Pakistan
With a cumulative score of 1.66, Pakistan ranks number 34 among emerging markets and number 62 in the global ranking.
- Emerging markets
- Asia-Pacific
1.89 / 5
Power score
1.11 / 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 unconditionally by 15% by 2030 versus a business-as-usual scenario (BAU) from 2018 levels. 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 (30% by large hydro and 30% by other 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 although this ban only targets plants that import coal and not those that will use indigenous material. 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 60% 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, with around 146 megawatts added through its net metering policy in 2020-21 fiscal year. The country is mulling reviving auctions which had previously failed to materialize in new power projects. All current power purchase agreements in Pakistan are over 15 years. The government announced plans to support the build of 9,000 megawatts of new solar projects in Pakistan to help reduce the cost of imported fuel amid soaring fuel prices globally. The government will provide land, offtake guarantee and exemption from duties and taxes for these projects.
Power policies
Power prices and costs
Residential, commercial and industrial tariffs jumped by 37-38% in 2021 in rupee terms. Power tariffs are regulated in Pakistan.
Power market
Generation, transmission and retail are unbundled in most of Pakistan, with the Water Power and Development Authority having been separated into generation companies, the National Transmission and Despatch Company (NTDC), and distribution companies. K-Electric, the utility that serves the city of Karachi, however still controls generation, transmission, distribution and retail in its jurisdiction. 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.
Pakistan launched its wholesale power market, known as the Competitive Trading Bilateral Contract Market (CTBCM), in June 2022. This market will allow power consumers with loads greater than 1 megawatt to buy electricity from a supplier through a competitive transparent market.
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. 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 $1 billion 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 2020, power from some wind farms was curtailed due to low power demand, the impact of Covid-19, grid instability and currency devaluation.
Currency of PPAs
Are PPAs (eg. corporate PPAs and all other types) 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?
Fossil fuel price distortions - Subsidies
Does the government influence the wholesale price of fossil fuel (used by thermal power plants) down through subsidies?
Fossil fuel price distortions - Taxes
Does the government influence the wholesale price of fossil fuel (used by thermal power plants) up through taxes or carbon prices?
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. The policy also covers heavy commercial vehicles as well as two- and three-wheel vehicles. 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 15-30 kilometer, 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 efficiency policy
Does the country have a national energy efficiency plan?
Energy efficiency policy
Are there minimum energy performance standards for buildings?
Energy efficiency incentives
Is there access to loans or grants for energy efficiency measures (i.e. Wall or loft insulation or double glazing)?
Buildings policy
The National Energy Efficiency and Conservation Authority under the Ministry of Energy released a strategic plan (2020-2023) with a goal to reduce primary energy use by 3 million tons of oil equivalent (MTOE) relative to a business-as-usual scenario by 2023.
Buildings policies
Additional insights
from BNEF
Explore more detailed information on global commodity markets and the disruptive technologies driving the transition to a low-carbon economy.
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