Available online at ScienceDirect. Energy Procedia 52 (2014 ) Renewable energy and energy security in the Philippines

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1 Available nline at ScienceDirect Energy Prcedia 52 (2014 ) Renewable energy and energy security in the Philippines Sahara Piang Brahim 1 1 Energy Studies Institute, Natinal University f Singapre, (Singapre) ABSTRACT This paper fcused n the imprtance f renewable energy t Philippine energy security and sustainability agenda. It examined the status f renewable energy in the Philippines and discussed the pprtunities and challenges in the further develpment and deplyment f renewable energy. This research relied n secndary data frm the Philippine Department f Energy, ASEAN Centre fr Energy, Wrld Bank, and APEC Secretariat. Relevant infrmative jurnalistic reprts were als cnsulted. Amng the majr findings are: (1) renewable energy will accunt fr an increasingly significant share f the Philippine energy mix fr pwer generatin in the freseeable future and (2) fssil fuels, il in particular, hwever, will remain the dminant energy surce. Whether r nt the Philippine gvernment will achieve its renewable energy targets largely depends n hw efficient and fast it will be in addressing the related issues. This study builds n the existing knwledge base n Philippine renewable energy. Keywrds: energy plicy, energy security, renewable energy, the Philippines INTRODUCTION Althugh renewable energy (RE) cntributes steadily t glbal final energy cnsumptin, fssil fuels remain the primary energy surce. In 2010, fr instance, while RE s share f glbal final energy cnsumptin was 16.7%, fssil fuels share was 80.6% [1]. Hwever, il price vlatility, prjected depletin f fssil energy resurces, and prblems f climate change, envirnmental degradatin, and pllutin resulting frm cntinued fssil fuel use have driven bth develped and develping cuntries t seek and develp viable alternative energy surces. Renewables, namely, wind, slar, gethermal, and hydr shw ptential in this regard. In recent years, RE has becme an imprtant part f the energy agenda as cuntries cntinue t diversify their energy mix t achieve the twin bjectives f energy security and sustainability. While RE is prmising, much needs t be dne t address the challenges and gaps that will pave the way fr its further develpment and deplyment. The Philippines is a case in pint. Currently, the share f RE in the cuntry s primary energy supply mix is 40.7% [2]. The Philippine gvernment has set medium- and lngterm RE targets and implemented plicies that wuld help prmte RE develpment. These effrts are driven nt nly by the cuntry s aim f achieving energy security and/r energy self-sufficiency but als by its aims f becming the glbal leader in gethermal energy, the biggest user f wind pwer in Sutheast Asia, and the slar manufacturing hub in Sutheast Asia. With targets and plicies in place, the share f RE is prjected t increase in the cming years. THE PHILIPPINES: AN OVERVIEW An archipelag f 7,107 islands, the Philippines is ne f the 11 cuntries in the Sutheast Asian regin. It has a ttal land area f 298,170 square kilmetres and a ttal ppulatin f 94,852,030 [3]. Over the past decade, the Philippines has been experiencing an average grwth f 5%. It is ntewrthy that the Philippines had a grwth rate f 7.6% in 2010, which was the highest the cuntry achieved in 30 years [4]. Table 1: Key indicatrs, 2011 [5] Ttal land area (sq km) 298,170 Ttal ppulatin (millin) GDP (current US$, billin) GDP grwth (annual %) 3.7 GPD per capita (current US$) 2,370 Philippine GDP grwth rate, hwever, declined frm 7.6% in 2010 t 3.7% in 2011 (Figure 1). Althugh the 3.9% drp is significant, ther key indicatrs (Figure 2) shw sustained grwth. Figure 1: GDP grwth (annual %), [6] Crrespnding Authr: sahara@nus.edu.sg Published by Elsevier Ltd. This is an pen access article under the CC BY-NC-ND license ( Selectin and peer-review under respnsibility f the Organizing Cmmittee f 2013 AEDCEE di: /j.egypr

2 Sahara Piang Brahim / Energy Prcedia 52 ( 2014 ) specifically Saudi Arabia, UAE, Qatar, Oman, and Iraq (Table 2) [12]. Althugh crude il imprts frm the Middle East declined frm 84.4% in 2009 t 81% in 2010 (Figure 4) [13], the implicatins fr Philippine energy security remain significant. Figure 2: GDP (current US$), GDP per capita (current US$) [7] In a recent grwth frecast by the Wrld Bank, the Philippines is expected t grw by 6.2% in 2013, making the cuntry ne f the fastest grwing ecnmies in the Asia-Pacific regin [8]. With sustained ecnmic grwth, imprved living standards, increasing purchasing pwer, and an annual ppulatin grwth rate f 2% [9], energy demand in the cuntry is expected t increase in the freseeable future. As such, the Philippines will cntinuusly be faced with the challenge f energy security. PHILIPPINE ENERGY SCENARIO The cuntry s ttal primary energy supply slightly increased frm millin tnnes f il equivalent (mte) in 2010 t millin tnnes f il equivalent in The share f RE was 39.8% and 40.7% in 2010 and 2011 respectively. The cuntry achieved a 1.5% increase in energy self-sufficiency frm 2010 t In terms f primary energy supply mix, il was the dminant energy surce (Figure 3) [10]. It is ntewrthy that the Philippines is a net energy imprter, particularly f fssil fuels. Mst f its crude il supplies, fr instance, are imprted frm the Middle East, 40% 35% 30% 25% 20% 15% 10% 5% 0% Figure 3: Primary Energy Supply Mix, [11] 2010 As a net energy imprter, the Philippines is inevitably vulnerable t il supply disruptins, il price fluctuatins, and geplitical dynamics shaping the energy exprting cuntries. The cntinued use f fssil fuels in the cuntry nt nly highlights the issue f energy security but als the equally imprtant issue f sustainability. Due t glbal cncerns abut climate change, envirnmental degradatin, and pllutin, there is an imperative fr the sustainable use f energy. Thus, energy insecurity and increasing CO 2 emissins are amng the majr issues affecting the cuntry. Cnfrnted with these challenges, the Philippines seek t harness and utilize viable alternative energy surces. Table 2: Crude Oil Imprtatins frm Middle East (vlume in thusand barrels) [14] Cuntry Saudi Arabia 38,235 35,610 41,881 37,165 43,841 45,074 46,872 46,603 22,578 30,359 Kuwait NA NA NA NA NA NA NA NA NA NA Iran 19,432 28,859 21,918 25,144 20,004 18,700 1,455 1,915 NA 819 Iraq NA NA NA 396 NA NA NA NA 99 NA Abu Dhabi NA NA NA NA NA NA NA NA NA NA Qatar 6,637 7,466 4,181 5,563 5,536 2,568 4,374 NA 8,372 4,273 Dubai NA NA NA NA NA NA NA NA NA NA Oman 6,328 10,472 NA NA NA NA NA NA 1, United Arab Emirates 15,416 21,853 13, ,914 7,924 14,655 13,054 10,144 18,088 Yemen 2, ,407 NA NA NA NA NA NA NA Ttal Middle East 88, ,008 84,384 68,793 72,295 74,266 67,356 61,572 42,243 54,232 RENEWABLE ENERGY AND ENERGY SECURITY IN THE PHILIPPINES In its quest fr energy security and sustainability, the Philippine gvernment sees tremendus ptential in RE. Dependency n imprted fssil fuels has becme an impetus fr the cuntry t implement plicies that will help facilitate the further develpment f RE. Amng the laws enacted include the Bifuels Act f 2006 r Republic Act 9367 and the Renewable Energy Act f 2008 r Republic Act 9513 [16]. Cnsidered milestnes, these laws seek t

3 482 Sahara Piang Brahim / Energy Prcedia 52 ( 2014 ) strengthen the RE sectr by addressing barriers such as high upfrnt and technlgy csts, nn-cmpetitiveness, nn-viable markets, inaccessible financial packages, and scial acceptability. The Bifuels Act f 2006, fr instance, prvides fiscal incentives and mandates the use f bifuel-blended gasline and diesel fuels while the Renewable Energy Act f 2008 prvides fiscal and nnfiscal incentives t private sectr investrs and equipment manufacturers and suppliers. Fiscal incentives include, amng thers, incme tax hliday (ITH) and lw incme tax rate, reduced gvernment Percentage f Overall Ttal Vlume f Crude Oil Imprts t the Philippines Year Figure 4: Crude Oil Imprts frm Middle East [15] share, duty-free imprtatin f equipment and value-added tax (VAT)-zer rating, tax credit n dmestic capital equipment, special realty tax rate n equipment and machinery, cash incentive fr missinary electrificatin, exemptin frm universal charge, payment f transmissin Table 3: RE-based On-grid Capacity Installatin Targets [20] charges, and tax exemptin n carbn credits. Nn-fiscal incentives include renewable prtfli standard (RPS) and feed-in-tariff (FIT) [17]. The deplyment and develpment f RE are crucial aspects f the gvernment s strategy t make energy available, affrdable, and accessible t the citizens. In an effrt t reduce its heavy dependency n imprted fuels, the Philippine gvernment has increased the use f renewable energy fr pwer generatin and rural electrificatin. The Natinal Renewable Energy Prgram (NREP) was launched n 14 June 2011 t serve as the framewrk fr the accelerated develpment and advancement f RE resurces, and the develpment f a strategic prgram t increase its utilizatin. [18] It prvides the verall strategic plicy directins in the cuntry s RE industry, sets RE targets, and aims t address issues related t transmissin, grid integratin fr intermittent RE resurces, and scial and ecnmic impacts [19]. Table 3 belw utlines the RE-based n-grid capacity installatin targets as stated in the NREP. On a per technlgy basis, the NREP seeks t increase gethermal capacity by 75%, increase hydrpwer capacity by 160%, deliver additinal 277 MW bimass pwer capacities, attain wind pwer grid parity with the cmmissining f 2,345 MW additinal capacities, mainstream an additinal 284 MW slar pwer capacities and pursue the achievement f the 1,528 MW aspiratinal target, and develp the 1st cean energy facility fr the cuntry. [21] Sectr Installed Capacity, MW as f 2010 Target Capacity Additin By Ttal Capacity Additin, MW Ttal Installed Capacity by Gethermal 1, , ,495 3,467 Hydr 3, ,161 1, , ,729.1 Bimass , Wind 33 1, ,345 2,378 Slar Ocean Ttal 5,369 2,157 5, , , ,236.3 Currently, the NREP mainly deals with the additin f RE-based capacity fr pwer generatin. The prgram fr nn-pwer applicatins will be included at a later stage [22]. The NREP, mrever, utlines a RE radmap as seen in Figure 5. The launching f the Philippine Energy Plan (PEP) by the Department f Energy (DOE) further highlights the gvernment s effrts twards achieving bth energy security and ecnmic develpment in a sustainable manner. The Plan s plicy thrusts are as fllws: T achieve energy security by increasing the use f RE and the explratin f petrleum and cal; T increase energy access; T prmte lw-carbn future by priritizing energy efficiency and the use f clean, alternative fuels and technlgies; T climate prf the energy sectr ; T develp reginal energy plans ; T encurage investments in the energy sectr; and

4 Sahara Piang Brahim / Energy Prcedia 52 ( 2014 ) T identify and implement energy sectr refrms. [24] All f these energy-related plicy agendas are a result f the demands f a grwing ecnmy and an increasing ppulatin with imprved living standards. As a fast grwing ecnmy, the Philippines has becme highly energy-intensive. Figure 5 : Renewable Energy Radmap [23] Energy cnsumptin has seen and will see a cntinued grwth due t increasing demands in all the industrial, cmmercial, and residential sectrs. As seen in Figure 6 belw, the cuntry s energy requirements have been met and will be met mstly by fssil fuels, particularly il and cal, in the freseeable future. address the cuntry s energy and sustainability challenges. The specific quantifiable targets set by the PEP include, amng thers, the fllwing: Fig 7: CO 2 emissins frm fssil fuel cmbustin, [26] Figure 6: Prjected primary energy demand [25] While fssil fuels meet mst f the cuntry s energy requirements, it is nt withut challenges. The prjected increased fssil fuel use will inevitably result in increased CO 2 emissins. Figure 7 belw shws the prjected CO 2 emissins frm fssil fuel cmbustin. In the cntext f climate change and increasing CO 2 emissins, sustainability has becme a pririty fr the Philippine gvernment. RE develpment is cnsidered a majr pprtunity in terms f prviding sustainable, diverse, and reliable energy surces. As previusly discussed, the DOE has launched the PEP t Triple RE capacity by 2030; 90% husehld electrificatin by 2017 and 100% siti energizatin by 2015; 30% f all public utility vehicles will run n alternative fuels; Implement higher bifuels blend; and 10% energy savings n the ttal energy demand. [27] But while laws have been enacted, plicies implemented, and targets set, there remain a number f challenges t RE develpment in the Philippines.

5 484 Sahara Piang Brahim / Energy Prcedia 52 ( 2014 ) CHALLENGES TO RENEWABLE ENERGY DEVELOPMENT IN THE PHILIPPINES RE develpment is faced with a number f regulatry barriers. Fr instance, while the Renewable Energy Act f 2008 prvides fr nn-fiscal incentives like FIT, it was nly in July 2012, almst fur years after the enactment f the Renewable Energy Act, that the FIT rates were issued [28]. The rates are as fllws: P9.68 a kilwatt-hur fr slar; P8.53 a kwh fr wind; P6.63 a kwh fr bimass; and P5.90 a kwh fr hydrpwer prjects. N rate fr Ocean Thermal Energy Cnversin (OTEC) resurce was issued, pending further study and data gathering [29]. Althugh the issuance f FIT rates by the Energy Regulatry Cmmissin (ERC) [30] was and is regarded as a very significant mve twards the prmtin and develpment f RE, it was nt withut challenges. The apprved rates were lwer than what the Natinal Renewable Energy Bard (NREB) [31] prpsed: P17.95 per kwh fr slar; P10.37 per kwh fr wind; P7 per kwh fr bimass; and P6.15 per kwh fr run-f-river hydr [32]. As the FIT will be the key determinant f a RE prject s ecnmic viability, it remains t be seen hw it will impact the RE industry. The final rules and regulatins cncerning the FIT system are yet t be implemented. Other mechanisms, as prvided in the Renewable Energy Act, namely RPS, net metering, RE market, green energy ptins, intercnnectin with the grid, pririty dispatch, and RE trust fund are needed t be put in place t further attract investrs. Putting all these mechanisms in place is nt an easy undertaking. Accrding t the directr f the Philippine DOE s Renewable Energy Management Bureau Mari Marasigan, these mechanisms can nly be put in place in the next tw years [33]. Anther issue cncerning the RE industry is the need fr develping lcal technlgies. Accrding t Cmmissiner and Vice Chairpersn f Philippine Climate Change Cmmissin (CCC) Mary Ann Lucille Sering, the csts f RE will remain high if the cuntry cntinues t depend n imprted technlgy. Mrever, she argued that it is imperative fr the DOE t wrk clsely with the CCC as the enactment f the Renewable Energy Act was dne withut factring in climate change. Fr instance, a significant reductin f rainfall particularly in Mindana in specific mnths is expected by This prjectin will surely have an impact n the hydrpwer supply in that regin and as such, it is imprtant t cnduct vulnerability assessment while pushing fr RE use at the same time [34]. Other issues include lack f public awareness f the benefits f the RE prjects (scienvirnmental cncerns) and absence f cmmercially viable market fr RE systems [35]. CONCLUSION The Philippines sustained ecnmic grwth, cupled with grwing ppulatin with imprved living standards, is the main driver fr the increase in dmestic energy demand. As the demand fr energy is prjected t increase in the cming years, the challenges f energy security and sustainability becme mre pressing nt nly because the cuntry relies heavily n imprted energy (il in particular) but als because it has limited energy resurces. Hwever, in addressing energy security and sustainability challenges, harnessing and utilizing renewables can be a viable alternative given that the Philippines has significant, mstly untapped RE surces. The tremendus ptential f RE in terms f minimizing the cuntry s heavy dependency n imprted fssil fuels has driven the gvernment t push fr the further develpment f its RE sectr. The gvernment has enacted laws namely the Bifuels Act and Renewable Energy Act, which will attract and encurage investrs t invest in the RE sectr, and which will in turn pave the way fr the expansin f the sectr. Thrugh these laws, the gvernment is increasing the use f RE fr pwer generatin and rural electrificatin. In cnnectin with the enactment f the Renewable Energy Act f 2008, the NREP was launched n 14 June 2011 as the verarching framewrk fr the further develpment and increased deplyment f RE surces. It is ntewrthy, hwever, that the cuntry s energy requirements in the freseeable future will be met mstly by fssil fuels, il and cal in particular. While plicies are imprtant in accelerating the develpment and advancement f RE and have been implemented by gvernment fficials, there have been gaps between the implementatin f plicies and putting in place the related mechanisms. Fr instance, the FIT rates prvided by the Renewable Energy Act were nly issued fur years after the enactment f the said law. The FIT is cnsidered t be a guarantee t ptential investrs f a stable pricing mechanism and a key determinant f the ecnmic viability f RE prjects. Hwever, the FIT rates were significantly lwer than expected and were received by investrs with less enthusiasm. The final implementing rules and regulatins f the FIT system as well as ther mechanisms, namely, RPS, net metering, RE market, green energy ptins, intercnnectin with the grid, pririty dispatch, and RE trust fund have yet t be put in place. There is als an imperative fr the Philippine gvernment t develp and tap int lcal technlgies. At current rates, RE is mre expensive than ther surces like cal and il. The high csts are related t the dependency n imprted RE technlgies. These csts will remain high vis-à-vis the cuntry s increasing reliance n imprted technlgy. Hwever, the RE industry expects the csts t g dwn in the cming years, fllwing the setting f FIT rates. There is als a need fr RE plicies t cmplement climate change plicies as climate change-related phenmena will have an impact n the RE resurces. The lack f public awareness f the sciecnmic and envirnmental benefits f the RE prjects is als an imprtant issue that needs t be addressed. What the Philippine gvernment can d is t enhance its infrmatin, educatin, and cmmunicatin campaign t encurage greater citizens participatin. The Philippines being a demcratic cuntry shuld engage her citizens in

6 Sahara Piang Brahim / Energy Prcedia 52 ( 2014 ) plitical decisins which impact and/r can impact the lives f the general public. In the final analysis, it remains t be seen whether r nt the gvernment can achieve its RE targets. These targets might seem ambitius cnsidering a wide range f issues that need t be addressed. Given that the Philippines is the wrld s secnd largest prducer f gethermal pwer, there is a relatively gd prspect f achieving its RE targets. But whether r nt these installatin targets can be realized by their designated dates largely depends n hw practive, fast, and mst imprtantly, efficient the gvernment will be in prperly addressing the related issues and in implementing the necessary mechanisms. REFERENCES [1] REN21. (2012). Renewables 2012 Glbal Status Reprt. Paris: REN21 Secretariat, p.21. [2]. Department f Energy. (2012). Philippine Energy Plan Retrieved 13 December 2012, frm [3] Wrld databank. Wrld Develpment Indicatrs (WDI) & Glbal Develpment Finance (GDF). Retrieved 13 December 2012, frm 4 [4] Wrld Bank. (2012). Philippines Overview. Retrieved 13 December 2012, frm w [5]Wrld Bank. (2012). Indicatrs. Retrieved 13 December 2012, frm [6] Ibid. [7] Ibid. [8] Rem, Michelle V. and Riza T. Olchndra. Wrld Bank raises 2012 PH grwth frecast anew. Retrieved 27 December 2012, frm ph-grwth-frecast-anew [9] Wrld Bank. (2012). Philippines Overview. Retrieved 13 December 2012, frm w [10] Department f Energy. (2012). Philippine Energy Plan Retrieved 13 December 2012, frm [11] Ibid. [12] Layug, Jse M. (2012, February). The Natinal Renewable Energy Prgram: The Rad Starts Here. Presented at the Eurpean Unin-Philippines Meeting n Energy, Manila. [13] Ibid. [14]Philippine Natinal Statistical Crdinatin Bard. (2011). Energy and Water Resurces. Retrieved 10 January 2013, frm [15] Ibid. [16] Cngress f the Philippines. (2006). Republic Act N Retrieved 11 January 2013, frm [17] Marasigan, Mari. (n.p.). Renewable Energy Develpment in the Philippines. Retrieved 11 January 2013, frm n%20- %20Renewable%20Energy%20Develpment%20in%20t he%20philippines.pdf; de Guzman, Ruby. (2012, February). Challenges and Incentives fr Renewable Energy Prject. Presented at the Philippine Landfill Gas Frum Wrkshp, Quezn City; Ellrin, BenCyrus. (2012). Green energy ffers hpe t Mindana. Retrieved 5 February 2013, frm [18] Layug, Jse M. (2012, February). The Natinal Renewable Energy Prgram: The Rad Starts Here. Presented at the Eurpean Unin-Philippines Meeting n Energy, Manila. [19] Ibid.; Department f Energy. (2011) Energy Sectr Accmplishment Reprt. Retrieved 19 August 2011, frm [20] Layug, Jse M. (2012, February). The Natinal Renewable Energy Prgram: The Rad Starts Here. Presented at the Eurpean Unin-Philippines Meeting n Energy, Manila. [21] Department f Energy. (n.p.). NREP bk. Retrieved 29 January 2013, frm [22] Ibid. [23] Ibid. [24] Department f Energy. (2012). DOE: Achieving Energy Sustainability. Retrieved 15 January 2013, frm [25] APEC Secretariat. (2006). Energy Demand and Supply Outlk 2006: Philippines. Singapre: APEC Secretariat, p.76. [26] ASEAN Centre fr Energy. (2011). The 3 rd ASEAN Energy Outlk. Jakarta: ASEAN Centre fr Energy, p. 66. [27] Department f Energy. (2012). DOE: Achieving Energy Sustainability. Retrieved 15 January 2013, frm [28] Rem, Amy. (2012). Difficult rad ahead fr renewable energy sectr. Retrieved 15 January 2013, frm [29] Rem, Amy. (2012). ERC apprves rates fr renewable energy. Retrieved 4 March 2013, frm [30] Energy Regulatry Cmmissin. (2012). Histry. Retrieved 4 March 2013, frm [31] Rem, Amy. (2009). Renewable energy bdy frmed. Retrieved 4 March 2013, frm /Renewable-energy-bdy-frmed [32] Rappler. (2012). Investrs rethink renewable energy prjects due t lw tariffs. Retrieved 15 January 2013,

7 486 Sahara Piang Brahim / Energy Prcedia 52 ( 2014 ) frm [33] Legaspi, Amita. (2012). Fur years after passage, Renewable Energy Law yet t be implemented in the Philippines. Retrieved 15 January 2013, frm y/business/fur-years-after-passage-renewable-energylaw-yet-t-be-implemented-in-phl [34] Ibid. [35] Department f Energy. (2005). Renewable Energy. Retrieved 18 March 2013, frm