Philippine Energy: Coal Remains King

In United Nations hearings into climate change, the Philippines, wracked by increasingly violent weather events, has become the poster child for environmentalists concerned that both violent storms and rising waters pose an existential threat to the country’s 7,100 islands.

Since the super typhoon Haiyan/Yolanda smashed into the islands of Leyte and Samar, killing at least 6,300 people in November of 2013, Philippine representatives to international climate change conferences have become prominent proponents of reducing fossil fuel emissions, one of the world’s top sources of carbon emissions.

But the Philippines has a dilemma as its economy soars upward along with its expanding population, now over 100 million people. Two weeks ago, energy officials issued environmental compliance certificates for 21 new coal-fired plants to meet the country’s burgeoning energy needs. Some 40 percent of the country’s energy needs are now provided by coal.

Greenpeace said in a 2014 report that at least 45 new coal-fired plants would become operational by 2020, increasing carbon dioxide emissions by 64.4 million to 79.8 million metric tons a year. And, although the main island of Luzon, where most of the country’s industry is centered, is relatively safe from brownouts, the farther you get from Manila, the more likely that brownouts will be a way of life.

To some extent, the country is stuck when it comes to renewables or clean energy production from gas. It doesn’t have the technology or the sophistication to operate nuclear plants. Wind is fickle and not a particularly attractive investment for private enterprise without subsidies, which are provided in many developed countries. Gas is far more expensive than coal, the bulk of which both must be imported, a strain on the fiscal budget.

Geothermal has considerable potential but like wind is an investment risk by private enterprise. With hydropower, the two comprise 5,275 megawatts, or about 30 percent of total usable power. While national energy capacity is more than 16,000 megawatts, only about 13,000 are available at any given time, given plant maintenance, breakdowns, etc.

In 1973, then-President Ferdinand Marcos commissioned a nuclear plant in response to the global oil crisis and an embargo by Middle-East producing states. Construction began in 1979, only to stop when a safety inquiry revealed more than 4,000 defects. The plant, built on the Bataan Peninsula north of Manila, was sited near major earthquake fault lines and close to Mount Pinatubo, which subsequently exploded in one of the biggest volcanic eruptions of the 20th century. Costs soared to US$2.3 billion. It was never made operational and it remains to this day a monument to folly and endemic corruption.

Detachment from reality?

In hearings two weeks ago, Sen. Loren Legarda accused government agencies approving the construction of coal plants as being “detached from human reality” because of the threat to the environment. But only two of the new plants are operational, and environmental clearance certificates are only a part of the approval process for the 21 plants.

Energy officials responded that an environmental clearance certificate is just one part of the approval process of a new coal plant and though 21 new certificates have been issued, only two new plants – one in Toledo, Cebu and another in Quezon province – are operational.

Because the country’s energy system is privatized, according to an analysis of the situation by the Manila-based Pacific Strategies & Assessments, the government cannot directly invest in power plants. Since coal is the cheapest, most reliable way to produce electricity, it attracts the most private investment.

Speechifying is easier than building

“In short, it is easier and more enjoyable to travel the world attending climate change conferences and giving high-minded speeches about the global climate than it is to address the real problem at home,” according to the PSA report, which is available only by subscription. “How can the Philippine government provide adequate incentives to businesses to encourage them to invest in renewable, climate-friendly energy sources?”

The Philippines has a looming power shortage and lawmakers and energy officials have not provided adequate long-term solutions, according to the report, which raised concerns that foreign investors could turn away despite strong GDP growth over the period of President Benigno S. Aquino’s term, with local companies possibly facing layoffs of employees and contributing to the country’s considerable poverty.

While a World Bank study found that the Philippines is the third most vulnerable country in the world to extreme weather events, the country is not particularly a major contributor to climate change. It is 138th in the world in terms of per capita CO2 emissions, according to the United Nations. Yemen is a greater contributor to climate change.

In any case, as Greenpeace pointed out, reliance on coal is likely only to increase despite the Aquino administration’s implementation, starting in 2011, of a National Renewable Energy Program designed to provide incentives to private investors with the goal of 50 percent of the country’s power being generated by renewables by 2030. That goal is not likely to be met.

The Philippines has struggled with delays in the program, with amendments that make long-term investors nervous and with the lack of an effective formula that would make renewables such as solar and wind as profitable as coal and oil.

So while coal-fired plants continue to face public antipathy, there appear few alternatives. The government is working with private enterprise to provide clean coal technologies to reduce emissions of pollutants to levels approaching those of natural gas. The government is also working on developing carbon capture and sequestration technologies. But transition to renewables is a long way off.