Wanted: An energy revolution in the Philippines
MANILA, Philippines — Our country is on the cusp of a revolution that is sweeping the world today, with many powerful vectors converging to transform the energy industry as we know it. If we are able to seize them and ride the wave, we have a golden opportunity to leap forward and build a power industry that is truly for the 21st century — one that addresses not only inclusive economic development but adopts exponential technological advances and mitigates climate change as well.
Serving as the backdrop to all these are the undeniable environmental changes we are experiencing in the world. CNN recently reported about the National Oceanic and Atmospheric Administration’s (NOAA) monthly global climate report. Its latest edition in April indicated that for 400 consecutive months or more than 33 years, the earth’s temperature has been above average, and that the third highest recorded temperature occurred in that month.
Moreover, 18 of the warmest 19 years in history have occurred since 2000. While natural factors can account for some of those anomalies, NOAA scientists say the overall pattern is definitely not natural, and these are mainly due to anthropogenic or human factors. NOAA climatologist Ahira Sanchez was quoted as saying, “Climate change is real, and we will continue to see global temperatures increase in the future.”
Philippines among most vulnerable
What we need to understand is that the Philippines enjoys the unenviable position of being among the most vulnerable in the world. In the Global Climate Risk Index, our country ranks among the top five and is, in fact, the number-one country in the world affected by climate-related disasters over the last 20 years. This is not surprising given that over 50 percent of Philippine municipalities and almost all major cities are coastal in nature, and that 62 percent of Filipinos live in coastal zones.
Even more disturbing is how climate change primarily affects children. According to a paper published in the journal Pediatrics, children are estimated to bear 88 percent of the burden of disease related to climate change. Extreme heat waves have caused emerging infectious pathogens such as the Zika virus and increased incidence of waterborne bacterial infections. Extreme weather events are also damaging crops, impacting the food supply and thus childhood nutrition. Given the adverse impact on the youth, it is no surprise that the surge in demand for cleaner sources of energy comes from millennials, as they will inherit the planet. Companies like Google, Facebook, Apple, AT&T, Walmart, and Unilever Philippines have adopted renewable energy to fight climate change and also because their customers demand it.
We’re lagging behind
It is in this context that the global energy revolution is underway. But while the rest of the world is moving to clean energy, in the Philippines we have a different story. Here, coal plants continue to be built unabated. Coal accounts for 50 percent of our country’s power generation, with 21 existing coal plants and 27 more to be built in the coming years. Conscious decisions need to be made to start moving away from coal.
Last May 2016, we at the Energy Development Corporation (EDC) made the categorical announcement at our annual shareholders meeting that our group of companies under our parent firm, First Philippine Holdings Corporation, would not invest, build, or develop any coal-fired power plants.
Thus far, we are the only large energy company in the Philippines to declare unconditionally that we would not do coal-fired power. It wasn’t always that way; we were actively bidding for power plants, which included coal, during the Philippine government’s privatization program. Being among the three largest power companies in the country, we definitely had the organizational capability and resources to develop coal-fired plants. We bought a number of sites intended for such plants in Southern Philippines and engaged a number of coal experts for our business development teams.
Not ‘Business as usual’
Operating in a deregulated and privatized power market in the Philippines means staying competitive and having the cheapest generation sources in order to keep winning customers. Coal, given its abundance in the world, was traditionally among the cheapest fuels for power generation, but that has changed in the last year or so. We’ve always been staunch believers in a decarbonizing pathway, but I’ll be the first to admit that we believed the world still had more time to get its act together.
However, that view changed immensely in November 2013, when our largest geothermal plant in Leyte, Southern Philippines, was directly hit by one of the most powerful typhoons on record to ever to hit the planet.
Personally fearing for the lives and safety of all 743 of our employees and seeing them knocked off their feet overnight; seeing hard-nosed mayors literally crying and desperate for food and water; witnessing the enormous suffering of communities who lost loved ones and whatever few possessions they had — seeing all these first hand, as well as the scale of rescue, relief, and rebuilding efforts that came after — has had an enormous impact on how we’ve moved forward as a company. This was the rude wakeup call that, as an energy company, we could no longer be “business as usual.”
However, we still face quite a number of challenges. Price competition is intense and retail competition and open access is underway. A low price is still the main driver of electricity consumers. This has driven down profit margins of all power producers. But we’re driving down costs in our geothermal business, both the old-fashioned way and through the use of new technology.
Yet another challenge is the government’s ambivalence on climate-change issues. Because there’s so much political pressure to provide everything at the lowest possible cost, employing historically more expensive sustainable methods of production has never been encouraged. There’s nothing to encourage the use of electric vehicles, organic food production, the use of plastics and or the use of more recycled materials on a national scale. In the power sector, policy has been skewed towards the use of coal plants because they are historically cheaper than any other source of power.
Optimism for green energy
You might wonder what keeps us committed to this green road despite all the obstacles. There are more and more companies that are conscious about greening their footprints and supply chains. This has a lot to do with the millennial consumer’s coming of age.
Another reason for optimism about clean energy is that the forces of technology are moving very fast. Solar, wind and battery storage have experienced exponential cost reductions over the last few years. In recent years, the prices of coal and other fossil fuels have been moving up. This means that the government’s argument on cost is less relevant today than it was five years ago.
Just keep in mind that when someone tells you that renewable energy is intermittent and makes power grids unstable, know that there are many technically and economically feasible ways to handle these issues, and progressive grids are already incorporating them into their day-to-day operations.
Green revolution now
With all the old arguments in favor of fossil fuels being torn down by events, the world is now moving irreversibly toward cleaner energy, including China and Europe. Despite the election of President Trump, many US states are defying him and using cleaner energy. It’s time for the Philippines to join the bandwagon. Policies must be put in place to encourage the use of clean energy. The Green Energy Option that was improved under the RE Law 10 years ago should be implemented as soon as possible. Incentives must be implemented to encourage the use of geothermal power. In order to make sure that consumers are protected, they should be given a choice. Therefore, full retail open access should be allowed.
We Filipinos are some of the most innovate, creative people on Earth. We should not allow ourselves to be dragged, kicking and screaming, into the future. We should be lighting and leading ourselves and the region into the promise that the future of clean energy holds for us.
