ISLAMABAD, May 08 (SABAH): Experts on Wednesday underlined that given the increasing climate burden, Pakistan must analyze the hidden social and environmental cost of power generated from the fossil fuels and embed it in its long-term planning. This includes the cost incurred from damaging impacts on the local community, health, ransportation, and general wellbeing of the masses due to intense carbon emissions, and degradation of natural resources.
The Sustainable Development Policy Institute (SDPI), under its Network for Clean Energy Transition (NCET), held a high-level roundtable titled “Weighing the Actual Cost of Coal Power Generation in Pakistan: An E3 Approach”, bringing together energy experts, policymakers, academics, and civil society to scrutinize the hidden environmental and social costs of coal-fired power generation.
Muhammad Ayub, Former Managing Director of National Transmission and Despatch Company (NTDC) acknowledged coal’s role in diversifying the energy mix post-2013 but warned that the real cost of coal is far greater than calculated. Weak institutional frameworks and political resistance are stalling tariff reforms that include environmental and social costs. He highlighted that any tariff reforms require a coordinated strategy.
Engineer Ubaidur Rehman Zia, Head of Energy Unit at SDPI highlighted that Pakistan has already faced a substantial cost of climate catastrophes, leading to its financing needs of over USD 348 billion, that are expected to further increase if no action is taken. Climate change needs to be integrated within the economic planning and development agenda of the country, he added. Engineer Ubaidur Rehman Zia further mentioned that Pakistan is going to finalize the Resilience and Sustainability Facility (RSF) under an IMF program, which will most certainly lead to the imposition of carbon tax. This would further lead to higher taxes for industries reliant on fossil fuels such as coal.
Presenting the report, SDPI’s energy analyst Zainab Babar highlighted that while coal remains a reliable energy source, it embeds significant unpriced costs that go unnoticed in power bills. “The health damages alone amount to $15.98 per MWh. Sahiwal Coal Power Plant incurs Rs. 18,271.51 per MWh in externality costs, while Engro Power Generation’s figure is a staggering Rs. 40,392.72 per MWh,” she said.
From the preliminary findings of the study, she said found that coal-fired power plants (CFPPs) contribute nearly 27% of Pakistan’s total CO₂ emissions, with the Sahiwal and Engro plants emitting 887 kg/MWh and 2154.05 kg/MWh, respectively. Transport emissions and environmental degradation further amplify the real cost of coal-based electricity. Ms. Babar advocated for the introduction of a Pigouvian Tax, a pricing mechanism for hidden costs.
Ali Nawaz, Director General at Private Power and Infrastructure Board (PPIB), however, called for data recalibration, questioning discrepancies in emissions data: “We must ensure data accuracy before finalizing carbon taxes. Additionally, these plants use non-potable groundwater, not freshwater, and scrapping them after billion-dollar investments isn’t viable.”
Quratul Ain Jamil from PPMC echoed similar concerns: “Tariffs currently only reflect direct fuel costs. But we’re now at a point where carbon externalities may be factored into national energy planning. However, this needs an integrated planning and long-term planning approach. She emphasized that Pakistan’s 60% renewable energy target by 2030 is a de facto shift toward a carbon-neutral sector, aligning with IMF’s Resilience and Sustainability Facility (RSF), which proposes a carbon levy from July 2025.
Badar Alam, CEO of PRIED, criticized the neglect of social and natural resource costs associated with CFPPs. “It’s not just emissions—we’re funding expensive infrastructure with public money while companies profit. A carbon tax should be levied directly on CFPPs, not consumers,” he insisted.
Helen Mashiyat Preety from Bangladesh shared her country’s perspective, noting the slow but determined shift away from coal: “We aim to phase out fossil fuels by 2060 and are increasing our renewable share despite early over-dependence on gas. Pakistan’s renewable integration is an encouraging example for us.”
In his closing remarks, Shakib Elahi appreciated the SDPI team for generating meaningful, data-backed insight on a critical issue: “This report is a step forward in shaping an informed, responsible energy future for Pakistan,” he concluded.
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