Pakistan will need more than $390 billion in additional investments by 2050 to transition toward low-carbon energy solutions, including switching from coal to gas in industries, electrifying transportation, and replacing gas with electricity for cooking, according to a recent report by the Organization of Islamic Cooperation. . Asian Development Bank (ADB).
The report, titled “Pakistan’s Low-Carbon Energy Prospects and Technology Roadmap,” highlights the significant financial commitment needed to expand energy under a low-carbon scenario. Hydropower generation will require $153 billion, nuclear power $103 billion, wind power $62 billion, and solar power $51 billion.
In addition, $22 billion will be needed to modernize the energy transmission and distribution system to accommodate increased demand and maintain grid stability.
The Asian Development Bank stressed that achieving this ambitious investment goal will be difficult. With limited direct government financing, the majority of financing must come from the foreign and domestic private sector, equity financing, bank loans, and international assistance.
The report stressed that regulatory reforms and creating a favorable investment climate are essential to attract financing on a large scale.
Under the low-carbon scenario, energy-related greenhouse gas emissions are expected to fall by 23% by 2030 and 36% by 2050 compared to the business-as-usual approach.
The ADB stressed the need for strong policies to align private sector incentives with environmental goals, enhance financial intermediation, and ensure that the regulatory framework supports these goals.
Effective system planning, incentives for flexibility on the demand and supply side, and strong mechanisms for achieving near-term balancing will also be critical to achieving this transformation.
Pakistan’s ambition to achieve upper-middle-income country status by 2047, coupled with commitments under the Paris Agreement, increases the urgency of the transition towards sustainable energy. In its revised NDCs submitted in 2021, Pakistan committed to reducing greenhouse gas emissions by 50% by 2030 – 15% unconditionally, and the remaining 35% contingent on international financial support.
The report identifies key mitigation opportunities, including switching from coal to gas in industrial sectors, electrification of transportation, and replacing gas with electricity for home cooking. By 2050, 26% of Pakistan’s energy supply is expected to come from natural gas, with 22% from clean fuels.