LCOY PAKISTAN POLICY INPUTS - ENERGY

1. Energy Transition for All

Demand 1:

• Issue: Over-reliance on fossil fuels for energy generation.

• Fact: According to the Integrated Generation Capacity Expansion Plan 2023-2047, Pakistan’s
current installed capacity is 41,268 MW. Of this, 58% is based on conventional fuels, with
41% of that coming from imports. Only 6% comes from renewable resources, including wind
and solar. According to the World Bank, utilizing just 0.071 percent of the country’s area for
solar photovoltaic (solar PV) power generation would meet Pakistan’s current electricity
demand. Under the Alternative and Renewable Policy (ARE policy) 2019, Pakistan aims to
increase its share of renewable energy to 60% by 2030, including hydro resources.

• Target: Solar and wind energy.

• Responsible Entity: Ministry of Energy, Pakistan

• Call to Action: By 2030, achieve 60% of the energy through renewable resources, focusing on
solar and wind. This includes incentives for households to install solar panels and subsidies
for manufacturers producing wind turbines locally. The government should focus on
implementing the provisions of the ARE policy equitably.

Demand 2:

• Issue: Deployment of indigenous Coal.

• Fact: The caretaker government has rolled out fast-tracked policy measures, which include
the immediate development of indigenous coal resources to meet Pakistan’s energy demand.
While there are strong national and provincial motivations for the development of domestic
coal in Pakistan, including local economic development, jobs, and increased energy security,
the economics do not support such a strategy because of recent VRE cost reductions.
Additionally, it will increase Pakistan’s contribution to global carbon emissions as well as
adversely impact the local environment. A clear example of this is seen every year during
Lahore’s smog and the establishment of a coal power plant in Sahiwal, an agricultural area,
for which coal is transported on rail from Sindh.

• Target: Phase-out coal completely from the energy mix.

• Responsible Entity: Ministry of Energy

 • Call to Action: It is interesting that while China has promised to phase-out coal and is
focusing on immediately stopping investments in coal within China, it continues to fund coal
projects internationally, including projects within CPEC. Pakistan should immediately stop
mining and production of energy using coal, and prioritize investments in renewables.

Demand 3:

• Issue: Rapid depletion of natural gas reserves.

• Fact: Pakistan's natural gas reserves are estimated to be exhausted by 2030. The nation has
consumed about 81% of total oil reserves and above 69% of its cumulative gas reserves. The
total recoverable resources of natural gas were 63.24 trillion cubic feet (TCF), consumed
43.73TCF, and the balance of 19.51TCF gas reserves are available. Currently, natural gas
production is 3,390MMCFD (million cubic feet per day). With the current rate of production,
indigenous natural gas will contribute to total gas consumption for another fifteen years or
so.
• Target: Alternate cooking energy sources.
• Responsible Entity: Provincial Governments and local community bodies.
• Call to Action: Transition from gas to electric stoves by 2026, while supporting the utilization
of sunlight for cooking and promoting adaptability in Pakistani society.

2. Reducing Carbon Emissions

Demand 3:

• Issue: Rising carbon emissions from transportation.

• Fact: It is estimated that transportation contributes to 21% of total greenhouse gas emissions
in Pakistan. Air quality is not accurately measured in Pakistan, in fact, quite patchily,
wherever the meters are installed. But wherever it is formally measured, the annual average
PM2.5 exceeds the WHO standards by large margins. Unchecked population growth has led
to urban pressure and an explosion in the number of vehicles crowding the streets. From
2007 at 5.2 million vehicles to 26.5 million in 2018, for instance, is a huge private transport
burden. Typically, heavy traffic congestion and the use of low-quality fuel contribute in
spades to ambient pollution. Low-quality fuels produce hazardous pollutants such as carbon
monoxide, hydrocarbons, NOx, lead, and other particulate matter. Although Euro-2 fuel is
banned in Lahore, the slow pace of switching to better-grade fuels is adding to the mix.

• Target: Public and private transportation.

• Responsible Entity: Ministry of Climate Change, Pakistan, Ministry of industries and

Environmental Protection Agencies.

• Call to Action: By 2027, transition 30% of public buses to electric or hybrid models. Introduce
tax incentives for individuals purchasing electric cars. Pakistan’s National Clean Air Policy was
approved in March 2023. The need for urgent and doable responses entirely shapes the
NCAP’s ambitions. The plan is neither based on complicated interventions nor expensive new
 infrastructure. In fact, it is reasonably low-tech in identifying one priority action in each of
the big five sectors with the aim of reducing air pollutant emissions across all major sources.

• Firstly, fine-tuning automobiles to reduce emissions and mandating Euro 5 and 6 fuel
quality standards may reduce sulfur and other pollutants from our vehicles.

• Second, implementing emission rules for companies may reduce particulate matter
emissions by requiring filters on high-polluting gear. This requires more provincial
EPAS supervision but is worth the regulatory capacity investment.

• Third, homeowners are urged to utilize low-emission cooking devices. This entails
switching to cleaner cooking fuels like LPG and electricity and more efficient biomass
cookstoves. This will reduce indoor and outdoor air pollution.

• Preventing open burning of MSW is the fourth NCAP recommendation. This

intervention is a crucial duty of municipal governance at dump sites that need best
practices to prevent fires. Only waste-contractor migraines may result.

• Fifth, prevent agricultural residue burning. Seasonal smoke from both countries
pollutes transboundary air, forcing crop-producing regions in Pakistan and India to
shift. Alternative applications of agricultural waste for animal feed, fuel, or soil
reincorporation are also promoted.

Demand 4:

• Issue: The environmental crisis from single-use plastics.

• Fact: The International Trade Administration of the United States reports that Pakistan
generates more than 49.6 million tonnes of solid wastes annually, with an annual increase of
2.4%. Recent estimates indicate that over 3,3 million tonnes of plastic are discarded annually
in Pakistan. In South Asia, Pakistan has the highest percentage of improperly managed
plastics. The country lacks appropriate waste management infrastructure and most of it ends
in landfills, unmanaged sites or scattered about land and aquatic bodies. “Single Use Plastics
Prohibition Regulations 2023” was passed in June 2023 in an effort to curb plastic use. Plastic
manufacturers were given a clear directive to stop the production of non-degradable plastics
by August 1, 2023. However, the policy remains ineffective.

• Target: Plastic products.

• Responsible Entity: Provincial Governments and Corporates.

• Call to Action: Ban single-use plastics by 2025, establish recycling centres in all major cities,
and promote the use of alternative materials. Conduct extensive media campaigns on living
sustainability and promoting reusable plastics, glass, and other materials, banning the use of
single-use plastic bottles, and ensuring the effective implementation of the Single Use
Plastics Prohibition Regulations 2023.

3. Energy Efficiency and Conservation

Demand 5:

• Issue: High energy consumption in new buildings.

 • Fact: Buildings account for nearly 40% of national energy consumption showing a rapidly
increasing energy demand. The country’s energy needs have surged from 484 terawatt-hours
(TWh) in 2000 to 1,071 TWh in 2021, highlighting the urgent need for greater efficiency in
energy consumption. In contrast, developed nations such as Germany and the Netherlands
have successfully curbed their energy usage, showcasing the potential of embracing energy-
efficient strategies. Saudia was able to save over 20% of its energy using energy-efficient
practices. The National Energy Efficiency and Conservation Authority of Pakistan approved
the energy efficiency policy 2023 this year, which sets the stage for energy-efficient practices
in building designs.

• Target: Energy consumption in new constructions.

• Responsible Entity: Ministry of Housing and Works, Pakistan and real estate developers.

• Call to Action: By 2027, ensure that 70% of new constructions are energy-efficient, following
green building standards. Create financial incentives for retrofitting older buildings with
energy-efficient solutions. The increasing demand for new construction in Pakistan presents
a significant opportunity to improve energy efficiency by employing energy-efficient building
design techniques, materials, and practices. As a result of accelerated urbanization and
population growth, urban areas are projected to house over 40 million people by 2023,
necessitating the construction of new buildings and a rise in energy demand.

Demand 6:

• Issue: Energy wastage in community setups.

• Fact: Only 58% of Pakistan’s population has access to grid electricity, but energy losses are as
high as 30% in some areas due to outdated infrastructure.

• Target: Energy conservation.

• Responsible Entity: Local Municipal Bodies and Community Development Authorities.

• Call to Action: Reduce energy losses to below 15% by 2026 by upgrading infrastructure.
Support decentralized renewable energy projects for rural areas.

Overarching Energy Policy Suggestions:

1. Lack of Long-Term Vision and Collaboration: Despite commitments under the Paris
Agreement, the absence of collaboration between various ministries like climate change,
planning, and energy results in haphazard and half-baked policy measures. The ARE policy
2019 and the Integrated Generation Capacity Expansion Plan, while approved, remain
underutilized.

2. Inadequate Pricing of Carbon: Without a comprehensive carbon pricing mechanism,

Pakistan's heavy reliance on RFO and RLNG fossil fuel plants, run in violation of the merit
order, drives up electricity prices and results in energy poverty.

3. Limited Research & Development Funding: While foreign technologies often dominate, the
prioritization of imported and domestic fossil fuels disincentivizes RE IPPs, curtailing local
renewable innovations.
4. Subsidies and Misaligned Prioritization: Despite abundant solar and wind potential, the
government's prioritization of fossil fuels and long-term contracts disincentivize the offtake
of cleaner energy sources.

5. Infrastructure Lock-In and Planning Gaps: Projects under the CPEC largely favor non-
renewable sources. Transmission and distribution planning remain inadequate, leading to
critical blackouts during high demand or adverse weather anomalies.

6. Inefficient Building, Transportation Standards, and Policies: Major cities suffer from
pollution due to outdated standards. While an energy efficiency policy and an EV policy exist,
they are primarily desktop studies with minimal on-ground implementation.

7. Regulatory Barriers: Complex provincial and federal regulations deter renewable projects.
Despite policy frameworks like the ARE policy 2019, government procurement often deviates
from recommended simulation outputs.

8. Grid and Infrastructure Shortfalls: Pakistan faces recurring energy shortages. T&D losses are
high, around 30%, attributed to the lack of sustained investment in the infrastructure.

9. Inadequate Investment in Renewables: The government's prioritization of long-term fossil

fuel contracts has stifled solar and wind energy projects, even though they can offer
sustainable solutions.

10. Insufficient Focus on Just Transition: As the world moves away from coal, areas relying on it,
like Thar, require holistic plans, considering both environmental and socio-economic factors.

11. Limited Public Engagement: There is often a disconnect between policy creation and public
perception, leading to challenges in project acceptability and implementation.

12. Lack of Cross-Sectoral Coordination: With agriculture being a significant sector in Pakistan's
economy, there's an urgent need for a coordinated approach between energy and water
policies, ensuring a sustainable trajectory across all sectors.