The Pros and Cons of a MinPoCor

Recently, there are initiatives to push for the refiling of house bills, which seeks for the creation of Mindanao Power Corporation or MinPoCor, according to a Businessworld report. The new entity will be a government owned and controlled agency (GOCC) that will manage the Agus and Pulangi hydropower plants.
The report cited the interim head of the Mindanao Power Monitoring Committee (MPMC), Glenn Jay Reston saying that the MinPoCor “will help maintain affordable electricity rates in Mindanao and assure that the revenues earned will also be reinvested in the island.”
The House of Representatives of the last Congress passed a consolidated bill on the establishment of the MinPocor. However, the said bill failed to pass the scrutiny in Senate. Under the bill filed in the lower house, MinPoCor will operate as a stand-alone GOCC and will raise funds to operate and maintain the remaining power assets of the government in the region.
Now that the discussion on the MinPoCor has been revived, let us ask the following questions: Is it beneficial to create such a GOCC? What are the pros and cons of having the Mindanao power corporation?
On the one hand, having MinPoCor will address the power crisis in the island. It will be an entity that will focus on the needs of Mindanao’s energy sector. After all, the appalling power situation in the region is a result of the long neglect of the national government through poorly crafted government policies.
To stress this point, a report from the Asian Correspondent said that in 2009, the Philippine Chamber of Commerce and Industry already stressed that the island was in need of additional 100 Megawatts to keep up with the economic activities in the region. Plus, business and industry leaders were already asking the national government to address the need for additional capacity as estimates show that Mindanao will likely suffer from power shortages by 2011 if no new capacity were to be installed.
However, the previous administration failed to heed the calls for the additional base load capacity. It was no surprise then that a full blown power crisis interrupted in 2012, with the island suffering from at least 8-hour rotating black outs.
Given the above slow response of the national government to focus on the power situation in Mindanao, it might be in the best interest of Mindanawons to have an entity that concentrates on the power situation in the region.
However, there is also a downside to the creation of MinPoCor.
Being a GOCC, it is still a government entity and will suffer the same problems of a government monopoly, as well as bureaucratic issues.
The possible lack of funding for MinPoCor could create bigger problems as it could delay the much-needed repairs and rehabilitation of the hydro complexes in the region.
The essence of EPIRA is to privatize the government-owned energy assets. The government, after all, has limited funds for the maintenance and operation of assets. This said, it is probably better for the private sector with deeper pockets to take the commercial, operational and constructions risks of operating and maintaining the power plants. Otherwise, the government will need to borrow additional funds and pay for the interest of borrowing money.
There are various ways of going about the privatization of the hydro plants. In my opinion, the Power Sector Assets and Liabilities Management or PSALM could enter into a 25-year power supply agreements before bidding out the hydro plants. This is to ensure that low prices are kept low despite the privatization for the benefit of NAPOCOR’s existing clients including distribution utilities and industries directly sourcing their power from the said plants. Of course, this will be much more complicated given the implementation of the Competitive Selection Process or CSP but still can be done if the government acts on it.
Additionally, Pete Ilagan, President of the National Association of Electricity Consumers for Reforms Inc has suggested privatization through “cooperativization” where cooperatives will own the assets. According to Ilagan, this will ensure that consumers welfare prevails over the interest of big businesses.
We also have to consider that the creation of a new entity always comes with challenges. For one, the efficiency of a GOCC is questionable. GOCCs work under a framework of a democratic government where there is a separation of powers. A democratic government is, almost by definition, designed to be inefficient – there are strict rules on checks and balances. So, if one desires to have an “efficient” company, going through the GOCC way may not be the answer.
However, one can separate the ownership of an asset like the Mindanao power plants and the management of these plants. As government way of running things is based on a democratic framework– it does not have the discipline of profitability and efficiency that private capital will require. So, therefore, there is a way to compromise: the government can keep the ownership of the assets, but the management, including future investments, can be done by the private sector.
Before opening the management to the private sector, the government can enter into long-term power contracts with all existing customers. The government can, for example, fix the current power rate and maybe index to CPI for the next 25 years. This will ensure two things: the government asset will not compete with private generators and second, low power rates from these hydropower plants are assured for the next 25 years.
The private sector entity that comes in will then face the challenge of improving the efficiency of the assets by rehabilitating them and improving operations and maintenance to have an upside on their investment.
So, this is the challenge of a MinPoCor: have the discipline that the private sector (and consumers) require but operate within a framework of a democratic government. Otherwise, there will be no change in the cost structure nor ability to maintain these plants. It is essential to form a management team for the MinPoCor that is not only knowledgeable and transparent but also can approximate or surpass private sector management efficiency. Otherwise, the reforms needed to push the national government to pay attention to the power problems of Mindanao will remain unsolved due to the problems within the organization.
This is not to say the GOCCs cannot be run efficiently. I have seen some GOCCs and government agencies that are at par with the standards set even for private sector companies. These GOCCs are often those that have had the luck of having someone with a vision of running the GOCC effectively. However, these are few and far in between. As a whole and in the long run, the need to adhere to the principle of separation of powers will wear down on efficient management set in place by different administrations.
So, are the hydro complexes better off in the hands of a GOCC? While some may say the jury is still out, others disagree outright.
According to UP economist, Gerardo Sicat, there are several studies showing the success of privatizing hydropower plants:
“There is growing evidence that the privatization of the hydroelectric power plants in the whole country is working well. With the government being relieved from the task of operating the generating plants, gains in efficiency and in service delivery improvements have become noticeable among the privatized plants.”
So, just how beneficial is the creation of the Mindanao Power Corporation? It’s also advantageous to have an entity that is dedicated to the needs of the island. But on the other hand, the possible lack of funding and management problems may exacerbate the woes of Mindanao’s power sector further. There is a way out – the government can keep the assets and maybe even transfer these assets to MinPoCor.
In summary, one need not privatize the ownership of an asset – it is the management of these assets that may need private sector discipline. Further, to ensure a fair level of power rates, the government can enter into long-term power sales contracts with all current consumers of Mindanao. If the management of these assets is privatized, the private investors should have the incentive to invest in the rehabilitation of the power plants so that its efficiency is enhanced thus giving the investors the upside that they are looking for.
In the end, everyone wins: the Mindanao consumers are happy because their low rates are assured for the next 25 year and the government and the local governments should be happy because the assets are not privatized. The MinPoCor proponents can even lobby to have these assets transferred to MinPoCor. Plus, the private sector is happy because a chance to invest in the power sector is open to them.

References:

http://www.econ.upd.edu.ph/perse/?p=913

http://www.bworldonline.com/content.php?section=Economy&title=mindanao-power-corp.-backers-push-for-law-ahead-of-agus-pulangi-privatization&id=135866

http://www.philstar.com/nation/2015/05/27/1459319/bill-creating-mindanao-power-corp.-passes-house-joint-committee

Energy Book by Myrna Velasco

http://opinion.inquirer.net/83960/better-way-to-privatization

 

 

It’s About Time

President Rodrigo Duterte made strong pronouncements after attending the Asia Pacific Economic Cooperation in Peru, promising to open up our utilities to more competition.

In his speech delivered in New Zealand, the president said “The only way to make this country move faster to benefit the poor is really to open up the communications, the airwaves and the entire energy sector. My decision now is to open the Philippine economy to other players.”

He further added that the government is “now also looking into regulatory requirements and institutional arrangements to hasten the entry of new players in the power industry and energy sector.”

This is good news for us, not only for energy players like myself but the rest of the country. I have long been advocating for the opening up of the sector to more players, including foreign ones. I have always been vocal in my desire to lift the 40 percent restriction on foreign ownership to address the energy needs of our country for several reasons.

For one, the building of power plants, particularly renewable energy plants is capital intensive, and there are very few local businessmen who can cough up the needed money to explore and build RE plants. The government no longer spends for the exploration of renewable energy and has left the task to the private sector. Unfortunately, exploration is not a cheap undertaking.

Take the case of geothermal energy where drilling of a single hole can cost $5 million, and that doesn’t include expenses incurred for the feasibility studies before drilling.

What we need are foreign investors who can shell out the money and provide the technologies needed to harness the energy from renewable sources because local businessmen do not have them. What we can do is to limit the foreign ownership of the renewable sources, but welcome more foreign investors to own equipment needed to convert our resources.

There’s another reason why the energy sector is ripe for more foreign ownership. The International Energy Agency or IEA has reported that roughly $165 trillion funds are ready for renewable and efficiency efforts from the years 2020 to 2030 after the government heads last year signed the agreement to reduce and limit carbon emissions to help save the environment.  This means the Philippines can take a share of that pie if we open ourselves to more foreign owners. We are, after all, a natural choice to receive these funds given the country’s abundance of natural resources.

The Philippines has been one of the fastest growing economy in the region and the Duterte administration is determined to keep our economic growth momentum that will be felt by the Filipinos. But the government can only accomplish such by building infrastructure to support our economic growth including power plants for stable and affordable energy supply.

Hopefully, the president can achieve his goals by having a cooperative Congress that will push for the needed changes in the Constitution. This necessary change is long overdue.

Reference:

http://business.inquirer.net/220139/digong-opens-3-sectors-foreign-investors

 

Inaction vs. Action: The Cost of Choosing “Cheap”

Quite a number of articles I have written on this blog discussed the portfolio theory, which essentially debunks the myth that choosing traditional forms of energy are more economical.  As I have been saying, our penchant for choosing the energy source based on current market prices or what we term as the least cost method for energy planning, may, in fact, be more costly in the long run.

However, what I have written focused on the cost of building the power plants and energy generation. There is one aspect that makes traditional sources of energy more costly for everyone: the impact on the environment.

Perhaps, it is still unclear to many what the relationship between climate change and the use or non-use of traditional sources of energy. To put things in better perspective, we should illustrate why we must choose renewable energy with the following numbers:

According to the report ‘Energy Darwinism: Why a Low Carbon Future Doesn’t Have to Cost the Earth’, published by Citi, the power sector contributes roughly two-thirds of the total greenhouse gas emissions. On the other hand, other sectors such as land use, agriculture, and forestry, as well as other industrial processes combined only contribute a third of the overall greenhouse gas emissions.

To make matters worse, 90 percent of the greenhouse emissions of the energy sector are carbon dioxide emissions or CO2 since most greenhouse emissions are C02.  However, 65 percent of CO2 emissions from the sector are from fossil fuels and other industrial processes.

Given the above figures, surely, we can no longer say that the fossil fuel powered plants are the cheaper options.

Fortunately, the report of the third largest bank in the US also includes an analysis of the cost implications of continuing with the world’s current heavy reliance on fossil fuel versus the cost of changing the energy mix to include more renewable energy.

What Citi did in its report is to analyze two scenarios: the cost of inaction and action. Under the inaction scenario, the world will continue its energy consumption patterns that are heavily reliant on fossil fuels. Under this assumption, there would be a slight pick-up in renewable energy investment, but the penetration rate of RE will stay at 6% by 2040 and fossil fuels will compose of two-thirds of the power mix. This scenario also assumes zero investments in energy efficiency, which will result in a compound annual growth rate (CAGR) of 2.4% of electricity generation from 2015 to 2040.

On the other hand, the Action scenario assumes that the energy mix favors renewable energy as solar and wind will contribute 22% of the energy mix while fossil fuels are reduced to 28%. The penetration rate of RE also increases to 34% from a mere 6% in 2012.

Is there a difference in costs of the Action and Inaction scenarios? The report says yes, one scenario costs more than the other. Contrary to popular belief, though, the cost of taking the Action scenario is cheaper than the Inaction scenario: the business as usual energy mix is at $192 trillion while the low carbon option will only cost $190.2 trillion from 2015 to 2040.  Citi notes that the falling costs of renewable energy coupled with less dependence on fuel usage account for the cheaper costs of the Action scenario. The report stressed that “Yes, we have to invest more in the early years, but we potentially save later, not to mention the liabilities of climate change that we potentially avoid.”

 

action-vs-inaction

Cost of Action vs Inaction. Source: Citi Research

What would it cost the world if we choose the Inaction route?

 

A report written by Lord Stern with the title “The Economics of Climate Change” in 2006 warned us of the possible overall costs of failing to act on the risks of climate change. The report, widely known as the Stern Review, concluded that losses from effects of climate change would be five percent of the world’s gross domestic product (GDP) per year between ‘now and forever.’ It could even be as high as 11% when we include other effects on the environment and health, which, unfortunately, are hard to quantify.

There are also other research papers that tackled the potential losses in GDP due to damages from climate change. The Citi research noted that a temperature increase of 2.5°C could result in loss of 0.9 to 2.5 % of the world’s GDP.  A loss of 0.7% to 2.5 % of the GDP is roughly % $44 trillion, the report said.

Aside from losses because of climate change, there are also losses in GDP due to heavy reliance on traditional sources of energy.  In a study, Professor Shimon Awerbuch noted that the oil price spikes in the years 2000 to 2004 cost the European Union €700 billion. The prominent advocate of portfolio theory in energy planning further noted that the world would avoid losses of $95 to $176 billion for at least an addition of 10 percent renewable energy in the mix.

The findings of these reports may vary in their calculations, but it is clear that it’s time to do away with thinking only of short-term prices in energy planning. What we should do is plan our energy needs with the future in mind since our penchant for looking at the current and short term costs are and will cost us more. And unfortunately, the costs are not purely monetary

We favored what we thought was cheap. Sadly, what we thought would save us money is making us pay more. The Citi report summed the situation best “A simple reason why atmospheric concentrations of greenhouse gases has grown is that they have been put there as a result of our using historically the cheapest, easiest, or most readily available solutions to a requirement, such as energy. To look at it another way, adopting a lower carbon path is (at least superficially) more expensive, otherwise all things being equal we would logically have gone for a cleaner option.”

References:

Energy Darwinism: Why a Low Carbon Future Doesn’t Have to Cost the Earth by Citi

The Role of Renewables in Enhancing Energy Diversity and Security: Portfolio Approaches by Shimon Awerbuch

Fluctuation and Energy Costs

It has been in the headlines; the Philippine peso hit a 7-year low when it breached the P48 benchmark in September. The falling value of the peso against the dollar worried many people, as it impacts many businesses, especially those firms whose loans are in dollars. On the other hand, dollar-earning Filipinos such as our OFWs are probably rejoicing at their increased purchasing power.

But what many fail to realize is that the average Filipino families are affected by the strength of the dollar against the peso. In fact, Filipinos will have to shell out more for electricity if the peso continues its depreciation. After all, importation of raw materials of traditional sources of energy is mostly US dollar denominated.

It doesn’t help either that coal prices in the world market, according to Meralco are getting more expensive. The falling peso value against the dollar and the increase in coal prices then makes an unfortunate consequence for us: higher generation charges.

Such is the price we have to pay for choosing what we thought was the least cost. I have been consistent in explaining the perils of favoring the least cost method of energy planning.

We have for the longest time been favoring fossil fuel generation over renewable energy because of our penchant for choosing the least cost in terms of current market prices. In energy planning, this means choosing coal-fired plants over renewable energy to dominate our energy mix. At a glance, coal plants seem cheaper. Plus, it is faster to build. On the other hand, renewable energy power plants require higher capital.

Unfortunately, looking at only current prices can be misleading as it fails to consider other factors, particularly, the higher costs of raw materials. Consider this example. One may build a coal-fired plant at $1/kWh based on current prices or a solar power plant at $4/kWh for the next 25 years.

What would be the ‘cheaper’ option?

At first, we may think that coal is the cheaper option. However, what if the international prices of coal go up significantly in the future? It is a given that the cost of producing electricity would be far greater than $1/kWh, and could even double, triple, quadruple and so on.  We have already been in this situation many times in the past. For example, we suffered from the changing policies of coal producing nations when a few years back, Indonesia decided to stop exporting some certain grade of coal. We ended up paying more for electricity since the Philippines is a heavy importer of coal from Indonesia.

And we are back again in a scenario where we will likely pay more for the higher costs of coal. With the falling peso value against the dollar, we are likely to make a dent in our pockets when it’s time to pay our electricity bills.

On the other hand, choosing to build solar powered plants means a guaranteed cost for next 25 years. That means being free from the risk of having to pay more in the future for events that are beyond the consumers’ control.

So, is it really cheaper to depend heavily on fossil fuel power plants? Maybe not, if we consider that world events such as the US Federation’s announcement of maintaining their current interest rate—the cause of the strengthening of the US dollar— indeed happen and they affect the cost of our electricity.

Let us also remember, too that prices fossil fuels are likely to spike as these resources are slowly depleting. In fact, the world’s consumption of fossil fuels outpaces the world’s production of coal and fossil fuel.

Our energy mix is under review headed by our Climate Change Commission. Hopefully, the review results in an energy mix that is dominated by renewable energy sources, not only because it will be beneficial for our environment, but also because it will help the consumers’ pockets.

Energy Poverty

 

Solar-Lighting-Poverty-Kerosene-Renewable-Energy

Some 1.2 billion have no access to power. Photo c/o dsuonenergy.com

 

Imagine young children in far flung areas walking several miles to get to school, studies at night using kerosene lamps and spend their free time from school fetching water from the nearest source. Think of tired workers, particularly our farmers who cannot extend their productive hours due to lack of electricity in their areas.

Sadly, many of our fellowmen and others from other countries suffer the above scenarios given the prevalence of energy poverty. Some 1.2 billion people in this world are without access to electricity.[1]

In the Philippines, energy poverty remains a problem. In fact, we have one of the lowest national electrification rates in the region as of 2013 according to the International Energy Agency (IEA) at 79%. Our neighbors such as Singapore, Malaysia and Brunei are at 100% while Thailand, Vietnam, Laos and Indonesia are at 99%, 97%, 87%, and 81%, respectively. We are at the bottom of the list, just higher than Cambodia at 37% and Myanmar at 32%.[2] We may have one of the highest economic growth in the region in recent years, but we still have a long way to go in providing electricity to all.

It is widely known that electricity is necessary for any economic growth and will improve the lives of the 21 million Filipinos who live in the dark.[3] A study published by Philippine Institute of Development Study showed that rural households and rural-based economic agents directly benefit from having electricity given that they can expand their productivity and economic ventures at home. [4]Access to electricity allows families to operate their livestock and poultry farms, efficiently store their produce and food for their family’s consumption, and venture into micro-small enterprises like food processing. Such activities provide food and additional income for the household. After all, electricity is a significant determinant of agricultural productivity.

The absence of electricity, too, poses a health risk since those without power are forced to rely on solid fuel for cooking like charcoal and fuel wood. Unfortunately, using solid fuel is a health hazard and IEA estimates that roughly 4.3 million premature deaths are due to household air pollution from the use of solid fuels for cooking.[5] In fact, cook stove smoke is the single largest environmental threat according to research.[6] The Global Burden of Disease study showed that some 3.5 million die annually from respiratory diseases caused by burning of dung, brush, and wood for fuel use. The research also noted that deaths from the emission of the material above are more than twice than the recorded deaths from AIDS or Malaria.

It is then essential to provide clean and sustainable power if we want to help our needy countrymen especially since the poorest of this nation are from the agricultural sector and more than half of our population do not have access to clean cooking facilities.[7] World Bank Vice-President Rachel Kyte sums it best “Access to energy is absolutely fundamental in the struggle against poverty….It is energy that lights the lamp that lets you do your homework, that keeps the heat on in a hospital, that lights the small businesses where most people work. Without energy, there is no economic growth, there is no dynamism, and there is no opportunity.”[8] Indeed, we need to move fast to address energy poverty.

 

 

[1] World Economic Outlook 2015 data base

[2] World Economic Outlook 2015 data base. International Energy Agency http://www.worldenergyoutlook.org/resources/energydevelopment/

 

[3] World Economic Outlook 2015 data base. International Energy Agency http://www.worldenergyoutlook.org/resources/energydevelopment/

[4] The Impact of Infrastructure on Agricultural Productivity by Gilberto M. Llanto (2012)

National Geographic http://energyblog.nationalgeographic.com/2012/12/13/cookstove-smoke-is-largest-environmental-threat-global-health-study-finds/

 

[5] http://www.worldenergyoutlook.org/resources/energydevelopment/modernenergyforallwhyitmatters/

[6] National Geographic Blog http://energyblog.nationalgeographic.com/2012/12/13/cookstove-smoke-is-largest-environmental-threat-global-health-study-finds/

[7] World Economic Outlook Database; Traditional use of biomass for cooking

[8] Quoted in National Geographic “Five myths about Energy Poverty” http://news.nationalgeographic.com/news/energy/2013/05/130529-surprising-facts-about-energy-poverty/

The Rise of Renewables

 

To be clear, I have no fundamental problems with fossil fuel-based power plants.  In fact, I have built a number of them.  My current focus on renewables stems from the belief that in the long-term, it will be economically more sound for our country and for our planet. My approach is based on a need to look at energy planning that takes on risk as a major parameter. From this perspective, a portfolio approach with renewables as a major part of the country’s energy portfolio will be good for business in particular, and the well-being of our countrymen in general.

Just last year, Pope Francis released a landmark encyclical that warns of the dangers we face for refusing to take care of our environment. The Pontiff also stressed the need for renewable energy development to address the growing concerns about the environment.

Similarly, the COP 21, the largest single gathering of world leaders produced what was considered as the most important agreement of nations in combatting climate change: to hold the increase in the global average temperature to below 2 centigrade above pre-industrial levels. An important agreement since achieving such will result in mitigating the rising atmospheric temperature to help prevent driving poor nations further into poverty.

Perhaps, the greater awareness and the campaigns made by known personalities such as the Pope and our world leaders about climate change and its consequences helped spur the growth of the renewable energy sector. But just how significant the growth of the RE sector will be?

A report by McKinsey solutions showed that energy demand will change significantly in the next 35 years as it is likely to grow only by 0.7 percent annually.  Electricity is seen to account for majority of the energy demand among all energy types and we are likely to see a shift to cleaner energy technologies with coal expected to peak by year 2025, while demand for oil flattens.

Similarly, a recent study conducted by Bloomberg New Energy Finance showed that two-thirds of the total investments in the power sector will be spent on renewable energy development from 2016 to 2040. According to the report, roughly $7.8 trillion are likely to be invested in renewable, an amount significantly higher than the expected $ 1.2 trillion to be invested in coal plants.  Of the $7.8 trillion, wind energy will account for $3.1 trillion, solar for $3.4 trillion and hydro roughly $911 billion.

We are already seeing the rise of the renewable energy sector as early as last year. After all, 2015 was a record year for global investments in renewable energy according to the report, Global Trends in Renewable Energy Investment 2016 published by Frankfurt School of Finance & Management. The report revealed that globally, investments in renewable power capacity in 2015 reached $265.8 billion, almost double than the investments in fossil power of $130 billion.  Plus, developing countries have overtaken developed nations in renewable energy investments. Developing countries, after all, have invested a total of $156 billion last year, which is higher than the $130 billion spent by advanced countries in their RE sector.

As a Renewable Energy developer, it is heart-warming to see that RE development globally are advancing significantly, and that most countries are now taking serious efforts in developing their green resources to replace coal as the main power source.

In our country, the government, too, are somehow making efforts to develop the RE sector. Just recently, a report of the Inquirer said that the Climate Change Commission (CCC) has announced that it has started what it called a “comprehensive review” of the Philippines’ energy policy. The DENR and DOE, along with NEDA are part of the review committee. This undertaking is expected to result in reshaping the power plans of the country, putting RE sources in the forefront to coal. According to the Commission, the review will take roughly six months to complete and a new development framework on energy development will be produced.  Plus, Secretary Emmanuel de Guzman, vice chair of the CCC said that the end goal is to “lay the ground toward clearer procedures away from coal and on the faster way to enhance RE.”

I say that this is a good step in paving the way for more renewable energy development in the country. However, it is also my fervent wish that this review is also accompanied by other reforms in the sector including the lifting on foreign restriction for investments, and other regulatory issues hounding the RE sector, which I have already discussed thoroughly in this blog. It is my hope that this review and major reforms in the sector take place soonest to help the growth of the renewable energy sector.

Encouraging Developments

A recent report by the International Energy Agency showed that some 6.5 million deaths yearly are linked to air pollution. The same report noted that the premature deaths attributed to outdoor air pollution would probably increase to 4.5 million from 3 million by the year 2040 with much of the deaths concentrated in Asia. After all, according to the World Health Organization, roughly six out of seven million people who die yearly due to air pollution are in Asia. And these numbers are likely to increase if no real efforts are made to curb emissions.

Sounds gloomy, right? However, all is not lost as the report also stressed that the dreary scenario above could be changed if total energy investments are to be increased by seven percent until 2040.  Increasing investments in energy will mean a decline in premature deaths from outdoor air pollution by 1.7 million in 2040.  Deaths from household pollution would fall by 1.6 million annually, too.

Will we see an increase in investments significant enough to alter the number of deaths linked to air pollution? Similarly, can we also reduce our carbon footprint globally and hold the global average temperature to below 2 centigrade as agreed by our leaders in last year’s COP 21 meeting?

Maybe. But it is worth noting that many are taking environmental problems seriously. What we see these days are prominent people who are urging us all to sit up and find solutions to the growing problem of climate change. Last year, the Pontiff spoke out about the environment. This was also followed by the world leaders in COP21 who reaffirmed the previous commitment of allotting $100 billion yearly by 2020 to fund climate-related efforts, and to keep the global average temperature to mitigate the risks of rising atmospheric level. Even Oscar best actor Leonardo DiCarpio spoke emotionally about our environment in his acceptance speech.

Just recently, the three North American leaders agreed to a trilateral energy and climate plan during the recently concluded Tres Amigos summit. Presidents Barrack Obama of the US and Enrique Nieto of Mexico and Canadian Prime Minister Justin Trudeau committed to increasing the power coming from clean energy sources to 50 percent from the current goal of 37 percent by the year 2025. The trilateral agreement also includes the three countries agreeing to increase the goal of reducing methane emission from 40 to 45 percent as well as to commit to the research and development of clean technology initiatives and their commercialization.

Even farmers are now being encouraged to adopt climate-smart farming methods through the Climate-Smart Lending Platform. This platform has the intention of making credit cheaper and easier for small-scale farmers to protect their crops from weather disturbances while adopting climate-friendly practices. The goal of the initiative is to entice farmers to sustain their climate-smart agriculture practices.

rice fields negros philstar

Dry rice fields in Negros due to El Niño. Photo c/o Philstar/AP

Similarly, in Mexico, an Energy Savings Insurance Initiative was launched by the Inter-American Development Bank where small and medium-sized businesses in the agro- investing sector can buy insurance for their energy-efficiency upgrades for a small amount. These SMEs can benefit from buying such insurance since they will spend less on power should their upgrades work. If not, these firms can obtain an insurance pay-out. This initiative is set to be replicated in other Latin and Caribbean nations soon.

Locally, our Climate Change Commission has already started its review on how we can attain our commitment to helping the world reduce our carbon footprint. This initiative involves other departments including the Energy Department in reviewing our Energy Plan to promote the development and use of more renewable energy sources.

All these initiatives are music to my ears, as well as for others who wish to help address the world’s environmental problems. May these agreements and efforts undertaken by different countries and their leaders bear much fruit so that the next generation can enjoy God’s gift of nature.  After all, in the words of Pope Francis “The effects of the present imbalance (in the environment) can only be reduced by our decisive action, here and now.”