Impact of China-Pakistan economic corridor on Pakistan's future energy consumption and energy saving potential: Evidence from sectoral time series analysis

Abstract China-Pakistan Economic Corridor is a strategic economic project to enhance economic connectivity between Pakistan and China. We estimate the impact of CPEC related economic activities on overall energy consumption and its saving potential for Pakistan by 2030. Johansen cointegration is employed to evaluate the long run relationship between energy consumption and its determinants at aggregate and sectoral levels and forecast future energy demand using scenario analysis. Baseline scenario results indicate that aggregate energy consumption will approximately be 41% higher in 2030 compared to 2013 levels. Energy consumption in industrial and commercial sectors in 2030 will increase by 136% and 414% under baseline scenario. The Monte Carlo Simulations incorporating future uncertainty support the scenario analysis results. Energy saving potential suggests that energy conservation should be part of overall energy policies and sector specific energy intensity targets should be implemented to harness the energy saving potential.