July 23, 2018, 1:48 am
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Perks to boost RE share in energy mix

The International Food Policy Research Institute (IFPRI) said the Philippines could supplement 57 to 60 percent of its energy needs with renewables by 2040 if carbon taxes or subsidies for renewable energy (RE) are implemented.

Alam Hossain Mondal, a researcher at IFPRI and lead author of the study, said in a statement the Philippines’ current energy supplymix must be diversified to minimize import dependency on fossil fuels and meet the country’s energy needs. 

“Without diversification, fossil fuel dependency will grow sharply, by an average rate of 7 percent per year and car emissions could amount from 43 million tons in 2014 to 144 million tons by 2040,” Mondal said.

By taxing carbon and subsidizing RE investments, the long-term cost of pursuing RE will be lower than maintaining current high levels of dependency on fossil fuels, according to the study.

In a scenario presented by IFPRI relying on incentives from carbon taxes, if a tax of $10 per ton of carbon emitted would be imposed in 2020 and increased by $10 increments each decade, coal-based energy would shrink from the current trajectory of 2,243 terawatt hours (TWh) to 1,553 TWh by 2040.

In another scenario presented by the group, if RE subsidy is provided ranging from three to six cents per kWh, over 1,000 TWh will be added to the RE sector until 2040 and that will force a 35 percent drop in coal-based power usage.

The studysaid if either of the scenario happens, electricity generation in the country would grow tenfold to 131 TWh in 2040 from newer technologies.

Mondal also noted current challenges in the local electricity sector such as high prices, underinvestment in generation, reduced self-sufficiency and expected high levels of greenhouse gas emissions. 

He said these issues will be solved by energy source diversification, which also poses other benefits such as economic stimulation and job creation. 

“Reductions in coal-based power generation, which occurs in all four alternative scenarios, also means reductions in greenhouse gas emissions. The energy generated by coal-based power plants would decrease from about 32 percent in 2014 to 20 percent, and 17 percent by 2040 in the carbon-tax and renewables-subsidy scenarios, respectively,” he added.

However, the study acknowledged that development of energy generation based on renewable sources would bear costs to as much as $15.6 billion, butsaid the costs will outweigh the benefits.

“Each of the alternative policy options we examined has implications for energy costs, energy requirements, and the environment. All these considerations must be weighed carefully to create a plan for investing in the Philippine power sector for long-term sustainability,” Mondal said.

At present, the government provides eligible RE projects with feed-in-tariff which assures qualified power plants of fixed rates currently at P9.68 per kwh for the first batch of solar projects and P8.69 per kwh for the second batch; P8.53 per kwh for the first batch of wind projects and P7.40 per kwh for the second batch; P6.63 per kwh for biomass; and P5.90 kwh for run-of-river hydro.

However, the premium is currently on hold except for biomass and run-of-river hydro projects that will be completed until the end of 2019, but with degressed rates at P6.5969 per kwh and P5.8705 per kwh, respectively. 

Meanwhile, the government recently slapped coal with additional taxes. An additional P50 per metric ton was implemented this year and will increase to P100 by next year and to P150 by 2020.

Under the Department of Energy’s National Renewable Energy Program, the country’s RE capacity is expected to reach as much as 15,304 megawatts (MW) by 2030 and at least 20,000 MW by 2040.
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