The global and regional perspective of energy to understand the energy crisis is complex, requiring complete analysis of various factors, like prices, supply chain, demand, policy, technology, infrastructure, regulations, environment and geopolitics.
To meet market demand, it is to understand that the energy supply chain is a network of interdependent actors and processes that produce, transport and distribute energy resources. It is also susceptible to many risks, like accidents, natural disasters, sabotage, cyber-attacks and conflicts. However, the ongoing Russia-Ukraine war is a significant geopolitical element that affected not only the worldwide supply chain but increasing the energy demand, chiefly in Europe and other energy-importing countries. The war has reduced the economic growth and income of both countries involved in the conflict, also their neighbours and trading partners.
Researchers said that the resultant rise in energy prices also negatively influenced the developing economies. However, the war has increased the awareness and urgency of diversifying the energy sources and routes of energy supply with improving the efficiency and resilience of energy system.
Pakistan: Consumption Of Coal By Sector (000 metric tonnes) | ||
---|---|---|
Sector | FY2023 (July-March) | Share (%) |
Power | 7,295.3 | 47.32 |
Brick Kilns | 3,321.2 | 21.54 |
Cement/Others | 4,800.0 | 31.14 |
Household | 1.5 | 0.01 |
Total | 15,418.0 |
Around the globe, economies are facing high demand for energy to attain sustainable economic growth. The problem, however, is how to meet the growing demand and reduce reliance on depleting fossil fuels because their frequent utilisation exerts adverse environmental impacts on the socioeconomic progress.
Besides, the volatile price dynamics of fossil fuels and the widening demand-supply gap of electricity calls for an urgent search for cost-effective, environment-friendly and reliable energy resources. These factors result in a growing interest of economies to develop renewable source of power supply. At the worldwide level, experts have largely recognised the significance of the association between energy and economic progress. That being the case, it is usually proved that economic development and energy reinforce each other. Thus, affordable and sustainable energy supplies not only bring prosperity to the population at large but also assists to eradicate poverty by various direct and indirect channels.
Pakistan as a country is not an exception as the statistics revealed that global electricity demand is projected to grow between 62 and 185 per cent by 2050 as against with 2021 levels. Ambitious climate scenarios, wind and solar together generate greater electricity in 2050 than all sources combined in 2021.
Inflation, the energy crisis and rising interest rates, are pushing over 50 countries are at risk of bankruptcy, unless developed countries offer urgent assistance. Approximately 75 million people who presently gained access to energy are probable to lose the ability to pay for it. 100 million people may revert to the use of traditional biomass for cooking. At the current rate of progress, 670 million people will remain without electricity by 2030, which projected to 10 million greater than previous year.
According to the International Energy Agency (IEA) forecast time is to add as much renewable power to avoid energy crisis in the next five years as it did in the past 20 years. This means that total capacity growth of renewable power is set to almost double in the next five years, overtaking coal as the largest source of electricity generation by early 2025 worldwide.
The Energy Outlook 2023 outlines three trends that will eventually hinders global energy transition attempts: marginal growth in coal consumption to compensate for gaps in gas supplies; more extreme weather events will force various states to fall back on fossil fuels; and renewable energy investment will weaken.
Situation in Pakistan
In the Economic Survey of Pakistan during FY2023, country’s total installed electricity capacity stands at 41,000 MW; the percentage share of hydel, thermal, nuclear and renewable is 25.8 per cent, 58.8 per cent, 8.6 per cent and 6.8 per cent, respectively. The share of thermal as a dominant source of electricity supply has fallen over the previous few years, explaining the increased reliance on indigenous sources. On the other hand, against total electricity generation of 94,121 GWh, the share of hydel, nuclear, and renewable is combined as 53.8 per cent, which is a good sign for the economy and the environment.
Statistics also showed that in Pakistan during FY2023 (July-March), total electricity consumption is 84,034 GWh. The household sector is the largest consumer of electricity, consuming 39,200 GWh (46.6 per cent), followed by the industrial sector with 23,687 GWh (28.2 per cent). Moreover, agriculture and commercial sectors consume 6,906 GWh (8.2 percent) and 6,576 GWh (7.8 per cent), respectively, whereas the electricity consumption in other sectors (streetlights, general services, and other government) is 7,664 GWh (9.1 percent).
Sources disclosed the government expects to save Rs 438 billion yearly by implementing the energy conservation plan from July 1, 2023 to avoid the energy crisis. The implementation of the formerly proclaimed plan will save 8,000 MW of electricity while the duty imposed on substandard fans will meet tax worth Rs 15 billion. Moreover, banning the manufacturing and import of substandard bulbs will fetch Rs 23 billion in revenue, Rs 86 billion will be generated from e-bikes and Rs 23 billion will be saved by using LED lights instead of bulbs. Moreover, as per the plan, closing the markets 4.0 hours earlier will help save Rs 62 billion, while permitting 20 percent of the staff to work from home will save Rs 56 billion.