Security of its electricity supply is a key issue for the Philippines, which experienced a number of power outages earlier this year - the coal-fired installed capacity supplying around 48% of its electricity has not been able to cope with peak demand. The system has been under stress due to the effects of El Niño, which causes warmer weather, and increased electricity demand for air conditioning, and a longer dry season, which lowers hydropower supply. Two earthquakes that hit Luzon and Visayas in April 2019 have also caused power outages. Along with the climate imperative to decarbonise, the vulnerability of the system to environmental hazards highlights the need to rethink its current structure.
Long-term planning to increase renewable can help address these challenges by decentralising and diversifying the Philippine power mix. These measures can enhance the system’s reliability, and reduce emissions, while supporting the achievement of the country’s 100% electrification by 2022 target. If the Philippines couples low carbon development with energy efficiency goals, it can ensure a more robust power supply for its population.
In 2015, the Philippines had around 12 GW of coal-fired power capacity under construction or in the pipeline. Since then it has built around 2.9 GW, with another 12.6 GW on the way, triggering concerns over the potential creation of stranded coal assets worth billions. Announcements expressing continued support for coal-based electricity generation and increased capacity add to the uncertainty around the Duterte’s administration’s ability to take substantial action required to meet the Philippines’ Paris climate commitment.
While the Philippine Paris Agreement target (NDC) is a reduction compared to a business as usual (BAU) pathway, there is no definition of that BAU pathway, rendering the NDC emissions level uncertain. Nor does it quantify future land use emissions, adding to the lack of transparency. In our projections, the CAT assumes that industrial, energy and agricultural emissions are also to be reduced by 70% below a BAU which would result in emissions reverting to 1990 levels by 2030 (excluding LULUCF).
We rate the Philippines’ conditional target of 70% below business as usual (BAU) levels by 2030 “2°C compatible”. The Philippines’ emissions pathway towards 2030, as proposed in its NDC, could be rated “1.5°C Paris Agreement compatible,” if it were unconditional. However, given the conditional nature of the NDC target, we have downgraded it by one category to “2°C compatible.” For full details see fair share section.
The Philippines’ Climate Change Commission is in the process of revising its NDC, and has proposed a tentative target that makes progress in defining mitigation strategies and targets for all sectors. However, it has revised the conditional target downwards, from 70% to 67% below BAU by 2030, a weakening of its level of ambition if based on the same BAU. The draft also presents sectoral reductions but not sector BAU projections, again making it difficult to quantify the emissions reductions contributions and evaluate the ambition level.
According to our analysis, the Philippines will need to implement additional policies to reach its conditional NDC. Full implementation of the planned “National Renewable Energy Program” and “The Energy Efficiency and Conservation Roadmap” would lower emissions by 11% compared to current policy projections. However, the NDC target is unlikely to be met if all the announced coal-fired power plant capacity (more than 10 GW) were to be built. For full details see current policy projections section.
In 2015, the Philippines Department of Energy (DOE) announced that more than 10 GW of coal-fired power plant capacity would be constructed by 2025, and released its Coal Roadmap 2017–2040. Despite this, when the Philippines joined the Paris Agreement in 2017, the Secretary of Energy, Alfonso Cusi, stated that ratification would have no effect on these plans.
If all the power plants in the pipeline were to be constructed, the Philippines coal capacity would increase by about 60% above 2016 levels. It would be difficult for the government to achieve its NDC target with all these coal plants. The situation is compounded by the fact that this upswing of development has also increased interest in domestic coal exploration.
Notwithstanding the significant coal pipeline, there has been some regulation of coal-fired electricity as part of the wider Tax Reform for Acceleration and Inclusion (TRAIN) Act, implemented in 2018. The Act raises taxes on coal from 0.19 US cents in 2017 to 2.85 USD cents per metric tonne in 2020. Even though this measure taxes fossil fuels, and boosts renewable energy cost competitiveness, it is unlikely to incentivise a shift away from coal-fired power generation as major distributors can still pass the higher generation costs on to end consumers.
In April 2019, president Rodrigo Duterte signed into law the Energy Efficiency and Conservation Act which creates an Inter-Agency Energy Efficiency and Conservation Committee (IAEECC). This agency will develop projects aiming to reduce energy costs in state-owned and leased buildings and facilities.