Pakistan's choices in a changing global energy market.

Byline: Dr. Shahid Rahim

The global energy markets are in flux and the scene is changing rapidly. Most analysts believe that profound shifts are shaping the way energy is supplied and demanded. They also feel that these are not mere occasional aberrations or cyclic adjustments but a fundamental transformation is underway that will persist much longer and have important implications for developed and developing countries alike.

Though the changing energy scene poses many challenges to our policy makers, it also offers a rare opportunity for them to reshape the nation's energy future along more secure and sustainable lines.

There are striking developments on the supply side. Noteworthy among these are the technological advances and productivity gains, mainly from non-OPEC suppliers led by US shale gas revolution, which expanded the recoverable oil and gas reserves by upward of 20 percent during the last decade (BP's Statistical Review of World Energy 2018). These resulted in a supply glut in the global market leading to lowering of fuel prices.

Even more striking are the technological strides seen in the non-fossil fuel sector, mainly solar and wind, which have contributed to their making unprecedented inroads in the energy supply market, even in the face of cheaper and abundant fossil fuel supplies.

According to a press release from International Renewable Energy Agency (IRENA) in April this year, in the power sector alone, 94 GW of new photovoltaic (PV) capacity was added during 2018 bringing the total worldwide PV capacity to 480 GW. Similarly, a 49 GW of new wind capacity was added during 2018 bringing it to a total of 564 GW.

The demand for various energy supplies has been not only sluggish, it has been changing in important ways too.

Spurred by the prevailing price volatility in the fuel market and efforts to reduce energy and carbon intensities of their economies, many countries, in particular the developed ones and also China, have made important structural adjustments that significantly reduced their demand for fossil fuels, thus further contributing to the market volatility.

Society's push for shifting its energy mix towards cleaner and lower carbon fuels, primarily to counter the looming threat of global climate change, has also resulted in lowering of demand for carbon-intensive oil and coal supplies, making renewable and natural gas as the net beneficiaries.

Meanwhile, the composition of energy demand has also been changing...