Energy Efficiency Roadmap for Pakistan Contents Executive Summary........................................................................................................................................ 1 1. Preamble .................................................................................................................................................... 3 2. EE Roadmap Considerations .............................................................................................................. 4 2.1 Energy Efficiency and Conservation (EE&C) Opportunity....................................................................... 4 2.1.1 Energy Sector ............................................................................................................................................... 4 2.1.2 Conservation Potential ................................................................................................................................ 5 2.2 Barriers to Energy Efficiency Adoption ..................................................................................................... 6 2.3 Sectoral Initiatives Identified by NEECA Board ........................................................................................ 7 2.4 Adopting EE&C - International Best Practices ......................................................................................... 7 2.5 EE&C and Climate Change Linkage........................................................................................................... 8 3. Energy Efficiency & Conservation Road-Map ......................................................................... 12 3.1 NEECA Mandate................................................................................................................................................................12 3.2 EE&C Roadmap Phasing................................................................................................................................................12 4. Operationalization Phase ................................................................................................................. 15 4.1 Operationalizing NEECA and Provincial Focal Agencies ...................................................................................15 4.2 Develop Repository of Information ..........................................................................................................................16 4.3 Establish protocols for coordination and collaboration ...................................................................................16 4.4 Developing the policy & regulatory framework ..................................................................................................17 5. Development Phase 2019 - 2020 .................................................................................................. 18 5.1 Establish Promotion and Outreach programs ......................................................................................................18 5.2 Develop Indices, Targets, & Address Barriers .......................................................................................................18 5.3 Develop Training and Investment Programs.........................................................................................................19 5.4 Establish Modus Operandi to Enforce Regulatory Regime .............................................................................19 5.5 Establish Certified Energy Auditors Program ........................................................................................................20 5.6 Develop Performance Contracting ............................................................................................................................20 6. Implementation Phase – 2019 - 2020 ......................................................................................... 21 6.1 Targeted Technical Services / Demonstration Programs .................................................................................21 6.2 Appliance Standards and Labeling Programs .......................................................................................................22 6.3 Mandatory Audit Programs for Designated Consumers ..................................................................................23 6.4 Building Energy Code (BEC) .........................................................................................................................................24 6.5 Identify/specify Energy Efficient Building Materials ...........................................................................................24 6.6 Develop Prototype EE Building Designs..................................................................................................................25 6.7 Establish National / Regional Building Energy Audits Programs ..................................................................25 6.8 Power Sector EE Programs ...........................................................................................................................................26 6.9 Establish EE Programs in the Transport Sector.....................................................................................................27 6.10 Establish EE Regimes for Agriculture and Water Supply Systems ................................................................28 6.11 Prepare and publicize (prototype) EE Project ideas ...........................................................................................28 6.12 Total Energy Management Programs and ISO 50001 Compliance ..............................................................30 6.13 Devise Appropriate Energy Pricing Regime, Design / Implement Fiscal &Financial Incentives .......31 6.14 Instituting National EE Awards....................................................................................................................................31 7. Proposed Funding Arrangements ................................................................................................ 32 Energy Efficiency and Conservation Roadmap for Pakistan Executive Summary As Pakistan has a tremendous potential for economic expansion, it will be important that energy resources are used efficiently to promote sustainable growth. The National Energy Efficiency and Conservation Act 2016 (NEECA Act, 2016) provides the much-needed governance framework that can facilitate wide scale adoption of sound energy efficient practices throughout all sectors of economy. The Act designates the National Energy Efficiency and Conservation Authority (NEECA) as the apex agency to coordinate and catalyze national efforts to promote conservation. While NEECA is entrusted with a wide range of regulatory responsibility, the Act also recognizes the crucial role the Federal and Provincial bodies must play in implementation and allows them to tailor activities in a manner consistent with national and provincial priorities. With the governance framework in place, NEECA can take strategic actions in accordance with provisions and spirit of the Act. To facilitate actions a road map is needed to guide coordination and implementation in a disciplined manner across the country. The Energy Efficiency and Conservation Roadmap for Pakistan (Roadmap) contains an actionable agenda to meet the regulatory functions assigned to NEECA in NEECA Act 2016. Major considerations that went into developing the Roadmap include a review of the barriers to EE&C promotion, and the functions assigned to NEECA and the provinces under the Act. The EE&C potential for each sector of economy as estimated by ENERCON (the former focal agency for energy conservation prior to NEECA Act) and the status of energy conservation programs at the provincial level were reviewed. Relevant international experiences and prevailing government commitments and polices were assessed. Finally, discussions with concerned provincial agencies informed the development of the Roadmap. The Roadmap is broken down into three phases: An Operationalizing phase, a Development phase, and an Implementation phase. Each phase comprises distinct activities and is sequenced so that activities requiring urgent attention can be done on a priority basis. Implementing the Roadmap begins with operationalizing NEECA and the respective provincial agencies, and so a fully functional NEECA is given a high priority. Operationalizing NEECA requires human resource mapping, and design of an appropriate institutional structure. Ensuring NEECA has staff with appropriate skills and competency is a fundamental and a priority important actionable step. Other early steps include developing a repository of information to provide the source data for preparing relevant and effective programs and projects. A critical function of NEECA is coordinating and collaborating with provincial governments and other stakeholders in ensuring the country meets the overall goals and objectives, consistent with national and international obligations. These include Pakistan’s pledge to reduce, by up to 20%, its 2030 projected GHG emissions. As this improvement (relative to a business-as-usual forecast) will be achieved primarily through a reduction in energy use. EE&C constitutes a key component of the country’s commitments on mitigating climate change and the Roadmap recognizes this central role. The operationalizing phase includes giving clear definition to such protocols as a priority for ensuring maximum impact, thereby avoiding conflict and optimal utilization of available resources. The second phase of the Roadmap, the Development stage, highlights the need for establishing information dissemination and outreach programs, developing energy consumption benchmarks, establishing 1|P age conservation targets, and enhancing the policy and regulatory framework, when necessary. Earlier initiatives were hampered by the absence of specific reliable data on energy use patterns, making it difficult to benchmark and set specific conservation targets for any sector/subsector. Now that the regulatory regime is in place to collect such information, it is imperative that barrier be addressed effectively. Increasing awareness among the key actors to assist in developing the technical support through appropriate training and education programs forms an important component of this phase. The Roadmap proposes that the Authority set directions for outreach, determine qualification levels and advise on curricula requirements needed to provide a cadre of qualified professionals and technicians. The third stage, the Implementation stage, includes creating structured, sectoral programs, developing targeted services designed around low-cost, quick pay back interventions, implementing standards and labelling programs, initiating mandatory audit programs for designated consumers, developing and promoting building energy codes, establishing EE regimes for agriculture and water supply systems, establishing EE programs in the transport sector and other supporting activities to ensure that the benefits of energy conservation are actually realized. The Roadmap also presents an initial list of projects that can be considered for preparation by NEECA or provincial focal organizations with the collaboration of concerned agencies. Finally, the Roadmap highlights the need for appropriate resource allocation by the government to begin commencement of core activities. The Roadmap may also serve as a useful tool to assist the government in seeking funding and support from the multilateral organizations for activities or projects of specific areas of mutual interest. 2|P age 1. Preamble Pakistan’s economy has tremendous potential for growth and expansion. A vital input for economically and financially sound growth is an energy sector that is sustainable, affordable and accessible to all. While increased supply will be necessary to meet future demands for commercial energy, it is imperative that in future all energy utilization is efficient. Energy efficiency should be an integral component in delivering fair and equitable energy access to the country’s citizens. While the contribution of energy efficiency has been long recognized and prior national initiatives have demonstrated the benefits afforded through energy efficient practices, the full potential remains relatively untapped. The National Energy Conservation and Efficiency Act (NEECA Act 2016) provides the governance framework that can facilitate national efforts and reinvigorate wide scale adoption of sound energy efficient practices. The Act declares the National Energy Conservation and Efficiency Authority (NEECA) as the apex agency to coordinate and catalyze efforts to promote conservation in all sectors of economy and NEECA has been entrusted with a wide range of regulatory responsibilities. The Act also recognizes the crucial role the Provinces can play in implementing country efficiency initiatives and allows for them to tailor their activities in a manner consistent with individual provincial priorities. In preparing the Roadmap, a meeting with the provincial stakeholders was organized by the Power Division of Ministry of Energy in Islamabad which was followed by a visit of World Bank’s team to all provinces. The key elements of the proposed Roadmap were discussed during these meetings. The discussions revealed a broad consensus on the need to (a) establish focal institutions to be responsible for Energy Efficiency and Conservation (EE&C) activities at provincial level as high priority (b) induct experienced professionals in the designated institutions, and (c) prepare work plans tailor made for specific regional needs and conditions. With the governance framework in place and modalities of coordination between key stakeholders being set, NEECA is now focusing on national initiatives, consistent with the Act, that can deliver energy efficiency throughout key sectors of economy. The initiatives require a Roadmap to guide coordination and implementation of the national EE program. This Energy Efficiency and Conservation Roadmap for Pakistan has been developed considering all the above. Considerations that went into developing the Roadmap include a review of NEECA’s mandate as well as barriers that continue to put conservation and efficiency efforts on the backburner. The country’s prior energy conservation activities were reviewed, national efforts to tackle climate change assessed and current international best practice analyzed and evaluated to better understand lessons learned and to shape a Roadmap that can be effective and consistent with Pakistan. The Roadmap outlines activities, programs and priority actions that need to be taken by relevant agencies to capture the benefits from energy efficiency and conservation1. When appropriate, concrete projects can be developed based on identified activities included in the Roadmap. The Roadmap also highlights the collective responsibility that various stakeholders have, be they at the federal and provincial levels, and/or part of the public and private sectors. 1 “New supply in country provides energy at around 3-30 cents/kWh whereas energy efficiency investments provide energy at 1-3 cents/kWh” Presentation by Special Secretary on NEECA and the Provincial Governments, January 15, 2019 3|P age 2. EE Roadmap Considerations This Roadmap consists of an actionable agenda to ensure promulgation of NEECA Act 2016. Other considerations Core Barriers to EE Competencies / in developing the Roadmap includes a adoption Risks review of barriers to EE&C adoption and the potential for EE&C in various sectors of economy. Also, the Roadmap builds on the strengths of prior initiatives including those coordinated by ENERCON and the lessons learned Potential from these efforts. It also considers Goals / complementary on-going in-country Targets initiatives such as the Second National Communication on Climate Change (2018) and donor funded activities. It considers prevailing international best Climate practices and delivery mechanisms and Stakeholder Change Replicability Expectation their applicability/implementability / visibility Linkage with respect to the local context. ` The Roadmap is sequenced so actions such as institutional strengthening and Figure 2 – EE Roadmap Considerations necessary regulatory imperatives are addressed on a priority basis. Given the role envisioned for NEECA under the Act, implementation of many activities will leverage existing provincial and other entities. The primary considerations in building up developing Roadmap are depicted in Figure 2. 2.1 Energy Efficiency and Conservation (EE&C) Opportunity 2.1.1 Energy Sector Oil and Gas are the predominant energy sources used in meeting national commercial energy needs. About 85% of oil needs are through imports while the gas is mostly indigenous. The total primary energy Share of Energy Supplies Share of Energy Consumption 1% 13% 6% 8% 34% 36% 23% 1% 6% 38% 34% Industrial Transport Oil Gas LNG Import Domestic LPG Coal Electricity Commercial & Other Govt Figure2.1.1 (a) Energy Supply & Consumption 4|P a g e commercial supplies were around 80 million tons of oil equivalent (TOE) while final energy consumption was recorded as 50 million TOE. (source: Pakistan Energy Year Book 2017). Information relating to supply and consumption is shown in Figure 2.1.1 (a) below Of original recoverable oil reserves of 160 million TOE, about 116 TOE have been extracted and consumed. Given an annual compound rate of growth (9%) and at the present level of consumption, the remaining recoverable reserves will not last more than three years if the country relied only on its internal sources. Similarly, about 70% of the original gas reserves have been utilized and it has now become unavoidable to import additional gas. The need for fuel imports will continue to increase, if new reserves are not exploited. To enhance energy security, there is an urgent need to utilize indigenous and imported energy resources judiciously to save on foreign exchange expenditures. The original oil & gas recoverable reserves vs balance reserves are shown in Figure 2.1.1 (b). Natural Gas Reserves Total Crude Oil Reserves (milllion TOE) (million TOE) 1118.64 774.90 160.62 343.74 116.06 Original Recoverable Reserves Cumulative Production 44.56 Balance Recoverable Reserves Original Cumulative Reserves Original Recoverable Recoverable Production Cumulative Production Balance Reserves Recoverable Balance Recoverable Reserves Reserves Figure2.1.1 (b) Oil & Gas Recoverable Reserves (original vs balance) 2.1.2 Conservation Potential Pakistan submitted its Climate Action Plan to the United Nations Framework Convention on Climate Change (UNFCCC) in November 2015. Subsequently, the Second National Communication (SNC) on Climate Change (May 2018) reiterates the country’s commitment to UNFCCC and Paris Agreement. While not a major emitter of greenhouse gas emissions (GHG), the country ranks among the top 10% countries at risk from the impacts of Global Climate Change. The SNC illustrates the need for mitigation actions in the energy and agriculture sectors as collectively they account for over 90% of GHG emissions. Although the contributions will reduce by 2030, the two sectors will still represent more than 88% of the emissions. Mitigation strategies outlined in the SNC include using market mechanisms and ensuring energy pricing to consumers continue to reflect “cost-of-service”. The SNC highlights the key role and active engagement of the Provinces in adopting the mitigation strategies Implementation of the EE&C can leverage this successful collaboration. The SNC also recognizes energy conservation and efficiency benefits and how this remains underutilized to date. This offers the country a tremendous opportunity. Various sector studies, conducted initially by ENERCON and also corroborated by similar studies carried out by other agencies, show energy saving potential in major sectors of the economy up to of 20% - 25% of total sectorial consumption. This can be translated to realizable savings of around USD $10 billion to the national economy till 2030. 5|P a g e Table 1 Conservation Potential (source: ENERCON) Industry 25% Buildings 22-25% Transport 20-23% Agriculture 25% The SNC also highlights successes from application of energy efficient practices and adoption of more efficient technologies. Successes include changing to more efficient technologies, for example in lighting, where incandescent lights have been systematically replaced by compact fluorescent lamps under pilot demonstrations that used incentives. Although the market share of incandescent lamps for lighting has reduced to around 50%, an improved lighting technology (light emitting diode (LED) lamps) provides a further opportunity to decrease energy use. Other opportunities exist. In the residential sector, for example, space conditioning is an area where efficiency improvements are critical. New fan annual sales are about 10 million and fan efficiencies can be improved by up to 35%. Space heaters, using natural gas, are typically more than 30% less efficient than modern units. Home appliances, such as refrigerators and air conditioners, (typical purchases as the economy grows) have low efficiencies compared to international standards. In the agriculture sector, energy is used predominantly for pumping water for irrigation and for powering farm machinery. Successful pilots undertaken by ENERCON and through the Tube-well Efficiency Improvement Program (TWEIP), supported by USAID, have shown that significant improvement in tube-well efficiency is possible. Also, solar water pumping technology is now commercially viable. In industry, replacing inefficient technology, (boilers over 35% improvement; electric motors 20-30%) can reduce consumption. In the buildings sector, quick improvements can be made through catalyzing use of new technology for lighting and space conditioning and energy efficient appliances, but these must be complemented by longer term actions that upgrade the energy efficiency of the building stock. For example, it is imperative to ensure new construction and retrofit of existing buildings incorporate energy efficient materials. Earlier, ENERCON developed a building energy code to complement the National Building Code. These documents must be updated, applied and use enforced. For existing building, particularly in the commercial sector, energy audits should be carried out as the energy efficiency performance in the sector has been declining. The transport sector has also seen a fall in efficiency. International experience shows that proper vehicle maintenance pays dividends with respect to fuel consumption with 10% improvement achievable. 2.2 Barriers to Energy Efficiency Adoption Efficient use of energy resources is hampered by several barriers, including policy constraints, and lack of awareness and information on EE practices and technologies. Others include limited trained personnel and commitment to energy efficiency. The principle barriers are shown below. Legal Status of Inadequacy of Lack of Absence of Absence of energy centers Fiscal and Information Energy Regulatory and Week and EC Know- Financial Efficiency Framework Institutional Incentives and how Infrastructure Structures Mechanisms Figure 2.2 EE&C Barriers Absence of Government Constraints Due Inadequacy of Difficulties in Training and Support for to Absence of Standards and Complying with Formal Energy Demonstration Labeling Building Energy Education Efficiency Mechanisms Regime Code Facilities Promotion Absence of Energy Absence of Absence of Efficiency Non- Energy Monitoring Indices financial Pricing and and Incentives Evaluation Targets Framework 6|P a g e 2.3 Sectoral Initiatives Identified by NEECA Board As stated above, significant potential exists in each of the major sectors of the economy. In recognition of this, NEECA Board has identified sectoral initiatives that merit inclusion in a national EE&C activity. Some of these include designating and operationalizing provincial agencies, finalize organizational structure for NEECA, developing rules & • Developing Vision / Mission Statement for regulations, launching national EE awards, strengthening NEECA standards & labeling regime for energy consuming • Developing National EC Policy as per NEECA Act 2016 appliances, promoting building energy code in public • Designating and Operationalizing Provincial sector buildings and EE buildings and introduction of national Agencies scheme for certified energy auditors etc. Unlocking the • Finalize Organizational Structure for NEECA potential will require careful planning and program design to • Developing Rules & Regulations ensure implementation by the stakeholders, be they policy • Launching National EE Awards • Strengthening Standards & Labeling Regime for makers, program developers and implementers. The key Energy Consuming Appliances initiatives as advised by NEECA Board are summarized in • Promoting Building Energy Code in Public Figure 2.3 Sector Buildings and EE Buildings • Introduction of National Scheme for Certified 2.4 Adopting EE&C - International Best Energy Auditors • Inclusion of Private Vehicles in Motor Vehicle Practices Examination Ambit and Strengthening MVE While prior efforts have clearly shown the country can tap into Testing Infrastructure the benefits from widespread application of energy efficient • Developing Program on Tractor Fuel practices and technologies, the momentum generated by Optimization • Establishing at least One Energy Tribunal earlier efforts often dissipated as an appropriate framework for sustaining gains was not in place. Fortunately, Pakistan can Figure 2.3 -Sectoral EE&C Priorities benefit from international best practice that has seen countries around the world adopt EE&C in a sustainable manner. The following elements are found in the most successful initiatives:  An Enabling Framework that consists of three elements: governance/oversight, program administration and energy efficiency delivery mechanisms  A phased Roadmap that ensures analyses, adoption and implementation are structured and systematic. In the analytical phase, objectives are set, national institutions, policies and market conditions are analyzed together with energy supply, demand and natural resource considerations, and programmatic options assessed considering policy, technology, and supply and demand options. The technical, economic and financial implications and cost/benefits should be assessed to facilitate selection of appropriate options. Selected options should be adopted through formal legal channels. During the implementation phase it is important to monitor and evaluate progress and to be prepared to modify programs if national priorities change; and  Policy and implementation tools that include: o Effort defining Interventions that motivate and drive energy efficiency, including target-setting policies, supporting measures o “Carrot-and-stick” policies that encourage action and address or alleviate barriers to efficiency improvements, thereby leveraging the effectiveness of effort-defining policies o An Implementation toolbox that provides for guidelines, tools, templates etc. that support the above policies e.g. technology listings etc. 7|P a g e Pakistan now has a robust enabling environment and governance framework. Although, the country needs a clear EE& C Roadmap, prior and on-going work will ensure the country can complete the analysis phase, in an effective and expedient timeline, following development of an overall Roadmap. The country can also benefit from international best practice when designing implementation programs. Best practice shows it is important to:  consider other policy priorities that may conflict with energy efficiency program needs,  account for resource requirements for implementation, such as: human resources (program managers, technical specialists) and capital needs (grants and loans to finance program management, procurement, financing schemes, and other components)  review roles of coordinating and implementing entities and create a reasonable timeframe for implementation and achieving results.  include a lag time between implementation and being able to effectively measure changes/improvements. Successful implementation also indicates programs need the following, irrespective of the area targeted:  Management: chose personnel with an energy efficiency background.  Policy and Regulation: develop programs with cross-cutting EE elements.  Data and Information: for planning and as input into other areas.  Technical support: to develop codes & standards, develop equipment specifications, conduct technical due diligence including energy audits.  Training and education: trained and educated professionals are needed in different disciplines: business, engineering, financing, governance, communications.  Promotion & Outreach: outreach may be needed to create awareness, promote results to scale up programs, facilitate political support, solicit and enlist program participants.  Investment promotion: access to financing is needed to facilitate implementation of EE measures.  Monitoring & evaluation (M & E): all programs need M & E with appropriate KPIs to determine impacts. 2.5 EE&C and Climate Change Linkage The Roadmap recognizes the country’s commitments on climate change and the close relationship between those obligations and energy conservation. Specifically, Pakistan has committed to reduce its emissions (in terms of CO2 equivalent) by 20% – relative to a baseline estimate – by 2030. This will be achieved primarily through improvements in energy supply/demand patterns and reductions in energy use. Pakistan’s climate change commitments therefore highlight the need for: (a) improving energy use efficiency; and (b) promoting the use of fuel/energy resources that involve reduced levels of emissions, and clean energy technologies. Various elements of the Roadmap that complement/reinforce these commitments are discussed in the following paragraphs. As required under the Paris Accord of December 2015, Pakistan is finalizing its Second National Communication (SNC) titled ‘Strategic Support for Energy Efficiency in Pakistan’ to the UN Framework Convention on Climate Change (UNFCCC). This submission was based, in part, on a report2 prepared for NEECA through funding from this activity. The SNC submission provides, inter alia: commentary on the 2 This report relied extensively on the analysis and recommendations listed in ENERGY: Pakistan Low Carbon Scenario Analysis, a report prepared by a multi-disciplinary team funded by Climate and Development Knowledge Network (CDKN). CDKN is funded by the UK Department for International Development (DFID) and the Netherlands Directorate-General for International Cooperation (DGIS) 8|P age process for preparing Pakistan’s Greenhouse Gas (GHG) inventory, identifies the major sources of GHG emissions in the country, and provides projections of Pakistan’s GHG emissions;  A documentation of the country’s concerns regarding the climate change agenda – given Pakistan’s high vulnerability to climate change3;  A cataloguing of the mitigation analyses carried out, and actions that are being undertaken (or being prepared) across all sectors of the economy, to with Pakistan’s commitments under the Paris Accord. The SNC submission also documents the governance and institutional framework which has been put in place by the federal and provincial governments – for preparing Pakistan’s GHG mitigation and adaptation initiatives. Specifically,  The Ministry of Climate Change (MOCC) is charged with preparing national climate change policies and action plans, and oversees the work of and coordinates with several federal authorities, research institutions, universities and private sector organizations – including: o Global Change Impact Studies Centre (GCISC), o National Disaster Management Authority (NDMA), o Pakistan Environmental Protection Agency (Pak-EPA) and o Zoological Survey Department of Pakistan (ZSD). It also maintains strong interaction with the Pakistan Metrological Department (PMD), Pakistan Agricultural Research Council (PARC), Federal Flood Commission (FFC), Indus River System Authority (IRSA), Water and Power Development Authority (WAPDA), National Energy Efficiency & Conservation Authority (NEECA), Alternative Energy Development Board (AEDB) and Civil Society Organization and private sector. A summary of the key items in the sectoral action plans and projects proposed for the SNC is presented below. Residential and Commercial sectors Actions to promote energy conservation and efficiency in these sectors (as per the draft background report for SNC) included recommendations to:  Establish energy performance standards for appliances, equipment and machinery, and adopt legislation that bans the manufacture, import or sale of appliances not meeting those standards;  Introduce testing, certification and approval systems, to ensure that these standards are adhered to;  Undertake skill upgrading programs for small-scale/cottage industry producers – to demonstrate the benefits of upgrading manufacturing processes.  Improving roof insulation and (other) building design  Solar/renewable energy lighting, water heating and other systems. A common theme that will be pursued in future is to price energy at its true cost of supply, and limit subsidies on electricity or gas to only poor households. The Government is aware that subsidizing energy creates a perception in consumers’ minds that energy is a free good and using energy 3 Pakistan is among the top ten most climate-affected countries of the world (according to the Global Climate Risk Index). 9|P age inefficiently (or wasting it) is not really an issue. This perception will be countered by adopting ‘full cost recovery’ pricing policies for electricity and gas. Building Energy Efficiency Regime A Building Energy Code was prepared in the mid-1990s and is being updated. Also, after the disastrous earthquake in 2005, UNHABITAT provided support for preparing plans and designs for energy efficient housing. The code established minimum performance standards for windows, openings, heating, ventilating and air-conditioning (HVAC) equipment, and lighting. Updates of the code will be designed to ensure that the code reflects recent developments in building technology, that performance are aligned with local and regional conditions, etc. Industry Options for improving Energy Efficiency – as documented in the draft report for SNC – included the following:  Improvement in Process Operation. E.g. Proper metering in the textile and sugar industry can reduce the energy consumption significantly;  Replacement of low-pressure boilers with higher pressure boilers can increase the energy efficiency in the sugar industry;  Installation of Variable Frequency Drive (VFD) or inverters on pumps and motors;  Installation of Heat Recovery Systems (HRS) from exhaust flue gases in sugar and paper industry;  Thermal insulation of steam lines and valves can reduce the energy losses in almost all the industrial units;  Improvement of Maintenance Operation i.e. reduction of air leakages; and  Proper maintenance and operation of electrical motors. Other options for improving energy efficiency in various sub-sectors included:  For cement, convert from single-stage dry kilns to high-efficiency multi-stage kilns;  For bricks manufacturing, convert from bull-trench/clamp kilns to zig-zag or other modern designs;  In textiles and other industries promote thermal efficiency improvements, introduce energy audits and inspections, etc.;  Promote the use of bagasse for electricity generation; and  Require industries to demonstrate regular maintenance of boilers and machinery, and replacement of equipment with more efficient and high-performance equipment. Options for improving efficiency and reducing emissions in transport which were identified in the draft/background report included:  Upgrading performance standards for road vehicles4, and fuel specifications;  Improving vehicle owners’ and operators’ attitude towards vehicle maintenance, and (over time) enforcing regular maintenance practices; 4 In addition to vehicles, these standards could cover vehicle spares and replacement parts, tyres and other accessories. 10 | P a g e  Transferring from road to rail particularly for freight, and petroleum products from road to pipelines;  Fuel switching – e.g. to electricity for railways, from diesel and petrol to CNG/LNG for road vehicles; and  Establishing more, and efficient. Rapid Bus Transport systems in urban areas. Waste sector Current activities to improve solid waste management which were documented in the background report for SNC included:  Solid Waste Management Guidelines (draft) prepared with support by Japan International Cooperation Agency (JICA), Japan.  Converting waste agricultural biomass into energy – a project by UNEP and other donors.  North Sindh Urban Services Corporation Limited (NSUSC) – Assisting the district government in design and treatment of water supply, sanitation and solid waste management  The URBAN UNIT, Planning and Development Department, Punjab - conducting seminars on awareness of waste water, sanitation & solid waste management techniques.  Lahore Compost (Pvt.) Ltd. – a project to handle organic waste management in Lahore. The company is registered as a CDM project with UNFCCC.  Different NGOs are involved at small scale for solid waste collection, and recycling. Forestry sector Promising options to mitigate and reverse the decline in forest cover (as a means for carbon capture and absorption) which were identified in the draft report prepared for the SNC included:  Community based forest management – to conserve rare species and conifer forests;  Agroforestry, particularly on irrigated farmlands;  Commercial plantations;  Afforestation of rangelands and degraded lands;  Riverine plantations; and  Provision of alternate fuels – to reduce dependency on fuelwood. Therefore, Pakistan is putting in place with donor support a comprehensive plan (and programs, projects and actions that support this plan) to further its climate change agenda. EE&C occupies a central place in Pakistan’s plans, the Roadmap builds on this central role, and a number of actions and recommendations of the Roadmap are aimed at reinforcing the country’s plans to meet its climate change commitments. The EE&C Roadmap covers a timeframe up to 2030, albeit it is front loaded with a heavy agenda of actionable points in the initial five (05) years. The Roadmap highlights several activities that need to e taken up on a continuing basis throughout the indicative timeframe. Further description of the Roadmap is covered in the forthcoming section of the report. 11 | P a g e 3. Energy Efficiency & Conservation Road-Map 3.1 NEECA Mandate NEECA Act provides a governance Develop Vision, Strategy and Initiate, catalyze, framework for preparing and targets for EE&C program carryout and coordinate implementing a nationwide EE&C and make appropriate EC Programs institutional arrangements program. It defines, inter alia, the mandate and functions of the Prepare Policy and Establish Protocols for coordination, outreach/ National Energy Efficiency and regulations, systems and promotion, and Conservation Authority (NEECA) and procedures implementation the authorities and powers which are vested in NEECA (to enable it to Establish Repository of Program Development perform its functions). It also identifies Information Demonstration, R&D areas for coordination as well as mandates of other departments or Recommend / strengthen Prohibit manufacture, entities (e.g. provincial governments national EE standards. import and sale of Display of Labels and energy in-efficient and/or federal line Ministries). strengthen infrastructure equipments. Obtain data / The Act delegates broad authority information and develop Prescribe and implement and responsibility to the NEECA energy consumption building energy code Board. The Board consists of key benchmarks stakeholders including Energy Auditors and Establish fiscal and representatives from the Provinces. Managers. Carry out Energy financial incentive Audits and Energy Use This facilitates an inclusive process for Assessments programs activity design, development, implementation and oversight of EE&C Establish system of designated adoption in the country. The Board, through consumers NEECA, can nominate stakeholders from the public and private sectors to ensure a holistic approach to policy and regulatory Figure 3.1 - NEECA Mandate promulgation and program design and development. 3.2 EE&C Roadmap Phasing Figure 3.2 shows three phases of the EE&C Roadmap initiatives recommended in adopting EE as an imperative. The Roadmap will help in ensuring mandates are carried expediently, cost-effectively and, in a manner, consistent with the 2016 Act. The Roadmap outlines phased and complementary policy and regulatory initiatives, activities, actions and projects and programs. The Roadmap also includes sequenced coordinated tasks and identifies key actors and their roles and responsibilities. A key starting point is to define a vision for what the EE&C initiative is expected to accomplish and goals and targets the EE&C can deliver for the country. Accomplishing the vision and achieving goals and targets will require a supporting policy and regulatory framework, resource mobilization, including institutional and human capacity development, access to information to increase awareness and aid planning and decision-making, technology and financing. It will also require compliance and enforcement, as prescribed under the policy and regulatory framework. Above all, it will require behavioral change, so energy efficiency is embraced by the citizens of the country and becomes an integral part of their everyday lives. 12 | P a g e Operationalizing NEECA and Develop Policy & Regulation Carryout Awareness and Implementation Phase – EE&C Development Phase 2019 – 2019 20 2020 30 Operationalization Phase - Provincial Focal Agencies and Procedures Outreach Campaigns HR Mapping & Procurement Develop EC Benchmarks / Design Sector Specific EC Resource Identification and Indices Programs / Projects Mobilization Develop EE Targets Strengthen Standards & Define Actionable Priorities Promotion and Outreach Labeling Programs Repository of Information Program Fiscal/Financial Incentive Define Constraints and Mechanisms Defining Coordination Protocols Addressal Mechanisms Certification of Energy Design Programs / Targeted Professionals Services / Projects Mandatory Energy Audits Promote Building Energy Codes Institute Energy Figure 3.2 – EE&C Phases One of the key priorities of the Operationalization phase is to establish the institutions (NEECA at the federal level, and special departments/agencies at the provincial levels) and to staff them adequately. This will involve ensuring a cadre of professionals with experience in climate change issues is also inducted into the respective institutions. Similarly, the Roadmap recommends establishment of a comprehensive Repository of Information, as a stand-alone database, an integrated set of databases, or a combination of the two. This Repository will include statistics on energy use by fuel, emissions factors, etc. and will support the preparation of programs, projects, and other activities that are aligned with national priorities. Also, it is proposed that protocols for information sharing and collaboration (between various Ministries/departments, federal and provincial governments, etc.) be prepared at an early stage of the EE&C program. This will ensure a coordinated approach between Ministry of Energy, Ministry of Climate Change, the provinces and other stakeholders that have key roles in the climate change agenda. The NEECA Act provides a substantial role to NEECA to gear up and implement an EE&C program by way of preparation of the National Energy Efficiency and Conservation Policy. The private sector’s active participation is critical for a successful EE&C program, both with regard to energy end use and energy supply. On the end use side, the private sector accounts for the bulk of energy use in the country and therefore holds the largest saving potential. On the supply side, again, the private sector has the means to finance the large investment required for increased supply (in an efficient and least cost manner) whereas public sector resources are constrained by the requirement of other priority sectors such as education, health, poverty alleviation, etc. These considerations regarding the central role of the private sector need to be addressed in the national Policy. As EE&C is relatively nascent activity in Pakistan, it requires substantial support and incentives for this activity to be widely accepted and adopted. This includes propagation, demonstration and facilitation - through instruments such as dedicated credit lines, specialized financial institutions etc. There is also a need for developing the capacity of domestic financial institutions and commercial banks to handle the specific financing needs of EE&C activities. The government can best achieve this objective by incorporating these considerations in the national Policy. In the Development phase, the Roadmap proposes that indicators (and formal energy use indices) be prepared – covering current levels and future targets – for all key economic activities. Future targets for such indices should, clearly, reflect national priorities and obligations in terms of emissions, and other climate change impacts. The Roadmap also proposes that such targets be established for intermediate 13 | P a g e years, in addition to the terminal year (2030). This will allow the Government to monitor the progress achieved (annually and over a five-year period) towards meeting the 2030 target for emissions reduction, and to adopt corrective measures, if the mid-term review indicates that the terminal year targets are unlikely to be met. Similarly, it is important to ensure that the rules, regulations, and SOPs that are prepared, under this phase, adequately cater to the needs to monitor climate change and emissions impacts. The Roadmap recommends outreach and dissemination on EE&C be carried out at the outset of the Implementation phase. This will accelerate building a consensus on energy saving and conservation, as well as help in demonstrating the risks and disadvantages of inefficient energy use, based on the harmful impact of emissions, pollution and other aspects of the climate change agenda. Similarly, it is expected that when programs and projects draw upon the database/Repository of Information, the likelihood of conflicts and contradictions between the climate change agenda and individual investments will be minimized, if not eliminated. Establishing a cadre of energy professionals (including inspectors and/or auditors) can complement such project and programs by allowing each activity to be monitored in terms of its climate change impacts. Similarly, the penalties and restrictions included in the ‘inspection, auditing and monitoring’ rules and regulations will act as a deterrent for inefficient energy use, especially for polluting activities. The Roadmap, therefore, needs to be considered in a holistic manner and an integrated approach needs to be adopted in implementing the recommendations. The three phases of the EE&C initiative as discussed above provide a logical pathway in adopting energy efficient practices. The vision of the Government is for the country to utilize energy efficiently while promoting universal energy access to ensure the country continues to grow economically and meets its national climate change goals in a financially sustainable manner. Achieving this will require commitments from a broad range of stakeholders; an enabling environment that stimulates actions and investment through incentives: and establishing the required infrastructure – the capacity of NEECA to perform its functions, protocols for coordinating the program among various governments and departments, rules and regulations to support the implementation of the program. The Act also requires NEECA to facilitate, monitor and coordinate various EE&EC activities. Consequently, NEECA needs to develop capacities to, inter alia, prepare:  successful pilot/demonstration projects which are replicated/rolled out nation-wide by private investors, consumers, the utilities, etc.;  awareness and information dissemination campaigns – to publicize the need for and benefits which can be achieved through greater efficiency in energy production, supply and use, list the standards and specifications that apply to various products/equipment, etc.; and  the rules/regulations through which various EE&C activities will be monitored and enforced. 14 | P a g e 4. Operationalization Phase 4.1 Operationalizing NEECA and Provincial Focal Agencies Implementation of EE&C Roadmap begins with operationalizing NEECA and concerned provincial focal agencies. NEECA, being the apex agency, is required to coordinate and lead national pursuits to promote EC effectively. Making NEECA fully Anatomize the previously sanctioned HR provisions functional is thus a high priority in the Roadmap. Other steps to be taken include developing a Conduct HR mapping and design desired structure. March – December 2019 repository of information which provides the source for preparing Develop / Design HR Policies. relevant and effective action plans and projects, evaluating the Develop framework for HR Development impacts of such plans in relation to national priorities and Initiate HR procurement circumstances and relative to their (originally) projected/anticipated Appoint MD / fill key positions to spearhead EE national pursuit outcomes; and establishing communication and coordination Review institutional arrangements for other concerned entities protocols. Key steps for equipping NEECA IMPLEMENTING AGENCIES with the required Human Estab. Division / MOE Provincial Govts. NEECA. Resources (management, professional staff, and manpower) Figure 4. 1. – Operationalizing NEECA – A key first step are shown in Figure 4.1. A key step in operationalization is to determine the functions NEECA will carry out on a day-to-day basis and what functions can and should be delegated to third parties. NEECA’s HR requirements should be developed from this assessment and/or determination. As the overall strategy is to leverage existing organizations and entities, the overall professional NEECA staffing requirement can be relatively small, provided the recruited professional staff have the necessary skills and capabilities to carry out their respective duties in a manner consistent with the expected modus operandi. A critical function for NEECA is coordination, collaboration and cooperation with provincial governments and other stakeholders, to achieve overall goals and objectives, consistent with international obligations on Climate Change (Greenhouse gas emission reductions by 20%, relative to a baseline forecast, by 2030), and it is important the organization structure and human resource base cater for this. 15 | P a g e 4.2 Develop Repository of Information There have been several major Identify Provincial, National, International bodies and agencies March – December 2019 ** continuing activity prior EE initiatives. They include activities supported by Organize national and provincial workshops to establish linkages international agencies and carried out at provincial, and Establish information exchange protocols national levels. However, there is no centralized repository of Obtain relevant information from the concerned agencies/bodies all the outputs of the prior Develop a database / MIS for informed decision making * work and the lessons learned. Creation of an easily accessible IMPLEMENTING AGENCIES central information repository with relevant energy efficiency-related National / Int. Agencies NEECA information/data can help Provincial Agencies expedite future EE programming. It will, inter alia, provide credible and comprehensive Figure 4.2 - Develop information Repository to allow of Information the Government to set intermediate and long-term targets for the EE&C programs, permit ranking in terms of economic priority of key sectors, programs and projects, support preparation of least-cost and high return projects and investments, and enable such activities to be evaluated (mid-course or on completion). NEECA will need to access information for benchmarking and targeting as well as for initiating and coordinating requests for technical and financing assistance and information exchange. The key steps required for establishing a repository of information are listed in Figure 4.2. 4.3 Establish protocols for coordination and collaboration The EE&C Program (and Establish Advisory committees and working groups to specific projects and provide recommendations for coordinatoin, outreach ** continuing activity March – December 2019 and promotion, and impmenentation of the EE&C activities to implement the program. Program) need to be prepared in coordination Develop and implement coordination protocols, to build with provincial governments support - across constituencies and stakeholders - for programs/projects and other stakeholders to avoid conflicts and duplication of efforts, Implement monitoring and evaluation activities to determine outcomes from EE&C national program * ensure maximum impact and optimal utilization of available resources (including, IMPLEMENTING AGENCIES inter alia, skills and expertise, Multilateral Agencies, prov. Govts, Ministry of Energy NEECA private sector as well as financial resources). The approach to and specific Figure 4.3 – Establish Coordination Protocols steps to ensure coordination need to be developed early on. 16 | P a g e 4.4 Developing the policy & regulatory framework One of the key tasks for NEECA Ascertain Constitutional and Legal requirements (under the Act) is to develop and periodically update the National Energy Conservation Policy. The Establish a Task Force/committee to prepare (draft) Policy and Vision/Strategy for EE&C; key steps are listed in Figure 4.4. March – December 2019 They include: (a) determining the Develop process for seeking inputs from Stakeholders - academia, sector professionals/experts, manufacturers, equipment and fuel suppliers, etc. rules and regulations to be promulgated, preparing drafts and submitting those to the Draft Policy prepared required approval forums; (b) developing protocols for Discussion and comments coordination between federal and provincial governments and Submission to CCI between various departments and entities; and (c) establishing energy tribunals. EE&C Policy approved and adopted IMPLEMENTING AGENCIES MOE and NEECA/prov. governments, other experts CCI Cabinet Figure 4.4 – Policy and regulation development 17 | P a g e 5. Development Phase 2019 - 2020 5.1 Establish Promotion and Outreach programs Promotion and Outreach Establish Advisory committees and working groups to provide activities need to address recommendations for coordinatoin, outreach and promotion, and impmenentation of the EE&C program. two key areas. The first is to July 2019– December 2020 ** continuing activity increase awareness of EE &C benefits and the National Develop and implement broad-based outreach programs to increase awareness and promote EE&C across the country Policy. The second is to support implementation of specific programmatic Develop and implement coordination protocols, to build support - initiatives and encourage across constituencies and stakeholders - for programs/projects and stimulate participation by intended beneficiaries. Implement monitoring and evaluation activities to determine outcomes from outreach programs * Abroad-based outreach initiative must be designed to IMPLEMENTING AGENCIES raise collective consciousness across a diverse constituency, and it Multi. Agencies, prov. Govts, private is important to recognize Ministry of Energy sector NEECA reaching each one will Figure 5.1 – Implement Outreach Activities require different outreach avenues and methodologies. The programmatic-related outreach must be designed to ensure maximum uptake and participation in the program by intended target audiences. 5.2 Develop Indices, Targets, & Address Barriers Although the energy saving Identify key energy data requirements to develop EE indices. potential in the various October 2019 – December 2021 sectors is well known, Identify key entities to obtain energy production, consumption data. absence of specific reliable Develop key comparative statements on specific energy consumption in data on energy use patterns each sub sector. makes it impossible to Obtain specific energy consumption data in other countries. benchmark and set specific targets for any Create consultative groups for setting EE targets sector/subsector. After establishing a central Establish monitoring protocols for measuring performance vs targets information repository, a next step will be to evaluate Establish incentive and penalty regime for compliance with/failure to meet targets and determine what goals can be set for reducing energy IMPLEMENTING AGENCIES intensity and for meeting MOE, MOIndustriy Utilities, Industry GHG emission Planning Commission, Associations, others NEECA FBS, provinces, others commitments. Figure 5.2- Develop EE Indices / Set Regional, Sectoral / National EE Targets 18 | P a g e 5.3 Develop Training and Investment Programs There are some key barriers Establish Advisory committees and working groups for outreach, that need to be addressed training and education and investment promotion. early on. These include: increasing awareness among Develop Outreach programs to increase awareness in each sector key actors to ensure they January 2020 – June 2021 understand why the Federal Government is seeking to tap Define EE &C competency gaps in each sector into the EE opportunity as well as assisting in developing the technical support capability Design training courses and education curriculae necessary to fill competency gaps through appropriate training and education programs. While there is a prime role for Define financing gaps and investment constraints the Authority to oversee and coordinate awareness Develop financing mechanisms including incentives to fill creation initiatives to ensure investment gaps. that messaging is consistent IMPLEMENTING AGENCIES with national policy goals and Ministry of Energy Multi. Agencies NEECA that training and education activities deliver a qualified and Figure 5.3 - Create Structured Programs for Outreach, Training & Education and competent workforce with the Investment Promotion skills to execute EE&C actions, actual delivery of promotion and outreach campaigns and training courses and education programs, can be realized using existing channels such as media companies and vocational and professional education providers. The role for the Authority will be to set direction for outreach and determine education levels and advise on curricula requirements needed to provide a cadre of qualified professionals and technicians. Similarly, there is a need to determine if financial incentives are needed to stimulate investment in energy efficiency technologies and practices. Therefore, NEECA, in concert with advisory committees and working groups, should develop activities for outreach, training and education and investment promotion. 5.4 Establish Modus Operandi to Enforce Regulatory Regime A fully functional NEECA also Develop SOPs to enforce regulatory regimes requires a standardized approach to operations and for enforcement of July 2019 – June 2020 regulatory regimes. These are shown Develop / draft / Notify Rules & Regulations in Figure 5.4. Establish protocols of coordination at the Federal, Provincial and / or local govts for compliance with NEECA Act Establish energy tribunals Define cross sectoral linkages and interrelatedness IMPLEMENTING AGENCIES Ministry of Energy NEECA Figure 5.4 - Establish Modus Operandi to Enforce Regulatory Regime 19 | P a g e 5.5 Establish Certified Energy Auditors Program Establishing a certification Establish liaison with reputed international certification agencies program for energy auditors is a key component of the Act Identify (from international certification agencies' standards and criteria) the experience and qualification requirements for energy and is likely to serve as a auditors January 2020 – March 2021 fundamental instrument to build ** continuing activity local capacity for promoting EE. Invite applications from private audit firms, individuals, instituions, The required steps are shown in etc. that wish to be designated and certified as energy auditors Figure 5.5 Short list firms, individuals, institutions that meet qualificaiton standards Energy Audits can be instrumental in achieving end Announce/publish lists of certified energy auditors * results: for regulators and oversight institutions they Prepare modules for training programs to develop/upgrade energy auditors' skills in accord with international standards and norms * provide a basis to assess the compliance by companies and Conduct examinations and publish updated lists of certified auditors * firms with applicable standards and enable them to take IMPLEMENTING AGENCIES corrective actions; for management they document Ministry of Law & PA MoE NEECA efficiency of energy use within Figure 5.5 Establish Certified Energy Auditors Program the company and identify opportunities for cost savings. 5.6 Develop Performance Contracting Performance contracting is often Program proposals by Energy Service Companies in used for implementing EE&EC consultation with consumer July 2019 – June 2010 activities. It involves formal agreements between 2 or 3 parties Identifying program partners like sources of funding – a consumer, an energy service company (ESCO) and, in some Developing metering mechanism saving cases, a utility or financial institution evaluation/measurement procedure to share investment risk and profits. Finalizing templates of bipartisan or trilateral legal The steps involved are described arrangement below. Usually, the ESCO prepares an investment grade audit/ Publicity and awareness raising to highlight risk sharing and benefits program/project for a consumer and estimates the value of energy IMPLEMENTING AGENCIES savings the program/project will ESCO(s) Consumer Utility / others NEECA generate for the consumer. The investment grade audit also Figure 5.6 Develop Performance Contracting provides for a performance guarantee (and consequently the level of energy savings) of the savings, which may equal or a portion of the total/computed level of savings, that will accrue to the consumer. The consumer and ESCO enter into a legally binding contract agreement, based on the (energy efficiency) performance guarantee, and implicitly the actual/accrued value of savings (reduction in the consumer’s electricity or gas bill) that forms the basis 20 | P a g e for payment to the ESCO. The risk/rewards from the investment/project are thereby shared by both the consumer and ESCO. The agreement usually prescribes a measurement and verification (M & V) protocol for determining the level of energy savings. The investment to implement the project is either made by the consumer or through a third party that may include the ESCO. Any necessary maintenance necessary to ensure the guaranteed performance of the project is usually done by the ESCO at the ESCO’s expense. The performance of the project is monitored on a regular basis as set out in the contract, often by an independent entity, following the prescribed mutually agreed M & V protocol and the savings determined and payments made as appropriate. The performance contract often includes penalties, payable by the ESCO if the guaranteed performance is not realized. This mechanism has been used successfully in the United States to upgrade the energy efficiency performance of federal and state facilities. Federal and provincial governments, and the respective departments/entities/agencies, should review whether such an approach could be adopted and utilized for specific EE&C activities in the country. Key points to consider include whether consumers would carry out a specific activity on its own (because of its profitability or quick returns) or whether a mechanism for sharing the risks may prove of interest. In all cases, there is still the need for access to financing and the creditworthiness of ESCOs and consumers may be a barrier that needs to be considered. In addition, the legal veracity of a performance contract in the country is unknown. If it is concluded that this mechanism has merit or can stimulate some types of investments, for investments involving ‘large’ expenditures, then NEECA could, inter alia, prepare: (a) templates of performance contract agreements that can form the basis of third party agreements between the parties; (b) use publicity and awareness raising campaigns, to highlight the benefits (e.g. sharing of risks among various parties) of this approach; and (c) projects/programs which they would like to partner, or support through available sources of financing (e.g. the ECF). 6. Implementation Phase – 2020 - 2030 6.1 Targeted Technical Services / Demonstration Programs 5. Targeted services are Identify priority sectors, user groups, utilities, etc. where high potential for energy savings is visible/established. January 2020 – December 2025 designed around low- prepared in 3-5 years, while ** Some of the tasks can be others will be implemented period. SO this in effect a throughout the program cost, quick payback continuing activity. Develop targetted demonstration projects for 'high-potential' sectors, interventions which can be carried out by Identify sub-sector specific demonstration program like waste heat competent energy recovery, fuel substitution, lighting replacement / automation, etc. * service companies and can become a source of Identify opportunities for major rehabilitation and revamps revenue generation. Develop projects to initiate national / provincial scale demonstration Similarly, selected and dissemination of low cost interventions * demonstrations should Institute mechanism for large scale sensitization and dissemination of be used when results for concerned stakeholders appropriate. IMPLEMENTING AGENCIES Provincial EE Agencies, utilities, industries, consumer groups NEECA Figure 6.1 - Targeted Technical Services / Demonstration Programs 21 | P a g e 6.2 Appliance Standards and Labeling Programs Phasing out of inefficient appliances and adoption of new Sensitizing the stakeholders ** Preparing and adopting performance standards for equipment, machinery, appliances and products will require 3-5 years, but standards is needed. Appliance testing and certification and labeling infrastructure needs to be Review international standards / specifications for possible adoption in Pakistan established. Figure 6.2 sets out the key steps. Prepare specs and standards for specific appliances, enforcing and implementing them will be a continuous task, so this is also (in effect) a continuing activity The process should involve an early machinery, equipment items. * review of standards and specifications for equipment and Notify the accepted/approved standards and machinery prepared by reputable specifications international institutions (for example, IEEE, US DOE.), and a Announce timeframe for introduction/adoption of new July 2019 – December 2023 standards subsequent decision on what standards are most applicable and Ascertain the state of testing facilities, certification best reflect the local situation. The bodies/institutions and develop criteria for designated standards and specifications facilities.. * selected for adoption should seek Improve testing infrastructure, notify to replicate the adoption of the approved/certified testing labs, product inspection international best standards and bodies, etc. specifications in a phased manner. A phased approach is required Review legal framework for introducing/mandatory new standards because current standards for equipment and machinery (manufactured, sold or used) in Announce penalties for non-compliance Pakistan may need to be revised/updated in order to conform to internationally Develop SOPs, legal processes for institute inspections / pentaliteis accepted standards; producers, importers and traders will have invested in facilities and stocks in Quality and safety checking, penalties for non- compliance * compliance with existing standards, and it is not fair to ask Update specs/standards - in accordance with them to adopt the updated international norms* standards and specifications immediately. Therefore, a phased IMPLEMENTING AGENCIES approach should be followed that¨ PSQCA PCSIR NEECA a. describes the norms /standards/specifications that Figure 6.2- Standards and Labelling for Appliances will apply to all machinery, equipment and appliances after a transition period; b. sets out the time limit for this transition period; c. defines the tests and certificates (e.g. those carried out by internationally reputed and recognized laboratories, and by accredited laboratories in Pakistan) which will be acceptable for complying with the ‘approved’ standards and specifications; 22 | P a g e d. encourages the private sector to invest in laboratories, etc., to perform testing and certification functions – i.e. specifies the equipment/facilities and resources (including professional staff and expertise) which a certified lab must have, the fees it can charge for tests and certificates, and periodically invites applications from firms and individuals that wish to set up such facilities; and e. specifies penalties which will be imposed on manufacturers, importers, traders, etc. who continue to provide items that do not comply with approved specifications, after the transition period. Legal documentation to ban the manufacture, import and sale of non-compliant items after the transition period needs to be prepared and notified, in parallel. 6.3 Mandatory Audit Programs for Designated Consumers An energy audit is necessary to Develop basic information system for private and public sector assess the efficiency of energy auditors will require 3-4 years, but audits will continue throughout the industries ** Identifying auditors and developing qualification standards for utilization in any entity and the Select Designated industries for mandatory energy audits 2016 Act prescribes their use. A program period. So this is also a continuing activity key role will be for NEECA to set Develop energy audit manulals / Instruct and Facilitate criteria for qualified energy Mandatory Audits and Gather results January 2020 – December 2024 audits and auditors and to Publicize Results of Mandatory Energy Audits determine what facilities will be subject to mandatory audit Monitor the results of follow up and Retrofit programs programs. The program can be initiated through a combination Facilitate identifying rehabilitation and revamp opportunities * of voluntary and mandatory audits for specific enterprises Institute Awards for Largest Energy Savings * and industries. Showcase industries with largest intervention plan and savings Subsequently, periodic (annual as Model industries and offer fiscal incentives to them perhaps)) audits should be Design a national program for energy audit for SMEs not required for all large energy included in designated list consumers. Seek assistance from multilateral support for carrying out audits Mandatory audits can be carried out by private sector IMPLEMENTING AGENCIES firms/companies certified by NEECA. It will be important Private (certified) auditors Provincial EE Agencies, NEECA NEECA and provincial EE Agencies monitor the actions Figure 6.3 – Energy Audit Programs for Designated Consumers taken by private- and public- sector firms, in response to the energy audits. The entire rationale for undertaking the audits will be negated if the audited firms/companies do not prepare retrofit and other investment plans to offset the inefficiencies in energy use efficiency identified during the audits. 23 | P a g e 6.4 Building Energy Code (BEC) A NEECA- developed BEC can Gear provincial governments to amend / adopt building energy implementation handbook can be prepared over the same period, and initial implementation can also be conditions, etc. So, this is also a continuing activity set benchmarks for energy code. may need revisions to incorporate region specific completed in this time frame. However, the BEC ** The first BEC can be finalized in 2-3 years, an consumption in the building January 2020 – December 2026 Develop Compliance Handbook of Building Energy Code of sector, the most electricity Pakistan intensive sector in the country. Implementation will require Develop standard operating procedures and protocols for appropriate awareness implementing Building Energy Code programs and compliance Develop strategy for nation-wide training programs for guidelines. architects, builders, developers and to implement BEC * A task force or committee of Initiate building energy audit and retrofit programs in public experts should be put in place and private sector buildings to develop the Code, and comments and inputs sort Facilitate local development authorities to incorporate BEC in their by-laws * from professional bodies and practicing professionals prior IMPLEMENTING AGENCIES to adoption of the Code. Provincial EE Agencies NEECA Figure .6.4 - Enforce Building Energy Codes 6.5 Identify/specify Energy Efficient Building Materials The use of EE building materials prepared in 3-4 years. The time January 2020 – December 2023 Identify building materials for energy efficiency frame for the major portion of constitutes a necessary element characteristics this task is therefore 2020- building materials can be A comprehensive list of to promote EE in the residential / community / commercial Identify procedures to use such materials buildings. A comparative 2023. analysis of building materials to Develop comparative statements for energy highlight their EE characteristics efficiency characteristics to allow for informed decision making will be important parts of this activity. Architect / building Disseminate information regarding energy efficient associations / Ministry of materials Housing can provide useful IMPLEMENTING AGENCIES inputs. A list of actions to Provincial EE Agencies NEECA promote the use of EE materials in (building and other) construction is Figure 6.5- Energy Efficient Building Materials provided in Figure 6.5. This task will be an ongoing activity for NEECA and provincial EE entities. Periodic dissemination of these efforts is important for ensuring that the advice provided by experts and professionals, and documented by NEECA, is optimally and continually utilized. 24 | P a g e 6.6 Develop Prototype EE Building Designs Buildings are major energy users accounting for about Organize a national competition for prototype normally require 1-2 needed, that can be done in subsequent EE building design for various regions If further work is This task should December 2020 50% of the national March 2019 – electricity consumption. years. The building design should include years The household sector is the considerations on building envelope, lighting, heating and ventilation, equipment, etc. major contributor and offers a tremendous Promote energy efficient building practices potential for energy through builders and local development authorities * savings. Developing IMPLEMENTING AGENCIES prototype Energy Efficient (EE) Provincial EE Agencies NEECA building designs for the housing sector will provide a good Figure 6.6 - Develop Prototype EE Building Designs opportunity for architects, builders and end users to replicate in their construction projects. The Prime Minister’s Housing Program presents a good opportunity to publicise EE designs, construction methods and efficient materials. This Program represents a large investment which will be closely monitored by building designers, construction firms, financiers, etc. and can set precedents for the construction of residential buildings well into the future. The Government can promote this by appointing a Task Force, comprising experienced professionals (architects, engineers, etc.) to prepare: (a) designs and prototypes of small to medium-sized homes; (b) construction standards/SOPs for installing appliances and fixtures, workmanship, etc. for homes constructed under the Program; (c) recommendations about building materials that are best suited, from an EE perspective, for various sized homes; and (d) specific considerations (responsive to the geographic, climatic and other conditions) which can apply to houses constructed in various regions. 6.7 Establish National / Regional Building Energy Audits Programs Energy savings in Establish protocols and standard operating procedures buildings can be such audits can be done in the next Preparing SOPs etc. will require 2-3 for energy audits in buildings January 2020 – December 2025 years, disseminating the needs for audits will be a continuing activity achieved based on Initiate building energy audit and retrofit 2-3 years. However, conducting comprehensive energy demonstration programs in public sector buildings / audits carried out by audit manuals competent energy service and/or audit Disseminate BEA results and cost benefits analysis for maximum replication firms/companies. Audits not only identify Encourage and facilitate energy audits and retrofits in opportunities to reduce large commercial and community consumers energy use but also help the market build Develop MIS with respect to energy conservation in its capacity to buildings effectively promote energy consumption patterns IMPLEMENTING AGENCIES in the sector. The Building Audits can be part of an Provincial EE Agencies NEECA overall Energy Audit program (see above) or be considered Figure 6.7 - Establish National Programs on Building Energy audits a separate program, with implementation through the private sector, if they are allowed to charge fees that 25 | P a g e are sufficient to cover the costs incurred in conducting these audits. The role for NEECA should be to establish a process for certifying private parties to carry out the audits. 6.8 Power Sector EE Programs NEECA Act allows Study the regulatory regimes for transmission, distribution NEPRA (the power require more time. Subsequently, the utilities will set for the power sector utilities will require 2-3 years, demonstrating the Developing coordination mechanisms between benefits of EE&C programs to the utilities will NEECA/provincial EE&C agencies and power sector regulatory have to implement EE&C programs on a Develop mechanism to liaise with DISCOs / NTDC to monitor authority) to take, (or and oversee their energy loss reduction program require utilities to take), specific Facilitate GENCOs for energy audit and identify opportunities July 2020 – June 2025 for efficiency improvement initiatives to improve continuing basis the efficiency of Develop protocols to oversee the energy efficiency program of the independent power producers energy production, evacuation and Coordinate with WAPDA to have energy audits done by the distribution systems. hydro power stations NEECA can play a Develop protocols of coordination with Discos, NPCC for load strong coordinating analysis and to design load management programs role to monitor such initiatives taken by the Develop incentive programs for consumers to implement end use energy efficiency relevant entities. Develop joint M&E for cogeneration initiatives IMPLEMENTING AGENCIES Power Sector Entities NEECA / Concerned Entities Figure 6.8 – Power Sector EE Programs 26 | P a g e 6.9 Establish EE Programs in the Transport Sector Transport is an Promote ecofriendly driving habits through awareness and important sector of dissemination programs Preparing and implementing the main programs in the road transport sector can be done in 3-5 years; for railways and economy with large airlines a longer timeframe is proposed as it will require potential for energy Develop fuel efficiency standards for light and heavy vehicles savings. NEECA Act Activity 9 - January 2026 – December 2030 intensive investigation and preparation provides for Develop phase out program for old inefficient vehicles improvement for the all January 2021 – December 2025 modes of transport. Develop / Monitor implementation of freight/load regulation and aerodynamic drag recommendations for trucks Road transport is the Develop Action Plan to promote regular vehicle maintenance, major consumer of announce timeline for mandatory inspection* petroleum products, and should be a priority Introduce incentives to promote private investment in tune-up centers, vehicle inspection and certification facilities, etc. area of focus. A range of activities can be Promote fleet energy audit and management programs initiated to promote efficiency in road Promote cycling culture transportation. Coordinate energy efficiency in the railways and airlines* A list of actions that can be taken to promote Devise mechanism and coordinate elimination of fuel and lube oil efficiency in fuel use in adulteration the transport sector is IMPLEMENTING AGENCIES provided in Figure 6.9. Perhaps the most important of these is Item 5 – promoting regular vehicle Provincial EE Agencies NEECA / Concerned Entities maintenance. While other measures, to upgrade vehicle specifications (to e.g. Euro 3, 4 Figure 6.9 - Establish EE Regimes for Transport Sector etc. in a phased manner) and fuel quality will also be required, it needs to be recognized that even vehicles manufactured to the latest specifications will not sustain improvements in fuel efficiency unless vehicle owners, fleet operators, etc. are required to carry out routine maintenance on their vehicles. The situation in Pakistan appears to be the opposite – regular vehicle maintenance is not considered an important activity, nor is it seen as a requirement for the manufacturers’ specifications and warranties. Clearly, this situation will not be addressed by one or two actions and so a phased program is proposed:  start with promoting the benefits of regular maintenance,  follow up by announcing a timeline when ‘annual vehicle inspections and certification’ will become mandatory, and  promote the setting up of tune-up/maintenance/testing and certification centers Demonstration/pilot’ projects can be set up in the public sector if the review of experience of the centers established by ENERCON concludes that these facilities accomplished their objectives. 27 | P a g e 6.10 Establish EE Regimes for Agriculture and Water Supply Systems Electric tube wells operated Promote energy efficient operation of agricultural tube can be done in 3-5 years, but audits will The tasks – conducting efficiency audits of tubewells, preparing energy efficient by urban water supply wells by demonstration, information dissemination, designs, and implementing retrofits – pricing of power, etc. entities constitute a very always be a continuing activity. July 2020 – December 2025 high peak load. Petrol and diesel used by such Promote energy efficient operation of tractors agencies is also a drain on the national availability of Initiate energy audits and retrofits of urban water supply fuels. Most tube wells systems (require municipalities to develop project documents) operate below rated capacities and require Promote farm mechanization and energy efficient retrofits. National / regional cropping practices projects can be developed by the municipalities and Evaluate viability of promoting 'solarization of tube wells' urban authorities, to based on location specific conditions / priorities improve tube-well IMPLEMENTING AGENCIES efficiency. Opportunities for energy saving also Provincial EE Agencies NEECA / Concerned Entities include converting such Figure 6.10 - Establish EE Regimes for Agriculture and Water Supply Systems tube-wells to solar powered pumps, etc. This may also offer a solution for some water pumping for agricultural uses – though those decisions should be taken after a careful evaluation of what is most appropriate in each location. In some areas the key constraint may not be the energy used for water pumping. The issue may be the optimal extraction and utilization of groundwater. Therefore, a program to convert agricultural tube-wells to solar power should be prepared only after it is determined this addresses the key challenges in the location. 6.11 Prepare and publicize (prototype) EE Project ideas For each sector, NEECA should consider preparing a set of project ideas and publicize potential benefits (rate of return, benefit-cost ratio, payback period, etc.) of those ideas to private investors. Projects can cover investments, capacity building and the provision of specific EE services. Potential investors would, clearly, be allowed to conduct formal and detailed feasibility studies, to confirm the “likely benefits” which are identified and publicized by NEECA. A tentative list of projects that can be considered for detailed preparation is provided below. Industrial Sector  Sector specific pilot / national projects on audit and retrofit in energy intensive industries  Energy audit and retrofit in energy intensive industries  National / regional projects to promote targeted technical services for quick energy savings  Demonstration projects on waste heat recovery / cogeneration / heating and ventilation / power factor improvement / equipment or process upgradation  Develop database management system to determine specific energy consumption indices  National / regional projects to promote EE in SME enterprises.  Awareness / training / dissemination of information / ToT / auditors / symposiums / regional workshops etc. 28 | P a g e Building Sector  Projects on BEC sensitization to include developing compliance handbooks, regional workshops / seminars and programs for architects / builders / housing societies, demonstration activities, other training and outreach activities.  National / regional pilot projects for building energy audits and retrofits  Developing / upgrading S&L regime, establishing / upgrading testing infrastructure.  Awareness / training / dissemination of information / ToT / auditors / symposiums / regional workshops etc. Transport  Project on developing program on phasing out old and inefficient vehicles.  Establish model vehicle test centers  Project on fleet management program  Project to promote low cost high payback initiatives in the transport sector  Awareness / training / dissemination of information / ToT / auditors / symposiums / regional workshops etc. Agriculture & Water Supply System  Regional projects on EE operations of water supplies.  Regional projects for EE agricultural tube-wells, farms mechanizations and promoting solar tube- wells  Awareness / training / dissemination of information / ToT / auditors / symposiums / regional workshops etc. Technical Assistance Programs  Special studies like developing fiscal and financial incentives for EC & EE, creating VC funds to promote EC & EE, baseline / feasibility studies, reconisense studies  Sector specific project development  Developing rules / regulations / codes / SOPs / handbooks etc.  Developing information systems on BAP / BAT on successful programs in other countries  Capacity building programs  Awareness / training / dissemination of information / ToT / auditors / symposiums / regional workshops etc. An alternate approach can also be considered. Investment projects can include the assembly or manufacture of high-value/energy intensive appliances such as air-conditioners, refrigerators, freezers, etc.; the manufacture of appliances consuming lesser amounts of energy (water pumps and motors, fans, irons, etc.); manufacture and/or assembly of energy efficient gas appliances – stoves and cooking ranges, room/space and water heaters; and electrical and electronic appliances – TVs, etc. One or more items can be selected from each category and feasibility studies conducted, and results publicized. An approach which may be more attractive to existing manufacturers can be to:  ascertain the current local market prices of existing models/appliances – covering both “regularly available” appliances and those marketed as “energy efficient” by manufacturers and sellers;  determine average sizes of factories producing such appliances in Pakistan, and the incremental revenue stream which accrues when a factory converts from producing regular to EE appliances;  compute the total/up-front investment (covering both debt and equity) this incremental revenue stream can cover/support, and the pay-back period and rate of return for this investment; and 29 | P a g e  publicize the results as projects for re-tooling of existing factories to produce EE appliances which are feasible/attractive given the current market conditions (market size, prices, etc.) in Pakistan. Capacity building projects include programs to develop and upgrade the skills of labor employed in manufacturing appliances including fans, pumps, motors. These items are produced in a few large-scale modern factories and in hundreds of small scale, local workshops and factories. The skill levels of workers in the latter category can (and most likely should) be upgraded – in simple tasks such as the electrical wiring of motors (and more specialized tasks), to produce items that comply with high EE standards. One potential project could be to use the training facilities available in national and provincial vocational training academies/institutions. Those institutions can be encouraged to develop programs (2-3-week duration courses for the simple tasks, longer duration programs for more sophisticated tasks) to upgrade workers’ skills. The benefits of hiring workers who are certified through such courses (and can produce appliances that meet EE standards) can be publicized to existing producers and assemblers. Factory owners will have to pay to have the skill levels of their labor force upgraded, so the training institutions can recover the costs incurred in preparing and conducting such training programs. 6.12 Total Energy Management Programs and ISO 50001 Compliance Total Energy Promote compliance with relevant ISO for EE&C practices in certifications will be a Encouraging firms to Management projects major energy consuming establishments continuing activity subscribe to such December 2030 January 2020 – or ISO 50001 international programs can be Establish total energy management (TEM) programs demonstrated to show how programs Monitor and compile results of TEM interventions which cover administrative, IMPLEMENTING AGENCIES technological and policy areas can achieve sustained energy Provincial EE Agencies NEECA / Concerned Entities savings. Such projects can be Figure 6.12- Total Energy Management Programs & ISO 50001 Compliance developed based on feasibility studies. These programs include systematic implementation by appointment of energy managers, preliminary energy assessments, detailed energy audits, retrofits and revamps, energy monitoring and evaluation in major establishments etc. 30 | P a g e 6.13 Devise Appropriate Energy Pricing Regime, Design / Implement Fiscal &Financial Incentives Pricing energy at its true cost of Conduct stuides to devise appropriate energy The need for the proposed reforms – pricing to supply and limiting subsidies to pricing regimes to promote EE&C incentives etc. to promote EE&C – will remain reflect true cost of supply, fiscal and financial only poor segments of society is an important element to promote Review international experiences, market throughout the program period. January 2020 – December 2030 studies to formulate incentive regimes EE&C. Adopting full cost recovery pricing policies for electricity and Liaison with SBP for financial incentives gas can discourage inefficient energy use. Attuned banking system to EC financing through awareness and well-structured There is an absence of fiscal and mechanism financial incentives to promote EE Educate stakeholders on incentive regime to practices. Incentives are used by encourage participation many countries to successfully Promote ESCOs for advisory services, risk promote EE practices. Such sharing, monitoring and EC project incentives include dedicated credit evaluations lines, accelerated depreciation for Create facilitation services for stakeholders to efficient appliances, risk sharing avail fiscal and financial incentives credit guarantee mechanisms, soft loans, subsidiaries for energy IMPLEMENTING AGENCIES audits, VC financing etc. Ministry of SBP/FBR NEECA Provincial Financial Instituions Designing appropriate Finance incentives will be a cornerstone to successful Figure 6.13 - Design and Implement Fiscal and Financial Incentives implementation of EC programs. 6.14 Instituting National EE Awards National awards for outstanding Introduce categories of awards and evaluation critieria EE practices will go a long way to Starting 2020 this activity can be promote EE practices in the done periodically after every 2 Define a transparent process for awards country. It is important that such awards are based on a pre- years Solicit maximum participation defined criterion and truly transparent and decided purely Award by the President or the Prime Minister of Pakistan on merit. Highlight and publish success stories for dissemination and replication . IMPLEMENTING AGENCIES Private Ministry of SBP NEECA Financial Finance Institutions Figure 6.14– Instituting EE National Awards 31 | P a g e 7. Proposed Funding Arrangements Efficient use of energy resources makes financial and economic sense. Studies previously conducted by ENERCON suggest that for every unit of cost spent on EC, savings amounting to four to 12 times higher in value can be achieved. Hence, the financial incentive exists for the country to adopt EE&C. Fully mobilizing the country to adopt EE&C will require about five years, so it will be imperative for the government to allocate resources to catalyze efforts. As such, it is strongly recommended in the first instance, one billion rupees’ contribution be committed by the government and released to kick-start NEECA and the EE&C. These funds should be in addition to the ECF funds, amounting to PKR 300 million, that are expected to be transferred to NEECA accounts to initiate core activities. It should be noted that for most activities in the Roadmap, specific projects can be developed based on basic information gathering, viability and reconnaissance studies. Support of multilateral agencies can help facilitate this. Once the Roadmap is approved by the government it can be shared with the multilateral bodies to assess level of interest in funding support for activities/projects. An alternate proposal is to explore avenues for funding NEECA largely from non-budgetary resources. This will involve developing the EE&C program in collaboration with the private sector to promote the acceptance and support by investors, manufacturing plants, building owners and other large users of energy. Once such support and buy-in is established, they should be willing to pay fees and charges for NEECA’s various services such as plant, building or entity energy audits. Since such services will generate profits (through significant reductions in energy use and costs) for private and public enterprises, they should be offered on a fee-for-service basis. The level for such fees and charges should be prepared and submitted to the required approval forum(s) for their concurrence. However, it is unrealistic to expect that the fees and charges can be imposed immediately. Therefore, for an initial period, NEECA will need to be financed primarily from the federal budget. Funds currently available can help the government through the initial period5. 5 It is recognized that those funds can only be transferred to NEECA through a decision of the Board of ECF. The custodian of the ECF should convene a meeting of the Board of ECF; and require the Board (through a resolution of the Annual Meeting) to transfer Rs 300 million to NEECA. 32 | P a g e