Energy efficiency improvements owing to technological progress in the energy-using appliances and equipment lower effective price of energy services and, in turn, result into behavioural ex-post increase in the consumption of energy. Thus, on net basis technological progress negatively influences the effectiveness of energy efficiency and circumvent the effects of environmental sustainable policies. This study is the first of its nature in Pakistan that estimates the magnitude of direct rebound effect in residential electricity consumption. Using the time series data from 1973 to 2016, we apply co-integration econometric technique and error correction model to analyse the direct rebound effect. The results indicate that the magnitude of direct rebound effect is 69.5 percent in the long run, while 42.9 percent in the short run. Further, impact of climate change on electricity consumption is examined. The results indicate that consumption of energy is increasing in both short run and long run under climatic changes. These findings suggest that the Government of Pakistan needs to consider rebound effects along with climatic changes in formalizing its energy policies.
Purpose of the study: This study attempts to provide an analysis of the energy sector of Pakistan including generation and quality of electricity, and potential of renewables for climate change mitigation. Methodology: The study used a quantitative approach for analysis. Primary and secondary data sources are used. Main Findings: According to the quantitative analysis institutions fail to meet the growing demand due to insignificant or no increase in capacity to produce power. CO2 emissions are rising because of increased reliance on coal and other thermal sources for electricity generation. Applications of this study: It proposes to increase the reliance on renewable resources and align the policy and regulatory framework for setting a sustainable economic system. The government should also plan for a rigorous electric supply system that would ensure the quality and sustainability of the electricity supply. Novelty/Originality of this study: It sets a benchmark analysis and sets the direction for the policymakers especially at the stage when the country has settled the shortage issue, but at the cost of increasing fossils share in the fuel mix, whereas the transmission and distribution of electricity supply are ignored.