Carbon neutrality and economic stability nexus: An integrated renewable energy transition to decarbonize the energy sector

Transition from fossil fuels to renewable energies would help to solve a major problem of climate change that bring the earth temperature below to 1.5 ⁰C and stabilize the economic condition of Pakistan. To address this problem, this paper implemented a Low Emissions Analysis Platform (LEAP) model to simulate the power sector for forecasting energy demand, production, carbon emission and total investment cost for the period 2020–2070 and also it assessed the economic stability using the economic indicators such as the Gross Domestic Product (GDP), the inflation rate, consumer's price index, unemployment rate, corporate profits and trade balance for the period 1970–2070 under the Fossilized Energy System (FES) and Defossilized Energy System (DES) scenarios. FES scenario incorporated the current energy policies of the Pakistani government with greater share of imported fuel. However, DES scenario is predicated on the consumption of indigenous renewable energy sources with 20 % energy saving policy. FES scenario is based on Indicative Generation Capacity Expansion Plan (IGCEP) report of 2021 and DES scenario incorporates the technical report like Intended Nationally Determined Contributions (INDC) under Paris Agreement (PA) report of 2015. Results depicts that, In FES scenario imported fossil fuels contributed 63.3 % with 153,083.7 million tone carbon emissions and renewables contributed to only 23.9 % in total energy mix until 2070. However, DES scenario meets with INDC, PA goals with greater contribution of renewable sources 59.1 % and lesser share of fossil fuels 40.9 % with 56,152.74 million tone carbon emissions. From the financial point of view, the transition requires an investment of 13.1 T $ per year, which is 40 % more expensive than making no defossilization and it is suggested that economic indicators will be stabilized mostly after the year 2045.