Fossil fuels accounted for 68% of the primary energy mix in 2017, with the power and transport sectors taking largest shares. The Philippines has seen some renewable energy developments, but this is outweighed by coal and gas plans. Renewables can increase energy security by reducing import dependence and decarbonise the power and transport sectors.
The National Renewable Energy Program (NREP) aims to triple renewable energy capacity level from 4.8 GW in 2010 to 15.3 GW by 20308. The NREP was updated with a target for 20 GW of renewables by 2040, whereas the new draft NREP (2020 to 2040) scales up ambition for the installed renewables capacity to reach 30 GW by 2040.
The Philippines is undergoing a number of electricity market reforms allowing for a competitive power market favouring renewable energy, including the Green Energy Option, renewable auctions, the Renewable Portfolio Standard, and a carve out clause for the Philippines main utility to curtail coal generation in favour of cheaper renewable energy.
The Philippines is highly dependent on coal, and the announcement of the coal moratorium in October 2020 indicates a political shift. However, the moratorium excludes committed power projects, existing projects with firm expansion plans, and other criteria such as projects with land or lease agreements or project approvals. The moratorium is likely to generate policy spill-over effects leading to the acceleration of renewables. It needs to be complemented with a plan to phase out existing capacity by 2040.
The Department of Energy (DOE) has approved four LNG regasification terminal projects for 2022 to 2025 worth PHP 64,632 million, with more investment expected in future. The Energy Committees of Congress are deliberating bills to support the development of the gas industry (The Midstream Natural Gas Industry Development Act and the Downstream Natural Gas Industry Development Act).
The recent expansion plans for LNG will continue import dependence, and lock in fossil fuels in the energy mix or risk expensive stranded assets. The LNG industry faces many issues including lack of transmissions and distribution infrastructure, rapid decrease of renewable energy prices, regulation restrictions, and power market structural changes. Scaling up cost effective renewable energy would remove the need for gas in the Philippines.
The Philippines lacks emission reduction targets and policies for the transport sector, which is dominated by fossil fuels. There are no policies to electrify this sector, nor plans to phase out heavy duty vehicles. This is a missed opportunity for decarbonisation, electrification, flexible grid management, and energy security (if powered by renewables). The Asian Development Bank plans USD 15 billion to support the transport sector between 2019 to 2023, including mass public transport systems, pedestrian walkways, and transport stations. The funding is aim to support climate mitigation and adaptation and presents an opportunity to transform the sector.