Industrial electrification could slash energy costs by 36pc, emissions by 50pc

ISLAMABAD: Pakistan could reduce its energy expenditure by more than 36 per cent and cut greenhouse gas emissions by over 50 per cent by 2050 if it transitions its industrial sector from fossil fuels to electricity, according to a new study.

The research, conducted by Berlin-based Agora Energiewende in collaboration with Islamabad-based Policy Research Institute for Equitable Development (PRIED), outlines a long-term roadmap for industrial electrification in Pakistan.

Industrial electrification refers to replacing fossil-fuel-based production processes with electricity-powered technologies, particularly for heat generation and manufacturing operations. According to the study, this shift is especially viable in sectors such as food and beverage, paper and pulp, textiles, and fertilisers, where low- and medium-temperature heat processes dominate.

Researchers say these industries represent the “strongest near-term opportunities” for electrification, as they can be transitioned with relatively high economic efficiency, particularly when combined with solar energy integration.

At present, Pakistan’s industrial sector remains heavily dependent on natural gas for core processes such as heating and boiling. The study notes that this reliance exposes industries to supply disruptions and price volatility, while also contributing significantly to greenhouse gas emissions.

Fuel mix data cited in the report shows natural gas accounts for 30 per cent of industrial energy use, followed by coal at 26.7 per cent and electricity at 15 per cent.

The food industry shows the highest immediate potential for electrification, with gas making up 51 per cent of its fuel consumption. The study estimates that switching to electric heating systems and solar-based load management could reduce costs by up to 90 per cent in some cases, with payback periods of just over two years.

The textile sector, another major contributor to Pakistan’s economy, is also highlighted as a strong candidate for early transition. On-site solar systems alone could generate significant annual savings per production process compared to gas-based systems, the report states.

Environmentally, the study projects that total carbon dioxide emissions from industry could fall from approximately 76.5 million tonnes to 36.9 million tonnes by 2050 under a full electrification pathway.

The report argues that beyond environmental benefits, electrification could enhance industrial competitiveness if paired with affordable and reliable electricity, alongside supportive government incentives.

The study’s lead author, Naila Saleh of Agora Energiewende, said external shocks such as disruptions in the Strait of Hormuz have further highlighted the urgency of reducing dependence on imported fossil fuels, though structural pressures like declining domestic gas reserves were already driving the shift.

Industry stakeholders, however, stress that high upfront investment costs remain a key barrier. Business leaders have called for low-interest financing and policy support similar to past solarisation initiatives to enable large-scale adoption.

Officials from the Ministry of Industries and Production said a new national industrial policy is being prepared, which will include reforms to support electrification and improve energy systems, including potential battery storage initiatives.

Researchers also caution that electrification will need to proceed in phases, starting with simpler low- to medium-temperature applications before expanding to more complex industrial processes as technologies continue to evolve.