Kanwal Naseer

Decarbonization is increasingly recognized as a vital strategy for industrial growth worldwide. Beyond its environmental significance, the shift towards cleaner technologies presents opportunities for economic prosperity. As the global industries acknowledge the need to reduce carbon emissions, Pakistan is also taking significant steps to adopt sustainable practices despite facing significant challenges in transitioning to low-carbon practices.

Talking to WealthPK, Dr Khalid Waleed, an energy expert at the Sustainable Development Policy Institute (SDPI), said, ‘‘Decarbonization is not only an environmental requirement but also a powerful accelerator for industrial development. It serves as an essential environmental goal and a key factor in promoting industrial expansion.’’ ‘‘As the global awareness of climate change intensifies, the industries are increasingly shifting from fossil fuels to renewable energy sources. In Pakistan, this transition is gaining momentum as companies recognize the need to decarbonize in their operations,’’ said Dr Khalid Waleed. ‘‘As the world faces the immediate threat of climate change, quick decarbonization of industrial clusters is critical to achieving a net-zero future.

In Pakistan, both the government and industries are realizing the need for giving these clusters a top priority,” he added. ‘‘Fossil fuels have long been the primary source of energy for Pakistan's industries, considerably increasing the country's carbon footprint. However, as the pressure to address climate change grows, many industries are exploring various strategies to reduce their carbon emissions and are turning to more sustainable energy sources such as solar, wind, and hydropower. This reform aims not only to reduce the greenhouse gas emissions but also to improve long-term economic stability and energy security," he explained. He further said while challenges exist, ‘‘Pakistan’s energy crisis poses significant challenges to achieving industrial decarbonization, primarily due to the high electricity costs and lack of competition.

However, the introduction of Competitive Trading Bilateral Contract Market (CTBCM) offers a promising pathway to address these issues by enabling a more market-driven approach to electricity trading.’’ ‘‘By switching to the CTBCM system, the industries would be able to buy electricity directly from the suppliers at competitive rates. This will allow them to evaluate multiple offers and choose the best bargains, which can lower their energy costs. This transformation is crucial for export-oriented industries to be competitive in the global market. The system also enables the industries to buy clean energy directly from the developers, reducing their carbon footprint and working towards net-zero goals,’’ Dr Whaleed added.

Economic researcher Absar Ali told WealthPK, ‘‘The need for sustainable, low-carbon development in the industrial sector is no longer a choice but an essential obligation. The future of any business exporting goods to the European Union (EU) will heavily depend on the type of electricity used in their production processes,” he continued. ‘‘If the already struggling Pakistani companies fail to invest in sustainable and renewable energy now, they will lose more competitiveness in the global market, leading to a further drop in exports. Without these investments, they may struggle to compete with businesses in other countries which are adopting greener practices,” he said.

In the current economy, accessing clean energy is essential for success. Failing to adapt to these changes can leave Pakistani businesses in a serious disadvantage. With limited resources and the critical nature of this issue, it's important for industries to align with global carbon emission standards. Doing so is necessary for them to remain competitive in the international market. Without meeting these standards, businesses may struggle to thrive and keep up with competitors from other countries that prioritize sustainability,” he concluded.

Credit: INP-WealthPk