'Over $100b needed for carbon-neutral energy sector'
Pakistan is transitioning away from fossil fuels at a faster pace than many regional economies, with plans to generate 60% of its energy from renewable sources by 2030 to meet its emissions reduction targets.
According to global data compiled by the Energy Institute, the share of fossil fuels in Pakistan's total energy consumption declined by 4.8 percentage points from 86.7% in 2019 to 81.9% in 2023. In comparison, the average decline in fossil fuel usage among low- and middle-income countries during the same period was just 0.8 percentage points (from 90.8% to 90.0%).
Further, recent data released by the National Electric Power Regulatory Authority (NEPRA) reveals that clean energy sources, such as hydropower, nuclear, and other renewables, contributed approximately 54% to the country's energy mix last month. The government's move away from furnace oil, the most expensive source of power, is evident, as it accounted for only 1% of the energy mix in April.
These figures show that, despite macroeconomic challenges, Pakistan currently holds a relatively cleaner energy mix compared to other Asian and low- and middle-income countries. Neighbouring countries like China and India generate approximately 61% and 75% of their electricity from coal, respectively. In contrast, Thar coal contributes only 13% to Pakistan's energy mix and has played a key role in ensuring grid reliability and affordability.
"The energy baseload of Pakistan should be based on indigenous sources of Thar along with renewables to ensure affordability and mitigate geopolitical shocks. Developing economies, including Pakistan, require a balanced transition to renewable energy. Fossil fuels are crucial for short- to medium-term energy stability," said Asif Arslan Soomro, an independent economic and investment analyst.
He added that balancing environmental goals with economic stability is crucial, as an abrupt shift from fossil fuels could disrupt growth and strain an already fragile economy. The energy transition will involve enhancing or transforming the entire energy system, and this significant investment relates to the development and upgradation of infrastructure, such as hydropower plants and transmission systems, as well as the phase-out of existing fossil fuel-based power plants.
Pakistan requires over $100 billion in investment to transition to a carbon-neutral energy sector, with $50 billion needed to achieve its 60% renewable energy target by 2030, according to the climate ministry.
Soomro noted that Pakistan has been ranked as the most vulnerable country to climate change in the Climate Risk Index (CRI) 2025 report, despite contributing less than 1% to global greenhouse gas emissions.
"Even though its climate impact remains negligible, Pakistan has committed to unconditionally reduce its overall projected emissions by 15% by 2030. We have also committed to reduce emissions by a further 35%, conditional on the availability of required external financing," he added.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Recorder
3 hours ago
- Business Recorder
US to explore cooperation with Pakistan on critical minerals, hydrocarbons
WASHINGTON: Secretary of State Marco Rubio said Washington looked forward to exploring cooperation with Pakistan on critical minerals and hydrocarbons, with his comments coming in a statement issued by the State Department on Pakistan's Independence Day. Why it's important Washington and Islamabad hailed a trade deal last month, which Pakistan said would result in lower tariffs and increased investment. Pakistan's Commerce Minister Jam Kamal has said Islamabad will offer U.S. businesses opportunities to invest in mining projects primarily in the southwestern Balochistan province through joint ventures with local companies, providing concessions such as lease grants. Barrick not acting as facilitator between Pakistan, Saudi Arabia for Reko Diq project, says CEO The province is home to key mining projects, including Reko Diq, run by mining firm Barrick Gold and believed to be one of the world's largest gold and copper mines. Key quotes 'We look forward to exploring new areas of economic cooperation, including critical minerals and hydrocarbons, and fostering dynamic business partnerships,' Rubio said late on Wednesday. US market: Pakistan exporters poised to gain notable competitive edge 'The United States deeply appreciates Pakistan's engagement on counterterrorism and trade.' Context Before President Donald Trump's administration, Islamabad's relationship with Washington had cooled in recent years, as the U.S. drew closer to Pakistan's traditional adversary India to counter China's rise, among other factors. Washington also resented Islamabad over Afghanistan, especially under former President Joe Biden's administration, which oversaw a chaotic withdrawal from Afghanistan and the takeover of the country by the Taliban insurgency that Washington accused Islamabad of backing. Pakistan denied the charge. In recent months, Washington's ties with Islamabad have improved. Trump took credit for a ceasefire between India and Pakistan after the Asian neighbors engaged in hostilities in May following an April attack in Indian Illegally Occupied Jammu and Kashmir (IIOJK). Pakistan praised Trump while India maintained that New Delhi and Islamabad should resolve their issues directly without outside involvement. Counterterrorism talks The U.S. and Pakistan held the latest round of counterterrorism talks in Islamabad on Tuesday. Washington has designated separatist militant group Balochistan Liberation Army as a 'foreign terrorist organization.' 'The US-Pakistan counterterrorism dialogue joint statement is one of the most positive and effusive I've seen from these two countries on CT for quite a few years,' Michael Kugelman, a Washington-based South Asia analyst and writer for Foreign Policy magazine, said.
Business Recorder
6 hours ago
- Business Recorder
Japan rubber futures end lower on weaker Tokyo equities, stronger yen
TOKYO: Japanese rubber futures dropped more than 2% on Thursday, pressured by lacklustre Tokyo equities and a stronger yen, though expectations of steady domestic demand helped limit the decline. The Osaka Exchange (OSE) rubber contract for January delivery ended down 7.2 yen, or 2.2%, at 317.2 yen ($2.16) per kg. The rubber contract on the Shanghai Futures Exchange (SHFE) for January delivery fell 230 yuan to settle at 15,635 yuan ($2,179) per metric ton. Japan's Nikkei share average fell 1.45%, pulling back from a record high scaled in the previous session, on concerns over a potential shift in Bank of Japan policy and a stronger yen. 'Rubber prices have been following the Japanese equities market this week, particularly stocks related to domestic consumption,' said Jiong Gu, an analyst at Yutaka Trusty Securities, adding that the strong yen was also a selling factor. Japan rubber futures track oil higher Still, the losses were capped as inventory drawdowns were steady in July, raising views of strong domestic demand, he said. The yen traded at 146.53 against the U.S. dollar, compared with around 147.93 yen during the Asian trade late on Wednesday. A stronger currency makes yen-denominated assets less affordable to overseas buyers. The dollar weakened to a two-week low against a basket of major peers on shifting expectations of U.S. rate cuts, with comments from the U.S. Treasury Secretary Scott Bessent also sparking some wagers on an outsized 50 basis point cut. The front-month rubber contract on Singapore Exchange's SICOM platform for September delivery last traded at 168.3 U.S. cents per kg, down 0.6%.
Business Recorder
11 hours ago
- Business Recorder
Shanghai Composite index flirts with 3,700 level as bullish mood persists
HONG KONG: China stocks edged up on Thursday to a fresh 3-1/2-year high as bullish sentiment continued to build on strong technology gains and renewed investor appetite. At the midday break, the Shanghai Composite index was up 0.2% at 3,690.88 after briefing topping the 3,700 level for the first time since December 2021. The blue-chip CSI300 index was up 0.5%. Leading gains, Shanghai's tech-focused STAR50 index was up 1.8%?, the semiconductor index jumped 2.5% and the insurance sector jumped 2.6%. 'Risk appetite seems to be returning' with margin buying surpassing 2 trillion yuan last seen in the 2015 bull market, Citi analysts said. Delivery of incremental demands-side stimulus is well on track following the Politburo meeting in July, the bank said, as measures such as interest subsidy for consumption loans, mega dam project in Tibet and 'anti-involution' campaign have all helped sentiment. External risks could be largely defused for now' with the U.S.-China tariff truce officially extended to mid-November. In Hong Kong, the benchmark Hang Seng Index weakened 0.1% to 25,597.85. The tech index lost 0.5%. Market heavyweight Tencent briefly touched HK$600 per share for the first time since 2021, after it reports a 15% revenue growth in last quarter on strong gaming performance. Asian fund managers' tone on China has turned more enthusiastic, with the growth outlook at a five-month high and households gradually increasing allocations to spending and investment, Bank of America said in a latest survey. China has recently climbed to the second spot in Asian among fund managers behind Japan, the bank said.
