Pakistan’s Senate Standing Committee on Finance has firmly rejected a government proposal to impose a significant Rs25 per liter carbon levy on petroleum products. The majority of the committee members voiced strong opposition, primarily citing concerns over the potential for increased inflation at a time when fuel prices are already elevated.

Finance Minister Muhammad Aurangzeb had put forward the proposal, which aimed to apply the levy to petrol, high-speed diesel, and furnace oil. The government’s plan included a future increase to Rs5 per liter by Fiscal Year 2026-27.

The proposed carbon levy was intended to serve a dual purpose: generate an estimated Rs48 billion in revenue and actively curb the consumption of fossil fuels, thereby supporting vital green energy programs. However, with the Senate panel’s decisive rejection, the future of this proposal remains uncertain. The Finance Ministry has yet to announce any plans to revise or reintroduce the levy.