Pakistan
With a cumulative score of 1.57, Pakistan ranks number 42 among emerging markets and number 71 in the global ranking.
- Emerging markets
- Asia-Pacific
1.84 / 5
Power score
0.95 / 5
Transport score
Buildings score
Only 56 markets (28 emerging markets) are scored on the Buildings sector. See the full list on the methodology page.
Low-carbon strategy
Net-zero goal and strategy
Pakistan does not have a net-zero goal or strategy.
Nationally Determined Contributions (NDC)
Pakistan submitted an updated ‘nationally determined contribution’ – its plan to help achieve the goals of the Paris Agreement – in October 2021. The country is aiming to lower its greenhouse gas (GHG) emissions by 15% from 2018 levels by 2030 versus a business-as-usual scenario (BAU). It says that with international support in the form of $101 billion of grant finance, GHG emissions could be cut by a further 35% by 2030.
The areas being targeted for mitigation are renewable energy, transportation, coal, and land use change and forestry. Pakistan is looking for 60% of all energy produced in the country to come from renewables by 2030 and for 30% of all new vehicles sold to be electric. Meanwhile, a moratorium on new coal plants was introduced in 2020 and coal imports have been banned. The country is also investing in nature-based solutions, undertaking an $800 million afforestation program, which it says will sequester 149 metric tons of CO2 equivalent over the next decade.
Fossil fuel phase-out policy
Pakistan does not currently have a fossil fuel phase-out policy. However, new coal-fired power plants have been subject to a moratorium since 2020 and power generation from imported coal is prohibited. Two new coal-fired power plants have been shelved in favor of hydro power, and there is an increased focus on coal gasification and liquefaction for indigenous coal.
Power
Power policy
Pakistan’s power sector is currently dominated by fossil fuels, which make up 59% of total capacity. It is hoping to flip this balance by 2030, with 60% of energy produced in the country coming from renewables, including hydro. The country aims to increase capacity to 20% renewable energy by 2025 and 30% by 2030. This is being achieved through policies such as feed-in-tariffs and net metering, and around 57 megawatts has been added through its net metering policy. The country has suspended its renewables auctions having failed to add any capacity through this policy. All power purchase agreements in Pakistan (PPAs) are over 15 years.
Power policies
Power prices and costs
Commercial tariffs increased by 34% in 2020, while industrial and residential tariffs decreased by 51% and 3%, respectively. Pakistan is currently working on setting up a wholesale electricity market. It is not yet completely established but is projected to be up and running by May 2022.
Power market
Generation, transmission and retail are unbundled in Pakistan, with the Water Power and Development Authority having been separated into generation companies, the National Transmission and Despatch Company (NTDC), and distribution companies. There are many independent power producers in Pakistan, primarily active in renewable energy, while government-owned entities are primarily responsible for developing hydro and conventional assets.
Installed Capacity (in MW)
Electricity Generation (in GWh)
Utility privatisation
Which segments of the power sector are open to private participation?
Wholesale power market
Does the country have a wholesale power market?
Doing business and barriers
The single offtaker in Pakistan is the Central Power Purchasing Authority, meaning the offtaker risk for renewable energy developers is relatively low. However, the country has a high level of utility debt, which has doubled since 2018, and owing to this, the government has not paid subsidies to generators in some cases. Losses due to theft and transmission system inefficiency stood at 29% of all power generated in 2020, equivalent to just under $1bn in electricity not paid for.
For utility-scale solar development, the major challenges are land identification and transmission bottlenecks. Without a local Pakistani partner, picking suitable land for project development is difficult. In addition, grid connection agreements take time to finalize, which often delays solar projects in the country.
This year, Pakistan discovered that it had been producing excess energy and is facing curtailment problems for the first time. Without appropriate battery policies, this will continue, even with the low rural electrification rate of 59%.
Currency of PPAs
Are PPAs signed in or indexed to U.S. Dollars or Euro?
Bilateral power contracts
Can a C&I (Commercial and Industrial) customer sign a long-term contract (PPA) for clean energy?
Bilateral power contracts
Can a C&I (Commercial and Industrial) customer sign a long-term contract (PPA) for clean energy?
Fossil fuel taxes
Does the government influence the wholesale price of fossil fuel (used by thermal power plants) up through taxes?
Bilateral power contracts
Can a C&I (Commercial and Industrial) customer sign a long-term contract (PPA) for clean energy?
Fossil fuel subsidies
Does the government influence the wholesale price of fossil fuel (used by thermal power plants) down through subsidies?
Transport
EV market
The electric vehicle (EV) market in Pakistan is very new, and most policies were introduced in 2020. The country has a target for 30% of new vehicle purchases to be electric by 2030, and 90% by 2040. This is supported by infrastructure initiatives that aim to have one fast DC charging station per 3 kilometer (km) square area, DC charging stations on all motorways every 15-30km, and uninterrupted power on feeders for charging stations.
EV policy
EVs benefit from 0% sales and income tax at the import stage in Pakistan, as well as a 50% reduction in motorway toll tax.
Transport policies
Fuel economy standards
Does the country have a fuel economy standard in place?
Buildings
Buildings market
Pakistan has implemented a minimum requirement for energy efficient design and construction of new non-residential buildings. The ultimate goal is to decrease building energy use by 20%, which the government is pushing through new laws targeting heating, ventilation, lighting, and air conditioning.
Energy performance standards
Are there minimum energy performance standards for buildings?
Energy efficiency plan
Does the country have a national energy efficiency plan?
Buildings policy
The government has yet to implement any substantive policy support in this sector and the low-carbon heat market remains at an early stage.
