ISLAMABAD, Jan 25 (APP): Minister of State for Climate Change Dr. Shezra Mansab Ali Khan Kharal on Sunday stressed that Pakistan’s energy transition has reached a decisive stage where economic stability and climate obligations must advance together, as continued reliance on coal has become a financial and trade liability for the country.
Addressing the Sustainable Development Policy Institute (SDPI) webinar on Consultative Discussion on Economics of Repurposing Coal-Fired Power, the minister said Pakistan’s dependence on coal is affecting households, industry and export competitiveness, particularly as global climate regulations tighten, said a press release.
Dr. Shezra Mansab noted that Pakistan is seeking win-win solutions with development partners, including China, to ensure a just, green and financially sustainable transition while maintaining strong bilateral cooperation.
She emphasized that the energy transition needs to be strategic, grounded in intellectual honesty, and aligned with realistic goals to optimise a green and clean transition. This will require innovative financial structuring, including debt restructuring, MDB blended finance, and mechanisms that support a just transition. She stressed that its equally important are comprehensive reskilling programmes to protect jobs and ensure that the energy transition is truly just and inclusive.
The discussion was moderated by Zainab Babar, Researcher at SDPI, who underscored that the dialogue aims to provide an economic case for repurposing coal infrastructure. She noted that identifying specific technical and economic barriers was the first step toward transforming ‘stranded assets’ into flexible grid-support hubs, eventually unlocking the blended finance required for such a large-scale shift.
Earlier, Dr Khalid Waleed, Research Fellow, SDPI and energy expert said Pakistan’s export-oriented industries, including cement, steel and iron, will increasingly face carbon intensity scrutiny under mechanisms such as the Carbon Border Adjustment Mechanism. He said coal, while once providing energy security, has now become a serious fiscal and trade risk in a world shaped by climate regulations being adopted by the European Union and planned by other major economies.
He emphasized that as Pakistan integrates more variable renewable energy (VRE), the national grid is losing the “mechanical shock absorbers” that fossil-fuel plants once provided.
“Instead of generating electricity, these coal plants should be converted into Synchronous Condensers,” Dr. Waleed explained. He highlighted that by utilizing the existing rotating mass of the generators, the plants can provide essential System Inertia, Short-Circuit Power, and Reactive Power Support. These services are critical for maintaining grid frequency and voltage stability, especially in the northern transmission corridors where high solar penetration has made the grid increasingly “weak.”
Professor Christoph Nedopil Wang, Director of the Griffith Asia Institute, said early retirement of coal plants can generate financial value if structured correctly through refinancing and debt restructuring. He noted that Pakistan’s young and highly leveraged coal plants are suitable candidates for such transition finance, adding that debt-for-renewables and debt-for-development swaps can align climate goals with investor interests.
A senior representative of the Ministry of Energy (Power Division) informed the webinar that the Integrated Generation Capacity Expansion Plan (IGCEP) 2025–35 has reduced planned capacity additions by around 8,000 megawatts, citing declining grid demand due to rooftop solar growth. He said Pakistan’s carbon intensity is projected to fall significantly over the next decade, while the country is on track to exceed 60 percent clean energy by 2035. However, he added that coal plant repurposing has yet to be formally assessed under IGCEP.
Brigadier (R) Raja Shozab of the World Bank said that the power contracts may need to be revisited and renegotiated through mutual consent, which could open pathways for alternative uses of existing assets. A thorough cost–benefit analysis is essential to assess how repurposing could practically work in the case of coal-fired power plants (CFPPs).
Dr. Tim Dobermann, Director Research, International Growth Center at London School of Economics emphasized that renewables are the fastest way to meet growing surplus demand, especially during summer peaks. The energy sector must distinguish between stock and flow in a rapidly evolving, innovation-driven landscape. Strategic reforms are needed to keep pace with technological change. Currently, there are insufficient incentives on both the supply and demand sides, requiring smarter tariff structures to manage peak demand and strengthen grid management. Risk-sharing mechanisms, including partial indexation, should be promoted to enable sustainable finance.
Dr. Sugandha Srivastav of the University of Oxford noted that any renegotiation of coal debt must align the incentives within the existing “cost-plus” contract frameworks. She highlighted that current contractual structures have inadvertently added to the sector’s fiscal challenges and the rising circular debt. Dr. Srivastav emphasized the need for a collaborative approach, where both host countries and international investors share the responsibility for transitioning toward sustainable energy and mitigating climate impacts.
Mansoor Ahmed of the Research Institute for Equitable Development emphasized that energy transition must deliver tangible benefits to affected communities, calling for financial savings from repurposing to be earmarked for community-owned solar projects, water security and local development, particularly in coal-affected regions.