Pakistan to Impose Climate Levy on Petrol and Diesel from July 1

From July 1, 2025, Pakistan will introduce a new environmental tax on fuel, the Climate Support Levy, under the federal budget for 2025–26. This new policy replaces the previous Carbon Levy and adds Rs2.50 per litre on petrol, high-speed diesel, and furnace oil. The levy will be doubled to Rs5 per litre in the following fiscal year (2026–27).

Government officials state that the revenue from this tax will be dedicated exclusively to green energy development and environmental sustainability programs nationwide. The aim is to fund Pakistan’s long-term climate resilience strategy while reducing reliance on non-renewable energy sources.

Economists and environmental experts believe this shift could enhance Pakistan’s reputation in global climate finance circles—provided the funds are used transparently. They also suggest it may attract further international support for climate-related initiatives, helping the country meet its emissions goals and transition to cleaner energy.

While the levy will lead to a moderate rise in fuel prices, officials maintain it is a necessary step for Pakistan to take meaningful climate action.