World leaders gathered in Lima last month for the 20th Conference of Parties (COP 20), designed to set the stage for strong climate change agreements in Paris this 2015.
The 2015 United Nations Climate Conference is slated from 30 November to 11 December this year. Among the expected outcomes are Intended Nationally Determined Contributions (INDCs), which are country-wide climate change mitigation and adaptation commitments.
The World Wide Fund for Nature (WWF-Philippines) believes that the Department of Energy (DOE) has a prime opportunity to generate an INDC by increasing the share of RE in the country’s power mix. About 70% of Philippine electricity is currently generated from fossil-fuels, with 90% of coal and oil resources imported at varying prices from other nations. The DOE recently supported an increase in the installation targets for solar energy under the Feed-in Tariff regime.
WWF believes that with the increase in solar, an additional increase in wind energy installation targets is a firm, next step that the DOE can commit to. Philippine Climate Change Commission Vice-Chair Lucille Sering last month stated that the country is committed to submit an INDC by June – the first pledge by a developing country.
Clean and renewable sources of energy such as geothermal, hydro, wind and solar energy are among the Philippines’ few competitive advantages, especially since the country has no significant deposits of fossil-fuels. Its continued reliance on imported fuel has made Philippine electricity rates among the highest in Asia.
Increasing RE Support Will Lower Philippine Electricity Prices
In 2001, the Electric Power Industry Reform Act (EPIRA) was implemented to limit the cost of electricity. At that time, the Philippine power generation mix was composed of 37.29% RE and 62.71% fossil-fuels. Unfortunately, RE share dropped to 28.37% a decade later.
The price of imported fuels fluctuates wildly. “Most of our power rate jumps were caused by generation cost hikes. With fossil-fuel prices continually rising due to dwindling supplies and soaring demand, the cost of our electricity shall rise even further. The best solution is to use existing RE resources to shield us from the cost volatility of fossil fuels,” says WWF-Philippines Climate Change Head Atty. Gia Ibay.
In 2013, WWF’s global Seize Your Power campaign called on financial institutions, private investors, pension funds and governments to avoid fossil-fuel investments and instead support clean and affordable RE sources.
RE can provide a stable source of electricity at a constant price for years, especially with the implementation of the government’s Feed-in Tariff (FiT) system. Under this system, RE projects are guaranteed a rate for the electricity they produce per kWh that will be held constant for the next 20 years, with the Energy Regulatory Commission (ERC) doing periodic reviews to adjust rates for foreign exchange and inflation.
This means that the price of RE-generated electricity will continuously become cheaper over time. Many RE plants can also be directly embedded onto certain key areas to further reduce the cost of electricity, eliminating the need for transmission and distribution lines to deliver electricity from power plants to households.
Unlike fossil-fuels where VAT is applied to add to existing cost, RE has been given a 0% VAT rate. In contrast, the International Energy Agency forecasts a steady increase in the cost of coal and other fossil-fuels over the next decade.
In short, increasing RE share will make electricity more affordable for Filipinos in the long run. WWF-Philippines aims to continue its Seize Your Power campaign by convincing both public and private sectors that RE is the primary solution to the country’s power needs. Seize the Wind, which encourages stronger support for Philippine wind farms, is its first phase.
“What better way to demonstrate leadership before the Paris talks than to show that the Philippines embraces clean and renewable sources of energy?” asks Ibay. “It’s time for us to divest from fossil-fuels and prepare for a windfall of clean and affordable power for all Filipinos!”