An emblematic city looks to renewable energy in Sialkot, Pakistan


An emblematic city looks to renewable energy in Sialkot, Pakistan

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Date: 1st October 2015
Author: CDKN Asia
Type: Feature
Countries: Asia, Pakistan
Tags: electricity generation, greenhouse gas emissions, energy, greenhouse gas emissions, industry, NAMA, renewable energy

Juan Pablo Osornio of Ecofys and Mehjabeen Abidi-Habib go behind the scenes of an initiative to green Pakistan's industrial heartland. Sialkot city, home of a thriving football manufacturing industry, is now the focus for a 'Nationally Appropriate Mitigation Action' or NAMA.

Sialkot, a small city in Pakistan’s prosperous Punjab has emerged as a national growth engine. A city ‘that was left by the wayside’ since India’s arterial Grand Trunk Road in the 17th century and Pakistan’s 21st century motorway bypassed it, now Sialkot is a self-organised community of industries that exports up to USD 1.6 billion per year, mostly of sports and surgical goods.

Pakistan’s energy sector, mostly sourced from its hydroelectric power, is in crisis. Inadequate supply is thought to cost USD14 billion annually according to one study conducted by experts. [1] This has affected Sialkot’s industrial productivity.

“In Sialkot some 11,000 small and medium industries are operating at 60% of total capacity” points out Mr. Ahmed Zulfiqar Hayat of the Leather Garments Manufacturers & Exporter Association of Sialkot. “We are on a war footing about energy supply”, he continues.

As the President of the Sialkot Chamber of Commerce Mr. Fazal Jillani explains:  “We have been of the national radar for so long, that we have learned to do things ourselves. The city has redefined what is possible with a ‘can do’ spirit as it has built [2007] and operated its own private airport and is connecting a highway to the nation’s arterial motorway in 2016”.

It is now widely recognised that the next barrier to Sialkot’s rise is energy provision.“Barriers are breakable and we are not dejected by the government” says Jillani. The opportunity to show-case a way forward to supply clean energy to the city and reduce its carbon footprint are clear to the city’s industrial associations which are part of the Chamber of Commerce.

In energy hungry Sialkot, diesel generators,already widespread in its industries,have proved an expensive and dirty alternative. Renewable energy options are not only going to be cheaper to run, but industrialists know their use will be rewarded by global clients who prefer clean production, onethat addresses climate change by reducing greenhouse gas emissions.

CDKN helps Sialkot assess NAMAs to provide renewable energy solutions

Since 2007, developed countries have been providing resources to developing countries to assist them in the reduction of greenhouse gas emissions through Nationally Appropriate Mitigation Actions (NAMAs) without hindering their economic development. According with the NAMA database, 157 NAMAs have been submitted by 49 countries, only nine are from Pakistan. Of the 157 NAMAS, only 13 are being implemented.

One of the largest barriers to allow for broader NAMA implementation is finance. The amount of money donor countries are willing to provide greatly depends on the NAMA’s ambition (i.e. estimated greenhouse gas emissions reductions and game changing potential) and its plan to monitor, report and verify (MRV) these reductions. The more ambitious NAMAs with the more rigorous MRV systems have a higher likelihood to raise international funding.

With this in mind, Pakistan’s Ministry of Climate Change and the Punjab Power Development Board requested the Climate and Development Knowledge Network (CDKN) to assess whether a NAMA would be an appropriate tool to support renewable energy solutions for the Sialkot industry. Being entrepreneurial and export- oriented were two criteria for the choice of Sialkot.

CDKN, on its part, hired Ecofys (Netherlands) and PITCO (Pakistan), to analyse Sialkot’s industry energy demand and the availability of renewable energy technologies in Pakistan.The purpose was to find the best renewable energy option to alleviate the electricity difficulties of the city’s leather, sports and surgical sectors.

During the summer of 2015, more than 100 Sialkot industrialists participated in workshops analyzing their energy demands, the distribution among different company sizes and the renewable energy options available along with associated costs, saving potential and emission reductions. The workshops in Sialkot also helped validate the analysis and identify potential barriers based on the participants’ experience of introducing new technology in the city.

After discussing wind energy, hydroelectricity, grid-scale solar and photovoltaic or PV panels, local industrialists preferred PV panels for cost, ease of implementation and flexibility. PV systems help reduce electricity interruptions and have no associated fuel costs.

The use of PV panels in industry would be a game changer for Sialkot industry. Being readily available, PV panels allow businessmen to adjust the number of panels to their specific electricity needs and financial means. They can belater scaled up, when more electricity is needed. “Factory to factory solutions from 300 kW to 1 MW are common PV solutions for half a dozen factory clusters”, said one of the leading industrialists at a local workshop.

The deployment of PV technology would help Sialkot’s economic growth while at the same time reducing greenhouse gas emissions, important considerations for a NAMA. If a NAMA is developed and registered in the UNFCCC NAMA Registry, then it will be accessible to a myriad of international funders. “We are a bankable city, and our Chamber of Commerce will hold guarantee to any investor from the world”, affirms Jillani, the President of the Chamber.

Resources and interest are there. International funds have pledged close to USD 35 billion for climate actions. The Green Climate Fund, an international facility that allows private –public partnerships to finance NAMAs, alone has USD 10.2 billion. There is also interest from individual developed countries. The First Secretary of the German Embassy to Pakistan, Sebastian Ernst, who attended the final deliberations of the project in Islamabad, pointed to his country’s continuous commitment to helping Pakistan’s energy needs.

What next to trigger change?

“You have to be responsible for the change you bring, and don’t wait for anyone”, pointed out Ali T. Sheikh, CDKN’s Asia Director when addressing the Sialkot Chamber’s frustrations at the slow reaction times of public institutions.

A NAMA takes time for the Government to prepare and offer for international finance. In the months that this process requires, one immediate solution offered by Omar Malik of PITCO was for lead industrialists in Sialkot to initiate pilot projectswith PV systems. Mr. Malik pointed out that the State Bank of Pakistan lends to large associations at 6% interest rate, making this an attractive funding source for PV panels forSialkot industrialists.

Perhaps the most pressing challenge to start the renewable energy journey in Sialkot is the heightened state of readiness of the industry and their fast response times, and the slower processes of government facilitation. Yet, putting both slow and fast responses into motion may enable the best actions to surface.

The question then is how to bridge the entrepreneurial spirit of Sialkot’s private sector with the public sector. Just as nature needs catalytic enzymes, would a go-between be needed to enable fast and fruitful results through public and private sectors entering a new technological stage?

CDKN’s assessment project for NAMA on renewable energy solutions in Sialkot city comes to a completion this fall. Will the Government of Pakistan request a follow up to just one mechanism such as a NAMA?  Or open up to a plethora of actions and funds that will trigger the emblematic city to adopt clean energy.

While chairing a stakeholder conference on Sialkot’s energy assessment in Islamabad in August 18th, Sam Bickersteth, Chief Executive Officer of CDKN, noted that responding to clean energy needs predicates “a strong demand, with citizens and government working together”.

[1]Economic Costs of Power Loadshedding in Pakistan, 2013: Dr. Hafiz A Pasha, Institute of Public Policy Beaconhouse National University

Picture Courtesy: Flicker (mirzairfan)

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