Daily Times

The global energy markets are currently in flux and the scene is changing dramatically. Most analysts believe that profound shifts are shaping the way energy is supplied and demanded. They feel that these are not mere occasional aberrations or cyclic adjustments but a fundamental transformation is underway that will have important repercussions for developed and developing countries alike. This arguably poses many challenges to our policy makers, but also offers a rare opportunity to them for reshaping our energy future along secure, affordable, and sustainable lines.

There are striking developments on the supply side. Technological advances and productivity gains, mainly from non-OPEC suppliers led by US shale gas revolution have expanded the global recoverable oil and gas reserves by upward of 15%in the past decade (BP’s Statistical Review of World Energy 2019). These resulted in a supply glut in the global market leading to lowering offuel prices.

Even more striking are the strides made by renewables, mainly solar and wind, leading to their unprecedented growth, even in the face of cheaper and abundant fossil fuel supplies. According to International Renewable Energy Agency (IRENA), in the power sector alone, 94 GW of new photovoltaic (PV) capacity was added in 2018bringingthe global PV capacity to 480 GW. Similarly, 49 GW of new wind capacity was added last year raising it to a total of 564 GW.

The demand for various energy supplies has been sluggish as well as changing in important ways. Spurred by the prevailing price volatility in the fuel market and efforts to reduce energy and carbon intensities of their economies, many countries, especially China, have made important structural adjustments to reduce their fossil fuel demand, thus further contributing to the market volatility.

Society’s push for shifting the energy mix towards cleaner fuels, primarily to counter the threat of climate change, has also resulted in lowering of demand for carbon-intensive oil and coal, making renewable and natural gas as the net beneficiaries.

Meanwhile, the composition of energy demand has been changing significantly too. There has been greater penetration of information technologies (IT) in the production and consumption sectors of society, leading to expansion of less energy intensive services and a corresponding contraction of energy-hungry industrial processes.

Also, on the demand side, two additional trends merit specific mention. One is the significant inroads that electric vehicles (EVs) have made in the transport sector in many countries. The other is the increasing utilization of energy storage technologies, largely for storing electricity, for small, medium, and large scale applications.

Collectively, these trends have acted to dampen the high demand growths seen in the past, in particular lessening the burden on oil supplies. Consequently, the global energy demand grew by just 1.5% per annum between 2007 and 2017. However, 2018 saw an unusual growth of 2.9%, essentially due to extended heat spells around the world. (BP’s Statistical Review of World Energy 2019).

The global energy scene is expected to remain dominated in the future by four strategic drivers.

First, society’s environmental concerns, in particular that of potential climate change and energy’s central role in combating it (over 75 percent of greenhouse gases emissions originate from the energy sector), will continue to force nations to strive for more efficient and less energy- and carbon-intensive development pathways.

Second, renewable will play an increasing and critical role in serving future energy demands in more sustainable ways. Bloomberg New Energy Finance (BNEF) predicts that some 11.5 trillion dollars will be invested worldwide in renewable between 2018 and 2050 (largely solar and wind), two-thirds of it going to power sector.

Suitable financial schemes will be needed to encourage investments in small-scale and distributed energy supply and demand management projects that might otherwise appear unattractive or high-risk to private investors and customers

Third, EVs will gain further ground over time, and will not only reduce society’s appetite for oil but will also contribute significantly in offering backup storage to regulate the demand on power grids. BNEF predicts that EVs will represent 55% of the world’s new light-duty vehicles sales in 2040, some41 million cars.

Fourth, storage technologies will also dominate the energy, especially electricity, markets enabling society to meet its energy demand by relying on stand-alone electric generating systems based on renewable sources, mainly solar and wind.

Pakistan’s policy makers must take notice of these global trends and respond by re-orienting our energy strategies to reflect the new realities. Continued reliance on large-scale, long-lived, capital-intensive, and fossil-fuel based energy structures poses huge risks to the nation as these will be socially, economically, and environmentally unsustainable.

Pakistan’s newenergy vision should build on seven strategic pillars: (i) deployment of clean and sustainable technologies in the country; (ii) production of alternative fuels from sustainable energy sources; (iii) shifting of transport to renewable electricity; (iv) deploying of energy storage technologies; (v) ) seeking interconnection with neighboring electric grids; (vi) maximizing energy consumption efficiencies; and (vii) building a flexible, modular, and enabling energy transportation and delivery infrastructure, mainly intelligent and smart grid.

There is nothing new or novel in the above list. Our energy sector decision-makers may already be aware of these global trends and the options before them. They may already be considering some of these in their future plans. However, the real and critical issue is how quickly and effectively they can put these on ground to replace the currently unsustainable practices which have brought the country virtually to the brink of financial collapse.

In this writer’s view, the following five enabling and complementary efforts will be required to successfully manage the desired transition to a secure, affordable, and sustainable energy future.

First, a clear blueprint (roadmap) will be needed that defines the ultimate shape and structure of the energy sector, by clearly laying down the various building blocks of the structure and how these are to tie and support each other, and charting out a clear, concrete, and time-bound action-plan for realizing the strategic objectives.

Second, an umbrella legal and policy framework will be required to guide the required transition by laying down the nation’s energy sector strategic priorities and establishing ground rules and regulations to discourage short-sighted decision making and encourage projects that are responsive to and supportive of the country’s strategic energy vision.

Third, a supportive R&D setup will need to be put in place in various universities to inform energy sector decision-making. These R&D programs should be tasked to explore the scope of different potential strategies to realize each energy option, identifying any potential hurdles and how these can be overcome, and the potential effectiveness of these strategies.

Fourth, local capacity for planning of efficient, clean, and renewable energy generation, transportation, and delivery schemes will be critical. A necessary ingredient of this capacity building should be acquiring the necessary tools for planning and design of such schemes and also the data and information bases to aid this process.

Fifth, suitable financial schemes will be needed to encourage investments in small-scale and distributed energy supply and demand management projects that might otherwise appear unattractive or high-risk to private investors and customers. These can be introduced from the platform of public utilities to cover, or at least share, the initial costs of such projects and later recovering these costs through customers’ utility bills.

The writer is a freelance consultant, specializing in sustainable energy and power system planning and development