Coal and economic development in Pakistan: A necessity of energy source

Abstract

In this research, the logarithmic mean Divisia index (LMDI) and the Input-Output (I–O) models were used to explore the determinants of coal consumption change during 1999–2018 in Pakistan. Some novel factors industrial structure, energy intensity (EI), economic scale, energy mix, and personified coal consumption were chosen and added to the LMDI and I–O models. The aim is to estimate the factors’ effects of various sectors that might provide a new way for policy-makers. The results show: (1) the variations in the driving factors industrial, cement, Brick-kilns, and power sectors are growing. (2) The industrial structure effect increasing coal consumption significantly, while energy mix and EI are growing energy efficiency from 2014 to 2018. The economic scale effects played a major role in coal consumption during 1999–2018, while EI, industrial, and energy mix have mixed effects. (3) The economic scale is the only factor which is stable and increasing Pakistan’s coal consumption. (4) From the LMDI, the economic scale effect is stable while I–O expresses that EI, energy mix and a trend in the industrial structure effects are key motives in boosting in coal consumption. It is suggested coal reserve of 185.175 billion tons can significantly improve social, economic, and energy in Pakistan.