Pakistan’s Green Industrialization Amid Climate and Economic Shocks
1. Introduction:
In recent years, Pakistan has faced an unprecedented convergence of challenges, driven by both internal and external forces. Among the most pressing are climate change and economic shocks, which have exacerbated the nation’s developmental struggles. The increasing frequency of extreme weather events, such as floods, droughts, and heatwaves, has not only threatened lives and livelihoods but also strained critical infrastructure. Simultaneously, economic disruptions — triggered by global supply chain issues, rising energy prices, and fluctuating commodity markets — have added further pressure on an already vulnerable economy.
Amidst this complex landscape, Pakistan has recognized the need for a shift towards green industrialization. This strategy aims to decouple economic growth from environmental degradation, positioning sustainable development as a means to mitigate climate risks while simultaneously revitalizing the economy. Green industrialization involves transitioning to renewable energy, promoting energy-efficient practices, and investing in eco-friendly industries, all while maintaining a focus on job creation, poverty alleviation, and improving quality of life. As the country navigates these concurrent crises, a green industrial revolution presents a potential pathway to resilience and sustainable growth.
2. Challenges to Green Industrialization For Pakistan
l Economic Instability
a. Debt Crisis:
Pakistan’s economic instability is a major hurdle for green industrialization. The country faces a significant debt burden, with mounting external liabilities, which limit government capacity to invest in large-scale green initiatives.
As of December 2023, Pakistan’s total external debt was $131.159 billion. This includes:
u $7.541 billion owed to the Paris Club
u $38.813 billion owed to multilateral donors
u $7.596 billion owed to the International Monetary Fund
u $7.8 billion owed to international bonds
u $68.91 billion owed to China
u Pakistan’s debt-to-GDP ratio was 74.8% at the end of June 2023. The IMF and credit rating agencies estimate that interest payments on Pakistan’s debt will take up 50–60% of the government’s revenue in 2024.
u Pakistan’s national debt is expected to increase by $170.3 billion between 2024 and 2029, reaching a peak of $446.61 billion in 2029
b. Energy Costs:
Rising fuel and electricity prices have also put immense pressure on industrial sectors, hindering investment in renewable energy solutions and energy-efficient technologies. Pakistan’s energy costs have been increasing due to a number of factors, including:
Ø Tariff increases
Ø The basic electricity tariff has increased by Rs18.39 per unit since April 2022. The cost of electricity varies depending on consumption and the province where you live.
Ø Fuel and petrol prices
Ø The rising cost of fuel and petrol directly affects the cost of electricity generation.
Ø Exchange rate
Ø The Pakistani Rupee has fluctuated a lot in recent years, which impacts the cost of electricity production.
Ø Taxes
Ø Electricity bills include taxes such as General Sales Tax (GST) and Financing Cost Surcharge.
Ø Here are some of the electricity tariffs in Pakistan as of July 2024:
Ø Residential Supply: 59.09 per unit
Ø Commercial Supply: 54.60 per unit
Ø Industrial Supply: 43.40 per unit
Ø The government has increased electricity prices to secure loans from the International Monetary Fund (IMF). Some say that the responsibility for the energy crisis is shared across the entire value chain, including consumers, government officials, investors, and lending organizations.
c. Inflation: The average consumer price inflation in Pakistan is expected to be 3.1% in 2024. This is in comparison to 4.06% in 2023 and 9.59% in 2022.
² In September 2024, Pakistan’s inflation rate was 6.9%, which was the lowest it had been since January 2021.
² In February 2024, the inflation rate was 23.06% year-on-year.
² The average inflation rate in Pakistan from 2001 to 2024 was 0.77%.
² The inflation rate in Pakistan reached an all-time high of 6.30% in June 2022.
² The inflation rate in Pakistan reached a record low of -3.20% in May 2024
The persistently high inflation rate erodes purchasing power and makes it difficult for industries to adopt more expensive, but environmentally friendly, technologies.
3. Climate Vulnerability
v Extreme Weather Events: In recent years, Pakistan has experienced devastating floods, heatwaves, and droughts, driven by climate change. These events disrupt industrial activities and damage critical infrastructure, further complicating the transition to green practices.Pakistan has experienced many extreme weather events, including floods, droughts, cyclones, and intense monsoons:
i. 2022 floods:Climate change caused increased precipitation and melting glaciers, resulting in catastrophic floods that affected one third of the country and 33 million people.
ii. 2010 floods:Rain intensity reached 300 mm in 36 hours, causing the highest water levels in the Indus River in 110 years. The floods affected more than 20 million people.
iii. 2001 rainfall:Islamabad recorded 620 millimeters (24 in) of rainfall in 24 hours.
iv. Temperature records:Pakistan has recorded several high temperatures, including:
Ø 52.6 °C (126.7 °F) in 2003, the highest recorded temperature in Pakistan
Ø 50 °C (122 °F) or above for multiple consecutive days in 2009, 2010, and 2016
v Water Scarcity: Water-intensive industries, such as textiles and agriculture, are particularly vulnerable due to worsening water shortages in key production regions like Punjab and Sindh.Pakistan is experiencing a water crisis due to a number of factors, including:
u Droughts:The country has experienced several extreme droughts in recent years, including the 2017–2020 drought, which was worse than the 1999–2002 drought. Rising temperatures have increased the frequency and intensity of droughts.
u Population growth:Pakistan’s population has more than quadrupled since gaining independence in 1947.
u Water management:The agricultural sector’s water management is inefficient, and the country’s water storage capacity is limited to 30 days.
u Infrastructure:Pakistan’s infrastructure is inefficient, and the government lacks a long-term policy to address the crisis.
u Water pollution:Water pollution is a contributing factor to the water crisis.
u Location:About 92% of Pakistan is semi-arid to arid, and the majority of Pakistanis rely on the Indus River basin for their water
4. Outdated Industrial Infrastructure
Most of Pakistan’s industrial base is outdated, with inefficient energy use and pollution-heavy practices. Upgrading infrastructure to meet modern green standards requires significant capital, technology transfer, and skilled labor, all of which are in short supply.
Pakistan ranked 67th in the basic infrastructure category in the World Economic Forum Survey. Pakistan’s infrastructure is considered poor by international standards, and this has a negative impact on the lives of its citizens. Some of the issues include: electricity shortages, lack of proper water and sanitation, and imbalance between demand and supply of infrastructure.
Some factors that could contribute to Pakistan’s poor infrastructure include: Policy failures, Bureaucratic barriers, Political instability, COVID-19 pandemic, and Natural disasters.
5. Key Green Industrialization Initiatives
l National Clean Green Pakistan Movement:
The Clean Green Pakistan (CGP) Movement is a five-year campaign by the Pakistani government to make the country cleaner and greener. The movement aims to change the public’s behavior to create a safe and sustainable environment.
The CGP Movement has several components, including:
a. Clean Green Campus Programme: This program engages young people to become climate and water activists.
b. Clean Green School Programme: This program teaches students about climate literacy and environmental education through creative learning.
c. Clean Green Pakistan Index (CGPI): This index focuses on competition between cities to implement actions to make Pakistan cleaner and greener.
The CGP Movement also aims to:
i. Achieve the targets of SDG 6 and SDG 13
ii. Engage all segments of society, especially the youth
iii. Motivate citizens to take voluntary initiatives
iv. Provide the physical environment needed for healthy living
The government of Pakistan is working to bring about institutional change and promote the implementation of the CGP Movement
l Shift to Renewable Energy in Industry
Pakistan is making strides in promoting renewable energy to power industries. With abundant solar and wind potential, initiatives such as the Alternative Energy Development Board (AEDB) aim to scale up solar energy in industrial zones, especially in power-deficient regions. Several solar and wind projects have been initiated in Sindh and Balochistan, with plans to integrate them into industrial sectors.Pakistan is transitioning to renewable energy in its industry through a number of initiatives, including:
v Increasing renewable energy share:Pakistan’s goal is to increase the share of renewable energy in its energy mix from 30% to 60% by 2030. This includes expanding solar and wind power to at least 30% of the country’s total electricity generation capacity.
v Reducing greenhouse gas emissions:Pakistan’s Nationally Determined Contribution (NDC) sets a target to reduce greenhouse gas emissions by 15% compared to 2015.
v Banning coal imports:Pakistan aims to ban coal imports as part of its transition to renewable energy.
v Expanding electric vehicles:Pakistan aims to increase the share of electric vehicles to 30% by 2030.
v Improving energy access:USAID has supported the transition to renewable energy by providing advisory services and policy support.
v Building transmission lines:USAID has constructed power transmission lines to connect Pakistan’s first wind energy corridor to the national grid.
l Sustainable Textile Production:
As one of the largest textile producers globally, Pakistan has begun exploring ways to make the industry greener. Initiatives include adopting water-saving technologies and using renewable energy in production facilities. Brands like Khaadi and Gul Ahmed are piloting green certifications for eco-friendly manufacturing, reducing the carbon footprint.
Ø Pakistan’s textile industry is working to become more sustainable through a number of initiatives, including:
a) Government policies:The government has implemented policies to promote sustainable practices, including the Textile and Apparel Policy 2020-2025. This policy aims to increase exports, improve compliance with environmental and ethical standards, and promote skill development.
b) Made in Green certification:This certification encourages textile manufacturers to adopt sustainable practices, such as reducing energy and water use, and using environmentally friendly chemicals and dyes.
c) National Compliance Centre (NCC):This center was established by the Ministry of Commerce to monitor and enforce compliance with regulations related to worker safety, rights, and environmental sustainability.
d) Renewable energy:Some textile manufacturers in Pakistan are using renewable energy sources, such as solar energy and Jenbacher gas engines.
e) Internet of Things (IoT) technology:Sensors and other technologies can be used to streamline operations, enhance sustainability, and improve communication within the industry.
The textile industry in Pakistan is known for its expertise in cotton cultivation and textile production, but it has also been criticized for its negative impact on the environment. This includes excessive water consumption, chemical use, and energy consumption.
l Circular Economy Initiatives:
Pakistan is pursuing a circular economy to promote sustainable development, environmental stewardship, and economic growth. A circular economy is an economic model that aims to reduce waste and use resources more efficiently by keeping products and materials in use for as long as possible.
Ø To implement a circular economy in Pakistan, the government, businesses, and society will need to work together to:
i. Improve infrastructure:Invest in waste management facilities, recycling plants, and renewable energy projects
ii. Create policies and regulations:Encourage businesses to adopt sustainable practices and penalize non-compliance
iii. Promote circular business models:Create cyclical resource acquisition, consumption, and recycling processes
iv. Change mindsets and behaviors:Re-imagine the relationship between resources in daily life and the corporate sector.
6. Opportunities for a Green Economic Revival
n Job Creation Through Green Technologies:
Investments in green technologies—such as solar panels, energy-efficient appliances, and green construction materials—create opportunities for job growth. As Pakistan struggles with unemployment, green industrialization could provide new avenues for employment, particularly in rural areas where infrastructure projects are needed to address both economic and climate challenges.
n Public-Private Partnerships:
Encouraging public-private partnerships in the development of green industries is crucial. International donors, such as the World Bank, the Asian Development Bank, and USAID, have provided financial support to Pakistan for climate resilience and green projects. Tapping into global climate finance through green bonds or carbon credits could also facilitate investment.
n Export Potential of Green Products.
By developing industries that produce eco-friendly goods, such as organic textiles, low-emission vehicles, and sustainable agriculture products, Pakistan could access new markets, especially in regions like the European Union, which prioritize imports with lower carbon footprints.
7. Barriers to Overcome:
u Policy and Governance Issues
Fragmented governance and weak enforcement of environmental regulations remain major obstacles. Despite a growing awareness of green policies, industries are slow to adopt them due to inconsistent policies and lack of incentives for sustainable practices.
u Technological Gaps
Green industrialization requires advanced technology and technical expertise, areas where Pakistan lags behind. Bridging this gap will require collaboration with international partners to transfer green technologies and upskill local labor forces.
8. Conclusion:
Pakistan’s green industrialization journey faces substantial challenges but also offers immense opportunities to align economic growth with environmental sustainability. By fostering innovation, investing in renewable energy, and adopting circular economy principles, Pakistan can address climate-induced shocks and build a more resilient industrial base. Success in these efforts will depend on strong political will, financial investment, and international cooperation, allowing Pakistan to emerge as a model for sustainable development in the region.