MAKATI, 29 October 2021 — Corporate directors stress the urgency to fast track the energy transition in the country, heeding the Code Red warning issued by the Intergovernmental Panel on Climate Change (IPCC) earlier this year.
“Evidence clearly shows even before the pandemic that coal has been intermittent and unreliable. As households and the private sector struggle with the economic impacts of COVID-19, data also shows coal is the reason behind spiking electricity bills and rotating blackouts. Continuing with coal is Code Red for businesses,” said Jephraim Manansala, chief data scientist of the Institute for Climate and Sustainable Cities (ICSC), in the first part of the Pilipinas: Aspire, Rise, Sustain corporate governance series organized by the Institute of Corporate Directors (ICD) with ICSC and The Climate Reality Project Philippines.
Deputy Speaker Loren Legarda, who opened the event, said in her keynote, “This is not the time for short-term thinking. The old world is unravelling fast. For too long we have been told renewable energy is expensive and unreliable. The reality is the opposite.”
Manansala emphasized that the Philippines has an overcapacity of baseload coal-fired power plants, yet rotating power outages were still experienced in different parts of the country in 2021, and even over the past few years, that led to significantly high electricity costs. In addition, these coal-fired power plants have not met the newly mandated allowable planned and unplanned outages set by the Energy Regulatory Commission (ERC).
This is not an isolated case, coal has continually proved to be unreliable and will soon be history globally, according to E3G programme leader Camilla Fenning. “The pipeline of proposed coal power plants has collapsed by more than three-quarters, with 1,175 gigawatts of planned projects cancelled, since the Paris Agreement negotiations in 2015, bringing the end of new coal power into view,” she said.
Fenning cited that the Philippines’ pre-construction pipeline for coal has fallen by 65 percent in July 2020, months before the Department of Energy (DOE) issued the moratorium on new coal plants. China’s pledge to halt funding for new coal-fired power projects abroad is also seen to have potential implications on five coal power projects under construction in the country.
Melissa Brown, director of energy finance studies in Asia of the Institute for Energy Economics and Financial Analysis (IEEFA), shared her insights as well, citing challenges in using fossil gas to fuel the energy transition. “Financing gas will be a heavy lift. Although we expect fossil gas to play a part in the Philippine energy mix, it is not an inevitability. Gas is very significantly expensive and with prices extremely volatile, it may be unmanageable if the power sector is not ready,” she said.
Moving forward, Manansala made the economic case for variable renewable energy, estimating 28 percent savings in electricity costs during peak hours in the noontime (11:00AM to 2:00PM), despite only having a 3 percent share in the Philippine energy mix, based on spot market merit order data from the Independent Electricity Market Operator of the Philippines (IEMOP).
“We need to shift from centralized to distributed generation. Centralized generation through coal is expensive, unreliable, dependent on imported fuels, and will soon be stranded assets. We have seen that the price of coal in the world market has already tripled since the start of 2021, and this just further reinforces the need for this shift to indigenous renewable energy sources to stabilize the electricity prices,” he said.
AC Energy President and CEO John Eric Francia, Management Association of the Philippines Energy Committee Chair Ernesto Pantangco, and Negros ENGINE Institute Senior Advisor Marlon Apanada also joined the discussion as reactors.
“Striking the right balance is crucial in this energy transition, and we need to recognize that it will take time. AC Energy is committed to net zero emissions by 2050 and we gear our generation portfolio towards renewables,” said Francia.
He also cited the importance of having a competitive power market. “We hope to make full use of the Electric Power Industry Reform Act (EPIRA) and renewable energy policies. There are still some gaps in the implementation. It just needs execution, and the market will step up to the plate,” Francia added.
NOTE TO THE EDITOR
“Pilipinas: Aspire, Rise, Sustain” is a three-part series certified by the Securities and Exchange Commission (SEC), as participation in this webinar meets the recommended best practices for continuing directors education prescribed by the SEC. The next two webinars will be on November 5 and November 12. For more information, visit https://www.icd.ph/webinars-3/pilipinas%3A-aspire%2C-rise%2C-sustain.
The Institute of Corporate Directors, is a non-stock, not-for-profit organization dedicated to the professionalization of Philippine corporate directorship by raising the level of corporate governance policy and practice to world-class standards.
The Institute for Climate and Sustainable Cities is an international climate and energy policy think tank group based in Quezon City promoting climate resilience and low carbon development.
The Climate Reality Project Philippines is the country chapter of The Climate Reality Project, an organization that aims to catalyze a global solution to the climate crisis by making urgent action a necessity across every sector of society.
AC Dimatatac, ICSC: firstname.lastname@example.org, +63 998 546 9788, +63 917 149 5649
Jash Estrada, ICD: email@example.com