Lahore School of Economics

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Pakistan: Energy Sector Issues: Energy Efficiency and Energy Environmental Links

Tariq Husain

Abstract: This paper analyzes Pakistan’s energy sector issues and highlights : (i) the importance of the link between energy and the environment ; and (ii) the central importance of energy efficiency for the high return demand side solutions for meeting the nation’s energy needs. The paper argues that energy planning should integrate the external cost of energy use in deciding about the composition of supply: coal; oil ; gas; hydro; renewable; nuclear; solar.

Currently , external cost of energy does not play a significant role in energy policy deliberations.

The paper utilizes external cost estimates made by the European Commission for Europe, and the US National Academy of Sciences for the US to derive a Total cost (External + internal) ranking of primary energy sources for Pakistan. This estimate is the low end of the cost spectrum because classic pollutants — sulfur dioxide, Nitrogen oxides, carbon mono oxide - in Pakistan are significantly higher than in Europe or the US. 

The paper discusses the experiences of China and OECD countries in increasing energy wide efficiency.The lessons are used to make recommendations for increasing energy efficiency in Pakistan. A central lesson coming out of the analysis is that Pakistan will have to significantly increase its energy related Research and Development (R&D) expenditures in order to adequately address its energy sector issues. A quadrupling from 0.25 % of GDP is recommended over a decade.

Tariq Husain presented the paper in sixth Annual Conference on Management of the Pakistan Economy (DEVELOPMENT CHALLENGES IN THE NEW DECADE). The complete paper will appear in the special issue of the Lahore Journal of Economics.

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posted by S A J Shirazi @ 5/08/2010 11:36:00 AM,

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