“Renewable energy is the way to go,” President Ferdinand “Bongbong” Marcos Jr. said in his State of the Nation Address in July. A few beats later, he called for “more gas explorations” in different parts of the country, signaling continued dependence on fossil fuels.
In his first year in office, the public saw how the Marcos Jr. administration advocated for “clean” energy, yet also called for the exploration of natural gas — a fossil fuel. In the latest draft Philippine Energy Plan (PEP), this contradictory rhetoric is made official as it provided no sunset provisions on the operation of fossil fuel-fired power plants, and even opened the possibility of further expansion of the liquefied natural gas (LNG) industry.
“The PEP is a reflection of the President trying to be popular in a period of crisis, but still accommodating of big business interests,” Philippine Movement for Climate Justice National Coordinator Ian Rivera told the Philippine Center for Investigative Journalism (PCIJ). “He keeps on contradicting himself.”
In September, the Department of Energy (DOE) presented to stakeholders its draft PEP for 2023 to 2050. The plan serves as a blueprint for the country’s energy sector, as it provides guidance to private investors as to which energy technologies will be prioritized by the government in the next two decades.
For environmentalists and experts, the new PEP could lead to instability in prices and supply as it veers away from indigenous and sustainable sources.
“The PEP allows everyone — stakeholders, policymakers, private sector — to prepare, and follow that plan… The only problem is the plan we have now will lead us to a very unstable future of energy supply,” Rivera added.
The draft PEP, as shown in a 2023 Climate Analytics report, presented two energy scenarios: a reference scenario and a clean energy scenario. The reference scenario assumes current strategies and technologies are used for energy planning, while the clean energy scenario assumes new technologies will be included in the mix to allow the country to reach its climate goals.
In both scenarios, renewable energy sources are expected to take up at least 35% of power supply by 2030, and 50% by 2040. This is an improvement from the target of the previous administration of President Rodrigo Duterte, which aimed for just 35% by 2030.
Still, it shows a future that finds the Philippines relying on natural gas and coal-fired power plants for the rest of its power needs. By 2050, the Philippines will still source at least 20% of its power supply both from coal-fired and natural gas power plants.
At least 4.8 gigawatts (GW) of the country’s energy needs are also expected to come from nuclear power plants under the clean energy scenario.
“The PEP undermines the development happening in the renewable energy sector, CEED Executive Director Gerry Arances said in an interview with the PCIJ. “Gas is carving out the space na dapat sa (that should be for) RE. It’s the new detour.”
The plan ignores the overwhelming call of both environmentalists and economists for the Philippines to rely on indigenous sources, such as renewable energy, for a secure energy supply, and as part of efforts to combat climate change.
The Paris-based International Energy Agency (IEA) had said coal and oil power plants must be phased out by 2040, to ensure global temperatures do not rise above 1.5 degrees Celsius.
Natural gas industry expanding in PH
The US-based thinktank Institute for Energy Economics and Financial Analysis (IEFFA) had said the Philippines could see itself locked into more expensive electricity prices if it opened itself up to more LNG power plant investments.
LNG, which has been touted by the government as the “transition fuel” needed for the country’s shift to cleaner sources of power, has been selling at historically high prices since the Russian war on Ukraine began. This geopolitical climate has led to the volatile pricing of LNG.
Despite these challenges, two of the three top power generators in the Philippines continue to expand their LNG businesses.
San Miguel Global Power Holdings Corp., the country’s biggest power generator and owner of the majority of the country’s coal-fired power plants, plans to develop more than 10,000 megawatts (MW) of natural gas-fired power plants. This would make the company one of the largest developers of gas-fired power plants in Southeast Asia, according to IEFFA.
The Lopez-owned First Gen Corp, a long-time developer of natural gas-fired power plants, also has plans to develop 2,000 MW of natural gas-fired power plants until 2030, on top of its existing portfolio of 2,017 MW. The company plans to open the country’s second LNG terminal in Batangas City before the year ends.
Coinciding with these developments is the passage of natural gas-related bills in the Senate and the House of Representatives. In August, the House of Representatives overwhelmingly voted for the approval of House Bill 8456 or the Philippine Downstream Natural Gas Industry Development Act.
The measure, shepherded by House Speaker Martin Romualdez, seeks to convert coal-fired power plants into natural-gas-fired power plants. It also mandates the Department of Energy (DOE) to lead the development of new natural gas-fired power plants to entice LNG investors.
Distribution utilities will also be mandated to acquire a percentage of their supply from natural gas power plants, whatever the cost.
In the Senate, a similar bill is pending at the committee level, sponsored by the Committee on Energy chairman, Sen. Raffy Tulfo.
Such policies are contradictory to what was once advocated by the Marcos administration, said Institute for Climate and Sustainable Cities energy transition advisor Albert Dalusung III, a former energy planner.
In his first press conference as Energy secretary, Raphael “Popo” Lotilla said he would focus on the use of “indigenous energy sources”. The country’s main source of natural gas, the Malampaya gas field off Palawan, will soon be depleted. The establishment of new natural gas-fired power plants will mean the use of LNG, an imported fossil fuel.
“For me, the question to ask is: How can you be so gungho on LNG when you know its historical price performance? You don’t know when the next war will escalate. You are just prolonging the life of fossil fuel-fired power plants,” Dalusung told PCIJ.
Nuclear development
The Philippines signed the 123 Agreement with the US government in November, providing the legal framework for the development of nuclear energy in the Philippines with American investors.
The Marcos Jr. administration has been advocating for nuclear energy alongside its push for RE. In May, the President expressed enthusiasm for a “micro modular reactor energy system,” a type of nuclear energy that has not been made for commercial use.
Since 2012, the US government has funded research and development of the technology. According to a Reuters report, it has granted $600 million to nuclear energy firms to commercialize the technology.
For Arances, the use of such technology will place the country at risk.
“Even a country like Japan, which has operated nuclear power plants for decades, can still suffer from a nuclear accident. What more the Philippines, where power companies can’t even operate coal-fired power plants without them breaking down? Nuclear energy adds a risk our country does not have to take,” Arances said in a statement.
‘Not ambitious’ RE targets?
Both the ICSC and CEED have projected that the country could source more than a third of its power requirements from renewable energy supply by 2030, the target of the draft PEP.
“Based on our study with Climate Analytics, the Philippines could already adopt 80% of its energy supply from RE sources by 2030,” Arances said. “If they (the DOE) say the grid could not accommodate intermittency of RE sources, then why not focus on the development of the grid?”
In a research paper published in October, Climate Analytics said the Philippines could begin the phaseout of fossil fuel-fired power plants between 2030 to 2040 based on the age of these facilities.
At least 1,211 GW of renewable energy may also be developed by 2050, thanks to onshore and offshore wind sources and solar rooftop and photovoltaic (PV) sources. The assessment was made through a technical simulation of eligible land, and offshore areas in the Philippines that may be used for RE development.
While the potential for RE is there, modernization and further development of the electricity transmission grid, which connects power plants to distribution utilities, is needed for the projection to be realized, the research paper said.
Climate advocates said the lack of clear plans on grid modernization in the draft PEP provides the DOE a cover to rely on natural gas-fired power plants.
“Where is the grid modernization in the draft PEP? They are not prioritizing that,” Arances said. “They are not even considering it.”
The DOE said the final PEP would be released in December.