Sustainable energy programme: government to prepare short-term policy recommendations

Federal government has agreed to continue to prepare short-term policy recommendations and awareness-building under ongoing new ADB financing project "Sustainable Energy Efficiency Development Programme".
Under this programme, new government will further develop recommendations for removing the institutional bottlenecks to government-sponsored energy efficiency and conservation programmes and support mechanisms playing a more effective role in nurturing a nascent energy efficiency industry and consumer culture.
Asian Development Bank experts stated that this priority base will help the new Government to identify and rectify existing policy and regulatory anomalies or provisions impeding energy efficiency and energy conservation implementation.
These anomalies may include import duties and sales tax on energy efficiency equipment (eg compact fluorescent lamps, light emitting diodes, high-pressure sodium and metal halide lighting, variable speed drives, co-generation systems, power factor correction capacitors, compressed natural gas conversion kits, computerised engine diagnostic and tune-up equipment, energy control and management devices, thermal insulation materials, and renewable energy equipment, etc) and possible surcharges on trade in inefficient items (eg incandescent lamps, used and reconditioned vehicles and machinery, etc).
This project will assist the government in building leadership and commitment by initiating mandatory public-sector energy efficiency practices in acquiring, constructing, and using new assets where possible (e g roof insulation, compact fluorescent lamp replacement, vehicle fleet tune-up and conversion, thermostat set points, etc) with appropriate budgetary allocations for estimated annual compliance costs.
Presently, the government is looking to develop and implement a phased strategy for undertaking a systematic, broad-based national energy efficiency programme. This would allow for a revival and enhancement of existing energy efficiency capability in the country in the short and medium terms in a sustainable manner, while consolidating and expanding them in the medium to long term.
Such a phased approach would call for a series of sequential and/or overlapping actions that could ultimately be mutually reinforcing and will require unwavering support from the government and the donor community, official sources observed.
Under sustainable energy efficiency development programme, national and international experienced consultants will prepare a set of comprehensive guidelines for the government to develop the national energy efficiency programme.
The guidelines would recommend methods and approaches to undertake to conduct an economic and comparative benefit-cost analysis of key energy efficiency investments in major energy-consuming sectors (industry, buildings, transportation, agriculture, commercial, and residential); prioritise focus areas, and develop realisable quantitative implementation targets and schedules; define verifiable energy efficiency indicators and performance monitoring methods; study energy pricing reforms to highlight tariff and price distortions and disincentives for energy efficiency; and evaluate and refine appropriate tax/subsidy, tariffs, structures, and price-based incentives and penalties (time-of-day tariffs, power factor penalties, smart subsidies, system benefit charges, rate-basing, shared savings, road use charges, etc) for inducing improved energy supply and use practices.
Commenting over the "roadmap and investment plan for energy efficiency development", official sources stated that the new government's commitment to a national energy efficiency programme, the government is looking to adopt a roadmap for implementing the energy efficiency programme. After the in-depth assessment of the energy efficiency market, the consulting firm will identify the potential commercial and economic drivers for energy efficiency, which will be further developed and implemented under the energy efficiency programme. The consultants will develop an investment plan corresponding to the roadmap and devise suitable options and mechanisms for financing energy efficiency projects in Pakistan.
Given the estimated large potential for energy efficiency improvements in Pakistan, several opportunities exist that can be readily tapped into without the need for extensive precursor preparations, detailed policy design, or framework development for achieving immediate payback in terms of energy savings and deferred additional supply requirements. Further refinement and expansion of such options could result in a portfolio of immediate, bankable energy efficiency investment options for Pakistan that may be considered by the government, ADB, and other financing agencies.
Some of these options have been identified in the report Implementing Energy Efficiency in Pakistan completed under ADB's Energy Efficiency Initiative Phase-II.
The consultants will further investigate these investment project opportunities and assist the Government in developing specific project proposals for ADB public-sector financing. The consultants will (i) recommend an appropriate transaction structure and specific funds flow and disbursement mechanism for the investment project; (ii) evaluate the executing and implementation agency's capacity for managing the fund based on such fund flow and disbursement mechanism; (iii) conduct a financial management assessment of the executing/implementing agencies; and (iv) evaluate the identified projects for technical, economic, and financial viability in accordance with ADB guidelines and national and ADB safeguard policies, sources mentioned.
Official sources stated that the improved energy efficiency represents a least-cost development strategy for Pakistan with substantial benefits to the economy. Establishing a dynamic energy efficiency policy and business environment, while financing priority investment projects, is an essential component of Pakistan's energy policy and energy security strategy.
ADB sources stated that this new project would enable the government to develop and implement a comprehensive energy efficiency sector development programme. efficient energy use in all sectors of the Pakistan economy will slow the overall rate of increase of energy demand to more manageable levels and reduce potential shortages. Improved energy efficiency will also (i) reduce large financial outlays required to develop additional energy supplies in the future; (ii) help minimise uneconomical standby capacity required to cater to peak loads; (iii) reduce subsidy requirements; and (iv) defer transmission and distribution system expansion needs, thereby saving public funds and increasing returns on energy infrastructure investments.