POLICY ISSUES AND OPTIONS IN ENERGY CONSERVATION & EFFICIENCY A Presentation for workshop on Power Sector Reform by K.M.Zubair, Chief (ENERCON) November 12, 2010

End Use Energy Consumption by Sector ( ) (Total: Million TOE) Power Sector takes the largest slice of national energy consumption closely followed by Industrial sector. HSD consumption for tractors is not separately available and is included in the transport section.1

Gravity of the Challenge  Sustainability of Indigenous fossil fuels  Sustainability of Environment  Economic Sustainability  Compounding poverty and political fallout

EC Potential in Pakistan Industry25% Transport20% Agriculture20% Buildings30% Power30% Average25% Possible Savings for Pakistan by EC US $ 2 Billion/Year.

 Barrier:  Option:  Absence of Legislation  A legislation specifically focused to promote efficient use of energy resources with provision of –Energy reporting –Mandatory audit of major energy consuming entities –Enforcement of standards and labeling, –Investment promotion –Punish the defaulter and reward the energy proficient Compendium of Barriers/ Options

Issue:Option: Distorted perception of EC Propagate EC as a means to cut costs; increased production and better profitability through efficiency improvement. It’s a win- win for all stake holders. CHP; Replacement of aging machines; LT/HT Revamp; Cogeneration can be considered as profitable propositions.

(Contd.)  Barrier:  Option: Absence of Financing Instruments/Mechanisms  soft leasing,  soft loans for energy-conservation specific projects; specific projects;  the use of micro-finance institutions need to be explored. need to be explored.  Private Public partnership by facilitating access to appropriate facilitating access to appropriate technology. technology.  EC Incentives

(Contd.)  Barrier:  Option: Lack of EC culture Cultivate a new energy culture through extensive advocacy, training, pilot initiatives, value engineering, and demonstration to promote energy efficiency in all sectors of economy

(Contd.)  Barrier:  Option:  Absence of Standardization & Labeling  Need to develop Energy Efficiency Standards in collaboration with relevant stakeholder institutions.  Need to strengthen the testing and enforcement mechanism to ensure successful compliance.

(Contd.)  Issue:  Option:  Lack of Awareness and Education  Programs be undertaken as CSR by large consumers.  More resources need to be allocated on a sustainable basis to educate the stakeholders.  Free time for EC on all electronic media by PEMRA be ensured.

(Contd.)  Barrier:  Option:  Poor Understanding on EC- Environment Linkages  EC and clean environment are inexorably linked. Most climate change initiatives around the world are EC focused. Such linkages need to be understood, and avenues for international support explored and exploited.

(Contd.)  Barrier:  Option:  Trust deficit with respect to energy service companies  ESCOS to play a predominantly more pro-active and risk- sharing role in entering into performance contracting with large energy consumers

(Contd.)  Barrier:  Option: Resource scarcity for fast track implementation of the NECP The political support should be available to make appropriate budgetary provisions from both internal as well as external resources. The need for NECP implementation as a cost effective means for energy security must be appreciated at all levels.

(Contd.)  Barrier:  Option:  Institutional inertia  Fast track restructuring/reorganization of relevant institutions based on comprehensive mapping with respect to their organizational functions or responsibilities.

Conservation Imperatives  Energy conservation represents least-cost ‘supply’ option. It’s a win-win for all.  Unit of energy saved usually is a fraction of generating additional unit  Electricity peak load reduction and shifting results in better utilization of existing generation assets  Efficient energy use improves environment footprints

Conservation Imperatives (Contd.)  Waste reduction improves economic productivity and international competitiveness  Extensive EC opportunities in Pakistan on both the supply and demand (end-consumption) sides  EC has short gestation periods and is quickly implementable