CORPORATE WINDOW : Mired in expensive non-renewablesArchive
The discourse surrounding alternative sustainable energy solutions is steadily gaining momentum in Pakistan. Beyond the confines of activists’ offices, corporate boardrooms, government committee chambers and conference halls in hotels, it is now visibly spilling into the streets of the country, marked by increased community involvement and engagement.
Pakistan is one of the most vulnerable nations susceptible to the repercussions of climate change, even though its contribution as a greenhouse gas emitter remains relatively limited. Presently, it is entangled in one of the most severe economic and energy crises, largely attributed to its heavy reliance on fuel imports, which constitute over 40 per cent of its primary energy supply. In this modern era, about a quarter of its population, out of 230 million, still lacks access to electricity.
“The convergence of pressing challenges has shed light on the discernment and shortsightedness of leaders who, for the sake of immediate political gains or financial benefits, have jeopardised the well-being of the majority, relegating them to a substandard quality of life,” commented an analyst.
For many years, successive oversized governments in the country have been shifting the burden of their mistakes onto the shoulders of the people. Unsuspecting users of public utilities and fuel have been saddled with various taxes, cleverly disguised under different names, in order to compensate for the revenue lost due to policy blunders and inefficiencies.
‘The energy policies pursued have been devoid of any vision and understanding of the population’s needs’
The insensitive international donors, solely fixated on the country’s financial balance sheet to ensure timely credit payments, vehemently oppose subsidies they consider unaffordable. However, they turn a blind eye to overcharging as long as the government manages to secure resources to narrow the fiscal deficit.
Currently, tensions are escalating as the public, already grappling with the economic downturn, grows increasingly frustrated and restless due to the steep increase in power and fuel prices. In addition to expressing their dissatisfaction with the interim government’s painful decisions, some segments seemed relatively receptive to climate activists’ calls to replace conventional options in the energy sector with sustainable and affordable solutions.
In response to a global call for action by the Climate Justice Movement (a network of social entities opposing ‘corporate globalisation’ and advocating for the equitable distribution of economic resources to mobilise the public against fossil fuels), several rallies were held in Pakistan last week. Coal, oil and gas have been identified as the primary contributors to climate change.
These demonstrations were strategically timed to coincide with the 78th General Assembly of the United Nations, which is currently in progress in New York.
Prior to the G20 meeting in India, a peasant rally was held in Lahore under the banner of the Pakistan Kissan Rabita Committee. It held fossil fuel-based energy projects responsible for climate change and demanded that developed nations allocate $40 billion to Pakistan to rehabilitate flood and rain victims. Additionally, they called for the diversion of public funds towards renewable energy projects.
Government agencies, officials, experts, rights activists and leaders of major political parties were approached for their input on the debate. A key official shared his perspective but declined to own it publicly.
“Our primary stance on the use of fossil fuels, including coal, gas, and oil, aligns with our commitment to the Paris Agreement. The goal is to transition towards cleaner, greener energy sources, with a strategic plan to double the renewable energy share in the energy mix from 31pc to 62pc by 2031.
“While clean energy is the main focus, it’s essential to acknowledge that Pakistan possesses the 7th largest coal reserves globally. Therefore, we are attempting to leverage this potential through advanced technologies like coal gasification and liquefaction to minimise environmental impacts.
“We are exploring avenues such as carbon credits to contribute to global efforts to reduce emissions as we navigate this intricate energy landscape,” he said.
Only one of the top three political parties (PPP, PML-N and PTI) approached, responded within the deadline. Khurram Dastgir Khan, a PML-N leader and former federal minister for energy, was to the point in his mailed comment.
“During the 16-month PDM government and afterwards, the position is clear: henceforth, there will be no new electricity generation capacity based upon imported fossil fuels. This policy is consistent with environmental protection, Pakistan’s international commitments, and reducing impact on our balance of payments.”
Hussain Jarwar, CEO of Indus Consortium, mailed a detailed note dissecting the issue, identifying policy flaws and suggesting a renewed commitment to move away from expensive, unsustainable sources of energy. He blamed dependence on imported fuel, negligence of indigenous energy resources and narrow vision of policymakers for the sorry situation. “In the FY22-23, Pakistan imported crude oil worth over $17bn and LNG worth $4bn”.
He viewed capacity payment to independent power producers (IPP) as a contributing factor to high power rates. “The severity of this issue can be gauged from the fact that around 80pc of the surcharges are payable under ‘capacity payment surcharge’ in the electricity bills for August 2023.
“According to the National Electric Power Regulatory Authority, the average generation cost of electricity in July 2023 was Rs8.34 per unit. It doubles to Rs16 after incorporating the transmission and distribution charges. However, the per unit electricity price paid by people has exceeded Rs50 per unit owing to capacity payments charged as Fuel Cost Adjustment (FCA).”
In a voice message, Abdul Rafe of Alternative Law Collective proposed devolution of the energy establishment. “The government should support community level off grind production. The sector should be devolved for better results.”
Abdul Aleem, secretary general of the Overseas Chamber of Commerce and Industry (OICCI), messaged. “Under the Paris Agreement, Pakistan has committed to cut carbon emissions by 50pc and achieve 60pc renewable energy by 2030 in nationally determined contributions (NDCs). The OICCI is committed to helping the government achieve the target. To this end, OICCI organised the first Pakistan climate conference in 2022 and submitted a white paper to relevant stakeholders. The OICCI has planned the second climate conference later this year to gauge the progress made and initiate actions to hit the targets.”
Zeenia Shaukat, Director, The Knowledge Forum, articulated the issue well in her detailed response. “The energy policies pursued have been reactive and devoid of any vision and understanding of the population’s needs.
“It led to expensive and unsustainable contracts with IPPs, promotion of an imported-oil dependent energy infrastructure leading to perpetual dollar outflow, and now, as we see, a blind pursuit of coal-based energy direction. These are unaffordable choices, not only in terms of their economic impacts but also in terms of the climate change impacts.
“Energy democracy is the solution, but it needs to be understood as much more than a decentralised power distribution arrangement. Energy democracy spans production, consumption, regulation, and governance, as studies suggest.
“This means the local population should have a choice to select energy options such as coal versus renewables. There are bottom-up energy consumption options suited to end consumer needs and local governments are empowered to promote energy-efficient building codes, vehicle regulations, and change land use for renewables, all reflecting the will of the population. All this requires structural reforms in governance, awareness, access to information, democracy and accountable governance”.
Published in Dawn, The Business and Finance Weekly, September 18th, 2023