Net zero and Pakistan’s energy system: no more business as usual

Net Zero is an international agreement for climate action that aims to achieve a balanced state of greenhouse gases in the atmosphere through emissions reduction and emissions removal from the atmosphere.

The Paris Agreement and IPCC (Intergovernmental Panel on Climate Change) underline the importance of net zero to meet the goal of 1.5°C by 2050 - the climate benchmark for world’s average temperature that should not exceed that of pre-industrial times by more than 1.5°C.

The Paris Agreement requires states to “achieve a balance between anthropogenic emissions by sources and removals by sinks of greenhouse gases in the second half of this century”.

Significant reduction in GHG emissions is required to limit the ever-rising global warming, as the climate crisis cannot be tackled without transitioning to net zero. This transition requires clear and sustainable financing mechanisms as well as robust and long-term net zero targets in all major GHG emitting sectors, including energy, transport, and agriculture.

Requiring businesses to go green and carbon neutral by developing Science Based Targets and decarbonising their value chains is critical to not only avoid irreversible ecological catastrophes caused by climate crisis but also fulfil major compliance demands from countries importing from Pakistan.

Climate change affects countries in an inequitable manner thus posing existential threats to the already dwindling economies and vulnerable communities. Therefore, net zero has the potential to be a climate justice tool if its targets redress the injustices fairly (Khosla et al. 2023). Climate-vulnerable but low-emissions countries such as Pakistan are required to strengthen their climate actions and cut their emissions.

However, this unfair burden of emissions removal requires ambitious inclusive governance processes to support a transition towards SDGs.

Pakistan is experiencing massive losses from climate change. Net zero targets, therefore, are crucial for Pakistan to not only enhance resilience to climate impacts but also mobilize the global community to strengthen the component of fairness for mitigating climate change.

Pakistan’s updated climate pledge has set a “cumulative conditional target” of limiting emissions to 50% of what it expects its business-as-usual levels to be in 2030. Moreover, due to mounting global compliance requirements and to retain its status in the global market, Pakistan’s largest export sector - textile industry - has taken promising initiatives to achieve net zero emissions targets in collaboration with other institutions.

Net zero coalition

Net Zero Coalition, also known as Net Zero Pakistan was convened by Pakistan Environment Trust in 2021. It is a collaboration among leading textile firms, non-governmental organizations, sector experts and public institutions to enhance corporate climate action to achieve net zero by 2050. Through this coalition, the private sector aims to accelerate its sustainability efforts, decarbonize value chains and advocate for climate action and justice. Net Zero Pakistan is one of the first initiatives from the global south to be recognized by the UN’s Race to Zero campaign.

Net zero and Pakistan’s energy sector Overview

Globally, three quarters of the GHG emissions come from the energy sector. The International Energy Agency (IEA) states that under the Net Zero Emissions (NZE) scenario, CO2 emissions fall by 40% by 2030 and to net zero by 2050, methane emissions from fossil fuels reduce by 75% by 2030 and solar and wind become leading energy sources of electricity globally. However, this is accomplished only if key pillars of decarbonisation are adopted through range of policy approaches and technologies. These pillars are energy efficiency, behavioral changes, electrification, renewables, hydrogen and hydrogen-based fuels, bioenergy and CCUS (Carbon Capture, Usage and Storage).

Energy sector is the largest GHG emitter in Pakistan. A heavy reliance on fossil fuels for primary energy supply (67.9% in 2022) has exposed the country to energy insecurity, and GHG emissions. Despite Pakistan’s substantial solar and wind potential, these resources have been underutilized, often due to vested interests and unfounded concerns about “surplus capacity”. To achieve the goals set in the 2019 Alternative and Renewable Energy (ARE) Policy and the 2021 National Electricity Policy (NEP), competitive bidding for new climate-friendly power generation projects and discontinuing the old practice of direct contracting and cost-plus tariffs are imperative.

Pakistan’s energy intensity of GDP is comparatively high in the region, signaling substantial room for demand-side efficiency improvements in alignment with the global decarbonization targets. With an energy intensity of 4.6 megajoules per dollar in 2018, compared to 4.4 MJ/$ in India, 2.6 MJ/$ in Turkey, 2.5 MJ/$ in Bangladesh, and 1.8 MJ/$ in Sri Lanka, there is a significant scope for enhancement. Moreover, Pakistan’s energy efficiency improvement rate of 1.2% over 2000–2018 falls short of the SDG7 (Affordable and Clean Energy) global target of 2.6%, emphasizing the need for accelerated progress in this regard.

While Pakistan is already grappling with challenges such as policy inconsistency, resource allocation issues, and a stressed economy, the country must immediately harmonize its economic needs with the overarching sustainable and climate energy objectives. The following approach is recommended to transform the energy sector sustainably to support climate action.

Decarbonise the industry first

In the quest for net zero, electricity is the new oil. Interventions such as advancement in the electrification of public transportation, implementing solar PV for distributed generation, tube well operations, and utilization of space heating and cooling using heat pumps (Heat & Cool ACs) in winter and solar geysers are crucial to establishing a sustainable and environment-friendly electricity system in Pakistan.

Also, exploring the potential for the geothermal as a carbon neutral source of energy will be a win-win situation for all. However, all of this entails investment and government support in the form of reasonable wheeling charges and enabling environment.

Export Industries, on the other hand, can achieve net zero without any financial support except increasing net metering limits to 5MW and expediting wheeling at 1 cent/kWh. It will not only help Pakistan maintain its GSP+ status but also give benefits of net zero products in the EU and GCC augmenting exports with cheaper green electricity and zero carbon products.

Decarbonise the power sector

Ensuring a stable, reliable, and continuous energy supply within an isolated grid, while simultaneously pivoting towards net-zero, necessitates meticulous planning and implementation of contingencies. There’s a requisite for robust infrastructural investments, innovative energy storage solutions, and an adept integration of renewable energy sources to minimize the vulnerabilities associated with isolated grids. Moreover, resilient policies and strategies should be sculpted to ensure that the transition towards decarbonization does not jeopardize energy security, particularly in scenarios where renewable sources may be intermittent or variable.

Conclusion

Pakistani exporters must realise that net zero is no more a voluntary environmental and sustainability initiative; it is a requirement for compliance with the upcoming environmental regulations such as EU’s Carbon Border Adjustment Mechanism (CBAM).

As the EU is placing stringent obligations that require importers to import climate-friendly products with less emissions, achieving net zero is a matter of survival for the industry and exports in the global market. An energy system established on net zero targets is crucial for Pakistan to not only counter climate catastrophe and ensure access to climate justice but to also achieve access to sustainable, equitable, and economically feasible energy sources.

Copyright Business Recorder, 2023