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.