Considering the Philippines’ growth objectives, the government’s mandate to establish an energy mix that addresses the trilemma, and the current energy mix, it becomes clear that government’s priority should be to diversify.
Three immediate courses of action are required:
Optimizing the coal share in the energy mix and reducing the use of imported coal can be done through the following policies.
First, set a cap on coal plant endorsements using a portfolio based approach. This can be done by limiting the endorsements of new coal plants to the projected baseload demand of each region taking into account the changing needs of the economy.
Second, create a gold standard for coal plants. The gold standard for existing plants would be in the form of (1) performance guards because as coal plants age they become more inefficient and thus more expensive, and (2) implementation of Sec. 13 and 19 of the Clean Air Act. For new plants, the gold standard can be a policy that only ultra-supercritical plants can be built.
Third, compliance of new plants with BOI environmental criteria set in the Investment Priorities Plan and BOI Memorandum Circular 2015-01.
Allowing natural gas to compete
Once coal's share is reduced, natural gas will be allowed to compete and optimize the mid-merit or at the very least, maintain its share in the current energy mix given the expected depletion of the Malampaya reserves.
First, a comprehensive natural gas policy and legislative framework has to be legislated to attract private sector investment. There is a natural gas bill filed in the Senate. Hopefully it will be enacted into law, unlike natural gas bills in the past Congresses.
Second, support for the construction of natural gas infrastructure has to be given. A low hanging fruit would be streamlining and fast tracking the processing of applications for permit for the construction, expansion, operation, maintenance and modification of pipelines, transmission and distribution related facilities of natural gas.
Third, other indigenous natural gas resources have to be explored, developed and produced, and each Philippine Energy Contracting Round (PECR) has to be swiftly resolved. An existing roadblock to the past PECR (and any future PECR) is the tax issue of the Malampaya consortium with the Commission on Audit.
Reducing overdependence on one energy source increases the flexibility to take advantage of rapid RE developments. Increasing both conventional and emerging RE can be done through the full implementation of policies in the RE Act, which include net metering, FIT, renewable portfolio standards, and the green energy option.
Also, incentives and government assistance for development and construction of conventional RE can be provided. Nuclear power can be explored as a new resource in the energy mix since it is reliable and efficient, and can counter the intermittency of variable RE. However, there is a high set-up cost and long-term skill base required for nuclear plants, while special precautions must also be undertaken to avoid any radioactive leaks and/or accidents.
All of these set the stage towards achieving a quality, reliable, affordable, and more sustainable energy mix, which can be easily adjusted to meet innovations in technology, and even unexpected changes in economic growth and population.
It is the responsibility of the government to provide these aforementioned policy directions as it works with the market (contrary to the view of letting the market decide) in order to attain a high-income economy, and energy security, equity, and sustainability.
It's time to ratify and implement the Paris Agreement. For energy, we begin with aiming for an optimal energy mix. – Rappler.com
This is the second of a three-part series on climate change and energy. The articles are based on policy briefs produced under the “Getting our Act Together,” project of the Ateneo School of Government in partnership with SSG Advisors. This project was designed to contribute to the discourse on Philippine climate and energy policies as the country tries to balance its economic growth targets with the exigencies of sustainable development.
Tony La Viña is former dean of the Ateneo School of Government. He served as spokesperson of the Philippine delegation to the Paris talks in 2015.
Teresa Ira Maris (Tim) P. Guanzon is currently the Senior Policy Advisor of the Reform Energy Project. She is a lawyer who specializes in public policy with a special interest in energy.
Lawrence Ang (left photo) is Director for Asia for SSG Advisors – a global development solutions firm and impact investment advisory. He brings nearly ten years’ experience at the nexus of sustainable development and private sector engagement in the region.