Energy 238 (2022) 121849

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Energy
journal homepage: www.elsevier.com/locate/energy

A review and analysis of renewable energy policies and CO2 emissions

of Pakistan
Hassan Qudrat-Ullah a, b, 1
a
Decision Sciences, York University, Toronto, Canada
b
KBS, KFUPM, Dhahran, 31261, Saudi Arabia

a r t i c l e i n f o a b s t r a c t

Article history: Pakistan's electricity sector is facing challenges including the demand-supply gap and frequent power
Received 4 June 2021 outages, increasing power-related fuel import bills, and increasing environmental emissions. The elec-
Received in revised form tricity sector is the biggest contributor to the overall emissions in Pakistan. To meet its carbon dioxide
18 August 2021
(CO2) emissions reduction target as agreed in the Paris Agreement, Pakistan has initiated various energy
Accepted 19 August 2021
Available online 23 August 2021
policy incentives and mechanisms to support renewable power generation. However, currently, the share
of thermal generation in the electricity supply mix is over 63%. Therefore, it necessitates having a log-
term assessment of these policy incentives and mechanisms to ascertain whether or not the CO2
Keywords:
Electricity
emissions reduction target will be met. We utilized a dynamic model to analyze the endogenous in-
CO2 emissions teractions among generation technologies, fuel resources, demand, capital investments, CO2 emissions,
Paris agreement production costs, and electricity prices. We developed and evaluated a reference scenario focused on
Nuclear power current policies and local conditions and an alternate scenario focused on the use of indigenous re-
Renewable energy sources and low carbon technologies. Contrary to the expectations of policymakers, the reference sce-
Indigenous energy resources nario neither helps Pakistan to achieve the CO2 emissions reduction target by the compliance year 2030
nor provides any relief to the users of electricity. On the other hand, in an alternate scenario, Pakistan can
sustainably achieve the emission target and the users of electricity can save about 23% per annum on
their electricity bills. Finally, policy implications and recommendations for the policymakers are pre-
sented that can equally be applied to other countries with similar electricity system dynamics.
Crown Copyright © 2021 Published by Elsevier Ltd. All rights reserved.

1. Introduction
Whether one believes or not in climate change per se, the
damaging effects of GHG emissions are becoming self-evident. For
instance, the increasing occurrence of thick smog-cloud over
several major cities of the world for several months every year (e.g.,
in China [1] and rising healthcare costs due to carcinogenic emis-
sions, devastating droughts, and floods [2,3] have become threat-
ening challenges for the welfare and economic development of
nations across the world. Consequently, with the adoption of the PA
in 2015 and its predecessors, the Kyoto Protocol in 2005, countries
have become more conscious of CO2 emissions reduction and the
development of different forms of low-carbon generation tech-
nologies [4].
Pakistan, a developing country with rising energy demand and
E-mail addresses: hassanq@yorku.ca, hassanqu@gmail.com.
1
Permanent faculty.
with a continued crisis in the electricity supply system [5e7] has
also ratified PA in 2016 [8]. Pakistan faces the classic dilemma: the
rising need for energy for the growth of its population and economy
and meeting the target of decreasing emissions by 5%e2012 levels
by 2030 as specified in Pakistan's INDC submitted in 2016 [9]. The
energy sector of Pakistan is the largest contributor to CO2 emissions
(i.e, 46% of overall emissions of 342 MtCO2e in 2012 [10]. The
electricity sector of Pakistan contributed about 67 about 64 MtCO2
in 2030. Since the power sector is one of the major contributors to
environmental emissions in Pakistan and has prospects of abating
emissions by undertaking alternative measures [11].
There are various incentives and mechanisms used globally to
reduce power sector CO2 emissions both on the supply side (e.g.,
renewables, nuclear, and CCS technologies) and demand-side (e.g.,
lower consumption rates and use of highly efficient equipment and
appliances). For instance, in the case of the US, some notable CO2
emission reduction mechanisms include (i) the abolition of sub-
sidies for traditional electricity technologies, (ii) accurate pricing
for electricity, (iii) introduction of country-wide feed-in-tariff, and

https://doi.org/10.1016/j.energy.2021.121849
0360-5442/Crown Copyright © 2021 Published by Elsevier Ltd. All rights reserved.
H. Qudrat-Ullah
Abbreviations
Alternate and Renewable Energy ARE
Autoregressive distributed lag ARDL
Carbon Dioxide CO2
Carbon dioxide capture storage CCS
China-Pakistan Economic Corridor CPEC
Grams of carbon dioxide equivalent per kilowatt-hour g CO2e/
kWh
Greenhouse gas GHG
Independent power producer IPP
Integrated Gasification Combined Cycle IGCC
Intended Nationally Determined Contributions INDC
International Energy Agency IAE
International Renewable Energy Agency IRENA
Logarithmic Mean Divisia index LMDI
Mean squared error MSE
Meter m
(iv) creation of a national fund for public awareness [12]. On the
other hand, in the case of Europe, Forster et al. found that supply-
side technologies using renewables, with wind power as the
dominant source and high-efficiency measures on the demand-side
will help achieve the desired lower CO2 emissions [13]. However,
the share of solar energy in the overall supply-mix of energy could
exceed 10% by 2050, and this share of renewable supply will pro-
vide little help in the needed reduction (i.e., to the order of 75%) in
the carbon intensity of the global energy system [14]. The inter-
mittent nature of renewables’ supply of electricity adds to the dif-
ficulty of using it as the sole source for electricity supply in the
world.
The other major alternate for power-sector CO2 emission
reduction is nuclear power. Nuclear power plant operations do not
emit CO2 emissions. Even based on the life cycle assessment of
emissions, it is shown that on average GHG emissions, compared
with conventional coal-based power production, are lower around
two orders of magnitude in the case of nuclear power [15]. Despite
the challenges of public acceptance, globally 10.4% of total elec-
tricity was generated through nuclear power [16]. According to the
WNA, global nuclear generation has risen for the past seven
consecutive years, with an output of 311 TWh higher than in 2012
[17]. Also, compared with renewables (e.g., hydropower (39.1%),
wind (34.8%), solar (24.5%), nuclear power plants have the highest
capacity factor of over 80% [18]. The role of nuclear power in CO2
reduction, therefore, appears to be promising.
In the case of Pakistan, it has a huge potential for renewable
energy and also experience and indigenous capability to operate
nuclear power plants. Pakistan has solar (5.3 (kWh/m2/day)), hydro
(59,000 (MW)), and wind (131,800 (MW)) energy [19]. When it
comes to nuclear power, Pakistan has developed an indigenous fuel
supply for its nuclear power plants and is currently operating five
nuclear power plants successfully [17]. Also, in the human resource
sector related to nuclear power, Pakistan is self-sufficient [18].
Towards achieving the goal of CO2 emission reduction, in addi-
tion to their commitment to having power-related CO2 emission to
325 Mt CO2 by 2030, policymakers in Pakistan have enacted specific
energy policies aimed at the development of renewable electricity
supply. Table 1 provides key features of these policies [20e22],
hereafter called RE Policies of Pakistan (REPP).
Despite the huge potential of renewables and the plan of adding
more to nuclear power capacity, Pakistan is still heavily using fossils
(e.g., 67% thermal electricity generation in 2019) [23]. Contrary to
2
Energy 238 (2022) 121849
Metric tons of carbon dioxide equivalent MtCO2e
National Climate Change Policy NCCP
National Transmission and Distribution Company NTDC
Near-Zero Emission Technology NZET
Non-autoregressive distributed lag NARDL
Operation & Maintenance O&M
Pakistan Energy Yearbook PEY
Paris Agreement PA
Pressurized-Fluidized-Bed Combustion PFBC
RE Policies of Pakistan REPP
Renewable Energy RE
Root Mean Squared Percent Error RMSPE
System dynamics SD
The United States Energy Information Administration EIA
Tons of Oil Equivalent TOE
Transmission and Distribution T & D
World Nuclear Association WNA
the expectation of IPPC that in the best-case scenario, greenhouse gas
emissions peak by 2020 [24], CO2 emissions in Pakistan are on the
rise. Also, the CPEC project is adding several coal-fired power plants
during 2020e2023 [25], apparently a move counter to CO2 emis-
sions reduction initiatives. With this evidence of mixed perfor-
mance, there is a compelling need for a systematic long-term
evaluation of REPP. The objectives of this study, therefore, are to (i)
provide an integrated, system-wide assessment and analysis of the
dynamics of the electricity systems of Pakistan, and (ii) identify an
electricity supply mix for Pakistan to meet its CO2 emission
reduction target affordably. These objectives will be realized by
addressing the specific research questions: (i) will staying-the-
course allow Pakistan to meet the PA-based CO2 reduction tar-
gets? and (ii) under the socio-economic and environmental con-
straints, what would be the best electricity supply mix to meet or
exceed the PA's desired target level of CO2 emissions?
The novelty of this research lies in its contribution to the
renewable energy policy domain by addressing the endogeneity of
contributing factors to power-related CO2 emissions; we utilized a
dynamic model to analyze the system-wide endogenous in-
teractions among generation technologies, fuel resources, demand,
capital investments, CO2 emissions, production costs, and elec-
tricity prices.
2. Pakistan's electricity sector: an overview
Pakistan's energy sector witnessed privatizations in the early
1990s [19,26]. IPPs invested predominantly in fossil-based elec-
tricity generation projects [20,25e27]. However, the supply of
electricity has almost always lagged the electricity demand (e.g., a
shortfall of 1318 (MW) in 2005, 5716 (MW) in 2010,5201 (MW)
2015, and 5000 in 2019) [27,28]. Most of its electricity supply is
based on CO2 emission-intensive fossil-based generation (see
Fig. 1). Investments in renewable energy started in 2008 only after
the promulgation of the 2006 RE policy [11,21,28]. It appears that
although nuclear power (8%) and renewables (4%) impacted the
supply mix of electricity in 2019, they hardly replaced fossil-based
generation. Instead, hydropower faced a decline of 9% due to
weather and technical issues with hydropower stations [23].
However, the electricity supply mix is dominated by thermal power
and during 2018e2019, more than 10% of electricity was produced
using expensive imported oil and more than 12% of the generation
was based on highereCO2eemitting coal technology [28].
H. Qudrat-Ullah
Table 1
Key features of energy policies aimed at CO2 reduction.
Energy Policy Key Characteristics
RE 2006 Policy [20]
Relief of customs duty or sale tax for machinery
import for RE projects.

No income tax on RE projects' earnings is charged.

Easy repatriation of equity and dividends

Raising local and foreign finance is allowed.

Non-Muslims and non-residents shall not pay Zakat
on dividends.
2012 NCCP
Encourage the development and promotion of
of Pakistan [21] hydropower generation.

Promote the development of renewable energy
resources.

Plan the necessary expansion of nuclear power for
Pakistan's energy security.

Mandate all new coal-fired power plants to perform
at a high-efficiency level.

Introduce a carbon tax

Promote and provide incentives for increasing the
low-carbon fossil fuels, and develop indigenous
technology for CO2 capture and storage.
National Power Policy
Introduce competitive bidding to lower the cost of
of 2013 [20] electricity.

Reduce subsidies.

Shift to low-cost fuels (i.e., local coal and hydro
projects)

Make IPPs responsible for their fuel supply

Manage the loss/theft of electricity effectively.
ARE Policy
Have a 20% of the generation from ARE technologies
of 2019 [22] by 2025 and a 30% by 2030.

Lower the average basket cost of generation in
Pakistan.

Promote the exploitation of indigenous energy
resources.

Use an open bidding process for tariffs.

Create a national carbon credits trading scheme.
On the demand side, the annual growth rate of electricity con-
sumption is 5.6% [23], 2020). The ongoing increase in demand for
electricity is natural due to the increase in economic activity and
population of Pakistan [6,26]. The domestic sector is the largest
consumer followed by the industrial sector, as shown in Fig. 2.
Fig. 1. Dynamics of electricity supply mix for 2008e2019.
3
Energy 238 (2022) 121849
Therefore, the price of electricity is critical for the successful
adoption of renewable and energy-efficient technologies, equip-
ment, and appliances in the electricity system of Pakistan.
Overall, the electricity supply system is a complex system due to
the dynamic and interactive nature of its constituting sectors. For
instance; increased profitability of a utility can cause more R & D
spending, which in turn, after some delays, can reduce cost (e.g.,
some processes become leaner and hence cheaper), eventually
increasing the profitability-a virtuous cycle or a positive feedback
loop. On the other hand, IPPs often want a quick return on their
investments. Depending on how the investment is being depreci-
ated financially, when the cost of electricity generation from a
certain technology is relatively high (e.g. hydro is more capital-
intensive than oil-fired power plants), the price of electricity is
set relatively high. This is a common risk-averting strategy of IPPs)
[26,29]. This risk-averse strategy encourages IPPs to invest in fossil-
based technologies, which can result in the suppression of the
share of investments for the capital-intensive technologies-a vi-
cious cycle. These feedback loops of an electricity system together
with its inherent delays (e.g., in construction) give rise to the dy-
namics in the supply mix and environmental emissions. An explicit
representation and accounting for these system-wide key struc-
tures of the electricity system are critical for a long-term assess-
ment and analysis of an energy policy.
Regarding nuclear power, Pakistan Atomic Energy Commission
(PAEC) is responsible for the planning, implementation, operation,
and maintenance of nuclear power plants. Fig. 3 depicts the dy-
namics of nuclear power generation in Pakistan. With a mere 3%
share in the supply mix in 2008, it has gained an 8% share now in
2019. Although a total of 1430 MW of nuclear capacity is installed,
as given in Table 2, comprising of five nuclear power plants. Two
plants are under construction with 1100 MW installed capacity
each [30,31], and they have a very ambitious plan of building
8800 MW by 2030 and 40,000 MW by 2050 of nuclear power by
2050 [4,32,33]. In a recent empirical study, Mahmood et al. [34],
found that nuclear power, with improved safety measures, is the
way forward for Pakistan to control power-related environmental
emissions.
H. Qudrat-Ullah Energy 238 (2022) 121849

Fig. 2. Dynamics of electricity consumption by sector for 2008e2019.

Fig. 3. Dynamics of nuclear power generation in Pakistan.

2.1. A brief overview of studies focused on Pakistan's power-related
CO2Emissions
Table 3, below, list all the 15 key recent studies which are
focused on Pakistan's power-related emissions. Overall, all of these
studies address important issues about power-related CO2 emis-
sions in Pakistan (e.g., accounting for households' CO2 emissions
[35], eradication of CO2 emissions with nuclear or renewable en-
ergy [36], power-related emissions and intensity of CO2 emissions
[37], etc.), however, they lack on several fronts:
(i) These studies have not provided a systematic, long-term
evaluation of REPP and INDC's role in CO2 emissions.
(ii) They lack an explicit description of how increasing the
expansion of non-fossil resources aid in achieving the PA
targets in their analytical models,
(iii) They did not account for both the supply-side and the
demand-side factors simultaneously,

Table 2
Nuclear power status of Pakistan.

Nuclear Power Plant Capacity (MW) Electricity Generation in 2019 (GWh) Human Resource

1. KANUPP-1 100 175 Local

2. CHASNUPP-1 325 2294 Local
3. CHASNUPP-2 325 2448 Local
4. CHASNUPP-3 340 2694 Local
5. CHASNUPP-4 240 2298 Local
6. KANUPP-2 1040 Under construction Local
7. KANUPP-3 1040 Under construction Local
8. CHASNUPP-5 1000 Proposed* Local
9. Coastal Nuclear Power 2200 Proposed* Local
Hub Balochistan

Source is (Mengal et al., 2019; NE, 2019).

4
H. Qudrat-Ullah Energy 238 (2022) 121849

Table 3
Key recent (2014e2020) studies on Pakistan's power-related CO2 emissions.

#-Study Modeling Scenarios/ Projected Main Findings

Approach Range 2030 CO2

1- [38] CGE model Yes/2009 No The impact of the carbon tax on GDP is negative but resulting reductions in pollutant emissions are relatively high.
e2050
2- [6] Survey NO No CO2e per month for household include: domestic vehicles ¼ 0.53 Gg CO2e (69%), electricity ¼ 0.15 Gg CO2e (19%) and
cooking ¼ 0.098 Gg CO2e (1 %).
3- [36] NARDL No No More nuclear or renewable energy technologies can help in the eradication of nd CO2 emissions.
4- [35] Econometrics No No Energy insecurity is damaging to the environment and socioeconomic conditions.
5- [28] Review study Yes/2010 No Biomass energy can help lower CO2 emissions and increase the share of renewables by 5% in 2030.
e2030
6- [39] ARDL No No RE has a negative and significant effect on CO2 emissions.
7- [40] Least Square Yes/1975 No The inverted U-shaped Environmental Kuznets Curve (EKC) hypothesis for per capita income (and Foreign Direct
estimator e2035 Investment (FDI) inflows) and per capita CO2 emissions in Pakistan are not supported.
8 - [4] LEAP Yes/2013 Yes/123.3 The government's power expansion plans will emit relatively more CO2 emissions.
e2035 MtCO2
9- [37] LMDI & scenario Yes/1978 Y Yes/198 Population and intensity of CO2 emissions caused power-related emissions.
analysis e2035 MtCO2
10- [41] TIMES Yes/2013 Yes/168 Coal-based electricity generation would be a major source of emissions leading to the highest amount of air
e2035 MtCO2 pollution.
11- [25] Systematic No No CO2 Emissions mitigation can be achieved through CCS technologies.
review
12- [42] LMDI No No Policymakers should efficiently enhance the decoupling between Pakistan's transport CO2 emissions and GDP.
13- [43] ARDL No No Nuclear power has an insignificant effect on CO2 emissions.
14- [7] Review study No No Pakistan has enough potential for renewable energy resources to overcome the energy, economic and ecological
problems.
15- [44] Grey Relational No No Population contributes more to intensifying CO2 emissions in the transportation sector of Pakistan.
model
16- [80] Simulation No No With increasing the emission penalties, the LCOE decreases, and the performance of the fuel cell and thus the diesel
fuel consumption increase.

(iv) They hardly account for time lags of electricity supply system
The interactions (and feedback) between the electricity system
(e.g., construction delays, regulatory approval delays, fuel are rarely modeled.
delivery delays), and
They do not distinguish between and account for the physical
(v) Feedback and interactions among variables are responsible (e.g., in construction of power plants) and the information de-
for creating the dynamics of policy incentives, over time. lays (e.g., in regulatory approvals) explicitly in their models.

The elasticity of substitution between the competing electricity-
Also, the methodologies of these sixteen studies (e.g., ARLD, production technologies is often assumed constant.
LDMI, TIMES, surveys, econometric, simulation, and review-based
Perceptions of people (e.g. regarding the adoption of renewable
analyses) have limitations for addressing the highly dynamic and technologies) are not explicitly modeled.
complex problem: long-term assessment of REPP which requires
The desired and actual state of variables of the electricity system
accounting for (i) the system-wide structures of the electricity (e.g., desired and actual stock of production capital) are rarely
systems (e.g., feedback loops and delays) responsible for the dy- distinguished in their models.
namic behavior of the system (e.g., the dynamics of supply mix and
Non-linear responses to actions (e.g., the effect of rising elec-
CO2 emissions) (ii) the PA's targets, simultaneously. This research, tricity prices on industrial consumption) are not explicitly
therefore, intends to fill this gap by explicitly accounting for these recognized and modeled.
issues in our dynamic model.
For an effective policy assessment and design support, the
required modeling approach needs to address the above-
3. Methods and materials
mentioned limitations. Among the various methodologies, the
system dynamics approach [48], stands out for its ability to
3.1. Modeling approach
Refs. [20,49e51]:
Although various modeling approaches (e.g., linear program-
(i) capture the essential feedback structures underlying any
ming, input-output molding, optimization, general equilibrium
energy system,
modeling, econometrics, etc.) and models (e.g., LEAP, MARKAL
(ii) account for the endogenous complexity of energy systems
GAINS, TIMES, etc.) have served the energy domain well
which is considered responsible for the behavior of the sys-
[4,20,45,46,70], the analysis of an energy policy in the context of
tem, and
ongoing challenges of climate change and energy security requires
(iii) link the observable patterns of a system (e.g., power-related
an integrated modeling approach capable of representation of the
CO2 emissions) to micro-level structures and decision-
dynamics of energy, economy, and the environment. However, a
making processes (e.g., investments in RE technologies).
critical look at these traditional techniques reveals several meth-
odological limitations and constraints including [20,29,47]:
System dynamics (SD) models have been developed and applied
to national energy policy design and evaluation [20,50,52]; energy

They rarely represent the non-linear relationships among
investments and uncertainty [50,53e55]; inter-fuel substitution in
various variables of the electricity system (e.g., increasing elec-
OECD-European electricity production [56,57]; privatization of
tricity tariffs, after a while, will lead to relatively different
electricity industry [45,58e60]; power-related emissions [
sensitivity levels for industrial and residential users)
5
H. Qudrat-Ullah
[50,52,61], 62], energy efficiency and electricity substitution by gas
[63,64]; and policy assessment and design in the natural gas in-
dustry [65,66]. Although these existing SD models address various
issues regarding electricity policy and power-related environ-
mental emissions, none of these studies fully capture the under-
lying conditions of the electricity sector of Pakistan. In this research,
therefore, we will address our research questions concerning
Pakistan's power-related emissions and its compliance with the PA-
based targets using a modified SD model.
3.1.1. The dynamic model: MDESRAP
We used an existing SD model, MDESRAP, which was developed
and applied for the assessment of Pakistan's earlier energy policies
[20]. The detailed mathematical equations of this model are pub-
licly available in Ref. [55]. To address our current research ques-
tions, this model is revised and is shown in Fig. 4 along with its
inputs and outputs.
There are three major inputs to the model, the GDP of Pakistan,
case-specific parameters, and two scenarios (please see sections
3.2.2 and 3.2.3). The dynamic behavior of MDESRAP primarily arises
due to key accumulations (or stocks) present in the various sectors
of the model. For instance, the Demand sector endogenously gen-
erates the electricity demand. Depending upon (i) the electricity
demand-supply gap from the Capital sector, (ii) availability of fuel
resources from the Resource sector, and (iii) policy regulations and
incentives from the Production and the Environment sector, the In-
vestment sector accounts for the investments in various technolo-
gies and adds new generation capacity. It should be noted that the
substitution of technology is based on the least-cost approach. The
construction of power plants takes time and these delays are
explicitly modeled in MDESRAP. Once the generation capacity is
ready and fuel is available at the site, the production of electricity
begins. The Production sector also accounts for the price of elec-
tricity endogenously factoring in the relevant costs (e.g., capital and
fuel costs) and IPPs’ investment returns. Based on the nature of
technologies in the supply mix, environmental emissions accrue
over time. The Environment sector, using a life cycle approach, keeps
track of the accumulation of CO2 emissions and accounts for the
associated clean-up costs. Based on the interactions among its
structural elements (i.e., various feedback loops and delays),
MDESRAP provides various outcomes including (i) electricity pri-
ces, a key factor in the affordability aspect, (ii) the evolving
Fig. 4. Research methodology flow chart and overall models' structure.
6
Energy 238 (2022) 121849
electricity supply mix, and (iii) the amount of power-related CO2
emissions accounting for the PA-based targets, the key factor in the
availability of cleaner and sustainable supply of electricity.
3.1.2. Key modifications of MDESRAP
As MDESRAP was originally developed in 2001 to assess Paki-
stan's energy policies, it was natural to revise it and incorporate
new features capable of accounting for the development regarding
Pakistan's renewable energy policies and its agreed commitments
of CO2 reduction. Here are the major modifications:
- To reflect the variability of substitution among completing
generation technologies, the substitution mechanism is
modeled as follows:
Depending upon the total cost (TC) of each technology, we apply
a multinomial logit (MNL) model to obtain the share of each
technology (ST). we focus, in addition to the standard cost ele-
ments, on the investment incentive premium (IP), the import de-
pendency premium (DP), the environment premium (EP) for each
technology, and we lump the rest in a power plant technology
choice premium (TP). The standard cost element includes capital
costs (CC), Operation and Maintenance costs (OC), and fuel costs
(FC). We have built this modified total cost structure, with the in-
clusion of the three kinds of premiums, based upon the work of
[56]. The model structure allows the user to switch on or off any
cost elements, as and when needed. Here is the mathematical form
of it:
.X
STi ¼ expða * TCi Þ expða*TCi Þ
Where, TCi ¼ CCi þ OCi þ FCi þ IPi þ DPi þ EPi þ TPi;i¼ 1 to 7; ais a
distribution parameter and accounts for the local distribution of
power plants.
When a takes an extreme value, then the aggregate choice of the
whole sector (e.g., all the IPPs) for a technology mimics the choice
of an individual IPP. The lower values of a represent greater vari-
ation between the individual choices and the aggregate (i.e., sector)
choice.
- Instead of only three technologies (i.e., hydro, thermal, nuclear),
the revised MDESRAP explicitly accounts for the dynamics of
H. Qudrat-Ullah Energy 238 (2022) 121849

seven technologies: hydro, coal, gas, oil, nuclear, solar, and
wind;
- Pakistan's PA-based targets for the reduction of power-related
CO2 emissions are explicitly modeled;
- A life cycle approach for the assessment of power-related CO2
emissions is modeled;
- CPEC-based power plants, predominantly coal-fired, for the
period 2020e25, as projected by NTDC [67], are included;
- Various policy incentives are explicitly modeled (e.g., attractive
bulk power tariffs).
3.1.3. MDESRAP's base Year's parametric values and key
assumptions
As is common with most modeling-based studies, a significant
amount of data and its pretreatment was undertaken during the
development of this revised MDESRAP. As RE 2006 was the first
major renewable policy in Pakistan that was implemented in the
year 2008, therefore we selected the year 2008 as the base year for
this study. Table 4 lists Pakistan's power plant generation and other
parametric values for each technology. Table 5 described the cost
data of the generation technologies. Key modeling assumptions
are:

T & D losses are assumed to decrease from 17.37% in 2013 to
12.5% in 2020, and about 11.7% by 2035, as projected by the
NTDC [67].

Given the conditions of the power sector of Pakistan, the reserve
margin is assumed as 10% for the modeling period 2080e2035.

Two nuclear power plants each with 1100 MW capacity which
were to be operational in 2020 and 2021 but are delayed now
[30] and can be available by 2025.

An additional coal-based generation capacity of 6600 MW by
2025, as per NTDC's projection regarding CPEC projects, is
considered.

The ARE policy of 2019's target of 20% RE generation in the
supply mix by 2025 is also accounted for in the model.

GDP of Pakistan is taken as an external variable and the World
bank database is used.

Cost data for generation technologies are based on levalized
costs.

As per NTDC's projections, a carbon tax of US$ 31/tCO2 is
considered effective from July 1st, 2025 [67].

The annual exchange rate as published by the State Bank of
Pakistan is used to cover US$ into Pakistan Rupees and (vice
versa) and US$ is indexed to the base year.
3.1.4. The revised MDESRAP's validation
The validity of simulation models is critical for their increased
acceptance and applications. There are several procedures and tests
available, both for the structural validity (e.g., extreme condition
test, and dimensional consistency test) and behavioral validity (e.g.,
anomaly behavior test and comparing means test) [49,77,78]. The
revised MDESRAP was successfully subjected to these procedures
and the details are published in Refs. [20,78]. However, to
demonstrate the historical fits, here we describe how RMSPE and
Theil'sinequality statistics” were applied to the revised MDESRAP
to ascertain its validity. We used the data for the period from the
year 2008 to the year 2019, during which key RE initiatives (e.g.,
REPP) and commitments towards CO2 emissions reduction (e.g., PA
and INDC) occurred. For this example, we have selected the vari-
able, “electricity supply” which impacts all other sectors of the
electricity system.
Fig. 5 shows how did the revised MDESRAP reproduces Paki-
stan's experience regarding “electricity supply” relatively accu-
rately. Table 6 presents the error analysis for this variable.
The RMSPE together with Theil's inequality statistics provides a
measure of the total error and presents its distribution into bias
(UM), unequal variation (US), and unequal co-variation (UC) com-
ponents [49]. In general, small total errors indicate confidence in
the model and large errors might point to the internal inconsis-
tency in the model.
For our selected variable, electricity supply, the RMSPE is 4%. This
small error indicates that the variable tracks the behavior quite
accurately. Of this small error, the error decomposition reveals that
3% of MSE is due to bias, 37% is due to unequal co-variation and 60%
is due to unequal variation. The plot of error is presented in Fig. 6. It
shows that the electricity supply, after beginning with a shortfall of
about 3% in 2010 and of about 2% in 2012 and 2013, improved with
a rise of 12% in 2015. After 2015, the supply remained high at an
average of about 5% until 2017 where it again lagged the actual
supply by a magnitude of 5%. Finally, it begins to overestimate the
actual supply by the year 2019. This analysis indicates that the
simulated supply tracks the underlying pattern in the historical
electricity supply almost accurately but shows little divergence on
point-by-point comparison.
One explanation of this behavior is the assumption that elec-
tricity supply is based on the average supply of all the power plants,
not on their peak (or under) performance. However, this model
could easily be “tuned” to replicate the historic supply. As the
purpose of our dynamic model was not to make point predictions
but to perform a long-term policy assessment and analysis, such
tuning in the parameters of the model would hardly enhance the

Table 4
Power Plants Data [31,68e70].

Power Plant Technology Average Life (years) Generation (GWh) Capacity (MW)a Capacity Factor (%)a Utilization Factor (%)a CO2 emissions (g CO2/kWh)

Hydro 80 28,707 6480 98 46 12.8a

Oilb 30 30,818 8027 63 58 1502.86b
Coalc 30 136 50 80 23 790c
Gasd 30 32,923 40,970 85 60 531d
Nuclear 40 3077 462 79 85 12.51
Wind 20 0 0 33 22 11.38
Solar 25 0 0 35 29 11.38
a
Capacity factor and utilization factor are average values based on the data of all the plants in operation in Pakistan (for Wind and Solar the source is [71]; the majority of
hydro generation is reservoir-based.
b
Majority of oil is furnace oil (imported) and large transportation distances are the factor in the higher emissions.
c
Majority of coal plants use locally available coal (transportation need is little).
d
Majority of gas-based plants are single-cycle plants and use natural gas. Currently, nuclear waste is kept in pools at the site of the power plants in Pakistan, a relatively
cheaper and low CO2 emitting operation [72].

7
H. Qudrat-Ullah Energy 238 (2022) 121849

Table 5
Cost of generation technologies [23,34,73,74].

Power Plant Capital Fixed O&M cost Variable O&M Key Parametric Values and Assumptions
Technology costa ($/kW-year) cost ($/MWh)
($/kW)

Hydrob 680 19.8 0.0
RE and nuclear technologies' data is from IRENA, as they do not report on fossils
Coal 1072 40.41 2.43e
The Discount factor is 10% for the duration of this study
Gasc 536 54.4 14.04
Data on Coal, Oil, and Gas power plants are based on IEA, EIA, PEY, and the least values are used to
Oil 710 6.97 4.48 account for the local economic conditions (e.g., labor cost, transportation is cheaper).
Nuclear 2805 30 0.51
Solar 618 39.56 0.0
Windd 1039 26.22 0.0
a
; These are levelised costs [75].
b
Reservoir-based hydropower data is used.
c
Majority of gas-based plants in Pakistan are single cycle.
d
Pakistan have predominantly onshore wind power plants; US$ are converted to Pakistani Rupees using an annual exchange rate as is reported by State Bank of Pakistan
and vice versa (e.g., US$ ¼ 59.86 in the year 2005e2006.
e
Most of the coal used is local and costs less due to shorter distances and cheap labor [76].

Fig. 5. Dynamics of model-generated versus historic electricity supply.

Table 6 validity of the model [20,77]. Thus, the favorable outcome of RMSPE
Error analysis of the revised MDESRAP. and Theil's inequality statistics adds to the credibility of the revised
Variable RMSPE (%) UM (%) US (%) UC (%) MDESRAP.

Electricity Supply 4 3 37 60

3.1.5. Development of policy scenarios

To address our objectives, we used scenarios (i) Status quo
scenario focusing on the REPP (i.e., existing energy policy): REPPS,
serving as our reference case, and (ii) Indigenous-Resource-

Fig. 6. Error analysis of the variable electricity supply.

8
H. Qudrat-Ullah
Intensive Low-Carbon-IRILS, the alternate scenario) [20].
The REPPS, the reference scenario, is based on Pakistan's current
conditions where the energy policies continue to provide fiscal
incentives for electricity generation without any preference for any
type of technology while IPPs are dominantly investing in pro-oil
and pro-coal generation.
The IRILS, on the other hand, focuses on (i) the exploitation of
indigenously rich hydro resources, (ii) abundantly available other
renewables (i.e., solar and wind), and (iii) low-carbon producing
nuclear generation. It should be noted Pakistan is rich in uranium
deposits. It has achieved self-sufficiency in the nuclear fuel cycle,
i.e., mining of uranium, making of yellowcake (U3O8), and fabrica-
tion of ready-to-use fuel since 1979 [17].
In this scenario, thermal power is bearing additional costs due to
the “environmental emissions tax”. An emission tax rate of $31/ton
of CO2, found through a detailed sensitivity analysis, is applied in
the IRILS. Such a tax is considered a step towards much needed low-
carbon economy [34].
4. Results and discussions
We used our validated dynamic simulation model, the revised
MDESRAP, to evaluate two scenarios: (i) REPPS (the reference) and
(ii) IRLCS (the alternate). Here we present our results and discuss
each scenario in terms of electricity supply mix, CO2 emissions, and
electricity prices.
4.1. Staying the course: the dynamics of REPPS
4.1.1. Dynamics of Electricity Supply Mix
Based on reference data, RE policy incentives, and INDC's
mechanisms, Fig. 7 displays the MDESRAP’‘s outcome-based total
electricity generation in Pakistan for the period of study. Post-2020,
there appears at least three major developments: (i) the dominant
presence of CPEC-based coal-fired power plants (ii) consistent with
Pakistan's INDC-based plans, hydropower is steadily increasing its
share in the electricity supply mix, and (iii) the share of low-carbon
technologies (i.e., nuclear, solar, and wind) is increasing at a rela-
tively slower pace.
With regards to the overall supply mix, there is a clear domi-
nance of thermal power plants. Before the year 2020, while oil-fired
and gas-fired power plants had the major share in the supply mix,
in the case of the post-2020 period, however, most of the electricity
was generated by coal-fired power plants. Consistent with the
government's ambitious plan to utilize the abundantly available
local resource (e.g., Thar coal deposits) together with the
commissioning of several CPEC-based coal-fired power plants, the
coal-based generation remains the dominant source of electricity
supply from late 2021 to the end of the year 2030. Only after 2030,
the year of compliance for the reduction of CO2 emissions set by the
PA, effective replacement of thermal generation by low-carbon
technologies occurs. Contrary to the government of Pakistan's ex-
pectations, the additional increase in low-carbon technologies is
hardly replacing thermal generation until the year 2031. Afterward,
we can see that thermal generation is replaced by low-carbon
technologies nuclear, hydropower, solar, and wind, and relatively
less polluting natural gas-fired power plants. Fig. 8 provides a
percentage-wise composition of power generation technologies
from the year 20102 to the end year with an interval of 5 years for
the REPPS, the reference scenario.
These dynamics of the electricity supply mix also provide initial
2
For a comparable view of supply mix, we have used the year 2010 (instead of
our base year, 2008).
9
Energy 238 (2022) 121849
information regarding our main research question: Will staying the
course allow Pakistan to meet the PA-based CO2 reduction targets?
With thermal generation as the dominant source of electricity
supply even up to the compliance yeat, 2030, it appears hard to find
an affirmative answer. In the following section, we will use hard
data (i.e, our model generated) to empirically address this question.
4.1.2. Meeting or missing the PA target: the dynamics of power-
related CO2 emissions
The above-mentioned analysis of the electricity supply mix re-
veals that thermal generation is still the dominant source for the
duration of this study. Table 7 presents the summary of MDESRAP-
generated power-related CO2 emissions and the PA target (i.e., 64.3
MtCO2 emissions by the year 2030) deviation.
Contrary to the expectation of Govt. of Pakistan, their
voluntarily-made commitment to the reduction of CO2 emissions is
not going to be achieved. The current energy policies and mecha-
nisms (i.e. REPP) and CPEC-based projects), on the other hand,
appear to deviate the power-related CO2 emissions by the addition
of 345.5 MtCO2 to the target of 64.3 MtCO2 in the yeat 2030. Thus,
staying the course is hardly a viable option for Pakistan. The situ-
ation of CO2 emissions in the year 2035 is even the worst and bleak.
Therefore, with a relatively shorter time window left, Pakistan has
to make some critical energy policy decisions to bring low-carbon
technologies to the electricity supply mix of Pakistan.
4.1.3. The affordability of electricity in REPPS: the dynamics of
electricity prices
As we discussed above in the case of electricity supply mix and
CO2 emission. continuing with the existing energy policies and
mechanisms can badly affect the consumers of electricity on the
affordability front. Fig. 9 shows the dynamics of electricity prices
for the duration of this study. In the post-2019 era, it appears that
two important developments regarding electricity prices in
Pakistan are at play: (i) use of local coal, and (ii) development of
imported-fuel-based coal-fired power plants under the CPEC-based
projects. Relatively lower prices up to the year 2025 can be ascribed
to the use of the locally available and cheaper supply of coal.
However, after the year 2025, this effect of cheaper coal appears to
be offset by the use of imported coal for CPEC-based coal-powered
plants. Only after the year 2028, we can see the relative decline in
the electricity prices due to the relatively increased share of hydro,
nuclear, solar, and wind up to the end of the year, 2035. Overall, this
trend shows that consumers will be paying higher electricity for the
foreseeable future until the current energy policy of Pakistan is not
adjusted towards the use of low-carbon and domestics resource-
based technologies.
4.2. Seeking the alternative: dynamics of IRILS
To address our 2nd research: what would be the best electricity
supply mix to meet or exceed the PA's desired target level of CO2
emissions? we used our validated dynamic model MDESRAP to
identify an alternate policy scenario. In this alternate scenario, our
focus is to find a low-carbon and affordable electricity supply mix
predominantly utilizing the available resources. We fixed the total
supply of electricity equal to that in REPPS and ran various simu-
lations to find the appropriate supply mix. Fig. 10 displays the dy-
namics of the electricity supply mix under IRILS and CO2 emissions
data are presented in Table 8.
It appears that under IRILS (i.e., aggressive deployment of low-
carbon technologies with a clear focus on the use of abundantly
available local resources), Pakistan can not meet but exceed the
promised reduction of power-related CO2 emissions by 2030. As
our scenario analyzed the supply mix dynamics up to the year 2035,
H. Qudrat-Ullah Energy 238 (2022) 121849

Fig. 7. Dynamics of electricity generation for the period from 2008 to 2035.

Fig. 8. Dynamics of electricity supply mix for the period from 2010 to 2035.

Table 7
Summary of CO2 emissions contribution by the generation technologies.

Year Power-related Emissions (MtCO2) Contributing Technologies Target Deviations (Mt CO2)

Thermal (i.e., Oil, Coal, and Gas) (%) Low Carbon (i.e., Hydro, Nuclear, Solar, and Wind) (%)

2010 72.7 99.4 0.6 e

2015 88.5 99.5 0.5 e
2020 113.8 99.3 0.7 e
2025 518.1 99.7 0.3 e
2030 409.9 99.2 0.8 þ 345.5
2035 2095.4 99.8 0.2 e

10
H. Qudrat-Ullah Energy 238 (2022) 121849

Fig. 9. Dynamics of electricity supply for the period from 2010 to 2035.

we can see in Table 8 that by the implementation of such a scenario,
Pakistan can well achieve sustainable lower CO2 emissions. How
did it happen? A simultaneous look at Fig. 10 and Table 8 shows that
under IRILS, low-carbon technologies effectively replaced the
thermal: the share of thermal generation in the supply mix
decreased from 61% in 2020 to 7% in 2030 and only 6% in 2030.
Although the share of hydropower remains steady (ie, had an in-
crease of 4% from 2020 to 2035), it was the nuclear (with the
highest gain of 18%), solar, and wind (both with a gain of 17% share
in the supply mix) generation that resulted in the low-carbon

Fig. 10. Dynamics of supply mix for the period from 2020 to 2035 in IRILS

11
H. Qudrat-Ullah
Table 8
Comparative view of CO2 emissions contribution by each scenario.
Year Power-related Emissions (MtCO2) Targeta Deviations (MtCO2)
Scenario 2020 2025 2030 2035
REPPS 113.8 518.1 409.9 2095.4 þ 345.5
IRILS 113.8 367.6 51.4 35.7 ¡12.9
a
Target ¼ 64.3 MtCO2 by 2030.
supply mix enabling Pakistan to meet its targets.
It is worth noting that a substantial increase in the capacity of
these low-carbon technologies in IRILS is in line with the Govern-
ment of Pakistan's plan (e.g., having the ex-hydro renewable ca-
pacity of 20% of renewables by 2025) [4,67]. If Pakistan could even
meet half of its planned capacity for nuclear (i.e., 8800 MW by
2030), the identified share of nuclear power in the supply mix (i.e.,
20% in 2030 and 23% in 2035) appears achievable.
Regarding the affordability aspect of electricity supply, Fig. 11
presents the comparative view of electricity prices in each case.
We can see the relatively lower electricity prices during the period
from 2020 to the beginning of the year 2025 under REPPS. How-
ever, afterward, as compared with REPPS, there are substantially
lower prices in IRILS owing to a favorable premium for cleaner
production (i.e., when a carbon tax of US$31 is implemented, it
penalizes the thermal generation and rewards the cleaner gener-
ation). Due to the relatively faster (as compared with the case of
REPPS) replacement of oil and coal-based power capacity by low
carbon technologies that have the least operating cost, the elec-
tricity prices continue to fall up to the end of the study period, 2035.
On average, as compared with REPPS (i.e., @ US cent 16.5/kWh),
users of electricity under IRILS (i.e., @ US cent 13.4/kWh) will save
about 23% annually from the year 2020 to the year 2035. Thus, on
the affordability front too, exiting energy policies and mechanisms
are not helping the users of electricity, be it the households or the
industrial and business enterprises in Pakistan.
5. Conclusions
Pakistan's electricity sector faces several challenges including
the frequent demand-supply gaps, costly import of fossils,
increasing power-related CO2 emissions, and meeting of CO2
reduction target by 2030 as stated in the INDC of Pakistan
Fig. 11. Dynamics of electricity prices under REPPS and IRILS
12
Energy 238 (2022) 121849
submitted the Paris Agreement. The government of Pakistan initi-
ated several positive steps including the promulgation of various
energy policies specifically in support of renewable and low-carbon
energy supply (e.g., RE 2006 and ARE 2019). However, the addi-
tional capacity of fossil-based generation through CPEC-based
projects appears to have more CO2 emissions. Therefore, the
emphasis of this study has been to assess the evolving electricity
supply mix under the current energy policies and support mech-
anisms and suggest a cleaner and affordable alternative. We ach-
ieved this objective by modeling the electricity system of Pakistan
by utilizing an SD model, the revised MDESRAP. Current policy
incentives and plans, and reference data informed the development
of the dynamic model and the reference scenario, REPPS. The
alternate scenario accounted for the abundantly available domestic
recourses and the government of Pakistan's plan for the carbon tax
and the expansion of nuclear power for the study period
2008e2035. Based on our modeling-based analysis, the key find-
ings are:

The REPPS, the reference scenario based on the government of
Pakistan's exiting energy policy and plans suggests that Paki-
stan's power-related CO2 emissions will miss the target of CO2
reduction by 2030 by a big margin of 345.5 MtCO2 emissions.

The IRILS, the alternate scenario mainly emphasized the use of
low-carbon technologies with an explicit preference for do-
mestic renewable energy sources.

The IRILS helps Pakistan to meet its power-related CO2 emission
target. As the emissions are even lower in 2035 than in 2030,
this reduction in CO2 emissions appears sustainable.

The IRILS prefers low-carbon technologies in the electricity
supply mix of Pakistan: the share of hydro, nuclear, wind, and
solar was 30%, 23%, 21%, and 20%, respectively in 2035.

The biggest polluter and with an expensive import bill, oil-fired
power plants have no share in the supply mix in 2035 under the
IRILS.

Compared with the REPPS, the users of electricity appear to pay
substantially less (i.e., a saving of about 23% per annum from the
year 2020 to the year 2035).
Overall, the government of Pakistan needs to make some ad-
justments in its existing energy policies and mechanisms to affect a
H. Qudrat-Ullah
major change in the electricity supply mix of the country. Staying
the course, it appears will neither allow them to meet their agreed
reduction of CO2 target nor to lower the electricity bills. Also, more
coal-fired power plants make the goal of having cleaner and
affordable electricity for people more elusive. Efforts and resources
should be channeled to realize the huge potential of indigenous
renewable resources including hydro, solar, wind, and biomass.
Using clean coal technologies, about 20%e30% share of coal can
allow Pakistan to keep its environmental emissions lower on an
ongoing basis. Although we focused on Pakistan's case, the vali-
dated dynamic model, MDESRAP, is flexible enough to be applied to
model and analyze the energy policies of any other region or
country. The goal of having a clean and affordable supply of elec-
tricity to people, as advocated by the United Nations [79] in its SDG
No. 7, is common to all nations. Tools such as MDESRAP, helping in
the long-term assessment and design of energy policies, can
effectively support the decision making of the policymakers in the
energy domain across the globe.
The credit of authors statement
I am the sole author of this paper.
Declaration of competing interest
The authors declare that they have no known competing
financial interests or personal relationships that could have
appeared to influence the work reported in this paper.
Acknowledgment
This research was funded by York University, Toronto, Canada
through grant # SSHRC-435-2015-1616.
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