Renewable Energy, Energy Systems and Policy    

Shifting to renewable energy sources is essential, but the only option left for the world to survive. It is inevitable now. Years and decades of burning fossil fuels have led to depletion of indigenous resources of the countries affecting their foreign reserves. This has posed a significant energy security threat all over the world especially to the developing countries. In fact, developed countries have been working and are still looking for alternate sources of energy within their land to reduce vulnerability due to geopolitical factors and volatile oil prices. Moreover, Pollution and Climate Change is even bigger threat to human survival. The pace at which the environment is deteriorating is alarming and calls for some significant and immediate measures by all the residents of planet Earth.  

Pakistan is currently dealing with a serious energy crisis that is causing environmental damage, ongoing shortages, and reliance on imported fossil fuels. According to estimates of the Oil and Gas Development Company Limited (OGDCL), Pakistan’s indigenous oil reserves will exhaust by 2025, and Pakistan will run out of domestic sources of natural gas by 2030 (Dr. Abid Q. Suleri 2021). The switch to renewable energy sources must be Pakistan’s top priority to address climate change, provide energy security, and promote sustainable development. 

Inefficiencies and an incapacity of the energy sector have led to the accumulation of around US$8.3 billion of circular debt in the electricity sector and US$6.3 billion in the gas sector. It is estimated that power shortages result in lost economic output of more than US$8 billion a year. Additionally, imports around 43 percent of our total energy supply require around US$13 billion of foreign currency per year. (Bank 2023)

As of 2023, the total installed capacity and electricity generation reached 41,050MW and 94,121GWh, respectively. The distribution of installed capacity of hydel is 25.8%, nuclear 8.7%, renewable 6.8%, and thermal sources is 58.7%. (Pakistan Economic Survey 2022-23)

Pakistan has 1288 MW capacity of renewable energy, 39287 GWh of hydropower, 1335 MW Wind energy, 1083MW solar energy as of 2021. (International Renewable Energy Statistics 2022)

The worldwide capacity of green energy is set to experience a notable surge in the next two years, primarily supported by an uptick in land-based wind ventures, an expansion in solar photovoltaic (PV) arrays, and substantial inputs from China. 

In 2023 and 2024, China is expected to make a larger contribution to the global expansion of renewable energy capacity, securing its position as the global leader in deployment. China created about half of the world’s new renewable power capacity in 2022. By 2024, the country is predicted to have contributed a record 55% of the world’s annual deployment of renewable capacity. By 2024, China will supply more than 70% of new offshore wind projects, more than 60% of onshore wind projects, and 50% of solar PV projects globally.

The impetus behind this growth includes concerns over keeping energy provision secure, supportive governmental policies, and the increasing cost-competitiveness of these technologies in comparison to traditional energy sources. Specifically, the quickened deployment of solar PV units across Europe can be linked to the region reacting swiftly to policy shifts and recent energy supply challenges. Without prompt policy action, there might be a slight reduction in the number of new wind projects, whilst solar PV is predicted to maintain its upward trajectory. 

The integration of green power options is pivotal in not only reducing energy-related expenditures but also in phasing out dependence on fossil fuels and enhancing Europe’s energy independence, despite potential challenges. Ultimately, policy reforms and pressures resulting from energy shortages are catalyzing the swift proliferation of green energy solutions, prominently solar PV, which in turn buttresses the worldwide energy grid and bolsters economic resilience.

Under Sustainable Development Goal-13, the United Nations has a target to cut down greenhouse gas emissions for which countries would have to switch from non-renewable energy sources to renewable energy sources. United Nations can make teams for different regions as a climate watchdog which will have two roles: 1. encourage, promote, and check upon countries install/ switch to renewable methods such as the use of solar energy, wind turbines, waste and biomass energy, geothermal energy, ocean wave/tidal energy, or Hydropower. 2. Estimate the costs incurred in this process in the developing regions, which might help in disbursements of funds from UN developing countries, or loss and damage fund (given it becomes functional)

The NDC was updated in October 2021 and submitted to the UN Framework Convention on Climate Change (UNFCCC). It is based on a comprehensive assessment of Pakistan’s climate change vulnerabilities and mitigation potential.

The NDC outlines a detailed roadmap for achieving the ambitious emission reduction targets that includes: 50% reduction of projected greenhouse gas (GHG) emissions by 2030 compared to business-as-usual, 15% reduction unconditionally, relying on Pakistan’s own resources, 35% reduction conditional upon receiving international grant finance. Now, there are certain strategies that are formulated to achieve these goals such as shifting to 60% renewable energy in the energy mix by 2030, achieving 30% electric vehicle penetration by 2030, banning the import of coal for power generation, expanding nature-based solutions for carbon sequestration. But this requires a lot of financing. The estimated cost of implementing this is $101 billion for energy transition alone.

We do not only need financial support, but technical assistance, and infrastructural modification for capacity building to adapt to this shift. 

The Indicative Generation Capacity Expansion Plan (IGCEP) 2031 is a comprehensive document prepared by the National Electric Power Regulatory Authority (NEPRA) of Pakistan. It outlines the country’s plan for expanding its electricity generation capacity over the next decade, from 2022 to 2031. The successful implementation of the IGCEP 2031 has the potential to transform Pakistan’s power sector and achieve several important benefits. On paper, NDC goals and IGCEP might be in sync, but both have huge problems in implementation, biggest being the financing, and Infrastructure which includes our capacity and transmission. 

The budget allocated to the Energy sector in 2023-24 plans generation of 682 MW of solar power, 100 MW of wind power, 254 MW of hydroelectricity. Also, measures like the exemption of solar panels and batteries from custom duty are steps taken to encourage installation of renewable energy. Many financial incentives are presented in the budget, but they all target businesses and do not do much in terms of encouraging households and individuals to play an active role. (Mushtaq 21 June, 2023)

The budget should include financial incentives for small-scale solar and wind energy projects, such as tax credits, grants, subsidies, and low-interest loans, to lower upfront costs and guarantee a positive return on investment. Financial support programs, such as low-interest loans, could encourage households to take an active role by installing solar systems and selling excess energy to the grid. A specialized fund for renewable energy might be established to work with private investors, international development banks, and financial institutions to get more households involved in solar and wind projects. 

According to a World Bank report, potential benefits from sustainable Energy if implemented can result in 13% reduction in generation cost from mobilizing renewable energy, saving $2 Billion from energy efficiency, and $13 Billion by avoiding imports. (Bank 2023)

The green finance market is evolving rapidly and had already reached $540 billion by the end of 2021. (SDPI June-December, 2022). Instruments such as green bonds, green loans, green, green funds, carbon credits, and green insurance can help by reducing costs, increased access to capital, improved risk diversification, and positive social impact. This would require extensive awareness and marketing to educate people about it.

Aliyan Abbasi

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