Last October 19, UP Vanguard Incorporated (UPVI) with SMC Global Power as a major sponsor, conducted a public webinar entitled “National Energy Security: Reliability and Resiliency in the New Normal”.
We had been fortunate to have a distinguished panel consisting of two former Energy Secretaries, namely Dr. Francisco Viray and Atty. Raphael Lotilla, and outgoing Chief Executive Officer of New York Power Authority, Mr. Gil Quinoñes. The forum was moderated by Atty. Mike Toledo, Director for Government Relations and Public Affairs of Metro Pacific Investment Corporation.
One of the main discussion points in the forum was the transition to clean energy. Panelists and reactors agree that the transition to a carbon-free environment is inevitable. Under the COP 21 Paris Agreement in 2015, countries should aim to limit global warming to preferably 1.5 degrees celsius compared to the pre-industrial level.
Dr. Viray pointed out that the International Energy Agency has recommended the complete phase-out of all unabated coal and oil power plants by 2040 to reach net-zero global energy-related carbon dioxide emissions by 2050.
He, however, sees three issues in the clean energy transition for the Philippines.
First, is that the mismatch in clean energy investments for whatever reason can impact energy security and price volatility. Second, the availability of cost of non-greenhouse gas emitting technology sharing the same characteristics of fossil fuel-fired plants and balancing the need for VRE sources may be subject to geopolitical challenges as the Philippines will just have to sit and wait on the technology made available by advanced countries. Third, he asked who bears the costs of the energy transition, especially the replacement of capacity generated by fossil fuel plants.
For his part, Atty. Raphael Lotilla said that the transition will not happen overnight and that it must be managed well. The pace of the energy transition will vary from one country to another but the end game is the same: a carbon-free environment.
He raised two points on how the Philippines can manage the clean transition properly.
First, he noted that the upstream natural gas and petroleum industry sector has a major role to play in the Philippines’ clean energy transition and energy security. Atty. Lotilla stressed that the country needs to provide investors with clear regulatory policies.
He cited the case of the Malampaya gas field’s tax issue where the Commission on Audit’s 2011 decision reversing the rule that the government will assume corporate income tax has caused major uncertainty among investors. The potential investors, he added, need more clarity and certainty before they shell out money for exploration and development work in other service contracts.
One of the reactors, UP Vanguard, Engineer Ray Apostol who is a long-time professional in exploration work, cited alarming statistics on the present administration’s lack of exploration activities.
Mr. Apostol noted that the Philippines is at the bottom among ASEAN countries when it comes to gas exploration. He stressed that there has been no exploration well drilled in the last five and half years. Mr. Apostol recommended that the government should ramp up support for exploration activities and carefully review the bidding process and exploration contracts. Likewise, the government should opt for non-exclusive exploration activities.
There is also a consensus that renewable energy is clearly the way forward for the Philippines. According to Dr. Viray, achieving energy security requires more development of renewables but, unfortunately, our country has no full control to harness and exploit these resources.
Atty. Lotilla stressed that we must allow more foreign investors so we can develop renewable energy sources in the country. He said that the provision in the constitution referring to foreign ownership that should be limited to 40 percent should only be interpreted for finite resources. The constitution talks about “potential energy” and thus must exclude solar and wind as they can be converted immediately to electricity.
One of the reactors, former Energy Undersecretary, Atty. Jay Layug echoed Atty. Lotilla’s point of allowing more foreign investors in the renewable energy sector.
He lamented the fact that the Philippines imported more oil and coal in the last five years as renewables only accounted for 800 megawatts (MW) out of the 4930 MW capacity added in the last five years. In contrast, from years 2010 to 2016, renewables accounted for 1,500 MW out of the 5180 MW total added capacity.
Atty. Layug stressed that the government cannot afford to adopt a technology-neutral policy. It must instead step up and be an enabler to ensure that the Philippines become more dependent on renewables instead of imported fossil fuels. He added that the country has too many laws but the problem lies with implementation, adding that the National Renewable Energy program is a “bible” that the government must follow.
For his part, Mr. Gil Quinoñes said that it may not be feasible to be 100 percent coal-free by 2050 but what is more doable is for the world to achieve 80 percent electrification from renewables.
He added that clean energy transition may be expensive but the climate crisis requires that problems be addressed as fast as possible.
Mr. Quinoñes stressed that richer countries should advance clean energy technologies that can be adopted by emerging markets like the Philippines.
Another reactor, Bill Lenihan, CEO of ZOLA Electric, a company that offers power solutions in Africa, noted that a centralized grid system won’t solve the emerging markets’ problems. He added that distributed energy and micro grid adaptation in the Philippines will differ from the ways the US and other richer countries have developed these technologies.
For example, in the United States, micro grids are necessary backups but they can afford to have them as mere backups as they have well-developed grids. On the other hand, the Philippines will need to make distributed energy resources (DERs) and microgrids as the primary source of power in many areas of the country.
In the end, Dr. Viray summed up the Philippines energy security problem best when he said that “We are not lacking in ideas and laws. What we need is to synchronize… Leadership is what we need.”