Energy security is economic security

There is encouraging news for the Philippines on the economic front. During the first quarter of this year, we were able to post a 5.7 percent economic growth, the fastest rate in Asean. Socioeconomic Planning Secretary Arsenio Balisacan believes that if we can sustain this momentum, the Philippines is poised to reach upper middle-income status by 2025. This prospect jibes with the World Economic Outlook of the International Monetary Fund, which said that the Philippines is the 33rd largest economy in the world.

Such a growth narrative aligns with President Marcos’ vision of positioning the country as a regional hub for smart and sustainable manufacturing and services, alongside becoming a prime investment destination. Indeed, a series of reforms and initiatives spanning infrastructure enhancements, investment incentives, and advancements in technology and education have been put in place.

There is, however, one potential gap that could derail this growth trajectory of the Philippines: our need for stable and dependable energy supply. Only this can power our desired level of expansion that would ultimately benefit the quality of life of as many Filipinos as possible.

But how we source our energy is linked to climate change with the global imperative to reduce dependence on dirty coal. Here in the Philippines, Department of Energy 2023 data show that 43.9 percent of the energy mix is from coal even as the Marcos administration is resolute to improve the national renewable energy (RE) power generation mix target of 50 percent by 2040.

While increasing the generation capacity from RE is a global trend, the high capital expenditure needed for RE projects, as well as the limited availability of indigenous energy sources, remains a challenge. In this context, the role of natural gas becomes crucial in this time of transition. It is a cleaner alternative to conventional fossil fuels and a more reliable energy source compared to renewables.

The Malampaya plant served the country well for many years, but it is now rapidly diminishing. While there are efforts to extend its lifespan through the drilling of new wells, another option is to import liquefied natural gas even as this could also create difficulties for the Philippines given the higher and volatile prices of LNG in the world market. Of course, we are not the only ones in need of imported LNG—we also have to compete with increasing demand from the rest of the world, thus tending to drive up prices further.

Faced with this challenge, Philippine legislators have proposed the Philippine Downstream Natural Gas Industry Development Act, emphasizing that natural gas is really a cleaner and more cost-effective energy source. The proposed law seeks to accelerate investments by offering incentives that would open the country to the right LNG players and long-term foreign investors that would aggressively forge a robust natural gas industry.

This law aims to strengthen and reinforce regulations governing the natural gas industry by addressing existing gaps and enhancing oversight while ensuring transparent and reasonable prices of natural gas.

Parallel to legislative efforts by Congress, there is always the opportunity for the private sector to work in closer collaboration with the government to jumpstart this industry. Aside from the energy stability and environmental benefits, developing LNG as a stable source of power will foster more infrastructure development, technology transfer, job creation, and trade, all of which will substantially contribute to the country’s overall economic growth and prosperity.

Certainly, this is a conversation worth starting and maintaining. This is also the reason that Stratbase will hold a forum on June 18 called “Advancing Energy Security: Fueling Sustainable Progress with Liquefied Natural Gas (LNG).” The gathering will bring together key stakeholders from the government, private sector, academe, and civil society to explore challenges and opportunities linked to incorporating LNG, contributing to the establishment of a stable and reliable power supply to attain energy security.

This week’s forum will definitely not be the last. It is important to keep exploring ways we can address our surging energy requirements. Achieving a well-balanced energy mix from cleaner sources of power is essential for robust economic velocity to be sustained.

Dindo Manhit is founder and CEO of the Stratbase Group.