War-triggered crises inflict severe human miseries and devastate economies but social scientists and political economists point out that these crises also spur technological innovations to help build a new world.
A recent article in McKinsey Quarterly noted that the 19th-century naval wars accelerated the shift from wind to coal-power vessels. World War I brought about a shift from coal to oil. World War II introduced nuclear energy as a major power source. In each of these cases, wartime innovations flowed directly into the civilian economy and ushered in a new era.
The war in Ukraine is different in that it is not prompting energy innovations itself but making the need for it clearer. The article concluded: “Still, the impact could be equally transformative.”
“The Ukraine war is already forcing every country and every company to dramatically advance their plans for decarbonisation,” says Tom Burke, director of E3G, Third Generation Environmentalism, the climate research group.
Global crises can birth technological innovations to help usher in a Green era
Pakistan seems to share the above views. In his budget speech, Finance Minister Miftah Ismail said Pakistan is suffering an acute shortage of energy. Thermal energy is expensive due to skyrocketing fuel prices. And renewable energy seems to be the way forward.
An analyst points out that oil, gas and coal imports constitute a large portion of our imports and the current prices of these fuels are a major factor for double-digit inflation.
He observes that the ailing power sector has been hit by the high cost of electricity generation, attributed (partially) to costlier out-of-date technology, poorly designed contracts, above-average transmission and distribution losses and below-average recovery of electricity bills.
In the prevailing situation, the budget presented by the PML-N-led government for 2022-23 has proposed to exempt import and local supply of solar panels from 17 per cent sales tax. Furthermore, consumers using fewer than 200 units of electricity will be facilitated to obtain soft loans on easy terms from banks for setting up solar panels.
Focusing on green energy due to the risk posed by climate change, the Khyber Pakhtunkhwa budget for 2022-23 provides Rs4bn for the installation of solar panels over 11,000 mosques across the province.
Similarly, the Sindh budget has earmarked Rs472m to solarise primary health facilities in 10 districts of the province, water pump units in Tharparkar and prisons.
Emphasising that a fast-track solar programme appears to be the need of the hour for reducing electricity costs, energy expert Syed Akhtar Ali says: “at least 1,000MW should be installed in one year from now.” He says it is not impossible quoting past performances in other segments of the energy sector.
Another major Ukraine war-related problem facing the world, including Pakistan, is food security. As a result of the ongoing food crisis exacerbated by the war in Ukraine, climate change and the continuing effects of the coronavirus pandemic, 323 million people “are marching toward starvation”, says David Beasley, who now leads the United Nations Food Programme.” And 49m are “literally at the famine door”. Mr Beasley had earlier warned that 2022 and 2023 could be the worst two years in the humanitarian world since World War II.
Talking of the gravity of the crisis, he remarks: “After all, we all here are, dealing with the third such crisis in 15 years, with the number of the world’s hungry having grown fourfold in just last four years.”
For the semi-industrialised essentially agricultural Pakistan the message is loud and clear: modernise long-neglected farming to manage food security. The policymakers are conscious of the need to focus on agriculture but steps taken in this direction still fall short of the farmers’ expectations.
The Ukraine war is a significant risk to economic development, say Pakistani analysts and policymakers as a prolonged conflict could further raise international energy and food prices and impede world trade through supply disruptions while generating further inflationary pressures. The problem confronting the policymakers is how to convert these challenges posed by energy and food crises into an opportunity to achieve high-tech enabled middle-class economy and food security at a faster pace than envisaged now.
Published in Dawn, The Business and Finance Weekly, June 20th, 2022