Modelling for policy assessment in the electricity supply sector of Pakistan

Purpose – The purpose of this paper is to provide a long‐term assessment of Pakistan's electricity policy in the context of both environmental and resource constraints. To increase the sustainability of energy supply, the Government of Pakistan introduced a series of reforms in the electricity supply sector during 1990‐1995. In response to these policy incentives, most of the independent power producer offers included coal, oil, and/or gas‐based power plants. Considering that Pakistan produces only up to 40 percent of its oil demand domestically and thermal power generation causes CO 2 emissions, there is a great need for an assessment of the existing electricity policy. Design/methodology/approach – Drawing on system dynamics methodology, this study presents and utilizes a dynamic simulation model that captures the dynamics of the sectors underlying the electricity supply system including investments, capital, production, resources, financial resources, and the environment. Findings – The key findings of this study are: policy incentives encouraged thermal‐based generation at the potential expense of hydro power generation; and the evolution of electricity supply related CO 2 emissions exhibits an exponential growth. Research limitations/implications – While there are other emissions related to the electricity supply system with potentially severe environmental concerns, for example SO 2 , this study focuses only on CO 2 emissions. Originality/value – The paper offers a system dynamics model and provides some useful policy insights for the electricity supply sector of Pakistan.