Current Policy Projections
Neither implemented nor planned policies are sufficient to achieve the Philippines’ NDC target. Emissions growth will be predominantly driven by increased energy consumption from transport and buildings. Current policy projections indicate a rapid and ongoing increase in greenhouse gas emissions which is inconsistent with meeting the country’s NDC and the goals of Paris Agreement.
Emissions under current policies (excl. LULUCF) are expected to increase to about 221 MtCO2e/yr in 2020 and 263 MtCO2e/yr in 2030 (see “Current policy projections” in the graph). If the Philippines fully implements its renewable energy and energy efficient targets (see Energy section for details) total GHG emissions in 2030 could decrease to 227 MtCO2e/yr (see “Planned policy projections” in the graph). In other words, the implementation of planned policies could yield an additional reduction of 10% in 2030 compared to our current policy projections.
The 2011 National Climate Change Action Plan (NCCAP) outlined a number of mitigation options; however, as the implementation of these measures is not mandatory, the CAT has not included them in our current policy projections.
In 2017, the Philippines published its AmBisyon Natin 2040 (Our Ambition 2040) which is a strategic development document providing a compilation of the population collective long-term goals (NEDA, 2017a). The Department of Energy has since strengthened its policy to support this vision, including the full electrification target by 2022, the improvement of the power supply reliability through a technology-neutral approach, and the promotion of energy efficient use (APERC, 2019). The vision also triggered the development of the Philippines’ first medium-term development plan anchored in a long-term vision, the Philippine Development Plan 2017-2022 (NEDA, 2017b).
Security of energy supply is a key issue for the Philippines, with the country experiencing a number of power outages earlier this year. The coal-fired installed capacity, that supplies around 48% of the country’s electricity, has not been able to cope with peak demand (Rivera, 2019). The system has been under stress due to the effects of El Niño, which causes warmer weather, and thus increased electricity demand for air conditioning, and a longer dry season, which in turn lowers hydropower supply (Rivas, 2019b, 2019a). Two earthquakes that hit Luzon and Visayas in April 2019 also caused power outages (Rivas, 2019a). In addition to the climate imperative to decarbonise, the vulnerability of the system to environmental hazards highlights the need to think of restructuring the current system (Vemuri, Bohn, & Schrade, 2018).
Long-term plans to increase renewables can help address these challenges by decentralising and diversifying the Philippines’ power mix (Ahmed & Logarta, 2017; Bertheau, Dionisio, Jütte, & Aquino, 2019; Domingo, 2019; Vemuri & Bohn, 2018). These measures can enhance the system reliability, and reduce emissions, while supporting the achievement of the country’s 100% electrification by 2022 target (Cervantes, 2019; Vemuri et al., 2018). If the Philippines couples low carbon development with its energy efficiency goals, it can ensure a more robust power supply for its population.
Considering these developments and aiming to secure the achievement of the Philippines’ long-term vision presented in the AmBisyon Natin 2040, President Duterte recognised the need to “fast-track the development of renewable energy sources and to reduce dependence on traditional energy sources such as coal.” Such goals, in combination with energy efficiency measures to reduce energy demand, would finally put the Philippines on a path towards decarbonisation of the energy system (CCC, 2019).
Decarbonisation of the energy supply sector
The Philippines’ energy mix relies heavily on coal, which accounted for 34% of the total primary energy supply in 2016. This reliance on coal has caused the emissions intensity of primary energy to increase by 10% since 2010 (see chart below).
In 2015, the Department of Energy (DOE) announced that more than 10 GW of coal-fired power plant capacity would be constructed by 2025, and released a Coal Roadmap 2017–2040 (Department of Energy, 2017). At the time the Philippines joined the Paris Agreement in 2017 and the Secretary of Energy, Alfonso Cusi, stated that ratification would have no effect on these plans (Flores, 2017).
Yet if all these power plants were built, it would be difficult for the government to achieve its NDC target (excluding LULUCF). The situation is compounded by the fact that this upswing of development has also increased interest in domestic coal exploration (Department of Energy, 2016). As the Philippines is preparing to update its NDC, it remains to be seen whether the Secretary’s comments regarding an unaltered coal-focused development pathway remain valid. Recent developments do not appear to be positive.
Since 2015, the Philippines has installed about 3.2 GW of coal-fired power capacity. As of July 2019, another 2.6 GW of new coal plants were under construction, with 12.0 GW in the pipeline (End Coal, 2019). If all the power plants in the pipeline were to be constructed, the Philippines coal capacity would increase by about 160% from 2016 levels. The APERC reference scenario, used in our projections, assumes a more modest, albeit significant, increase of 70% (APERC, 2019). A 2017 report states that the coal expansion plans, worth USD 20.8 billion, run the risk of becoming stranded assets due to building up overcapacities of coal, increased coal regulations and taxes, and increased competitiveness of other alternatives, e.g. renewables and natural gas (IEEFA & ICSC, 2017).
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 USD 0.20 in 2017 up to USD 2.85 per metric tonne in 2020 (Department of Finance, 2017). 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 (Department of Energy, 2018).
The Renewable Energy Act of 2008 aimed to accelerate the exploration, development and utilisation of renewable energy in the Philippines (Congress of the Philippines, 2008). The National Renewable Energy Program (NREP), established in 2011, is the blueprint for the implementation of the Act and seeks to triple the renewable energy capacity level from 4.8 GW in 2010 to 15.3 GW by 2030 (IRENA, 2017).
A feed-in tariff (FiT) applicable to solar, wind, biomass and small hydropower has been in effect since 2010; a net-metering (NM) scheme for generators smaller than 100kW since 2013; and the renewable portfolio standards since 2017. As a result, between 2010 and the end of 2018, 1.7 GW of renewable energy capacity had been installed in the Philippines (IRENA, 2019). This is a modest increase considering that a study shows that both FiT and NM result in profitable projects (Farias-Rocha, Hassan, Malimata, Sánchez-Cubedo, & Rojas-Solórzano, 2019). Given this slow progress, it remains unclear whether the planned capacity expansion set out in the NREP for 2030 will be met (IRENA, 2017). Even though the installed capacity has increased in recent decades, the share of renewables in power generation has been in a declining trend (see chart below).
Several regulations that support further uptake of renewables are under discussion or have been approved in 2019. For example, the DOE intends to foster a technology-neutral environment by ensuring transparent electricity prices (Department of Energy, 2019b) which is expected to instigate real competition between power generators (Ahmed, 2019). The DOE also established a framework for energy storage and off grid power development (Department of Energy, 2019e, 2019f).
Finally, improvements in the Green Energy Option Programme, that allows users to choose their renewable energy providers, and the Net-Metering Programme are in the works. Together they aim to add clarity for end-users, RE suppliers, and network service providers facilitating renewable energy choices and to encourage active participation of consumers in power generation (Department of Energy, 2019d, 2019a).
The Philippines is starting to take action on energy efficiency; in 2017, the Department of Energy published the Energy Efficiency Roadmap 2017-2040. Overall, the Energy Efficiency Roadmap mandates energy savings equivalent to 24% across energy demand sectors in 2040, compared to the reference energy demand outlook (Lister, Balamiento, Arter, Gunawardena, & Chandran, 2017). The document lists various measures to enhance energy efficiency in the buildings, industry, energy supply, and transport sectors. The Energy Efficiency Action Plan is being implemented by the Energy Efficiency and Conservation Division of the Energy Utilization Management Bureau of the Department of Energy, but the extent and coverage of implementation is unclear.
In April 2019, the President Rodrigo Duterte signed into law the Energy Efficiency and Conservation (EE&C) Act, establishing the general governance and strategies to improve energy use in the Philippines and aims to reduce final energy demand by 24% below a BAU demand by 2040. It creates an Inter-Agency Energy Efficiency and Conservation Committee (IAEECC) that will develop projects aiming to reduce energy costs in state-owned and leased buildings and facilities (Parrocha, 2019). It also delineates general provisions on energy performance standards, demand-side management, and incentives (Congress of the Philippines, 2018). The draft department circular with the implementing rules and regulations of the EE&C is under preparation by the Department of Energy (Department of Energy, 2019c).
The actual emissions and/or removal levels for the Philippine forestry sector is highly uncertain. National inventory data shows nearly zero emissions from the sector in 1994, but a net sink (removal of CO2 from the atmosphere) of 105 MtCO2/yr in 2000 (UNFCCC, 2017). This difference is partly attributed to changes in the definition of forests and the correction of methodological errors. The 1994 inventory did not account for millions of hectares of upland farms and presented very low biomass density for grassland (Republic of the Philippines, 2014); a logging ban on old-growth forests in the 1990s may also have contributed to the net removal of GHG emissions during this period (Asia-Pacific Forestry Commission, 2001). In contrast to this inventory data, the FAO estimates the forestry sector was a small net sink of 2.6 MtCO2/yr up to the years 2000 and became a larger sink capturing around 60 MtCO2/yr in 2016 (FAOSTAT, 2018).
With the goal of reducing greenhouse emissions from deforestation and forest degradation and conserve biodiversity, the Philippines has implemented the national REDD+ strategy (DENR, 2010). This strategy supported the creation of an institutional framework to monitor and avoid deforestation and development of forestry protection incentive mechanisms. In addition, a ban on cutting and harvesting in natural and residual forests throughout the country has been introduced by executive order in 2011 (President of the Philippines, 2011).
The Philippines Development Plan 2017-2022 (NEDA, 2017b) includes clearer strategies to rehabilitate and restore degraded natural resources and protect the fragile ecosystems while improving the welfare of resource-dependent communities. Some strategies of the implementation are:
- Complete delineation of final forest limits including production and high value conservation areas as protection forest.
- Reverse the loss of forest cover through sustained rehabilitation of degraded forestlands including critical watersheds and strengthened protection of remaining natural forests.
- Enhance management of Protected Areas and strengthen sustainable management through the issuance of appropriate tenure and management arrangement.
- Strengthen research and development on forest, watershed and biodiversity.