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Moving towards green energy through launch of EV policy

The world is fast moving towards an electric mobility revolution. Some countries have gone as far as to announce plans to completely halt the sale of Fossil Fuel Vehicles (FFVs). Norway plans to ban sale of all FFVs by 2025, Netherlands plans to ban such sales by 2030, while France and UK plan to do the same by 2040. Other countries such as China, Germany, Sweden and many US States have announced ambitious plans for Electric Vehicle (EV) penetration in their respective domains.

Pakistan has been lagging behind in EVs as India rolled out its first fleet last October, while China has been running electric-driven vehicles for many years. The EV industry, given its assured success, is likely to create new jobs in the country. Similarly, the planned conversion of CNG stations into EV charging stations will offer the easy availability of battery charging facilities to motorists without much investment.

Previously, Pakistan has aimed for touching the figure of 64% in going green by the year 2025. The Pakistani government is devising ways to introduce hybrid plants, which will include wind and solar energy. Green energy means that energy is renewable and can be replenished. This includes biomass, hydel, solar, and wind energy. This ambitious target is a means to solve the energy crisis situation in Pakistan, which is persistent for a very long time. Under this scheme, the government is also aiming at reinvigorating the gas industry of Pakistan and to increase the presence of green renewable energy. Giving rise to exploration and production for gas is also on the priority list of the government. Gas is a cleaner fuel to burn compared to diesel and petrol.

The government aims at substituting carbon-based fuel like petrol and diesel with green energy as well. The recent approval by the federal cabinet to introduce electric vehicles in Pakistan can be seen as an extension to achieving this ambitious target. The Electric Vehicle (EV) policy will open doors for new employment and business opportunities in Pakistan and will help in curbing pollution. The government wants to convert 3,000 idle fueling stations into electric charging stations. The EV policy will also help in curbing pollution from the country. Battery run vehicles’ spare parts will be charged with only 1 percent duty instead of the currently prevailing 25 percent duty. With the green revolution, Pakistan also hopes to reduce dependence on oil imports that could help save $2 billion. Pakistan is also planning to set up special units of electric car manufacturing in the Special Economic Zones being established under the China-Pakistan Economic Corridor (CPEC).

 

Some of the salient features of this policy are:

  • Market development and public awareness through incentives and subsidies on electric vehicles especially to companies willing to step up EV related industry in Pakistan (years 1 and 2).
  • Fuel import bill substitution through targeted penetration of electric vehicles along with local assembly and manufacturing (years 3 and 4).
  • Reasonable local adoption and export of electric vehicles and its components through indigenous research, development, assembling and manufacturing (year 5 and beyond).

One of the key objectives of the policy is to offer affordable transportation to the people as the cost of electric vehicles is much lower compared to petrol, diesel, compressed natural gas (CNG) or other fuels. Another major purpose of introducing EVs is to reduce greenhouse gas emissions. In developed countries, the greenhouse gas emissions from vehicles is around 20 per cent whereas in Pakistan it is 40 per cent, which the government aims to bring down with the introduction of electric cars, trucks, rickshaws, in order to reduce pollution and smog.

Around 45 percent of the air pollution comprises vehicular emissions, which generated particulate matter of 2.5 microns causing serious health issues mainly respiratory diseases. The number of fuel-based vehicles, on the other side, is increasing at an alarming pace. In 2018, in Karachi alone, over a thousand new vehicles were hitting the roads every day. Karachi already has an estimated 3.3 million vehicles on its roads.

On the other hand, the direction in which the government is planning to go will have implications for the automotive sector, as well. This policy may result in increase in the prices of vehicles, which have already gone up manifold in recent months, causing the worst ever slowdown in vehicle sales. The auto sector has opposed the EV policy on the basis of the government not holding necessary consultations with the key stakeholders of the auto sector. Moreover, the new entrants under the Auto Policy 2016-2021 might get confused about the future ambitions of the government under the new EV policy.

Introducing EVs in Pakistan can solve present and imminent problems of a number of sectors, including transportation, environment, economy and power. The future lies with EVs and the world is phasing out internal combustion engine (ICE) vehicles because of its environmental hazards and costly fuel issues. The EV industry, however, has to overcome the costly prices of batteries. Similarly, batteries’ range capacity is still a big issue. A battery must have sufficient energy to reach a charging point. Public response to EVs will be gauged once the fleets are rolled out. The government must ensure the sustainability of the sector by offering support to manufacturers as well as users.

The writer is a Karachi based freelance columnist and is a banker by profession. He could be reached on Twitter @ReluctantAhsan

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