Chitika

Monday, November 27

Renewable Energy in Pakistan

My friend wrote this excellent article entitled 'Adding fuel to fire' which recently got published in one of Pakistan's leading daily's. He presents arguments supporting ethanol as the next new renewable source of energy in the country. I was impressed to learn that Compressed Natural Gas (CNG) has been heavily encouraged in Pakistan and has been quite a success. I have included some excerpts from his article. I urge you to peruse the published version at your leisure.
By lifting import duties on CNG conversion kits, converting government vehicles, and liberally distributing licenses for CNG filling stations, the (Pakistani) government kick-started a cycle of CNG production that was then propelled by basic market forces and low CNG prices. As a result of these policies, CNG use has captured a large share of the petrol market over the last two years. There are over 1 million CNG-enabled vehicles in Pakistan today, constituting nearly 20 percent of all vehicles in the country. It is the third largest CNG fleet in the world.

That's great to know that Pakistan has the third largest CNG automobile fleet in the world. However, as my friend and author rightly points out, CNG, though clean, is not renewable. As a result of this, he proposes several measures whereby ethanol can be introduced as the source of renewable energy


According to the World Bank, the only potential renewable fuel anywhere in the world that can currently compete with petrol is ethanol from sugarcane. Pakistan produces the world’s 5th largest sugarcane crop, of which 20 percent is exported. In fact, until recently, Pakistan was the second largest exporter of sugarcane ethanol to the European Union — a preferential status we have since lost because of WTO obligations and dumping complaints. Several distilleries have planned to close down in light of this fact. Instead of curbing production of fuel ethanol, however, we should redirect it to the domestic market. Eventually, a domestic industry will grow, and the further development of sugarcane feed-stocks will accelerate rural infrastructure development and result in rural job creation from farms and processing facilities.

Experiences with fuel ethanol in Brazil and around the world suggest that government action is essential in the initiation of such programs to coax the market away from pre-existing technologies. A Pakistani fuel ethanol program, like its CNG predecessor, will need initial government support to develop an infrastructure in which the new industry can grow.

This entails providing incentives for both production and consumption of fuel ethanol. the fledgling industry will need fiscal support in the form of subsidies, tax incentives, and state-guaranteed credit, to ensure that it has a consumer base and a competitive price. As production increases, economies of scale will develop until ethanol production is cost-effective and self-sustainable.

This is an impressive article and quite eye-opening for me. I believe the ideas that he proposes are quite manageable. There is, after all, an infrastructure already laid down for CNG production. Thus the government is aware of the looming energy crisis. It's great that Pakistan is far ahead of other nations with regards to industrial and automotive CNG incorporation. It would be even more impressive if Pakistan can think to the future, utilize its renewable crop resources, and thus produce energy domestically.

4 comments:

Anonymous said...

It's a great idea in theory but, as your friend indicates, requires an almost herculean effort by the government to enact the necessary legislation. It would also be interesting to see if Pakistan uses sugar or corn to produce the ethanol or whether they just import it directly. Here in the US, sugar is used to produce ethanol whereas corn is a superior input. Unfortunately, a huge lobby in congress does not allow our "leaders" to facilitate the import and use of corn (or just the ethanol-fuel itself) for consumers.

- Sahil

omarhaq said...

if it does happen, i assume sugar will be used, since its used domestically and because there is a surplus now because of the EU restrictions.

but then again, i don't much about econ. I'll just till he reponds!

Anonymous said...

Sahil,

I agree that relative efficiencies are not always taken into account when it comes to things like this. The US is more efficient at corn production, so it would make sense to produce ethanol from corn, but there are other factors, such as taking away from food production etc, to consider. I actually don't think the effort by the govt in Pakistan would need to be all that herculean. All it needs is a bit of momentum. If a country like Brazil could sustain its ethanol program through its terrible financial crises of the 80s and 90s then there should be no excuses for Pakistan. In fact, if Pakistan can so rapidly promote the use of CNG, then why not ethanol? As for importing it, I'm not sure how sustainable that would be, but that is a question that lends itself to a more detailed analysis. The most important thing at present is that inertia and resistance to alternative energy at least begin to subside.

- Bilal Habib

Anonymous said...

Generally, I don't like the idea beacuse it takes from a limited food supply (corn can be used also). I think the world and Pakistan will abuse ethonal for cheap, renewable fuel and push food cost up.