Islamabad.

Published in Dawn, May 21st, 2026