Background

The energy sector of Pakistan is in crisis as a result of insufficient energy production to meet increased demand over the last decades. The major causes include debt recycling, financial conditions, and energy supplies. Natural gas and oil are the most dominant energy sources, with more than 80% of energy supply companies dependent on natural gas and oil. Low and cheap energy production from hydro electrical and coal resources are the main constraints that result in energy shortages and inadequate electricity production [1].

The demand for energy in Pakistan has increased due to the high population growth rate, which is estimated at about 3% per year. The use of coal, natural gas, oil, and liquefied petroleum gas has grown to accommodate the surging demands in the country’s energy sector. According to the Pakistan Economic Survey, consumption in the energy sector was 38.8 MTOE (million tonnes of oil equivalent) [2], which increased to 70.5 MTOE in 2016 [3, 4].

The energy sector plays a vital and important role in the development and economic growth of any country. Electricity—as a highly versatile form of energy—stimulates economic performance and plays an important role in the development of every sector of the economy. Over the past few decades, inadequate energy policy and energy production have plunged several countries into a severe power crisis, leading to poor economic performance [5, 6].

Over the past few decades, the failures of Pakistan’s energy policy have plunged the country into a severe power crisis and have led to poor economic performance. Like other advanced countries [7, 8], the demand for electricity in Pakistan is partly determined by issues such as rapid population growth, economic expansion, and electricity prices. However, Pakistan’s peculiar problems and its short-term power crisis arise from stealing, abuse, and over-utilization of electricity in homes and manufacturing as well as corruption, exaggerated, unreasonable or low institutional losses, mismanagement, and political arguments over large energy projects [9].

Multiple research studies have demonstrated that the energy sector is facing challenges globally in relation to sustainability, economics, and the environment. A range of models has been used to forecast and predict energy consumption and production. The major aim of this study is to forecast energy consumption from different sources including oil and petroleum, gas, electricity, and coal.

Data sources and methodology

Data

In this study, time series data was used to forecast the levels of future energy consumption of oil, gas, electricity, and coal. The data was collected from the Economic Survey of Pakistan and the Ministry of Petroleum and Natural Resources and Hydrocarbon Development Institute of Pakistan (HDIP).

Methods

To forecast future energy consumption of oil, gas, electricity, and coal, the following equation was used for forecasting a + bx, where

$$ a=\overline{y}-b\overline{x} $$

and

$$ b=\frac{\sum \left(x-\overline{x}\right)\left(y-\overline{y}\right)}{\sum {\left(x-\overline{x}\right)}^2} $$

In this equation, the variables x and y represent the sample means average (known_x’s) and average (known_y’s).

Results and discussion

The demand for energy has grown rapidly with the increase in usage and supply. The extent to which the economy is compromised by price increases depends on the proportion of oil as a share of national income, the ability of end users to reduce their oil consumption, and the degree of dependence on imported oil [10].

Figure 1 presents an overview of published data with regard to energy consumption of oil and petroleum in the household, industry, agriculture, transport, power, and other government sectors as well as the projected consumption to 2030 in tonnes.

Fig. 1
figure 1

Forecasted oil and petroleum energy consumption in households, industry, agriculture, transport, power, and other government sectors from 2000 to 2030 (Authors’ computations)

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Natural gas is the dominant fuel in Pakistan, accounting for about 47% of the major energy demand in 2012. Since 2000, the main energy sources in Pakistan are natural gas and oil, accounting for 50% and 29% of total energy consumption, respectively [11]. The annual consumption of natural gas, as one of the primary fossil fuels, has grown by 2.5%. The annual production of natural gas comprised 23.9% of the global demand for energy in 2012 [12], and this percentage is predicted to grow to 50% by 2020 [13]. Figure 2 illustrates the levels of consumption of natural gas energy in different sectors from 2000 and includes the projected consumption until 2030. The figure shows consumption in the household, commercial, cement, power, fertilizer, and industrial sector.

Fig. 2
figure 2

Forecasted gas energy consumption in the households, industry, agriculture, transport, power, and industry from 2000 to 2030 (Authors’ computations)

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Electricity consumption in Pakistan accounts for about 40% of global greenhouse gas (GHG) emissions. In 2013, 67.2% of the world’s electricity production came from fossil fuel power plants, making them key players in the development of GHG mitigation and strategies for the energy and power production sectors [14, 15]. Power supply plays a vital role in achieving sustainability and economic prosperity in any country. In Pakistan, a developing nation with a population of over 200 million people, the demand for electricity is increasing exponentially, due to an increased demand in both the household and manufacturing sectors. Figure 3 not only shows the known electricity consumption in different sectors from 2000 but also gives projections to 2030 including electricity use for traction, households, commerce, industry, agriculture, street lights, and other governmental fields.

Fig. 3
figure 3

Forecasted electricity energy consumption in traction, households, commercial, industrial, agriculture, street light, and other government from 2000 to 2030 (Authors’ computations)

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Hower et al. [16] determined that the demand for energy in Pakistan is growing rapidly as the GDP growth rate increases. Coal is a major resource for generating electricity and currently supplies 41% of global electricity demand. Coal accounts for 40% of the total global anthropogenic emissions of carbon dioxide, with about 70% stemming from the global electricity sector. For the production of heat and electricity, coal is considered as an important fuel, while oil is used for transportation, supplying about 93% of the energy for transportation globally and for the EU [17]. The current state of the world’s energy is facilitated by research and development with the aim to make the existing energy use more efficient. Coal energy consumption and its forecasting to 2030 for households; power and brick kilns are shown in Fig. 4.

Fig. 4
figure 4

Forecasted coal energy consumption in households, power and brick kilns from 2000 to 2030 (Authors’ computations)

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Conclusions and policy implications

Pakistan’s energy sector faces challenges with regard to insufficient production and supply. The purpose of this study was to demonstrate and forecast commercial energy consumption and supply from different sources including oil and petroleum, gas, electricity, and coal sources. The data were collected from the Economic Survey of Pakistan and HDIP.

In Pakistan, the development of appropriate policies for natural gas and oil production is not only necessary for improving and developing the energy sector, but also for economic development. The studies projections suggest guidelines which the Government of Pakistan may use to improve energy production from oil and other alternative sources. To increase Pakistan’s current ranking in global coal production, it is necessary to implement greenhouse gas mitigation technologies and consider alternative energy sources. This study suggests and recommends that the energy sector needs further improvements and the initiation of new policies and funding schemes to fulfill the country’s demands, including the consideration of solar electricity production.