In a move that has got the world applauding for Costa Rica, the country has completely given up reliance on fossil fuels for energy generation. So far this year, it has maintained itself on hydropower supplemented by geothermal, solar, and wind energy sources.
The Latin American country has had a good record of using clean and renewable energy. The country generated almost 80% of energy last year using hydropower. It has also invested $958 million in various geothermal projects.
Costa Rica is already well placed in terms of energy consumption as the small population size of 5 million and the absence of a lot of manufacturing industries hardly create a huge power demand. The presence of renewable sources of energy especially, geothermal has also facilitated the move.
The move towards renewable energy is imperative for the sustenance of the environment and life on earth. It is inevitable too as conventional sources of energy are limited. Apart from Costa Rica, Bonaire, a Dutch island territory off the coast of Venezuela is also in line to completely do away with fossil fuels. Iceland produces 85% of its energy from geothermal and hydropower plants. European Union has also set a goal of producing 20% of its total energy from renewable sources by 2020. Denmark, which produces 40% of its energy from wind energy has decided to bid adieu to fossil fuels by 2050.
Pakistan’s government has proposed to eliminate taxes associated with manufacturing of solar and wind energy equipment in the country, in an effort to boost the production and use of renewable power and overcome power shortages.
A new government budget bill, expected to be approved in parliament within a month, would give renewable energy manufacturers and assemblers in the country a five-year exemption from the taxes.
“Pakistan is paying the heavy cost of an ongoing energy crisis prevailing for the last many years,” Finance Minister Asad Umar said last week in a budget speech. “In this difficult time, the promotion of renewable energy resources like wind and solar has become indispensable.”
Only about 5 to 6 percent of the power to Pakistan’s national electrical grid currently comes from renewable energy, according to the country’s Alternate Energy Development Board (AEDB).
The proposed tax reduction should boost that by encouraging greater local manufacturing of equipment needed for renewable power expansion, said Asad Mahmood, a renewable energy expert with the National Energy Efficiency and Conservation Authority, which sits within the Ministry of Energy.
But manufacturers said the tax breaks likely would not be sufficient to spur expansion of local renewable energy industries.
Naeem Siddiqui, the chairman of Ebox Systems, which assembles solar panels in Islamabad, said the new tax breaks were good news but Pakistani manufacturers would still struggle to compete with tax-free, low-priced imports of foreign-built solar panels and other renewable energy equipment.
“The government has already waived off taxes and duties on the import of renewable energy products, and local manufacturers cannot compete with the low-priced imported items,” he said.
Pakistan today imports more than 95 percent of the solar panels and other renewable energy systems it uses, largely from China, said Aamir Hussain, chief executive officer of Tesla PV, one of the largest manufacturers of solar energy products in Pakistan.
“As long as the government will not impose duties on the import of finished products, the local market cannot grow,” he said.
Pakistani manufacturers also might need government help in pushing sales of new Pakistani clean energy products abroad, in order to build bigger markets and lower manufacturing costs, Siddiqui said.
Mahmood, of the energy ministry, said he believed the government would also move to cut existing duties on the import of components used in manufacturing finished renewable energy products, in order to help Pakistani manufacturers.
Taxes on those components have pushed up prices of Pakistani-made renewable energy systems, making them harder to sell and leading several companies to the brink of failure, he said.
Local manufacturers should work with the government to determine which components should be manufactured locally and which imported to ensure costs of locally made wind and solar systems are competitive, he said.
Muhammad Abdur Rahman, managing director of Innosol, a company that imports and installs renewable energy systems, said that cheap imports of renewable energy systems from China remain the main barrier to building more such systems in Pakistan.
“The local industry is facing pricing issues because of low-quality solar energy appliances being imported in the country that are very cheap as compared to the local market,” he said.
That might be resolved in part by the government starting a certification system for renewable energy products to grade them according to quality, he said.
Amjad Ali Awan, chief executive officer of the Alternate Energy Development Board, said the aim of the new policies was for renewable energy to supply 28 to 30 percent of the country’s national electrical grid by 2030. (VOA)