Coal and the Philippines’ future
President Benigno Aquino III recently attended the inauguration of the 300-megawatt coal power plant of Therma South Inc. in Davao City, Mindanao. He said that the coal power plant, once it becomes operational, “can be tapped into anytime, rain or shine, with very minor fluctuations.” Aquino said that the plant, which was developed by a subsidiary of Aboitiz Power Corp., will fill in the energy gap created by the reported failure of hydroelectric plants to produce electricity especially during the dry season.
For those statements and for attending the Davao event, the President has been strongly criticized by environmental activists. Some have called him a “climate hypocrite” for being a champion of climate justice in Paris, France last December while not walking the talk in his own backyard.
The Therma South Plant, as well as a few other coal power plants, was approved long before the Paris meeting and certainly before we committed to reduce our business as usual emissions by 70 percent in 2030. Personally though, I wish the President tempered his remarks in Davao with a commitment that, moving forward, we will now have to take into account our Paris commitments in making energy decisions. The phrase “rain or shine” is also unfortunate and condescending; someone should advise the President that renewables like geothermal, solar, and wind are just as reliable as coal in supplying electricity.
While it makes sense for the government to provide an immediate solution to the problem of availability and affordability of energy supply in Mindanao and the country, it has to also go the extra mile and create solutions that will benefit the country in the long term. The decision-making process for providing energy must not be done in a vacuum and all aspects must be carefully considered and weighed so as to truly have a vision for energy security that complements the country’s aspirations of sustainable development.
The Ateneo School of Government has come up with a policy brief that looks at different and interrelated perspectives exploring the role of coal-fired power plants in the Philippines’ energy roadmap. In “Striking a balance: Coal-fired power plants in the Philippines’ Energy Future,” we look at the viability of CFPPs from economic, environmental, social and policy perspectives. It is our hope that our findings, using this approach, can expand and invigorate an already dynamic discourse on the use of coal in meeting the country’s energy demand.
The Department of Energy has said that we would need 13,167 megawatts of new power capacity by 2030. Of this, 11,400 will be open for private-sector investments. Out of this 11,400 MW, 8,400 MW will be open for private-sector investments particularly for baseload power plants. Here in the Philippines, our baseload power plants utilize natural gas, geothermal, coal and baseload hydro technologies. In Mindanao, baseload hydro constitutes 33 percent of the installed capacities, while CFPPs have a 31 percent share of the region’s baseload capacity. For the whole country, however, coal and geothermal are the major sources of baseload capacity. But between the two, coal comprises the chunk or the bulk of investment flows—as of July 2015, 23 new coal plants are set to be established by 2020.
This is one of the serious consequences of a pro-coal policy. We have sidelined indigenous renewable sources like geothermal energy. We have compromised our energy security. Coal is poised to capture the baseload needs and pouring more money to it could lock in the economy to a specific energy source.
Now, do we really want that? Superficially, coal appears to be the least costly technology but if we measure the costs of coal through the common global reference Levelised Cost of Electricity, this would be arguable. Moreover, according to the 2011 study “The Social Cost of Coal: Implications for the World Bank” by Samuel Grausz, if the external costs of coal or if its impact on health and the environment are to be measured, CFPPs will be “one of the most expensive forms of electricity generation.” I will write about these external costs in another column.
As a matter of urgency, the government should now to cap the role of CFPPs in our energy mix in consideration of the baseload requirement by 2030 and aggressively seek, develop and invest on alternative sources of energy. “Close alternatives to coal as a baseload solution should be actively explored and supported. This is particularly the case for natural gas, which to date, is the closest alternative the country has towards supplying the baseload. Ultimately, a serious dialogue now needs to take place to understand, anticipate, and leverage the implications of capping coal-fired power plants to the baseload and positioning other energy sources for mid-merit and peaking demand.” We point this out especially as coal is not viable beyond baseload power generation and will actually entail more costs and losses when it is used to meet mid-merit and peaking requirements.
Even as the government argues for the necessity of CFPPs to address immediate power capacity needs, it must also recognize the impact of CFPPs to the country’s environment and also carefully study their consequences on the health of Filipino citizens. At the same time, while the incumbent leadership also calls for investments on coal, it must also provide the private sector and the public a credible analysis of the economic, social, health and environmental benefits of corresponding alternatives such as renewable energy.
We cannot afford to have a one-track assessment of our options for achieving energy security. It will be dangerous; it will send a wrong signal to investors. It is only proper that the government conveys to us what its plans are for the long term and how and when it intends to transition to an energy track that will lead us to sustainable development.
Policy changes are necessary and the government must have the political will to do them. If the current policy is the problem, then the sensible thing to do is to reform it and not just impose piecemeal solutions.
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