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Wednesday, May 22, 2024

Barriers to renewable energy transition for Pakistan’s textile industry

The Government of Pakistan must address the existing limitations of the net-metering scheme for solar, and wheeling charges and continue providing regionally competitive energy tariffs for the industry to regain sustainability progress and transition to RE.

By Shahid Sattar and Noreen Akhtar

The energy sector is the largest GHG producer in Pakistan. It is estimated that the energy demand in the country will reach 108 – 126 million tons of oil equivalent (TOE) by 2030. With the growing unsustainable management of energy demand, Pakistan’s continuous reliance on imported fossil fuels and outdated coal technology has affected the country’s energy security and its compliance with the global requirements on energy efficiency and decarbonization. However, the government’s recent tilt towards enhancing the country’s capacity for renewable energy (RE) consumption presents a major legislative and policy advancement.

The updated National Climate Change Policy, 2021 puts a major emphasis on achieving climate change mitigation goals via energy efficiency and reducing carbon emissions. It aims to seek technological breakthroughs to harness the country’s potential for renewable energy and declares that 60% of all energy produced in the country by 2030 will be clean through renewable resources and Pakistan will no longer pursue imported coal power plants. Further, Pakistan’s updated Nationally Determined Contributions (NDCs), 2021 support government’s energy-related policy interventions and have determined integration of renewable energy sources in all major sectors a high-priority area. The updated Renewable Energy Policy 2019 focuses more on green energy and aims to reduce GHG emissions using Kyoto Protocol.

Read more: The Snake Bites Once Again – Energy

Understanding the matter better

Pakistan has tremendous potential to fulfill its growing energy demand from renewables including solar, wind, hydro, geothermal and biomass, as these resources are greatly available in the country. Solar, for instance, is the most attractive alternate energy solution which has received considerable attention recently. Pakistan’s southwest region receives the highest irradiation. “The annual global horizontal irradiance in the Himalayas and Karakorum is 2300 kWh/m2, which is the greatest of any other region on Earth”. Wind energy sources have the potential to generate 43,000 MW of electricity.

Moreover, the International Renewable Energy Agency (IRENA) estimates that Pakistan’s hydropower sector has a potential of 60GW and it remains the cheapest source of power in the country. Biomass is estimated to generate 50,000 Gwh/ year in the country. Finally, geothermal energy resources are present in all the provinces, which can be used for power generation, heating and cooling of buildings and supply of hot water.

If Pakistan brings into play this untapped potential in all the major sectors by implementing exemplary policy reforms in spirit and expanding RE, a massive decoupling of growth from conventional energy resources such as fossil fuels can add to the existing efforts on climate resilience. RE expansion will make electricity cheaper, and enhance energy security and Pakistan can save up to $5 billion over the next 20 years, as per World Bank’s report.

Pakistan’s textile industry is one major sector that can benefit massively from the available RE resources in the country while supplying eco-friendly power.

RE and Textile sector

The textile industry’s manufacturing processes are energy intensive. 10% of global GHG emissions are accounted for by clothing and footwear production. Raw material production, harvesting, dyeing, and dumping of used textiles, are all major steps involved in textile manufacturing and their discarding emit GHGs into the atmosphere. For Pakistan’s textile industry, transitioning to RE solutions is not only cost and resource effective but also enhances the sector’s overall compliance with the global standards on energy efficiency and industrial decarbonization, such as those imposed by the European Green Deal. The government’s support, the growing renewable energy market and technological advancement are among the already existing opportunities for the industry to expand its business through renewables.

The government of Pakistan has supported RE development and encourages private sector involvement in projects related to carbon emissions reduction. The textile industry can become a leader in this if it prudently plans the right financial allocations to set up independent sustainable electrification. Also, RE technologies are becoming relatively affordable options for powering the industry that can enhance the cost-effectiveness of the manufacturing processes.

Read more: EU’s textile waste and used clothing in Pakistan

The industry’s current progress on offsetting emissions indicates that it has shown a promising commitment to achieving net zero by adopting a green supply chain philosophy. The Net Zero Pakistan initiative, for instance, is Pakistan’s largest net zero coalition and is the only second country-wide program, under Global Race to Zero, after Japan. It is a collaborative effort between non-government organizations, leading textile companies, public institutions and sector experts.

The textile companies, in this coalition, commit to set science-based net zero targets, measure and disclose their GHG emissions, decarbonize their value chains and advocate for climate action. Keeping in view the extrinsic pressure and internal needs for energy efficiency, the initiative must facilitate carbonization by increasing the renewable energy mix and incorporating energy-saving technologies.

Major textile companies are supporting climate action through clean energy initiatives including solarisation projects and technology installation such as waste heat recovery boilers and converting boilers to biomass-based fuels. International certifications in energy conservation such as LEED are acquired and water stewardship through sustainable bleaching techniques, zero wastewater discharge and recycling is achieved. A performance comparison of one of the companies ‘Sarena Textile Industries’ is given in figure 1.

The analysis of the current scenario of industrial energy efficiency reveals that the share of alternate energy sources such as renewable electricity and biomass in the industry is limited. Technology such as motors and boilers are inefficient and innovative ideas to save energy are exercised inadequately. Thus, the major decarbonization and energy conservation pathway for the industry is to transition to renewable energy technologies including solar PV, concentrated solar thermal collectors and wind turbines. Circular economy options including recovery, recycling and re-use must be compounded by rethinking process improvement options and innovative technologies via the right financial allocations and research breakthroughs.

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The industry can acquire Renewable Energy Certificate (REC) upon adoption of the RE technology. RECs are issued when one megawatt-hour (MWh) of electricity is generated and delivered to the electricity grid from a renewable energy resource. Pakistan has been approved for International-REC (I-REC) for electricity issuance. The I-REC for electricity issuers in Pakistan is the Pakistan Environment Trust (PET). RECs are tradable units and can be sold through exchanges or bilateral trades and can be a significant source of additional revenue generation.

Legislative challenges and the way forward

The industry is currently experiencing a number of barriers obstructing its transition to RE resources, that demand an immediate response from the government.

The limit of the present net-metering scheme for solar power systems of the industry is 1MW, which needs to be extended to 5MW –“especially when the demand of the large-scale manufacturing industry is between 1.5 to 5MW. This increase has the potential to add 5000MW of solar energy at no upfront investment from the GoP to the energy mix of the country. Furthermore, this will enable the EOUs to become competitive in the international market (with lower energy costs) and increase the share of renewables in the total energy mix as committed in the updated NDCs 2021.”

Read more: Inclusive and green pathways crucial for Pakistan’s industrial progress

Further, the government has planned to launch solarisation projects of around 14000MW which will not only “reduce the import bill of costly fuel but also help generate low-cost and environment-friendly electricity.” These solar systems will be provided at reduced prices and will be given tax incentives. However, in order to support the industry to enhance its energy efficiency in a sustainable and independent manner, it should be permitted to install its own solar power structures with the extension of a net-metering scheme for solar from 1MW to 5MW.

The wheeling case indicates that Pakistan needs to move towards free market models with multiple buyers and sellers to revive the power sector but also, to make it transparent. The wheeling regulations must incorporate wheeling of renewable energy and the associated wheeling cost must be reduced for any industrial off-site installation of renewable power infrastructure.

These legislative burdens coupled with the withdrawal of regionally competitive energy tariffs are pushing the industry into a zone of financial dismay where it is operating at less capacity utilization due to working capital issues, losing competitiveness in the international market and raw material issues. This will cause long-lasting harm to the industry’s current compliance and sustainability efforts and adoption of RE technology, as the present focus has shifted towards another day of survival by mitigating the impacts of the withdrawal of energy tariffs.

In conclusion, the Government of Pakistan must address the existing limitations of the net-metering scheme for solar, and wheeling charges and continue providing regionally competitive energy tariffs for the industry to regain sustainability progress and transition to RE. This will support the industry in utilizing the country’s current RE potential to the maximum, reduce reliance on fossil fuels and enhance competitiveness in the global export market. Otherwise, the government’s recent NCCP and NDCs that put extreme focus on RE will be restricted to paper without implementation in spirit.

 

Mr. Shahid Sattar, now Executive Director & Secretary General of All Pakistan Textile Mills Association (APTMA), has previously served as a Member Planning Commission of Pakistan and an advisor to the Ministry of Finance, Ministry of Petroleum, and Ministry of Water & Power.

Noreen Akhtar is a research analyst at APTMA. 

The views expressed by the writers do not necessarily represent Global Village Space’s editorial policy.