Pakistan Institute of Development Economics



Local Coal for Power Generation in Pakistan (Policy)

Author: Afia Malik


Coal contributes significantly to global energy supplies. In 2021, coal was the second-largest energy source consumed globally (Chart 1). Over the years, coal demand has increased substantially from 2.6 billion tons in 1980 to 5.5 billion tons in 2021 (Chart 2). Because of environmental concerns and the increasing trend towards renewables, its share declined in the United States and many European countries, decreasing global consumption in 2014 and onwards. But the trend reversed in 2020. It is because of the Russia-Ukraine war leading to the worldwide energy crisis that the demand for coal has increased.

According to the International Energy Agency (IEA) forecast, coal demand is expected to exceed the previous coal demand record of 2014 in the next few years. The United States and many European countries are shifting back to coal as it is still one of the cheapest energy sources.

The primary coal-consuming sector is electricity generation. High natural gas prices have increased reliance on coal for generating power. Coal consumption in electricity generation is expected to grow by more than 2%. If the gas prices continue to increase in 2023 or onwards, dependence on coal will remain, and demand will surge further.  Besides gas prices, coal prospects will depend on the transition speed towards renewable energy sources.


Pakistan has 186 billion tons of coal reserves, primarily located in the province of Sindh (Chart 4). Only Thar desert (10,000 sq. km) contains the world’s 7th largest coal reserves of about 175 billion tons (Chart 5), equivalent to 50 billion tons of oil equivalent (more than Saudi Arabia and Iran’s oil reserves) and 2000 trillion cubic feet of gas (68 times more than Pakistan’s total gas reserves). Thar Block-II alone contains 2 billion tons of lignite reserves, of which 1.57 billion tons are exploitable. This Thar Block-II can produce 5,000MW of electricity for 50 years, while the total Thar reserves can sustain 100,000MW for over two centuries . Most of the coal in Pakistan is lignite (with more moisture content, up to 50%).


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