OPINION
Uzair Younus
Think about energy security
mitigate geopolitical and domestic stability risks emanating in this transitory world. For Pakistan, this increasingly volatile era could not have come at a worse time. Struggling with domestic political polarisation and economic chaos, the country is already buckling under the weight of higher global energy prices. And while prices have eased recently, providing some breathing room to the government, the rapid devaluation nergy price volatility has shocked and awed the world, of the currency means that there is not enough financial space to pass unleashing a wave of inflation and pain on hundreds on the savings to citizens. In addition, the decision to reverse Imran of millions of citizens. While much of this volatility Khan’s disastrous price freeze has imposed an outrageous political has been caused by Russia’s invasion of Ukraine, it is cost on the ruling coalition government. Continued volatility, as preimportant to recognise that such volatility will be the dicted by many including the authors cited above, will only increase norm, not the exception, in the years to come. This is instability in the country and reduce the financial operating space for because as the global energy economy undergoes what is commonly successive governments. referred to as the clean energy transition, extraction of fossil fuels Pakistan’s policymakers, however, should think about this crisis will become financially and operationally more challenging. For as an opportunity to rebuild the country’s energy sector. As the climate countries like Pakistan, this new era of volatility poses immense crisis inflicts increasing costs on societies around the world, financial risks, mainly because the country is both a major energy importer institutions, especially multilateral ones, will begin to provide astonand struggles to generate enough dollars on its own to meet its ishing levels of financial and technical support to countries seeking to external financing needs. accelerate the clean energy transition. To fully realise this opportunity, This volatile future was forecasted by experts long before Puhowever, Pakistan must harness the capabilities and expertise of its tin’s military invaded Ukraine. Writing for Foreign Affairs in Januown people to develop a strategy to become energy independent. This ary 2022, Jason Bordoff, co-founding dean of the Columbia Climate requires a whole-of-nation approach, as near-term costs will have to School, and Meghan O’Sullivan, professor at the Harvard Kennedy be borne to maximise long-term gain. School, wrote that “talk of a smooth transition to clean energy is This will require marshalling domestic capital to develop indigefanciful: there is no way that the world can avoid major upheavals nous energy sources including coal to reduce reliance on imported fosas it remakes the entire energy system, which is the lifeblood of the sil fuels. Foreign institutions, particularly western ones, are unlikely to global economy and underpins the geopolitical order.” In the same support such efforts as part of a broader push to stop financing of dirty essay, the authors argue that petrostates “may enjoy feasts before fossil fuels like coal. But compared to economies such as India, China, they suffer famines, because dependence on the dominant suppliers and Germany, Pakistan uses a tiny fraction of coal in its energy mix. of fossil fuels, such as Russia and Saudi Arabia, will most likely rise The presence of Thar coal deposits provides a cheap and easily accesbefore it falls.” sible source of energy that is vital for generating sustainable growth in It is almost as if Bordoff and O’Sullivan knew about Putin’s the country. Given emerging global dynamics, this resource will have plans to upend global energy markets ahead of time and could visuto be tapped using domestic capital to create the space for long-term alise how Biden’s recent visit to Saudi Arabia would go. investments in clean energy. Recognising that this volatility will pose a major risk to enerIn addition, a consistent policy environment is needed to gy-importing nations around the world, the authors recommended properly execute this strategy. For far too long, Pakistan’s economy in the same essay that governments ought to proactively seek to has been held hostage by politics, where competing parties deploy a scorched-earth strategy to gain power. Such an approach undermines investor confidence, reducing the total sum of feasible investments and leading to the execution of deals where investors demand exorbitant and guaranteed rates of return due to the country’s risk premium. So long as this continues to be the The writer is Director of case, long-term investments that help achieve energy security and accelerate the country’s clean energy the Pakistan Initiative transition will not materialise. at the Atlantic Council, a A large contributor to today’s economic crisis in Pakistan is the country’s failure to take a longWashington D.C.-based term view on its energy security needs. With energy price volatility becoming the norm and not the think tank, and host of the exception, it is important for all stakeholders to come together and pursue common-sense policies. podcast Pakistonomy. He Anything short of that will only sow further chaos, making it likely that domestic instability will destroy tweets @uzairyounus. the country long before climate change has a shot. n
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