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In today's edition of This Week in Climate, we saw solar become Pakistan's single biggest source of electricity just three years after its boom began, saving an estimated $12 billion in gas imports, rising grid costs threaten to lock the country's poorest into pricier coal power, and China face a multibillion-dollar choice between writing off its Pakistani coal plants and slowing the solar.

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By Julian Moore

It wasn't that long ago that world leaders had an optimistic message on climate change.

In 2015, just a short decade ago, the ink was drying on the Paris Climate Accords, the Sustainable Development Goals had been rolled out after years of detailed planning, and at last it seemed the world order managed by international institutions like United Nations was confronting the kinds of global challenges that made them necessary in the first place. The adults were in charge again, and a plan was in place that would avert a future in which, like frogs in slowly boiling water, we waited for the wrong moment to jump to a low-carbon global economy.

While hope for decisive climate action sprang anew, there were still big questions that the Paris Accords left unanswered. Few concerns loomed larger than what to do about promoting economic growth in the world's most energy-poor regions of the world, principally in the Global South. If developing nations adopted the same coal-to-oil-to-natural gas energy path that had built wealth in the Global North, the global carbon budget would be exhausted well before anybody could avert the worst impacts of climate change.

But here, too, climate economists had an optimistic message to sell. Developing nations could, with careful management and duly thought-out energy policy, ‘leapfrog’ the fossil fuel systems of yester-century and develop on the back of renewable energy.

Doubters were pointed to the example of cell phones. In 2007, less than 50 million Africans had mobile internet access, a number that has grown to 600 million people today, due in large part to the proliferation of cheap smart phones that obviated the need for unwieldy copper wire infrastructure that supported telecommunications networks in developed countries. What the smart phone had done to landlines, the argument went, solar would do to fossil fuels. The French President himself, Francois Hollande, touted this vision of global clean energy growth in his pitch to global leaders leading up to the COP21 negotiations that produced the Paris Accords.

The competing frog metaphors actually spoke to a coherent theory about how the world could meet the titanic challenge of addressing climate change in time: if the ultimate risk of climate change is that it happens so slowly that we unconsciously boil ourselves alive, it can be addressed with unprecedented burst of technological progress shepherded by wise technocratic management.

That vision of a rapid transition may seem naive now, but this week, we are beginning to see how its end result is becoming reality, albeit for practically the opposite reasons than what climate economists hoped or imagined.

In Pakistan, a solar boom that has propelled renewables to the single biggest source of electricity in the country is also locking its poorest citizens into more expensive coal electricity.

The so-called solar power ‘boom’ or ‘explosion’— choose your combustion metaphor— began in earnest in 2024, when Pakistan imported 17 GW of solar, more than double the previous year and making it the world’s third-largest importer of solar that year. Prior to that, Pakistan had a grid that was heavily reliant on fossil fuels, and solar barely figured into the energy mix. But due to a number of factors that many analysts have referred to as a ‘perfect storm’ of economic and policy trends, Pakistani energy consumers, that is to say, everyday people, adopted solar as a means of economic relief from crushing energy prices.

And within the span of three years, solar has gone from being a virtual non-factor in Pakistan’s energy mix to today, when one fifth of the country’s electricity supply is now met by solar, making it the number one single source for electricity — not total energy, just electricity.

Even that figure is difficult to pin down. It is still unclear exactly how much solar has been installed, because so many of these are makeshift, “artisan” installations that have not met any sort of regulatory compliance and are completely off-grid and behind the meter, which precludes them from official data records. One story referred to farmers bringing out their panels every morning and lying them flat on the ground to save on installation costs. Many others are connected to the grid, and allow consumers to make money from feeding power back into it. At any rate, the best estimates are that 15 GW have been installed, which is impressive when compared to peak electricity demand of 30 GW across the country.

So what exactly led to this sudden solar spurt?

The first and most obvious factor is that, starting in 2022, a chain reaction of geopolitical and economic events led to a drastic spike in the cost of electricity in Pakistan with little relief for consumers. Pakistan does not produce many fossil fuels, and has therefore been entirely dependent on foreign sources for its fossil fuels. The 2022 spike in Russian gas costs led to a price shock for gas imports that provided Pakistani energy, and that was the immediate cause for a spiking cost of electricity. But that was only one factor that converged with economic decisions going back decades.

Prior to that, Pakistani grid managers had leveraged an expensive and expansive build-out of power plants and energy infrastructure during the 1990s via loans denominated in dollars, which became much more expensive when the Pakistani rupee collapsed in 2008. As a recourse, policymakers followed with more borrowing in the 2010s from China’s Belt and Road initiative, which has left the Pakistani power sector on the hook to foreign lenders and desperate to recoup costs just to repay interest on its electricity infrastructure.

In order to satisfy those debts, the IMF recommended that Pakistan reduce public spending, and in 2021, the government cut power subsidies, which increased the cost of grid electricity by 155% from 2021 to 2024.

So the combination of geopolitical and economic decision-making conspired to put the cost of electricity exorbitantly out of reach for many Pakistanis, and suddenly made the solar option more attractive.

Another factor is simply the historically poor reliability of the Pakistani grid. Pakistan has been plagued by frequent blackouts going back decades, which became untenable when the cost of electricity jumped.

But there were also some policy choices that helped, including a decision in 2023 to get rid of the import tax on Chinese solar and the introduction of a net energy metering system, allowing users to sell power back to the grid.

The expansion of solar power has obviously had several key upsides for Pakistani consumers.

The most obvious has been relief from extremely high electricity costs for everyone from farmers to pharmacists. This has come in handy especially since the beginning of the Iran War. Solar installations have dampened the impact of higher fossil fuel prices in Pakistan, and reduced costs for the government on importing fuel to power the grid. One study from Ember found that over the last five years, the solar boom has also saved $12 billion in gas imports.

It has also increased energy accessibility to remote regions that have historically been energy poor, particularly for farmers. One Bloomberg story quoted a farmer who could finally afford to power a water pump, allowing him to irrigate fields that had lain fallow for years and could now produce some income. And last but certainly not least, this will help Pakistan meet its goal to make renewables 60% of the grid by 2030.

But this is not a purely good news story.

Earlier this year, grid managers and the government were concerned about potential economic consequences, because as more Pakistanis reduce their dependence on the grid, fewer will pay power bills that grid operators are counting on to repay loans and keep coal operating profitably. This is the classic “stranded asset risk” that is a concern for fossil fuel producers all over the world, not just in Pakistan, and is a big part of why Big Oil is so committed to fossil fuels for decades into the future.

The upshot is that energy prices will rise for the poorest Pakistanis, because as costs remain steady, the number of people paying for grid power decreases. That means that some of Pakistan’s poorest, who cannot afford even the very cheap Chinese solar, are stuck with even higher costs than they were facing before. Some are even concerned that this could create a “death spiral” for Pakistani utilities, as these growing costs will push more people toward solar, further increasing prices, and so on.

Pakistan's solar boom is now colliding with an older Chinese investment in fossil-fuel infrastructure. The Belt and Road loan that Pakistan took from China back in 2008 was the first in a series of loans Pakistan took from China to build seven new coal power plants, including the Port Qasim plant, which cost $9.6 billion to build in 2017.

For Pakistan, this was a loan to keep up with power demand. For China, it was a long-term investment in fossil-fuel infrastructure. Chinese officials, like their Pakistani counterparts, did not foresee the chain of events that led to the present day, where Pakistan is flooded with solar and rapidly outcompeting coal, putting a profitable return on these plants in doubt.

It’s doubly problematic for China because this has been driven, of course, by Chinese solar. So China is now faced with a centi-billion-dollar choice: write off massive losses on coal to promote its clean-energy sector, or slow its clean-energy dominance in favor of dirty fuels to prevent losses. It is, in short, stuck with its past economic and foreign-policy choices, which are competing with its future.

And this has global implications. China has promised since 2021 not to build overseas power plants, and it hasn’t. But it still has similar projects in South Africa and Vietnam, among others, so if it cuts a deal with Pakistan, it risks creating a precedent that other countries will demand for themselves.

It’s still unclear how this will play out, but there are several options on the table.

One is that those coal power plants, when paired with Chinese batteries and storage, could be converted to renewable-energy facilities. Another is that, by simply adding more storage, they might be able to smooth out the duck curve and make energy prices more predictable, and thus give China a better gauge on when it might get its investment back. Another is simply taking a haircut. China has the wealth and power to take a loss on all of these coal power plants in the name of its renewable-energy policy if it wants to, although nobody likes losing money.

No matter what happens, the stakes for the climate in this story are absolutely massive. These coal plants together represent gigatons of carbon that could be diverted if they are retired early in favor of renewables. The ultimate answer is still being negotiated, but a factory manager quoted at the end of this Bloomberg story offered a revealing comparison: expensive electricity from coal-fired generation will become “just as obsolete” as landline phone connections in Pakistan, which are now outnumbered more than 75 to 1 by cellphones. “I don’t see any future for coal power plants,” he said.

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