Energy efficiency

STARTING 2016, the Philippines will implement a five-year action plan on energy efficiency in addition to an increased push for renewable energy, all part of efforts to address issues related to climate change. Officials of the Asia Pacific Economic Cooperation also met in Cebu City last week to draft a roadmap to promote energy efficiency in Apec’s initiative on environment-friendly development across the region.

Apec members, the world’s biggest producers and consumers of energy, have been urged to discuss the government interventions needed to lessen the effects of climate change through energy efficiency. The Philippines is not far behind in this regard: The Department of Energy has already come up with an Energy Efficiency Roadmap and a corresponding action plan that will be undertaken in 2016-2020. This roadmap is envisioned to be the master plan in achieving energy efficiency and in bringing conservation programs and activities to higher levels. It also defines the government’s role in coming up with a range of measures—mainly legislative orders and decrees targeting energy-saving programs—to improve energy efficiency. The action plan sets its sights on energy-intensive sectors such as transportation, industry, and commercial and residential sectors.

The Philippines has been quite aggressive in the field of renewable energy. In fact, it was already the second biggest geothermal producer in the world with 1,868 megawatts of installed capacity as of 2013, equivalent to 10.78 percent of its total installed power capacity. The Philippines is also aiming to more than double the renewable-energy-installed capacity to 15,300 mega-watts by 2030 from 5,542 MW in 2010.

Energy efficiency and savings are not new to the Philippines. It enacted the Energy Conservation Law in 1980 following the world oil crisis and embargo in 1973-1978; the Electric Power Crisis Act of 1993 and adoption of independent power producers (IPPs) in 1994 following the shortage of power supply starting 1991; and the Electric Power Industry Reform Act in 2001 and the Government Energy Management Program in 2004 to address the high cost of electricity starting 2000 and the high oil prices in 2003. It also filed the energy efficiency and conservation bill in 2013 to address the anticipated power supply shortage this year.

In 2004, Administrative Order No. 110 institutionalized a government energy management program that sought to reduce the government’s monthly consumption of electricity (in kilowatt-hours) and petroleum products (in liters) by at least 10 percent. Savings from September 2005 to March 2013 amounted to P2 billion (P1.7 billion on electricity and P274 million on fuel). A follow-up Administrative Order No. 183 in 2007 directed the use of energy-efficient lighting system in government facilities.

Earlier, the DOE issued a circular requiring all power-hungry establishments in the industrial, commercial and transport sectors to submit quarterly energy consumption reports and an annual energy conservation program report. The government also has an annual energy efficiency award, a recognition given to companies with significant energy savings achieved through the implementation of energy-efficient technologies and measures. In 2013, the program generated savings of 56 million LOE (liters of oil equivalent) and monetary savings of P2.4 billion and more than 90 million kilos of avoided carbon dioxide from 58 commercial and industrial establishments.

The fact that crude oil prices have fallen sharply should not lull the government into complacency. It is actually when oil prices are depressed that the government and the private sector have extra resources or savings to fund energy-conservation and -efficiency projects. Besides, crude oil prices can just shoot up. In May 1973, crude oil was just $19.35 a barrel. A Middle East crisis led to its surging to $51.77 a barrel in January 1974, or only eight months later. In January 1979, oil was $51.89 a barrel. By April 1980, it had shot up to $116.37. In July 2006, oil was $87.28 a barrel. Two years later, it soared to $144.78.

While current oil prices at less than $50 a barrel have gone down sharply from $106 in June 2014, a reversal can happen, and all it will take is a simple disruption in the Middle East supply. Congressional action on various energy-conservation bills pending since 2013 will be a big help. The Philippines should be better prepared the next time oil prices start shooting up.