Energy policy fixes: When ‘the future is now’

by Myrna Velasco – January 4, 2016

from Manila Bulletin

A country’s economic success is, of course, a cause for celebration. Yet it brings some challenges especially to a sector that provides it the backbone for growth – energy.

The lack of it can curtail economic activities and would cause extreme inconvenience to people (read: brownouts); while technology preference may set significant contribution to virulent greenhouse gas (GHG) emissions that are known in science to be potent triggers to planet’s warming.

For the Philippines, the battle line had been drawn: ironically, it is between life (or the need for survival) and the force of nature.

The year 2015 put the energy sector in sharp focus – not only domestically but on international affairs. The major events that had energy in the center of discussions include the: Asia Pacific Economic Cooperation’s 12th Energy Ministers Meeting (APEC-EMM) in the Philippines; and the 21st Conference of the Parties (COP 21) of the United Nations Framework Convention on Climate Change in Paris, France.

The 12th Energy Ministers’ Meeting of the Asia Pacific Economic Cooperation (APEC) in Cebu that was hosted by the Philippines October last year. (Photo by Department of Energy/APEC Secretariat)
It is a known fact that energy development in the Philippines has been taking a reverse track if compared to what other countries have been pursuing – that instead of aggressively advancing to ‘clean energy sources’, its capacity ramping up in the immediate- to medium-term are generally coming from coal plants.

Alright, some may argue that renewable energy (RE) installations – with the support of feed-in-tariffs (FITs) — are also being pursued vigorously and that the country already had high share of RE on its power mix prior to the entry of the new coal capacities.

Project developers reckon that ‘coal’ is the only technology desirable to address its need for base load capacity – if referenced on the current ‘spending power’ of the Filipino consumers. They further note that for an emerging economy, it is vital that it leans on a technology that will be affordable to sustain its expansion.

Up to that point, it is understandable. But the nagging question rests on the future: how committed the country is into re-balancing its energy portfolio to a low carbon future following this new era of ‘king coal’s dominance’?

Energy Secretary Zenaida Y. Monsada, in several forums, has stated that any fuel mix policy to be enforced shall be on a ‘voluntary basis’. It entails then that it now lies upon the conscience of the private investors if they will do something to help preserve the environment for their children and the children of their children.

As experts have warned: with the whole world now racing against time in reversing climate warming that may go beyond the 2.0 degrees Celsius pre-industrial levels target, governments and markets could no longer afford to slacken on the ‘energy transformation’ pathway.

‘Persuasive call’ in Paris

In his speech at the recently concluded COP21, United Kingdom’s Prince Charles has hit the nail on the head when he said that: “in damaging our climate, we become the architects of our own destruction … I pray that in pursuing national interest, you will not lose sight of the international necessity.”

He further stressed “while the planet can survive the scorching of the earth and the rising of the waters, the human race cannot…to avoid catastrophe, we must restrict climate change to less than 2.0 degrees, which requires a dramatic reduction in carbon emissions.”

In essence, the Paris climate change diplomacy negotiations set a strong tone on the need for countries to shift into ‘cleaner energy systems’ and be more cognizant of energy efficiency initiatives and ventures. To many, clean energy is generally equated to RE and technology-linked advancements such as battery storage – plus the other lower or zero carbon-emitting technologies such as nuclear and gas. In the discussions, it had been the coal facilities thrown in ‘a very bad light’ as they are known to have the highest carbon dioxide (CO2) emissions triggering climate change risks.

Moving past the so-called ‘dirty phase of development’ had been the resounding call on government leaders and the investing community – and so far, 186 countries lodged their Intended Nationally-Determined Contributions (INDCs) to reducing their respective carbon footprints.

The good news had been: the world’s biggest CO2 emitters – primarily China and the United States – joined the bandwagon. Plus, the developed nations have doubled funding commitments that must be channeled to their ‘least developed’ and developing counterparts to aid them on mitigation and adaptation – and with the intent also to build their capacity on technology transfer.

As emphasized, what will eventually entice technology transfer is the marketplace — it’s the price coming down and for it to come into the markets of the developing world. In time, consumers will be paying for these technologies without the feed-in-tariffs and subsidies.

US President Barack Obama somehow set the record straight when he averred that “as the leader of the world’s largest economy and the second largest emitter…the United States of America not only recognizes our role in creating this problem, we embrace our responsibility to do something about it.”

He stressed that the role of governments would be to “show businesses and investors that the global economy is on a firm path towards low-carbon future,” noting further that “if we put the right rules and incentives in place, we’ll unleash the creative power of our best scientists and engineers and entrepreneurs to deploy clean energy technologies and the new jobs and new opportunities that they create all around the world.”

The aim of the Paris accord, Mr. Obama said is “not simply an agreement to roll back the pollution we put into our skies, but an agreement that helps us lift people from poverty without condemning the next generation to a planet that’s beyond its capacity to repair.” The US trumpeted its achievements on carbon emissions reduction, mainly leaning on its massive rollout of RE projects; and the retrofitting as well as retirement of coal plants that have been replaced by gas facilities. But Mr. Obama has admitted they need to do much, much more to achieve their set targets.

Other countries – such as India and Africa – have also scaled up deployment of RE to electrify their remote villages – with them noting that rollout can be accelerated with anticipated further drop in the cost of solar photovoltaics (PVs) and wind turbines in the coming years. This is also seen an ideal solution to the off-grid areas in the Philippines. And just as the aspiration of similarly situated countries, battery energy storage, they said, will be the transformative phase that could advance these goals.

The power industry is not the only recognized culprit assaulting the environment. Co-sharing in the ‘evil billing’ is the transport sector. United Nations Environment Programme Executive Director Achim Steiner has noted that “the transport sector is responsible for a quarter of all energy-related CO2…and this will grow to a third by 2050, faster than any other sector.” The UNEP places its bet on electric mobility – being one of the viable shifts that could help pare the carbon emissions of the transport sector.

‘Energy resiliency’ in the equation

At the APEC-EMM meeting in Cebu, resiliency of energy systems and infrastructures had been the focal point of discussion.

Secretary Monsada who chaired the sessions had highlighted the ‘brunt of disasters’ on energy infrastructures and how such can disrupt the entire value chain if both developments and response-mechanisms are not resilient. “We have seen how communities are paralyzed during disasters when infrastructures are affected and damaged,” she said.

On the sphere of cataclysms, closest and most nightmarish to every Filipino had been super-typhoon Yolanda’s (international code name: Haiyan) devastation in November 2013. Past the human drama because of the magnitude of lives and properties that vanished plus the economic setback this disaster triggered, the resiliency of the country’s energy infrastructure had also been placed under stringent scrutiny.

The Energy Ministers during the APEC meeting have noted that the nuances and dilemmas posed by natural and man-made disasters on energy facilities and systems must not be neglected – and that knowledge-sharing as well as technology reinforcements are necessary to make them resilient to calamities and viable in sustaining the supply chain.

Yet another dilemma taking its core in the intensifying debate is the food-water-energy nexus or the so-called multi-dimensional puzzle of a thirsty triangle.

Michel Jarraud, chair of UN-Water, has opined that “water and energy are among the world’s pre-eminent development challenges and must feature prominently in the post-2015 agenda.” He added “strategic choices made in one domain have repercussions on the other … droughts make energy shortages, while lack of electricity reduces farmers’ ability to irrigate their fields. Pricing policies also highlight the interdependence between water and energy.”

And water, once it turns into a scarce resource, could become a “destabilizing factor” and may likely replace oil as the next trigger of global conflicts, as security specialists had assessed so. Severe water strains are being anticipated in North Africa, Central and South Asia; while lingering trans-boundary uses of water, including in many Asian jurisdictions, are already igniting tension among neighboring countries.

Policy and regulatory gaps

In the Philippines, major gaps still exist in policies and regulatory frameworks to support its ambitions toward cleaner energy future as well as on technological advancements and innovations – and it will be a tough call of action on the part of the DOE and ERC.

Energy regulation, as perceived in particular, had and could always be the source of pain and hope for consumers. If regulators will do the right thing, it will bear benefits for the consumers, but if they fail, the repercussions could be perilous — not just to an industry but to a country in general.

Note that the country is not alone in these kinds of energy dilemmas, thus, the regulators and policymakers can draw lessons and references from global peers. Should they need to be ‘the terrorists at the table” to arm-twist investors on setting forth clean energy investments? Strategy and rules crafting will be up to them to decide on. The only stern reminder is that: viable policy planning and regulatory enforcements by governments must lead the way for future investments.

Diversification of energy sources as well as best practices and technology advancements must be integrated in the policy-crafting menu. Just a reiteration: “any shift must not be expensive for the individual consumers; and that it shall bear no negative effects on competitiveness of modern economies.”