CPEC’s road to renewables
The China-Pakistan Economic Corridor (CPEC) has certainly emerged as a transformative initiative, significantly enhancing Pakistan’s energy sector by boosting its capacity and infrastructure. But Western media has repeatedly criticized the possible climate impact of the Belt and Road Initiative (BRI) — and CPEC. There are also worries about deforestation and biodiversity loss due to construction activities like building roads and power plants as part of CPEC.
However, these assumptions are far from reality. Both Pakistan and China are working together to address these concerns, collaborating to improve economic and legal ties in tackling climate change challenges by incorporating regulations into CPEC initiatives for their long-term viability and safety. Measures are being taken and the sustainability of the projects is being ensured. But these efforts face considerable challenges. Addressing these hindrances within the framework of CPEC and beyond is imperative to ensure an orderly and equitable green transition.
China’s ascent as a significant player in the global energy market is marked by substantial financing of infrastructure projects within the BRI countries. China is playing a major part in advancing renewable energy and environmentally friendly projects in Pakistan via the CPEC, which has set a model for Pakistan’s energy industry transformation amid global climate challenges. By investing in CPEC-driven projects, Pakistan’s energy landscape is evolving towards sustainability and a greener approach.
CPEC has already made significant strides in enhancing Pakistan’s energy capabilities. China’s transformation from funding fossil fuels to renewable energy investments presents a chance for Pakistan to capitalize on this progress. Factually speaking, an in-depth examination of the projects within CPEC reveals that Chinese funding is transforming Pakistan’s energy sector and propelling its goals in energy development.
China has in the past mainly focused its energy investments in countries along the BRI (such as CPEC) on coal and other fossil fuels due to the urgent need for electricity in recipient countries like Pakistan where short-term solutions were favored over long-term sustainability. However, now there is a major shift towards investing in cleaner energy sources driven by the increasing global focus on environmental conservation and sustainable development initiatives. Significant shifts have been evident in the BRI projects due to policy adjustments and financial investments.
China is committed to investing $100 billion for green initiatives. This changing approach is especially crucial in the context of CPEC as Pakistan urgently needs renewable energy solutions. The country’s move towards energy demands massive financial investment; estimates suggest approximately $115. 7 billion is essential for the development of renewable energy alone.
Funding is needed for shifting from coal to renewable energy sources such as wind power and reducing carbon emissions in sectors like transportation and manufacturing industries in Pakistan. China, with its deep pockets and expertise in green technologies, could be instrumental in helping Pakistan tackle these challenges. In the second phase of CPEC, a lot of emphasis is being placed on business-to-business interactions in industries such as the renewable energy sector.
As Pakistan moves towards cleaner energy sources, CPEC 2.0 will serve as a vital avenue for drawing investments into sustainable projects. In a major infrastructure endeavour, Chinese state-owned enterprises (SOEs) and private-sector investors are playing crucial roles in facilitating this shift by providing essential funding, technical expertise and experience.
The importance of CPEC 2.0 is highlighted by its focus on promoting green energy initiatives that support the growth of investments in Pakistan’s solar and wind energy sectors. In order to tap into its vast potential in wind energy, Pakistan is looking for an estimated investment of around $15. 12 billion for solar projects and $20 billion for wind projects. By utilizing the CPEC framework and receiving backing from Chinese investors, Pakistan can move closer to achieving these objectives.
China’s increasing dominance in the global renewable energy market is another factor Pakistan can capitalize on. It is projected that China will contribute nearly 60 per cent of the global renewable energy capacity by 2028, underscoring the country’s leadership in this sector. Chinese investors have been instrumental in advancing Pakistan’s energy sector with China contributing around 87 per cent of investment in solar photovoltaics (PV).
Strengthening ties between the Chinese private sector and Pakistan’s renewable energy industry can unlock significant opportunities. Joint ventures in distributed generation projects, expanding the technology supply chain, and fostering innovation in renewable energy technologies are key areas where such collaboration can be highly effective.
The growing electric vehicle (EV) market in Pakistan also offers a promising avenue for Chinese investment. As part of its green energy agenda, Pakistan has introduced favourable policies and incentives to promote EV adoption, particularly in Special Economic Zones (SEZs) established under CPEC. The short-term uptake of EVs presents opportunities for local manufacturing, especially in electric two- and three-wheelers, and for developing the necessary charging infrastructure. Chinese investors, with their expertise in EV technology and manufacturing, are well-positioned to play a central role in this emerging market.
Despite the progress made under CPEC, Pakistan’s renewable energy sector faces several challenges, including policy discrepancies, financial constraints and investor apprehensions. To attract more investment from China’s private sector, it is imperative to address these hindrances and create a more enabling environment for green investments. The key to this is ensuring better coordination between federal and provincial governments in Pakistan, as well as streamlining regulatory frameworks that currently hinder the growth of renewable energy.
CPEC has already contributed immensely to Pakistan’s energy sector, adding 11,650MW of electricity to the national grid between 2013 and 2018. As of 2023-2024, the country is expected to generate 138,759GWh of power, thanks in large part to CPEC-backed projects. While much of this capacity has come from coal, significant progress has also been made in integrating clean energy into the grid. During the same period, approximately 3,000MW of renewable energy was added, including contributions from hydropower, wind, and solar projects.
One of the flagship projects under CPEC is the Quaid-e-Azam Solar Park, which generates 1,000MW of electricity and was financed by a Chinese solar company. Similarly, wind power projects in Sindh and Balochistan have been developed with the assistance of Chinese investors. These projects highlight the potential for further collaboration in renewable energy and signal the shift towards cleaner energy sources within the CPEC framework.
China’s ongoing transition towards green energy investments, coupled with its commitment to environmental and climate governance, presents a timely opportunity for Pakistan to accelerate its own energy transition. As the world moves towards a low-carbon future, CPEC can serve as a critical enabler for Pakistan to tap into the expertise and financing offered by Chinese investors. This will not only help Pakistan meet its renewable energy targets but also contribute to global efforts to combat climate change.
However, realizing this vision requires addressing the challenges that currently hinder investment and creating an enabling environment for green energy projects. By fostering a robust policy framework, ensuring investor confidence, and enhancing collaboration between key stakeholders, Pakistan can position itself at the forefront of the global renewable energy transition — supported by China’s commitment to green development.
The future of Pakistan’s energy sector lies in its ability to embrace this opportunity and fully leverage the transformative power of CPEC. China’s role in advancing renewable energy in Pakistan through CPEC is a testament to the potential of international collaboration in addressing global environmental challenges. By leveraging the financial and technological strengths of Chinese institutions, Pakistan can accelerate its transition to a low-carbon economy, ensuring sustainable development for future generations.
The continued commitment to green investments within the CPEC framework will not only benefit Pakistan but also contribute to global efforts in combating climate change.