By Aliyan Abbasi
Shifting to renewable energy sources is not just essential—it is the only viable option left for the world to ensure its survival. Years and decades of burning fossil fuels have depleted indigenous resources, severely impacting countries’ foreign reserves and posing significant energy security threats, especially for developing nations.
Developed countries have been diligently seeking alternative energy sources to reduce their vulnerability to geopolitical factors and volatile oil prices. Meanwhile, pollution and climate change pose an even greater threat to human survival. The rapid pace of environmental deterioration is alarming and demands immediate, significant measures from all global citizens.
Pakistan is currently grappling with a severe energy crisis that causes environmental damage, persistent shortages, and a heavy reliance on imported fossil fuels. According to the Oil and Gas Development Company Limited (OGDCL), Pakistan’s indigenous oil reserves are expected to be exhausted by 2025, with domestic natural gas sources running dry by 2030 (Dr. Abid Q. Suleri, 2021). Thus, transitioning to renewable energy must be Pakistan’s top priority to address climate change, secure energy supplies, and promote sustainable development.
Inefficiencies and incapacity within the energy sector have resulted in a circular debt of approximately $8.3 billion in the electricity sector and $6.3 billion in the gas sector. Power shortages are estimated to cause an economic loss exceeding $8 billion annually. Moreover, imports, which account for around 43% of Pakistan’s total energy supply, require about $13 billion in foreign currency per year (World Bank, 2023).
As of 2023, Pakistan’s total installed capacity and electricity generation reached 41,050 MW and 94,121 GWh, respectively. The distribution of installed capacity includes 25.8% from hydel, 8.7% from nuclear, 6.8% from renewable sources, and 58.7% from thermal sources (Pakistan Economic Survey 2022-23). Pakistan has a renewable energy capacity of 1,288 MW, with 39,287 GWh from hydropower, 1,335 MW from wind energy, and 1,083 MW from solar energy as of 2021 (International Renewable Energy Statistics, 2022).
Globally, green energy capacity is set to surge over the next two years, driven by increased land-based wind ventures, the expansion of solar photovoltaic (PV) arrays, and significant contributions from China. In 2023 and 2024, China is expected to dominate global renewable energy expansion, contributing 55% of the world’s annual deployment by 2024. The country will lead in new offshore wind projects (over 70%), onshore wind projects (over 60%), and solar PV projects (50%) globally.
The growth is propelled by concerns over energy security, supportive governmental policies, and the increasing cost-competitiveness of renewable technologies. In Europe, rapid deployment of solar PV units is a response to policy shifts and recent energy supply challenges. While wind projects may see a slight reduction without prompt policy action, solar PV is expected to maintain its growth trajectory.
Integrating green power options is crucial for reducing energy costs, phasing out fossil fuel dependency, and enhancing energy independence in Europe, despite potential challenges. Policy reforms and pressures from energy shortages are catalyzing the rapid adoption of green energy solutions, strengthening the global energy grid and economic resilience.
Under Sustainable Development Goal-13, the United Nations aims to cut greenhouse gas emissions by encouraging a shift to renewable energy sources. The UN could establish regional climate watchdog teams to promote and monitor the adoption of renewable energy methods such as solar, wind, biomass, geothermal, and hydropower. These teams could also estimate the costs incurred in developing regions to facilitate fund disbursements from the UN and other financial sources.
Pakistan’s updated Nationally Determined Contribution (NDC) submitted in October 2021 outlines a roadmap for achieving ambitious emission reduction targets: a 50% reduction in projected greenhouse gas emissions by 2030 compared to business-as-usual, with 15% reduction unconditionally and 35% conditional on international grant finance. Strategies to achieve these goals include shifting to 60% renewable energy in the energy mix by 2030, achieving 30% electric vehicle penetration, banning coal imports for power generation, and expanding nature-based carbon sequestration solutions. Implementing these measures is estimated to cost $101 billion for energy transition alone.
The Indicative Generation Capacity Expansion Plan (IGCEP) 2031, prepared by the National Electric Power Regulatory Authority (NEPRA) of Pakistan, outlines plans to expand the country’s electricity generation capacity from 2022 to 2031. Successful implementation could transform Pakistan’s power sector, though challenges in financing and infrastructure remain significant.
The 2023-24 energy sector budget includes plans for generating 682 MW of solar power, 100 MW of wind power, and 254 MW of hydroelectricity. Measures like the exemption of custom duties on solar panels and batteries are steps to encourage renewable energy adoption. However, financial incentives are mainly targeted at businesses, with little encouragement for households and individuals.
To engage households, the budget should include incentives for small-scale solar and wind projects, such as tax credits, grants, subsidies, and low-interest loans. Programs encouraging households to install solar systems and sell excess energy to the grid could increase participation. Establishing a specialized renewable energy fund could attract private investors, international development banks, and financial institutions to support household projects.
According to a World Bank report, implementing sustainable energy could result in a 13% reduction in generation costs from renewable energy mobilization, saving $2 billion from energy efficiency and $13 billion by avoiding imports (World Bank, 2023). The green finance market, rapidly evolving and valued at $540 billion by the end of 2021 (SDPI, 2022), offers instruments like green bonds, loans, funds, carbon credits, and insurance to reduce costs and improve access to capital.
(Aliyan Abbasi is a student of MS Marketing and Sales at Bahria University. He can be reached at Aliyanabbasi252@gmail.com.)
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