Degree

Master of Business Administration Executive

Faculty / School

School of Business Studies (SBS)

Year of Award

2026

Advisor/Supervisor

Dr. Mujeeb U Rehman Bhayo, Assistant Professor, Department of Finance, Institute of Business Administration (IBA), Karachi

Project Type

MBA Executive Research Project

Access Type

Restricted Access

Keywords

I-RECs; Carbon Credits; Environmental Attribute Monetization; Renewable Energy; Carbon Markets; Additionality; Business Feasibility

Executive Summary

Pakistan is on the verge of an energy transformation, and this is the best time to capitalize on the environmental elements that are linked to the development of renewable energy. Sustainability pledges at the global level, carbon pricing schemes and corporate decarbonization schemes further fuel the demand of environmental commodities like carbon credits and I-RECs, but the involvement of Pakistan in these markets is still immature compared to its fast-growing renewable energy potential. This MBA Capstone Project, carried out in the Institute of Business Administration (IBA), Karachi, in partnership with Burj Clean energy Modaraba (BCEM), 7.5 MW wind captive plant (Power Cement) and 7 MW solar captive plant (BSEPL), assesses the business feasibility of capturing the environmental attributes monetization of the two captive plants and prepares an updated, staged business case and implementation plan to capture the value. The initial model is based on a fundamental assumption, that BCEM can enter into longterm, seven-year I-REC offtake contracts with both Mondelez International and Unilever Pakistan, the two anchor corporate purchasers with which the size of locked-in demand and pricing will be determined during the course of this analysis. All revenues quoted in the business case below are subject to the negotiation and conclusion of these two agreements; failure of which, on the assumed volumes or pricing, BCEM would have to draw more upon the free IREC market of Pakistan, which is characterized by its thinner, less predictable spot prices. Due to this reliance, and since the value of Scope 2 claims of Mondelez and Unilever are only provable with I-RECs, but not carbon credits. The proposed course of action is a stepby- step decision-making. Under the I-REC Standard, both assets and the implementation of the Mondelez and Unilever offtake agreements should be registered immediately because the pathway is the fastest (30-60 days to registration), the least expensive (an all-in first-year cost of about USD 2,000 per plant) and offers the highest risk-adjusted return of the three modelled pathways. Simultaneously, BCEM must award a low-cost, initial carbon credit additionality screening of both plants, prior to committing to the significantly increased cost and multi-year commitment of full carbon credit registration. The initial financial model reveals that Scenario 1 (I-RECs Only) will result in a cumulative net income of about USD 239,600 during the 2026 to 2033 modelling horizon on an initial outlay of only USD 2,000 which corresponds to an NPV of USD 136,929 and an IRR which is very high simply because the amount of capital commitment is so minimal. xiii Scenario 2 (Carbon Credits Only) yields a lower cumulative net income of about USD 124,200, initial outlay of USD 40,000 and no positive revenue till Year 3, which represents an 18 to 24 months registration and validation process of carbon projects in Pakistan. Scenario 3 (Dual Registration) yields a cumulative net income of about USD 143,500, which is better than carbon credits alone but still lower than the I-REC-only pathway when development costs are considered. There is a significant, and, hitherto, under-emphasized risk in the carbon credit route: since BCEM already has a bankable captive power purchase agreement underpinning the Power Cement wind plant, and because, under the sequencing approaches proposed in this report, the I-REC revenue will be contracted, the project might not pass the financial and common-practice additionality tests that Gold Standard and Verra approaches impose. This report thus advises that BCEM should not regard carbon credit registration as a default, but as a conditional one: a pre-registration, in-house additionality screen is to be done first, and an accredited carbon consultant contracted, at a market fee of about USD 25,000-40,000, only when that screen demonstrates a plausible case. In case these initial screening does not augur well, BCEM may continue the I-REC-only route and re-examine the carbon credit registration once the carbon market mechanism and precedent deals in Pakistan are fully developed. In addition to the business case presented to BCEM, this report discovers that Pakistan has a significant potential that remains unexploited in the targeted I-REC market. Though the country has built a significant amount of renewable generation capacity, very little proportion of the projects that should have been registered to get the I-RECs have been registered which would provide an opportunity of first movers to those that have registered their projects to receive the I-RECs. The 33 approved Science Based Targets (SBTi) companies in Pakistan, having their focus on the export-driven textile industry, and experiencing increasing pressure on the CBAM-related aspect of buying by EU customers, constitute a structural and expanding domestic demand that BCEM, and other renewable generators who will follow, will be wellplaced to serve. On the whole, this report finds that environmental attribute monetization continues to be a commercially viable proposition to BCEM, however, it must be done in the right order: seal both the Mondelez and Unilever I-REC offtake agreements and have both assets registered by PET at the earliest opportunity; execute a preliminary carbon credit additionality screen at minimal cost in parallel; and look to full carbon credit development, and the additional cost of a specialist consultant, only after that screen has given it a credible basis to do so. This is a staged method, retaining the option value of dual registration, and safeguarding xiv BCEM against an early investment of tens of thousands of dollars in a carbon credit pathway whose additionality case has yet to be tried.

Pages

xiv, 109

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