Analysis of coal-related energy consumption, economic growth and intensity effects in Pakistan

Abstract

Coal has been a valuable natural resource for Pakistan not just for its relative abundance but for its critical role in the progress of various energy industries. This study analyzes the impact of economic growth and coal intensity on Pakistan's coal consumption. The effects of economic scale and coal intensity factors are studied to analyze the decomposition under the national economic plan, industrial economic and intensity effects. To achieve this objective, we applied the Laspeyres index of decomposition method for yearly data spanning the period of 2001–2020. The empirical findings show that (i) economic growth leads to a rise in coal consumption; however, coal intensity effects present mixed results due to lower production and technology. The reason is that Pakistan started coal production from the Thar coalfield during the half-decade with a growth of 35.9%, which caused industrial intensity during 2006–2010 and 2011–2015. (ii) The power industry has the maximum contribution (98%) to the overall impact regarding the intensity effect. Cement, brick-kilns and Pak-steel industries contributed 0.06%, 1.71% and 7.66 (until 2015), respectively. (iii) The highest economic contributors are the brick-kilns, cement and power industries, which provide 166.56, 4614.74 and 1435.94 billion US$ respectively between 2001 and 2020. (iv) From 2001 to 2015, the coal intensity of each industry was mixed, but it then increased through 2020. Furthermore, these industries demonstrate that when coal use drops, the intensity will reduce. Finally, the average coal consumption is predicted to be about 35.80% from 2025 to 2035, which means that Pakistan may substitute its domestic resources and conserve its energy because of technical enhancement.