ON April 23, 2016, Pakistan became a signatory to the Paris Agreement on Climate Change, joining 174 other countries in a pledge to combat climate change. The surprise victory of Donald Trump in the US has cast doubts on this agreement. The prospects of American commitment to the agreement are slim — the president-elect has said that climate change is something the Chinese came up with to “make US manufacturing non-competitive”.
This uncertainty does not mean that Pakistan cannot take certain measures to make strategic investments and policy choices to foster the development of clean and modern technologies in the country.
According to Goldman Sachs and economist Jim O’Neill, Pakistan is poised to become one of the largest economies of the world in the 21st century. The current government is making investments in public infrastructure to foster long-term growth. As these projects reach completion, Pakistan will witness increased economic activity. This will in turn increase urbanisation and promote consumer spending. A rising middle-class will aspire to goods and services that were previously out of their grasp.
The direct impact of this growth will be witnessed in the production and sale of automobiles in the country. Restoration of macroeconomic stability in the past few years has led to an increase in demand of automobiles and motorcycles. Sales of locally manufactured and imported vehicles have continued to increase at over 10pc per year.
A national programme to promote the use of electric vehicles could spur private-sector investments in the energy infrastructure.
According to the Pakistan Automotive Manufacturers Association, July-October year-on-year (YoY) sales for this year fell by 8.77pc. This decline, however, is not due to lack of demand — the ‘Apna Rozgar’ scheme had led to an increase in smaller cars for taxis and the conclusion of this scheme has led to the YoY decline. Sales of buses and trucks clocked in a 55pc YoY increase during the period July-October 2016.
The negative externalities of the increase in demand for vehicles are already being witnessed in Pakistan’s urban environment. Peshawar, Rawalpindi and Karachi are among the World Health Organisation’s list of the 20 most polluted cities in the world. Choking smog during winters in Lahore has become a norm. While a number of factors contribute to urban pollution, the fumes of automobiles, buses, trucks, and rickshaws play a vital role. The result of this pollution is increased healthcare costs, low labour productivity, and an overall drag on economic growth.
A strategic road map to modernise Pakistan’s automobile sector can play a pivotal role in reducing pollution and bringing new technologies to the country. This road map should seek to phase out dirtier vehicles on Pakistan’s roads and incentivise the use of cleaner technologies with the ultimate goal of creating an electric vehicle ecosystem in the country.
For starters, the government should develop and enforce fuel efficiency standards. Both developed and developing economies have these standards, and governments have used these standards to foster technological innovation and modernisation.
Secondly, Pakistan should amend its automobile policy to incentivise companies that want to bring electric vehicles to the country. Reports that Renault-Nissan is entering the country is great news for Pakistan’s automobile sector, and the government should use this development to attract other companies provided that they bring cleaner technologies to Pakistan.
Finally, Pakistan must have a practical plan to make electric vehicles a critical component of the country’s transportation infrastructure. China and the United States are both leaders in this space, and Pakistan should use its close relations with both countries to bring electric vehicle technologies to the country.
Implementing fuel economy standards and having the right incentives for the production of cleaner engines is relatively easy. It is harder to execute a forward-looking road map that makes electric-vehicle adoption a reality in Pakistan. The country has been plagued with electricity shortages for decades and the electricity infrastructure has suffered from years of underinvestment. Convincing people to produce and purchase vehicles that run on electricity that is scarce is not plausible.
Strategic investments in Pakistan’s energy sector are expected to alleviate electricity shortages by 2018. A national programme to promote the use of electric vehicles could spur private-sector investments in the energy infrastructure. Successful execution is not a far-fetched proposition: during the Musharraf-era, Pakistan rapidly expanded its natural gas infrastructure as the government promoted the use of CNG in vehicles. That policy, in hindsight, was short-sighted and did more damage than good to Pakistan’s economy. However, the successful execution of this policy is evidence that Pakistan’s government can create the right environment for the adoption of clean and efficient electric vehicles.
This road map will not solve all of the problems caused by rising levels of pollution in the country. It will, however, be a major step in developing a modern transportation ecosystem that is built upon the widespread use of electric vehicles. Such a plan will not succeed overnight and will require broad support from political parties, automobile companies, the transportation sector and society at large.
The difficulty of the task at hand is no excuse to not try. Surely a country that can make nuclear weapons despite lack of international support can build a clean and modern transportation ecosystem in a global environment where there is widespread consensus to combat climate change.
The writer is a South Asia analyst at Albright Stonebridge Group in Washington DC.
Published in Dawn November 28th, 2016