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ISLAMABAD, Jul 23 (APP):Suggesting a pragmatic, phased-wise, and collaborative approach for the early retirement of coal-fired power plants (CFPPs), experts and energy economists, here at a webinar, have warned that abrupt decisions could jeopardize both energy security and economic stability in the country.
The webinar on “Early Retirement of Coal-Fired Power Plants in Pakistan” was organized by Sustainable Development Policy Institute (SDPI) in collaboration with the Boston University Global Development Policy Center, said a press release issued here on Wednesday.
The event that brought together a diverse range of stakeholders highlighted the financial, technical, and political complexities surrounding coal phase-out and Pakistan’s broader transition towards a green economy initiative.
SDPI Executive Director Dr Abid Qaiyum Suleri said that it’s been over a decade since global leaders committed to phasing out dirty energy, but fossil fuel consumption has doubled since 2000. Over 16,700 tons of coal are still mined daily worldwide.”
Emphasizing that the Resilience and Sustainability Facility (RSF) provided by the International Monetary Fund (IMF) is a timely opportunity to plan its transition, he said: “We must build a customized, credible, and cooperative transition pathway, one that balances climate ambition with local economic needs.” He further noted that discussions at SB62 in Bonn also focused on similar challenges, indicating a global shift in thinking that Pakistan can leverage.
Dr Kevin Gallagher, Director of GDP Center, said that tools such as blockchain-enabled asset fragmentation, carbon credit frameworks, and public-private partnerships are being explored globally to enable smoother transitions from coal.
Dr Khalid Waleed, energy economy expert at SDPI, said that Pakistan remains among the top 10 most climate-vulnerable countries, and is struggling to reduce its carbon footprint due to dependencies on coal plants.
He added that these plants are governed by cost-plus power purchase agreements that guarantee up to 25% return on equity (ROE), resulting in capacity payments exceeding $4 billion annually. “Imported coal dependence pushes generation costs to as high as PKR 25 per KWh, although switching to domestic Thar coal reduces costs but raises operational challenges,” he maintained.
Dr. Waleed further said that eight 660MW coal-fired power plants (CFPPs) alone emit 14.5 million metric tons of CO2 annually, causing severe respiratory illnesses and displacing local communities and ecosystems.
Mengdi Yue, Independent Research Consultant of GDP Center, while discussing China’s evolving but cautious stance on coal plant retirements, said China is committed to not building new overseas CFPPs; however, existing projects are still considered important for energy security and market growth.
Earlier, speaking at a workshop, the experts noted that the Energy Transition Mechanism (ETM) and voluntary carbon markets could offer pathways for collaboration with Pakistan, but successful implementation would require delicate negotiations due to diplomatic and commercial nature of these projects.
They highlighted the urgent need for a fit-for-purpose transition pathway for Pakistan. The speakers emphasized that while lessons can be drawn from Indonesia’s experience, Pakistan must evolve transition strategies to its own realities, including circular debt, currency depreciation, and grid inefficiencies. Another participant said that without concessional financing mechanisms, early retirement remains economically unviable.
The representatives from multilateral institutions mentioned that Energy Transition Mechanisms (ETMs) are not punitive tools, but strategic instruments to phase out coal responsibly, while scaling up clean energy and protecting workers and communities.
To conclude, experts agreed that China’s cooperation is critical, given its dominant role in Pakistan’s coal portfolio and its evolving domestic energy policies. A successful transition will require legal, financial, and technical alignment, including the use of ETMs, voluntary carbon markets, and a gradual, negotiated, and inclusive approach that ensures communities and jobs are not left behind.