Proceedings World Bioenergy 2010

INSTRUCTIONS FOR PREPARATION OF PAPERS
THE ECONOMIC, POLITICAL AND SOCIAL ISSUES, HINDERING THE ADOPTION OF BIOENERGY IN
PAKISTAN: A CASE STUDY
Umair Usman
UCH
Moonoo Chowk, Raiwind/Defence Road E. Lahore, Pakistan
Umair@uch.com.pk, Tel: 92-42-5321636, Fax: 92-42-5321638
ABSTRACT: The paper will inform the audience about the energy crisis that has crippled Pakistan’s economic growth
since the last 4 years, and the role that Bioenergy can play in resolving the issue. In order to help ease Pakistan in its
effort to curb this crisis and to get useful insights into the role that Bioenergy can play in solving Pakistan’s problems,
business ventures were attempted. The results were not encouraging and shed light onto the financial and technical
hindrances involved in creating and running bioenergy businesses in Pakistan. These issues themselves linked to the more
general Social, Economic and Political barriers for the adoption of Bioenergy. The paper concludes by providing
suggestions and recommendations, as to what the government, private sector as well as the international community can
do in order to overcome the crisis.
Keywords: Bio energy Policy, Biogas, Bio-ethanol, Third World, Pakistan
1 INTRODUCTION
Energy is considered to be the life line of any
economy. It is significant determinant of socioeconomic
development and is therefore one of the most important
strategic commodities [26]. Traditional growth theories
focus on the labour, capital and technology as major
factors of production and ignore the importance of energy
in the economic growth process [16].
In the era of globalization, even though dependence
of economies on energy and its demand is rapidly
increasing, the supply of it remains uncertain. Therefore
energy shortage will be one of the biggest problems
facing mankind in the next century [16].
One such country which is already facing an energy
crisis is Pakistan. Energy plays an important role as
compared to other variables included in the production
and consumption function for Pakistan, as it is in an early
stage of development [10]. Already Pakistan’s economy
has been under constant stress due to is energy crisis [7],
leading to a sharp decrease in its economic growth rate.
In order to study the role that Bioenergy can play in
overcoming the energy crisis, two business ventures were
attempted i.e. selling Biogas plants and Bio-ethanol.
Biomass seemed like a logical alternative energy solution
due to the country’s large agricultural base. However
both businesses failed at different stages of development
due to several micro and macro factors. Reflecting on
these failures, new business models are discussed that can
help create a formal Biomass industry.
However before details of the ventures are looked
into, it is imperative that Pakistan’s energy profile is
studied first, in order to better understand its needs.
.
2 PAKISTAN’S ENERGY PROFILE
2.1 Country profile
Pakistan is a middle income economy, with an
estimated population of around 170 million, among the
highest in the world. It is the founding member of
SAARC, G-8 and the OIC. Not only is it a major military
and nuclear power, but South Asia’s second largest
economy and a front line state on the war in terror.
It has sustained excellent growth record in the past
decade thanks to liberalization, and an opening up of the
economy. Due to economic growth that took place in in
the first half of the 2000s, the GDP of Pakistan doubled
between 1999 and 2007. The growth in GDP was even
higher than the population growth and therefore GDP per
capita increased by almost sixty percent between 2000
and 2008. Recognizing Pakistan’s economic growth,
Goldman Sachs now considers Pakistan to be among the
‘Next Eleven Countries’ i.e. nations that are likely to
become sizable economic powers and have greater
impact on global business in the new century [34]. As
Pakistan’s agriculture, industry, trade and services sectors
have been growing rapidly, the government has remained
negligent to the surge in energy demand, leading to a
massive shortfall in energy, which is only expected to
widen [26].
One of the key strategic objectives of the Musharraf
era was to turn Pakistan into an energy corridor,
connecting Central Asia (China and the oil producing
countries) to the rest of the world (14; 13; 26). However
Pakistan itself is now facing a major energy crisis. To
look into this crisis in detail, it is imperative to look at
Pakistan’s energy profile in order to better understand the
supply and demand of different sources.
2.2 Energy Profile:
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