No Quick Fixes In Energy Problem

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In the face of a looming energy crisis which threatens to stunt economic growth that is being experienced by the country, everybody is in a dizzying frenzy to find a solution to a problem that seems to have suddenly appeared during the last 6 months. And the loudest voice in the fray is the call for emergency powers for the President to enable him to provide quick fixes – renting or procuring generators to continue meeting the energy demand of a burgeoning population.

In a recent forum organized by the European Chamber of Commerce of the Philippines, President Aquino, once again, reiterated his call for both houses of Congress to hasten the grant of the emergency powers. As previously raised in this column, what we need are more lasting solutions, e.g. – a balanced energy mix with the end goal of achieving energy security,– a staple requested by all foreign and local investors.

It didn’t help that in the same forum, in a huddle among reporters, Energy officials disclosed that while it is has finally come up with a mix i.e. 30% natural gas including liquefied natural gas, 35% coal and the rest by other sources of energy including renewables, the policy is “non-firm”.

A non-firm policy. What does it even mean?

Amid all these, the public is bracing for rotating blackouts and investors are scratching their heads on how to sustain businesses in an environment of energy uncertainty.

Today more than ever, it has become imperative for the Philippine government to fully recognize that we are in what experts are calling an “energy trilemma” – which demands countries and leaders to tackle decarbonization, energy security and affordability all at once. A firm and implementable or actionable energy mix policy is what is required to address this energy trilemma.

Guidelines or non-firm energy mix will not be enough. Why would anyone build power plants running on renewable energy or natural gas if they will not have certainty of being dispatched?

Current dispatching of power is primarily based on generating cost that is why coal is the default. There is no consideration for the environmental and health cost associated with specific fuel source.

In the meantime, economies, much bigger than the Philippines, has already taken the heed of public outcry for a more balanced energy mix.

China, for example, in an effort to implement a more balanced energy mix, is considering a national cap on coal by 2016 and a ban on the use of coal in Beijing and other urban areas by 2020. China is reportedly doing this to reduce air pollution and minimize impact to health of its people. The Chinese government has adopted a firmer stance on the issue to arrest the problem of carbon emissions which were brought about by its huge economic gains in recent history. China is now the fastest growing economy around the world and may overtake the United States as an economic superpower in the middle of this century. As a result, China is now the largest consumer of energy, second-largest consumer of oil, and possibly the largest net importer of oil.

Indonesia, another bigger economy compared with the Philippines, is accelerating the construction of natural gas-fired power projects in Java to quickly address a looming power crisis due to delays of coal-fired power plants in other parts of the country. Note that both Indonesia and China are major coal producers!!!

Indeed, it has become an accepted truism that stresses from producing and using energy to meet growing demand are increasing. Climate change and the impact of air quality on human health are chief among these. As populations congregate in cities, governments must provide the right infrastructure to encourage smarter planning and the use of cleaner energy.

The provision for cleaner energy has become a basic right and not just a privilege.

Hence, President Aquino and his energy officials must carefully consider a number of factors in crafting its energy mix plan. Taking into account ‘externalities’ such as financial, environmental and social cost of energy sources should be the raison d’etre of responsible policy-makers.

It can never be more emphasized that the Philippines is experiencing an exponential growth in energy consumption thanks to the galloping population growth, urbanization, and economic development. We have seen how rural areas are giving way to cities – increasing the number of central business districts around the country which attract hordes of consumers that need energy for their daily activities.

The Department of Energy estimates that we need 3.7GW of additional power generation in the Luzon and Visayas grid alone by 2020.

Where will all that energy come from?

Clearly, the Philippines is facing an energy trilemma. Unfortunately, there is no ‘silver bullet. All sustainable and cleaner energy sources will have to be mobilized. The government needs to provide a policy environment conducive for private sector investments on infrastructure that can provide cleaner and affordable energy supplies.

Hand in hand, the government and the private sector must work together to achieve the following: a secure and reliable supply of energy; address impacts to climate change and improve local air quality; provide access to energy to improve quality of life and fuel economic growth; and ensure energy sources are cost competitive and affordable.

What the public demands is for a firmer and long-lasting solution and not just quick fixes.

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