Focused R&D: A key enabler to securing Pakistan’s energy future

Author: Dr Shahid Rahim

A fundamental transformation is underway in the world’s energy markets. This trend is reflected in the global Research and Development (R&D) spending as well, which has shifted now, from its primary focus on fossil-fuelled technologies in the 1980s and 1990s to low-carbon, renewable, and distributed technologies and more cost-effective demand-side options. A visionary and focused R&D program holds a key to securing Pakistan’s energy future. In fact, it will also act as a springboard for this purpose.

The global energy markets are currently in flux. There are striking shifts on the supply as well as demand sides. Technical advances have expanded the global oil and gas reserves considerably in the past decade, resulting in a supply glut and lowering of fuel prices. More striking are the strides made by renewables, leading to their unprecedented growth. The society’s push for shifting its energy-mix towards cleaner fuels, to counter the looming threat of climate change, has also resulted in lowering the demand for carbon-rich fossil fuels.

Meanwhile, the composition of energy demand has been changing too. Greater use of information technologies (IT) in every walk of life has led to the expansion of a service-oriented economy; replacing energy-hungry industrial processes. Also, on the demand side, significant inroads are being made by electric vehicles (EVs) in the transport sector and energy storage technologies largely for storing electricity.

The radical shifts in the energy markets have had their influence in the energy R&D spending and focus as well since many countries are striving to readjust their strategic positions to align their energy supply and delivery systems with the rapidly developing new market and technological trends in the world. Consequently, the spectrum of energy R&D has also undergone a complete overhaul.

According to “Energy Technology RD Budgets: 2019,” a report from International Energy Agency (IEA), public sector energy R&D budget for the world reached USD 28 billion in 2018, 68 per cent of which (USD 18.9 billion) came from IEA member governments. The US (35 per cent) and Japan (13 per cent) spent the most in energy R&D among IEA members, followed by France (seven per cent), Germany (six per cent), and the UK (five per cent).

The ratio of overall public energy R&D budget per a thousand units of GDP varied greatly among IEA members, ranging from less than 0.1 USD to almost 1.0 per thousand in 2017. Norway topped the list among IEA members with a ratio of 0.97, followed by Estonia (0.93). Other leading countries were Finland (0.82), Switzerland (0.61) and Hungary (0.54).

Over the last four decades, IEA members’ spending on energy R&D has also become more diverse. Nuclear power, dominant in the 1970s with 75 per cent of total public energy R&D, witnessed reductions to 22 per cent in 2018, comparable to the shares for energy efficiency (21 per cent), renewables (16 per cent) and cross-cutting R&D (22 per cent). R&D budgets on fossil fuels, which were at their highest in the 1980s and early 1990s, have declined since 2013 (15 per cent) to nine per cent in 2018.

R&D spending in low-carbon energy technologies (energy efficiency, carbon capture and storage, renewables, nuclear, hydrogen and fuel cells, storage, and other cross-cutting technologies) in IEA member countries saw a significant increase in 2018 to reach USD 17.8 billion, representing 94 per cent of the total R&D budgets. Spending on non-low-carbon energy technologies (mainly fossil-fuel based) kept its low levels in 2018, just above USD 1.0 billion.

The R&D spending on the energy of a select group of private companies surveyed by IEA reached USD 94 billion in 2018. Excluding transport, two-thirds of the total was in low-carbon sectors. Though the spending by oil and gas companies’ R&D budgets has been sluggish, that of power generation and supply companies continued rising. Four of the top ten are Chinese companies, and five are in the power sector.

Visionary and focused R&D can help a country unwind the complexities around energy challenges and choices, and make informed decisions

In the changing energy landscape, R&D has acquired a new and critical enabling role to any country’s transition to a sustainable energy future. Gone are the days when energy planning was a simple exercise to extrapolate past demand trends into the future and expand the supply accordingly using a suitable mix of conventional options. Numerous choices are now available on both sides of the equation, each with its peculiarities, challenges, and constraints. Visionary and focused R&D can help a country unwind the complexities around these challenges and choices, and make informed decisions.

Pakistan will also need to establish a national energy R&D agenda based on the emerging realities in the global energy markets. This R&D portfolio should not focus on basic science and technology (S&T) issues, but instead on exploring the viability of the available knowledge-bases and technologies in fuelling the development aspirations of the nation in a secure, affordable, and sustainable manner. It should also span the whole spectrum of the energy demand and supply value chain.

At a minimum, the national energy R&D agenda should cover the following:

(1) exploring the patterns of demand for various energy services and how can these be influenced to align them with national objectives;

(2) investigating the endowment of various energy resources in the country and their patterns of distribution;

(3) studying the cost-effectiveness and environmental-compatibility of various energy conversion technologies in harnessing the various resources;

(4) exploring the viability of different means in delivering energy to consumers;

(5) what industrial base will be required to maximise local manufacturing of energy equipment, devices, and systems?

(6) what set of competencies and skills will be required in the country for the planning, design, construction, operation, and management of energy systems? and

(7) what will be the financial issues involved in the above process and how the nation can best deal with them?

A strong and close collaboration between the government, academia, and industry will be required to push for the above energy R&D agenda in the country, as owing to the public-good nature of the above-listed issues, it will be unfair to assume the private sector will invest in such endeavours at its own. The government will need allocating a suitable fund for this purpose to set the energy R&D ball rolling in the country.

To avoid redundancy of effort and facilities and waste of precious human and financial resources, it will be prudent to hand over the execution and management of the suggested national energy R&D program and the associated funds to Higher Education Commission (HEC). The HEC can, after a careful survey of the available capacities and facilities in the country, can allocate components of the energy R&D agenda to different institutions in the country.

One hopes this constructive collaboration between the government, academia, and industry will soon start delivering answers to some complex and perplexing questions on the energy issues that the nation currently faces and the choices available to us. These answers will provide an objective knowledge-base in the country for making informed decisions on the energy issues by the government, policy-makers, planners, and investors.

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

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