Energy security of Pakistan

It is said, “Never waste a good crisis” … and Hilary Clinton added, “Don’t waste it when it can have a very positive impact on climate change and energy security.”

Good thing about Pakistan is that we are never short of crises and surely, we are in the middle of one that is existential in all its forms. We are looking into a pit that appears to be bottomless but there is always hope and we must put our house in order.

Out of many facets of this crisis, one is related to energy, but this crisis has a long history in the making. We have been dealing with a severe energy crisis for over a decade.

Policymakers frequently oversimplify the problem by blaming power outages, when the country is dealing with a severe case of energy insecurity that is both complex and costly. Pakistan’s national security is impeded by a slew of issues both inside and outside the country.

Energy now powers every sector of the economy; as a result, a country’s energy security posture has come to shape its economy, foreign policy, and security strategy.

In the modern times World Wars brought forward the concept of energy security and it was first recognized during the First World War when several battles were fought over energy resources. “God was on the side of the nation that had the oil,” said Prof. Wakimura of Tokyo Imperial University.

Like we are witnessing today in the Russia-Ukraine war, energy is effectively used as a weapon. Similarly in the 1940s, energy embargoes crippled opponents. Furthermore, battles were decided by availability of energy resources. Stalin was quite right when he said, “Engines and octane decided the war”.

The meaning and scope of the term “energy security” have grown significantly over time. Ideally to be energy secure, a country must be self-sufficient in producing its energy and not rely on imported supplies. However, that may not be possible for most of the countries in the world so realistically defining, modern energy security philosophy requires that the energy supply meet three primary criteria; sufficient quantity, consistent quality, and reasonable cost.

For a country’s energy supply to be considered optimal, three things must be present: first, enough energy to meet all its needs; second, uninterrupted service; and third a reasonable cost. Not only does this approach promote energy security, but it also fosters human security and long-term societal growth.

These three pillars of energy security are at the heart of modern energy policies around the world, that’s why we find developed countries’ energy policies based on these fundamental tenets: ensuring reliable energy supplies, encouraging citizens to use less energy overall, and increasing the use of renewable energy sources.

Risks to availability of reliable and affordable energy constitute a non-traditional security threat that every state must take seriously. The provision of reliable and affordable energy supplies for every one is the cornerstone of all national and international energy frameworks. From a geostrategic standpoint, energy security is regarded as critical for national sovereignty.

The unexpected rise and fall in energy costs has shocked the world many times in the last few decades, causing inflation and economic hardship for hundreds of millions of people. While Russia’s invasion of Ukraine is a major contributor to the current insecurity, it’s important to remember that events like these will become the norm rather than the exception in the coming years.

This is because extracting fossil fuels will become more expensive and difficult and those holding these resources would like to take their pound of flesh not only economically but by altering the world order to their advantage. In this new era of volatility, developing countries like Pakistan, which rely heavily on imported energy and struggle to earn enough dollars to meet its external financing needs, face particularly high levels of risk.

For Pakistan the current situation in all the three modern aspects of energy security is extremely unfortunate. When we consider the two interconnected aspects of energy security—adequacy and reliability—it is clear that, while more than a third of the population lacks grid access, those who are connected have been experiencing severe power outages due to the enormous disparity between demand and supply.

Third, the cost of energy does not paint a rosy picture either. The high cost of energy has a significant impact on the monthly budgets of middle-class families. While the cost of energy is a problem in many countries, including the most developed ones, the situation in Pakistan is particularly dire.

More than 10% of the population in several European countries may be suffering from fuel poverty, which has an impact on indoor thermal comfort. We can determine that well over 95% of Pakistanis are fuel-poor using the same criteria.

None of these indicators of Pakistan’s energy security is encouraging, it is further aggravated by our significant reliance on imports, particularly for oil and gas.

Nonetheless, in order to reduce its dependence on imports, Pakistan should have made better use of its indigenous resources of coal and extensive renewable resources of Wind and Solar. Furthermore, we must catch up on the lost decades where we made no efforts to increase water storage capacity through reservoir construction and generating hydel energy.

When we talk of breaking free from imported energy in view of our historical and oft-repeated cycles of foreign exchange shortage we must take nuclear energy very seriously as a major pillar of our energy generation. It has the potential to assist Pakistan in achieving energy security in several ways.

Nuclear energy can diversify Pakistan’s energy mix, reducing the country’s reliance on imported fossil fuels and helping to secure the country’s energy supply. It is a dependable source of baseload power that can help Pakistan balance its energy mix and improve and increase its usage of intermittent renewable energy sources.

As Pakistan has limited domestic oil and gas reserves, much of the country’s energy needs are met through imports. Dependence on foreign exchange reserves makes this aspect even far more important than it appears as a crisis of foreign exchange can derail the energy availability which has a cascading effect on the economy, security and sustainability of normal civic order.

Nuclear energy can help Pakistan reduce its reliance on imported fossil fuels, increasing energy independence and reducing country’s vulnerability to global energy market fluctuations.

Energy security should be prioritized in Pakistan’s energy policy framework and implementation plan. It would be critical to capitalise on indigenous resources, both conventional and unconventional, while also conserving and managing energy. While doing so holistic solutions are preferable to improvised ones like new power plants will be counterproductive unless they can provide affordable electricity.

Though conservation of energy doesn’t appear to be much in the discussion of energy security but it has a very important role to play. One megawatt saved is one less megawatt of energy that needs to be produced through imported fuel.

By conservative estimates Pakistan can save almost 4000 megawatt of energy through conservation efforts. In today’s discussion we would not delve much on this aspect leaving it to be dealt with some other day but energy conservation must be an important pillar of our energy policy.

Energy policies, such as regulations, incentives, and subsidies for various types of energy, have an impact on a country’s energy security.

A transparent and uniform energy policy can provide long-term stability and predictability for energy markets, allowing investments in energy infrastructure and technology to be made. We must examine our previous power policies objectively to determine what went wrong and what helped us. We cannot simply disregard our past performance while investigating the future.

Pakistani policymakers should use the current crisis to rebuild the country’s energy sector. As the cost of the climate crisis rises, financial institutions, particularly multilateral ones, will provide financial and technical assistance to countries seeking to accelerate the clean energy transition.

To fully capitalise on this opportunity, Pakistan must use the human resources and skills developed during the first phase of renewable project development, which provided the country with close to 3,000 MW of energy from wind and solar.

To address the issue of energy security in a meaningful way, a consistent policy environment is required. Politics has held Pakistan’s economy and energy policymaking hostage for far too long. This has resulted in an increase in the country’s risk premium, undermining investor confidence and reducing total investment. As a result, investors have demanded exorbitant and guaranteed rates of return, which we have been accommodating regardless of the country’s energy security or economic health.

Pakistan’s failure to address energy security contributed to the country’s economic crisis. With energy price volatility becoming the norm, stakeholders must work together to implement sensible policies. Anything less will exacerbate the chaos, increasing the likelihood of domestic insecurity destroying the country before climate change can.

Copyright Business Recorder, 2023