More positive energy for economic growth

Dindo Manhit, President of the Stratbase ADR Institute for Strategic and International Studies

The Philippine Statistics Authority has released data indicating 6.5-percent growth in the gross domestic product in the second quarter of 2017, up from 6.4 percent in the first quarter. One of the factors essential to sustaining this growth is the capacity of the Duterte administration to roll out its “build, build, build” program.

As our country sets out for development, harnessing affordable energy and increasing energy efficiency become our growing concerns. While it is settled that there is a strong correlation between energy and the economy, the way to move forward in terms of policy strategies remains to be seen. There is a need to develop a power program to encourage the acceleration and expansion of industries.

At a recent forum organized by Stratbase ADR Institute, the Department of Energy, through Undersecretary Felix William Fuentebella, presented the power capacity and gross generation for the first half of 2017. A look into the power sector’s installed capacity and generation shows that the installed generating capacity has reached 21,621 megawatts compared to 6,869 MW in 1990.

Based on the DOE data, capacity-wise coal has the largest share at 35 percent, followed by renewable energy at 32.5 percent. Much of the renewable-energy-based installed capacities come from hydropower (16.8 percent) and geothermal (8.8 percent). Oil-based and natural gas had shares of 16.6 percent and 15.9 percent, respectively. Further, gross power generation reached 44,649 gigawatt hours. Fossil-based generation (i.e., oil, gas and coal) is approximately 72 percent, while the remaining 28 percent is renewable-energy-based (predominantly geothermal and hydropower).

By 2040, the primary energy mix, although subject to change, will most likely consist of 41.6 percent coal, 32.2 percent oil, 9.0 percent biomass, 7.1 percent geothermal, 4.1 percent natural gas, 3.1 percent other technology, 1.9 percent hydro, 1.1 percent biofuels and 0.0 percent solar/wind. The entry of other technology serves as the window for other energy sources in consonance with the DOE policy of being technology-neutral, with the purpose of meeting the 70-percent base load, 20-percent mid-merit, and 10-percent peaking requirements for power capacity.

In order to fully support the operationalization of all the development infrastructure under Dutertenomics, the Philippines will need an additional power capacity of 43,765 MW by 2040.

Despite the growing popularity of renewable energy sources, fossil-based sources will remain the main engine of economic growth, and petroleum products will continue to dominate the country’s final energy demand, which is projected to triple between 2016 and 2040.

The research presented by Raul V. Fabella and Sarah Daway revealed that the Philippines’ national carbon footprint will have no effect on climate change, even when multiplied many times. Given that conventional energy will still play a vital role in the primary energy mix, the environmentalists’ fears of increased carbon emissions from the growing manufacturing sector are exaggerated. These fears should not distract from the government’s thrust to encourage more investments in sectors that will create more jobs for less-skilled workers, doing more to reduce poverty than comparable investments in other sectors.

With a large demand for power, the creation of investment opportunities for energy projects by fast-tracking the permit process, cutting red tape, encouraging policy reforms, and promoting transparency is of paramount importance as it yields to a better investment climate.

Hence, there is a need for the full-scale implementation of Executive Order No. 30 as it streamlines procedures for the processing of energy projects of national significance. To further strengthen its desired goal, EO 30 should also be harmonized and complemented by Sen. Sherwin Gatchalian’s Energy Virtual One Stop Shop Act of 2017.

As the future of the energy industry remains bright, we must continue to energize the economy to support the Philippines’ growth and development.

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