The Millennium Development Goal (MDG) states that GDP (at constant factor cost) per unit of energy use as a proxy for energy efficiency will be increased from Rs26,471 in 1990 to Rs28,000 in 2015.

A report monitoring all MDGs was launched by the prime minister early this year. In its 132 pages, the report mentions the target in a table but offers not a single word of explanation on progress or the lack of it.

The report is prepared by the Planning Commission and its UNDP-supported Poverty Centre. The priority for energy efficiency is completely ignored by relevant quarters.

Energy efficiency does not merit any discussion in a country whose largest import item (31 per cent) is oil-related and is facing a power deficit of 2000-3000 MW now and a lot more in near future. No surprise then that while the economic team celebrated high GDP growth, energy demand overshot supply by a wide margin. Never blamed for humility, the team changed gear to announce that rising energy consumption is also a sign of development. It is, but in per capita terms. In 2003, the developing country average for electricity consumption per capita was 1,157 kilowatt hours compared to Pakistan’s 493.

International comparisons in terms of purchasing power parity also indicate the potential for energy efficiency. Again in 2003, Pakistan produced $4.2 of GDP per kg of oil equivalent compared to the South Asian average of $5 and the OECD average of $5.3. Here is then a situation of a country extremely poor in terms of energy consumption per capita but ranking high as an energy waster.

Energy efficiency is important for several good reasons. First, it is the quickest means to augment supply. The load-shedding that the nation just faced could have been avoided by putting in place an effective awareness campaign, coupled with tariff reduction on energy savers. The assumption here is that the rise in demand was forecast correctly and in time, an optimistic assumption as the professional capacity in the government leaves much to be desired.

Anyway, the ENERCON had prepared a campaign, but the advisor to the prime minister on finance never got the time to consider it for funding. Awareness, it must be understood, is half of the energy efficiency business anywhere but especially so in a least literate country like ours.

Second, energy efficiency has proved to be the most inexpensive way of augmenting supply. Very nearly under all situations, a unit of energy saved through efficiency measures costs much less than a unit of energy produced by new investment. Third, rising energy costs are making the country less competitive in the world market. Energy efficiency is an effective method of reducing these costs.

Finally, while the energy saved improves energy security which has become important in the context of the world scramble for energy, efficient use of energy means less pollution at home and lower emissions for the world climate.

Industrial sector consumes 43.2 per cent of the total commercial energy, the bulk of it concentrated in a few hundred units. Energy audits carried out by the ENERCON show that energy efficiency can be improved up to 23 per cent. Basically it involves boiler/furnace tune-up and improved steam distribution systems. The focus is also on refrigeration, air-conditioning and co-generation. Modernisation and revamps, energy efficient combustion processes and controls and ready access to best practice are the desired areas of action.

With a share of 28 per cent, transport sector is the next largest consumer. The results of the pilot computerised tune-up centres set up by the ENERCON show that car owners can enjoy fuel saving of around 10 per cent. An important step to be taken is the system of effective motor vehicle examination at local levels. The sector as a whole has the potential of being 20 per cent more energy-efficient, as it will cover not just road transport, but railways, shipping and aviation also..

The third largest consumer of energy is the domestic/household sector, taking a share of 20.8 per cent. This sector is believed to have a saving potential as high as 30 per cent, achievable through energy efficient building design and by retrofitting or modifying existing buildings. It involves the use of energy efficient equipment, fixtures and appliances, and insulation material. A major step to be taken is the energy efficient building code.

All told, energy efficiency can contribute an annual saving of $2-2.5 billion, the equivalent roughly of one-fourth of the oil bill. There is money to be saved by the public sector and there are profits to be reaped by the private sector. The field is ideally suited for public-private partnerships.

The world is going for these economies and opportunities. China’s National Development Plan 2005-10 has the twin objectives of doubling GDP per capita and reducing energy use GDP per unit by as much as 20 per cent. There is active cooperation with California, the US showcase for energy efficiency. Japan, the hardest hit since the first oil price shock in 1973, has shown the do-ability of such plans by becoming the most energy efficient country. A unit of GDP consumes half of the OECD average consumption of energy. Its announcement of a “cool biz” plan signals that it can do more.

ASEAN has declared energy efficiency as one of its core programmes. Mexico promotes the slogan: “The most expensive energy is that which is not available and the cheapest energy is that we do not need.” India has enacted an energy conservation law and is promoting a green building initiative. Thailand gives fiscal incentives and earmarks a portion of petroleum taxes to promote investment in energy efficiency.

With the world abuzz with energy efficiency, why Pakistan is a laggard will be explored in the concluding part of this series next week.

The writer is Mahbub ul Haq Professor of Economics at GC University. E-mail: perveztahir@yahoo.com.