Pakistan’s performance in international financial markets, its lower credit rating and difficulty in handling financing related issues like circular debt has made it very difficult for the lenders to easily finance the power projects in Pakistan. The lenders who choose to finance the projects charge very high financing rates that make the power generated through ARE power plants expensive. If the situation is not handled adequately then materializing GoP plans for developing AREs would be difficult. Further, the GoP has included coal as one of the sources for generation of electricity in its energy generation planning. Future perspective of cheap coal power will make it difficult for ARE projects to materialize. By undertaking this NAMA, the GoP would be able to set a clear direction towards developing ARE market in Pakistan. This will enable easy financing available for the projects in the country and will smoothen the ways for setting up 3.2 GW clean wind power into its national energy mix. This will also help in reducing GHGs to the tune of 5.2 million tCO₂ annually. 

Further, the NAMA is designed to attract private sector to invest in the DG options and install such options at their premises to meet their energy needs. It is estimated that through an investment of US$ 14.27 million, this NAMA will trigger an investment of US $ 6 billion from the private sector till 2020 and quantum can increase more as the time passes and such options are being adopted by the end consumers in different sectors of economy.

It is noted that the sustainability, reliability and long term impacts are one of the corner stone’s for successful implementation of any development project/ programme around the world. This NAMA proposal includes an important section in form of creating a financial instrument that would ensure sustainability of the whole program.

The NAMA Support Project would result mitigating the risks involved in diversion from Business As Usual (BAU) growth trajectories. This will be done through removing technical, technological and financial barriers and improving the systems in vogue. This NAMA Support project is expected play an important role in overall Greening of Economy and Green Growth as is envisaged is Pakistan National Climate Change Policy of Government of Pakistan.

National Climate Change Policy approved in 2012 outlines goals and strategies to achieve targets in the Adaptation and Mitigation sectors. It guides the implementing agencies to exploit clean energy sources (i.e. alternative and renewable energy resources) to generate electricity, improve efficiency of currently installed thermal power plants, improve efficiency of the national grid system and deploy AREs for domestic uses.  

Moreover, Policy of Development of Renewable Energy for Power Generation, 2006 has been announced by the Government of Pakistan to attract private sector investment for developing clean ARE power projects with objectives of sustainable development, energy security, environmental protection and socio-economic uplift. The Power Policy 2013 of the Government of Pakistan (GoP) emphasises development of AREs for providing inexpensive and clean electricity to every household in Pakistan with deep interest of reducing GHG emissions. Please describe the national and international climate policy context: Describe the current framework for addressing climate change in the target country. Please include a description of the country’s mitigation strategy and plans to address climate change. Specify whether/how national targets relate to international agreements, especially to emission reduction pledges.

The projected electricity demand of Pakistan’s growing economy is expected to within the range of 306,797 GWh by 2020, and 889,583 GWh by 2035[1]. The planned projects in power sector indicate that most of the power is likely to be sourced from the country’s vast coal reserves.  The GoP is planning to harness local as well as imported coal for generation of 6,600 MW power in next five years. The installed capacity of coal power plants is planned to be enhance to 13,200 MW by 2025.[2] By 2050, energy related emissions are expected to increase to 2,730 MtCO₂e, i.e., equal to 64% of total emissions that year[3] – evidence that the energy sector in Pakistan will become increasingly carbon-intensive without intervention.

Pakistan is currently categorized as non-Annex-I country that does not have any binding to reduce GHG emissions. However, as a commitment to play a role in the global GHG emission reduction initiatives, GoP in its plans has keen interest to set up ARE power projects.The GoP, in its long term plans i.e. upto 2030, is targeting to set up around 15 GW ARE power through different applications in different parts of the country. This will result in increasing share of AREs in the energy mix from zero to around 12%.