Daily Times

Petyr Baelish in “Game of Thrones” famously defined chaos in the following way: “Chaos isn’t a pit. Chaos is a ladder. Many who try to climb it fail and never get to try it again. The fall breaks them. And some are given a chance to climb”. Physics defines chaos as “the property of a complex system whose behaviour is so unpredictable as to appear random, owing to great sensitivity to small changes in conditions.”

Chaos in Pakistan is exceedingly intricate and multifaceted. The nature of multifaceted chaos revolves around 3Es. These 3Es are (Political) Economy, Energy, and Environment. The relationship among these 3Es is such that we are stuck in a vicious cycle, where economic turmoil refrains us from making long-term sustainable decisions, which results in inefficient planning in energy and the environment. This ineffective planning in energy and the environment makes us vulnerable in terms of the economy, and the cycle continues. Currently, Pakistan is facing dollar outflow, rising debt, and chances of economic default as many prominent credit agencies like Finch and Moody’s have downgraded our credit ratings. Consequently, we cannot play with the Ponzi schemes anymore. The debts are expensive for us, and finding creditors is getting tougher and tougher. Thus, the time is ripe or, I would say, it is do or die for us to steer the ship out of these chaotic waters. In Lord Baelish’s words, “some are given a chance to climb”, Pakistan is also given a chance to climb the ladder and escape this chaos.

This article explores two conventional ways to enhance the energy transition and increase the dollar’s inflow in the economy, which is the lynchpin of the solution to our economic problems. So, that energy transition can be made part of economic policy. One is the supply-side solution through climate diplomacy, and the second is demand-side management in the transport sector for green development and energy transition.

Firstly, in climate diplomacy, our foreign corps is required to promote the global drive to address the issue of climate injustice, whereby some countries are facing disproportionate adversities due to climate change. Pakistan has recently faced floods caused by changing weather patterns, resulting in thousands of deaths and billions of dollars in damage. Effective diplomatic efforts can leverage climate financing initiatives such as the Green Climate Fund (GCF), established by the United Nations Framework Convention on Climate (UNFCCC), Just Energy Transition Partnerships (JETPs), the Asian Development Bank’s Energy Transition Mechanism (ETM), and the Bridgetown initiative. These initiatives provide financially constrained nations with a “big push” to break the vicious cycle of energy poverty and a struggling economy.

The ineffective planning in energy and the environment makes us vulnerable in terms of the economy, and the cycle continues.

The initial JETP was established during COP 26 in Glasgow, where France, Germany, the United Kingdom, the United States, and the European Union pledged USD 8.5 billion in funding to South Africa for an energy transition to renewable sources from fossil fuels. Additional countries such as India, Indonesia, Vietnam, and Senegal were announced as partners in the JETP approach in a subsequent round. The donor pool has since grown to include multilateral development banks, national development banks, and development finance agencies. Due to the involvement of a smaller group of actors, JETPs have the potential to achieve progress on the energy transition much more rapidly than through UN climate negotiations, where major oil and gas-producing countries may have the power to block agreements. Recently, at COP27, South Africa unveiled the JETP Implementation Plan (JIP), through which they are targeting 98 billion USD for energy transition financing. Likewise, in terms of the Asian Development Bank’s ETM, Indonesia signed an MOU to retire its 660 MW state-owned Cirebon coal power plant early and replace it with renewable energy sources. Thus, the energy transition is also leading to an inflow of dollars.

Another probable option is to explore the case of debt restructuring through debt-to-nature or debt-to-climate swaps under the Bridgetown initiative. Currently, the time is also ripe in the sense that the world is heeding the concept of climate change. Hence, diplomatic efforts can be steered in this context for an energy transition-embedded economic recovery.

Secondly, there is a need to understand the long-term viability and sustainability of energy transition through the transformation of the transport sector in Pakistan in terms of changing the behaviour of the public. 86 per cent of the total petroleum products are consumed in the transportation sector, which amounts to around $1 billion per month. If we save about 30 per cent each month, we can save $300 million per month and $3.6 billion annually. To achieve this, we can implement the following practical steps:

Short-term Solutions: The first and foremost solution in this regard is the effective and efficient use of the mass transit system. Transit trains are the most efficient mode of transportation, with a global average of 59 Passenger Kilometers per Liter (PKML) of fuel, which means that 1 litre of petrol will carry 59 passengers to 1 kilometre, followed by transit buses with 57 PKML, cars with 18 PKML, and pickup trucks with 15PKML. Mass transit systems can increase efficiency by 280 per cent compared to cars. The second one is to encourage the culture of carpooling. Carpooling calls for optimal use of seating capacity in cars, so, one person in one car is discouraged. Carpooling can increase fuel efficiency from 18 PKML for a car with a single person to 57 PKML. The third solution to reduce the fuel demand is to comply with fuel economy standards: simply complying with fuel economy standards can potentially increase fuel efficiency by 10 per cent, which needs regular and proper maintenance of engines. The fourth solution as short-run solution to effectively manage demand is to slow down the vehicles on highways. For instance, cars running at 120 km per hour consume almost 20 per cent more fuel than cars running at 100 km per hour. Lastly, work-from-home policy: The COVID-19 lockdowns reduced the demand for transportation fuels, which resulted in a significant reduction in import bills. A work-from-home policy can be a beneficial option.

The short-term solution can positively provide much-needed relief to the economy and will also provide the much-needed financial space so that we can aim for long-term solutions in terms of the energy transition, these long-term initiatives include the introduction of electric vehicles (EVs). EVs can effectively replace fossil-fuel-powered vehicles and help reduce import bills. Furthermore, alternative transportation fuels such as green hydrogen can be explored. Hydrogen is acquired by renewable electricity through the process of electrolysis of water. Globally, there is a renewed focus on the development of hydrogen-powered vehicles. Green hydrogen can be a more sustainable solution for the transportation sector. Hydrogen requires a combustion engine and provides a longer range than EVs. However, there are infrastructural limitations, technology transfer, and financial bottlenecks associated with hydrogen vehicles. Although there are positive developments in China in terms of hydrogen vehicle production, this option seems more futuristic than EVs. There is a huge potential in Pakistan to learn from the best practices in this regard from China to develop hydrogen as a heating and transportation fuel in Pakistan.

The concept of chaos is multifaceted, and while it may be defined differently by various disciplines, it remains a challenging phenomenon to deal with. In the context of Pakistan, chaos can be defined through the 3Es – Political Economy, Energy, and Environment – and the interrelationship among them that puts the country in a vicious cycle. This cycle continues with economic turmoil leading to inefficient planning in energy and environment, which in turn makes the economy more vulnerable. To steer out of this chaos, Pakistan needs to enhance its energy transition and increase the inflow of dollars into the economy. Two conventional ways of achieving this are through climate diplomacy and demand-side management in the transport sector for green development and energy transition. Climate diplomacy can leverage climate financing initiatives to provide financially constrained nations with a big push for energy poverty and a bad economy. On the other hand, demand-side management in the transport sector involves practical steps, such as the effective and efficient use of mass transit systems, encouraging the culture of carpooling, complying with fuel economy standards, and slowing down vehicles on highways. With these steps, Pakistan can make energy transition a part of its economic policy and eventually break the vicious cycle of energy poverty and a bad economy. The current time is favourable for Pakistan to do so, given the world’s increased attention to climate change and the need for a sustainable energy transition. By taking advantage of this opportunity, Pakistan can climb the ladder out of the chaos and achieve economic recovery through an energy transition. Moreover, demand-side management may be a more effective measure than the announcement of the provision of subsidies to fuels for poor segments. Although subsidies will provide a cushion, in the long run, effective demand-side management and financing of renewable energy will help us in finding a sustainable ladder to chaos in Pakistan.

The writer is associated with SDPI as an energy consultant. He can be reached at khalidwaleed@sdpi.org and tweets @Khalidwaleed_