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Clean Energy for Economic Prosperity

September 13, 2023 at 7:14 pm | Economic Affairs

Pakistan plans to increase its percentage of renewable energy to 60% in 2030 to reach its net zero emission goal as part of the Paris Agreement on Climate Change.

Dr Abid Rashid Gil

Energy transition in Pakistan is indeed a need of the hour. As a developing country with a rapidly growing population and expanding economy, Pakistan faces significant challenges in meeting its increasing energy demands while addressing environmental concerns.

An energy transition involves a shift from traditional, fossil-fuel-based energy sources to cleaner, renewable, and sustainable alternatives. Such a transition is crucial for Pakistan’s economic development, environmental sustainability, and social well-being.

Pakistan’s power generation relies heavily on fossil fuels, particularly oil and natural gas. It accounts for nearly 61% of the electricity generated, as documented in the Economic Survey of Pakistan (2021-2022).

Further, in the fiscal year 2021-2022, the power industry consumed 9.8 million tons of coal, the most of all sectors, accounting for 44.5 percent of the total coal consumption. The dependence on these imported resources makes the country vulnerable to global energy price fluctuations, geopolitical tensions, and energy insecurity.

Also, it is a drain on its foreign exchange reserves and puts the entire economy at risk through imported inflation. These inflationary pressures reduce the competitiveness of our exports and further constraints our capacity to pay for energy imports.

An energy transition, therefore, would promote the decentralization of energy production, enabling communities and industries to generate their power through solar panels, wind turbines, and other renewable technologies.

This diversification would enhance energy security and reduce exposure to international energy market volatility. Moreover, this decentralized approach can improve energy resilience, reducing the country’s reliance on centralized power plants and long-distance energy transmission.

Pakistan has a natural potential to produce renewable energy, especially wind and solar power. As per the World Bank (2020), using just 0.071 percent of Pakistan’s surface for solar photovoltaic (solar PV) power generation can provide the current demand for electricity in Pakistan.

Pakistan is also home to several famous wind corridors with average winds of 7.87 millimetres per second in 10% of the windiest areas. But, despite a myriad of projects installed, the wind and solar energy capacity in Pakistan at less than 1500 Megawatts is just 4 percent of the total capacity or about 2 percent of entire electricity generation.

Pakistan is highly susceptible to the impacts of climate change, including extreme weather events, sea-level rise, and glacial melting. The burning of fossil fuels releases greenhouse gases, contributing to global warming. By transitioning to renewable energy sources, Pakistan can significantly reduce its carbon emissions and contribute to international efforts to mitigate climate change.

It is also true that Pakistan, like other developing nations, has been the least contributor to climate change. Instead, the current and past burning of fossil fuels by advanced countries made the problem of climate change and global warming worse and at the stage that demands a complete overhauling of the global economies.

However, Pakistan is also a signatory to the Paris Agreement, which aims to limit global warming to below 2 degrees Celsius above pre-industrial levels. To fulfil its commitments, Pakistan needs to transition to a low-carbon economy.

The country can also access international funding and support for renewable energy projects and climate change mitigation initiatives. The global focus on renewable energy has also accelerated technological advancements in this sector. Embracing an energy transition would allow Pakistan to leverage these innovations, enhancing its energy infrastructure and management capabilities.

Besides, developed countries such as the EU, the UK, and the USA have started catalyzing funding under Just Energy Transition Partnership (JETP) program for developing countries for the green energy transition.

These findings are in the form of low-interest rate loans, private investments, and grants. Indonesia ($20 billion), South Africa ($8.5 billion), and Vietnam ($15 billion) are the first three countries to receive these grants, while Mexico and India are in the queue under the JETP.  

Pakistan plans to increase its percentage of renewable energy to 60% in 2030 to reach its net zero emission goal as part of the Paris Agreement on Climate Change. Due to poor macroeconomic conditions and a weak energy sector, Pakistan also requires a tailed JETP program backed by policy incentives and infrastructure of bankable projects, as well as credible private business associations and public sector organizations co-participating in these programs.

Investing in renewable energy infrastructure can spur economic growth and create green jobs. Developing, manufacturing, installing, and maintaining renewable energy systems would generate employment in various sectors. A thriving renewable energy industry would also attract domestic and foreign investments, fostering innovation and economic development.

The initial capital costs of renewable energy projects may be higher than conventional fossil fuel-based projects, and the operational maintenance costs of renewable energy systems are significantly lower. Once established, renewable energy sources provide a stable and predictable energy source, reducing the country’s reliance on imported fossil fuels and offering long-term cost savings.

Many remote and rural areas in Pakistan need access to centralized energy grids. An energy transition can empower these communities by providing off-grid renewable energy solutions. Solar panels and small-scale wind turbines can bring electricity to remote regions, improving living conditions, healthcare facilities, and educational opportunities.

 The United Nations’ Sustainable Development Goals (SDGs) emphasize access to affordable, clean energy, climate action, and sustainable cities and communities. An energy transition aligns with these goals and allows Pakistan to make significant progress toward achieving them.

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