Environmental Impact Assessment Of Power Sector Of Pakistan For Sustainable Development

The electricity sector’s function in the economy is critical for producing and consuming products and services.Electricity is one of the most important infrastructure tools for economic and social growth since it is the most versatile of all accessible energy sources.Population expansion,coupled with widespread urbanization,industrialization,and technical advancement,raises power consumption in Pakistan.Poor management and weaknesses in strategic planning execution degrade institutional performance and functionality.The power sector’s failure to satisfy rising electrical demand resulted in a persistent power shortage that hampered the country’s economic growth.In response,Pakistan engaged the private sector’s resources in energy generation and implemented multiple incentive-based frameworks in the late 1980s.Despite reforms and structural adjustments,the electricity industry is still dismal.Circular debt,excessive energy costs,a lack of inputs to the generation sector,underutilization,and overutilization of generation capacity are just a few of the numerous issues this industry faces.More than 60%of Pakistan’s power is generated using nonrenewable resources,exacerbating the country’s economic and environmental challenges.The greater share of thermal power plants and their capacity costs is a major issue in the green and cheap energy transition.This study evaluates power sector issues,performance,and pathways to achieve a sustainable power sector.The first strand of this study reviews the power sector’s status in response to Pakistan’s energy policy of 2015 to evaluate the existing issues in Pakistan’s generation,transmission,and distribution sectors to achieve a sustainable power sector in the future.For this purpose,this study compares the status of the whole power sector using several variables in 2015 and 2021.The energy policy of 2015 was presented to provide stable,affordable,green,and sustainable power to all populations using indigenous resources.The policy has increased the desired generation capacity,but not significantly from indigenous or renewable resources.The higher share of thermal power plants in electricity generation is the main reason behind high electricity costs and environmental concerns.The transmission sector’s performance is satisfactory,but capacity and reliability issues exist.The distribution sector of Pakistan has several technical and non-technical issues that also affect the performance of the whole power sector.The second strand of this study evaluates the environmental efficiency of thermal power plants.Thermal power is generally considered a more economical and stable energy source that meets 80 percent of the world’s energy demands.In Pakistan,thermal power plants utilize 34%of total primary energy for electricity generation and account for more than 60%of the installed generating capacity[1].Thermal power plants are substantial contributors to CO2 emissions;consequently,it is critical to evaluate thermal plant environmental efficiency.Pakistan is dealing with an energy crisis and climate change,while fossil fuel power plants are increasing.Improving the operating efficiency of thermal power plants may aid the government in meeting its sustainable development goals,but only if clean energy becomes less expensive and more dependable than fossil fuel energy.Pakistan’s current power-producing capability exceeds its current electricity consumption.Thermal power sources must be both economically and environmentally efficient to address the energy crisis and lessen the environmental effect of thermal power generation.Most thermal power plants are under a "Take or Pay" arrangement,which implies that the government must pay capacity costs to these power plants even if no electricity is purchased.The primary goal is to evaluate the environmental performance of thermal power plants in Pakistan.There are three key goals:(1)conserving input for power production,(2)green ranking of PP for order dispatch rather than merely cost-effective ranking,and(3)trend evaluation of environmental productivity for policy insights.The analysis uses current data spanning eight years,from 2014 to 2021.The biggest threats to Pakistan’s power sector’s sustainability include greater levels of circular debt,production costs,inefficiency,and the thermal proportion of generation capacity.The increasing reliance on thermal power plants has a negative impact on the environment and energy security.The vast majority of previous research relied on parametric approaches to reduce power generation costs,optimize energy mix,and assess the efficiency of renewable energy sources.Because coal is inexpensive and abundant in Pakistan,these studies advocated coal-fired power stations to minimize the cost of energy generation.Furthermore,they advocated for a shift in the energy mix,with more power generated from renewable sources.Because Pakistan is a fast developing country in the midst of an energy and environmental crisis,this study assesses the energy efficiency of its fossil fuel power plants.In addition,attempt to figure out what is causing the swings in the energy industry.This study is the first in Pakistan to employ and compare parametri c and nonparametric models using the most recent data(2014-2021)of thermal power plants.This research focuses on minimizing the use of fossil fuels and pollution.The statistics for all inputs and outputs are obtained from the National Electric Power Regulatory Authority’s yearly reports(NEPRA).The dataset contains 232 observations from 29 thermal power facilities in Pakistan over eight years.In order to ensure consistency in the outcomes of all models used in the assessment,input-oriented The DEA with a constant return to scale and the DEA with a variable return to scale approaches are employed.The obtained results from conventional DEA models are then compared with competing performance evaluation techniques of SFA and COLS.Furthermore,the super-efficiency DEA and Malmquist productivity index are applied to rank the thermal power plants and evaluate their performance trend during the study period.According to CRS-DEA and VRS-DEA statistics,the efficiencies of 29 thermal power plants are 86 and 96 percent,respectively,while scale efficiency is 90 percent.Most power plants are operating on an increasing return to scale.TPS Muzaffargarh,the most inefficient thermal power plant,used 39%more energy for electricity generation than ideal levels and emitted 39%more CO2.Inefficient power plants may lower their energy intake,O&M costs,auxiliary electricity usage,and CO2 emissions by 15.82%by improving their efficiency level.Comparing competing models shows that CRS-DEA findings are significantly correlated with SFA and COLS.In contrast,VRS-DEA provides higher efficiency values than other models,and the results are not significantly correlated with SFA and COLS.Therefore,the constant return to scale is adopted for the ranking and dynamic analysis of the thermal power plants.The mean efficiency scores of the DEA-Super efficiency range from 0.628 to 1.788.The dynamic trend analysis shows that the productivity of the thermal power plants decreased over time.Productivity declines are caused by the thermal power plants’ low efficiency and technological performance.Private power plants performed poorly during the study period compared to public and vertically integrated power plants of Karachi Electric(KE).The performance of smaller power plants is also better than large power plants.The average performance findings reveal that the power industry failed to manage the expanded production capacity throughout the assessment period.This extra capacity raised the environmental and economic burden inefficiently.The efficiency analysis of the thermal power plants provides several policy insights.Because fossil fuel power plants generate most energy in Pakistan,increasing their efficiency and reducing fossil fuel usage are key to achieving economic and environmental sustainability.Policymakers should also develop future energy strategies to reduce reliance on thermal power plants and enhance green energy output.To address the power sector’s technological growth challenges,the government should establish an R&D agency and seek assistance from overseas energy specialists.Finally,this study evaluates the performance of the distribution sector.The distribution sector supplies available electricity in the country to the end consumer.Pakistan is confronted with the problem of excess production capacity and underutilized power plants,which indicates the incapacity of the heavily subsidized distribution sector to dispose of excess energy output in the presence of potential users.A capacity excess is an additional burden on the exchequer account and one of the primary causes of the country’s high power costs.There are not many empirical studies on the performance analysis of the energy distribution industry in South Asian countries,especially for Pakistan,in the extant literature.This research will fill a vacuum by systematically measuring and benchmarking the performance of Pakistan’s distribution industry and providing new policy knowledge to address current concerns.The majority of previous research has focused on energy mix and renewable energy resources to address the country’s energy security and crises.With a two-stage DEA model,this study examines the most recent panel data from 11 distribution firms for 2016-2020,encompassing the whole service region in Pakistan.This study evaluated and benchmarked the EDUs using a non-parametric inverted frontier DEA model in the first stage.The efficiency score generated from the DEA evaluation is regressed against external factors in the second stage to quantify the influence of environmental variables on EDU performance.The benchmarking of utilities determines the best-performing units in the system and quantifies the difference in performance.Prior research examined 8 or 9 of 11 EDUs for efficiency analysis using data up to 2016.The ranking in this study is based on inverted frontier DEA,and the change in efficiency over time is analyzed using DEA windows.There is no agreement on which form of econometric model best accounts for DEA scores.Some claim that analyzing DEA efficiency requires just a censored(Tobit)regression.Other researchers claim that Ordinary Least Squares(OLS)yields the most accurate estimations.This study intends to demonstrate the robustness of the linear results by applying several estimating methods.First,the study ran an OLS regression to identify the factors influencing DEA ratings.Second,as previous research has suggested,this paper regressed a Tobit model and then investigated the determinants using a Truncated regression model,which might be an effective econometric model for this occurrence.Fourth,the Fixed Effect(FE)and Random Effect(RE)models were calculated in this work.According to Standard Frontier findings,TESCO,IESCO,QESCO,and KE were the most energy-efficient enterprises in Pakistan in 2015,followed by FESCO,MEPCO,HESCO,GEPCO,PESCO,and SEPCO.According to the Standard Frontier,TESCO,IESCO,LESCO,MEPCO,and KE were the most efficient firms in Pakistan in 2016.Similarly,the Composite Index indicates that IESCO was Pakistan’s most efficient power utility in 2015,followed by FESCO.According to the Composite Index,Pakistan’s most efficient distribution entity in 2016 was FESCO,followed by IESCO.In reality,in Pakistan,IESCO dropped from first to second place in the Composite Index rank in 2015,whereas FESCO rose from second to first in 2016.The external variables of electricity sales,consumer density,consumer structure,industrial consumers,and distribution losses are regressed against standard frontier and composite index values in the second stage.The standard frontier OLS regression has an R2 of 65.8 percent.The OLS regression of the composite index presents an R of 64.2%.The analysis demonstrates the importance of distribution losses in explaining DEA efficiency in Pakistan,and it has a negative impact on performance.In contrast,the consumer structure and electric sales variables have a favorable effect on the efficiency of the electricity distribution companies.This study offers policy implications for the distribution utilities based on the performance findings.Inefficient companies should follow the practices of efficient distribution utilities to improve their performance.Distribution companies should enhance their sales by electrifying communities that do not have access to energy.However,in the growth strategy,the density of the customers and the structure should be addressed,and populated and residential regions should be preferred.KE is a single privately held utility that has outperformed the majority of the utilities.Policymakers should also emphasize privatization in metropolitan regions while keeping consumer density in mind.