Three months into its term, the Duterte administration is tackling many issues head on, including energy, as elements of its development policies unfold. This is welcome because it provides stakeholders the clarity they need to voice support or opposition to the administration’s policies.
What is likewise clear is the administration’s desire to steer the Philippines toward industrialization.
Energy and power are critical to industrialization. Even a cursory analysis would show that the industrial development of the world’s most progressive countries were founded on abundant indigenous energy sources. Without their huge coal resources, countries like England and Germany would not have been industrial giants. Without its coal and oil resources, the United States would not have reached its lofty stature as the most powerful nation on earth.
Unfortunately, the Philippines has very limited fossil-fuel deposits and needs to import almost all of its fuel requirements. Even Malampaya gas is about to run out. Unless we impose our claim on Reed Bank, the chances of finding more natural gas deposits are slim.
But why must we always be dependent on other countries for our fuel requirements?
Do we really need to continue importing fossil fuels to feed the country’s growing energy demand?
We maintain that indigenous renewable energy (RE) sources can support and promote industrialization. It can be the anchor of our industrial policy.
The key to sustainable development is a secure energy supply with predictable, stable and affordable prices over the long term. A secure and reliable supply cannot be provided by imported fuels. A lesson from history is that the supply must come from indigenous sources.
The Philippines is blessed with indigenous RE sources, which can power its energy needs well into the future. Even excluding solar and ocean resources which have practically unlimited potential, the country’s RE potential is almost 100,000 megawatts, according to the Department of Energy. This is more than enough to support our power demand for the rest of the century.
As of the end of 2015, the Philippines’ installed capacity was only 18,696 MW. The forecast power demand and reserve requirements are expected by the DOE to reach 30,189 by 2030—less than one-third of the available RE supply—without counting solar and ocean resources.
To be energy-secure and self-sufficient, the Philippines must give utmost priority to reducing its reliance on imported fuels. Currently, the Philippines imports more than 80 percent of its coal requirements, with 70 percent of it solely coming from Indonesia. Any supply ban or delay will mean massive power shortages. In 2015, the country imported 15 million tons of coal worth $800 million in 2015 from Indonesia alone.
By utilizing its own RE resources, the Philippines will save billions of dollars in foreign exchange annually. Using no fuel, generation costs of solar, wind and hydro are stable and not subject to fluctuations in international fossil fuel prices. Hydropower and geothermal resources can replace coal-fired power plants and, thus, must be given priority in terms of permits, licensing and incentives.
Prior to the drastic decline in fossil fuel prices, these RE sources had lower costs per kilowatt hour than coal. The developments of hydro and geothermal have been slowed down by the difficulty of securing the required permits and licenses. The costs of solar and wind power plants are expected to continue their rapid decline. Feed-in tariffs for these technologies could be phased out within five years or less.
Many developed and industrialized countries are aggressively phasing out coal-fired power plants and nuclear plants. Their target is to have a 50-percent RE share of the energy mix by 2030, and almost 100 percent by 2050. The RE potential of these countries are much, much lower than the Philippines, and their per capita electricity consumption is much higher than ours. And yet, these countries are aiming to meet most of their power requirements through renewables by 2030 and to reach almost 100-percent RE share by 2050.
Up to the late 1960s, the Philippines was the envy of the rest of Asia. Our economy was second only to Japan. Almost all of the regional headquarters of major multinationals were based here. We were leaders in political stability, economic growth, infrastructures, education, and quality of life. We were about to take off and join the ranks of developed nations. But certain events took place between then and now that brought us to where we are today. And history will be the ultimate judge of not only what went wrong and what went well in the past, but also the kind of decisions our leaders will make today.
Depending on who one is talking to, today it seems we are either about to take off again or remain stuck in the mud of conventional thinking. We are hopeful, at least in terms of energy, that the choices being considered by the administration can be weighed with a keen sense of strategy, sustainability and economic stability, and the development of long-term industrial policy in mind. Because now is the time for bold action. It’s time for renewable energy to lead the way.
Pete H. Maniego is senior policy advisor of the Institute for Climate and Sustainable Cities.