Thinking Beyond Politics

The Department of Energy’s budget proposal for fiscal year 2018 is reflective of the administration’s aim of ensuring energy security, in line with President Duterte’s Ambisyon 2040.

AFP

On Aug. 17, the House of Representatives approved the Department of Energy’s proposed budget of P2.659 billion for 2018. The budget increased by P1.3 million or .05% from the P2.657 billion budget for 2017. By allotment class, Maintenance and Other Operating Expenses (MOOE) will receive the biggest share at P1.8 billion followed by Capital Outlay (CO) at P291.2 million.

The paramount goal of ensuring energy security by providing access to reliable and affordable energy, however, must translate into protecting the welfare of the consumers as the primordial concern of this administration.

In the same budget hearing, the department highlighted its pro-consumer distribution framework favoring affordability, choice and transparency, as provided in its Nine Point Energy Agenda. Consistent with this is DoE Secretary Alfonso G. Cusi’s announcement of the non-extension of the feed-in-tariff (FiT)subsidy for renewable energy projects so that electricity prices will be maintained at a minimum.

This syncs with the recommendation of Geoffrey Ducanes, Sarah Lynne Daway, Majah-Leah Ravago, and Raul Fabella in a study, “Carbon Footprint, Inclusive Growth and the Fuel Mix Debate in the Philippines.” The study authors suggested that the government shift additional charges (e.g. FiT, universal charge, stranded cost, missionary electrification charge) from Manufacturing/Industry to Services and the Treasury and to work towards a feed-in-tariff bill bankrolled by the Global Climate Fund.

In contrast to this pro-consumer direction, however, President Rodrigo R. Duterte’s steward of sound fiscal policy, the Department of Finance, through Undersecretary Karl Kendrick T. Chua, has announced plans for a 5% tax on coal, currently the Philippines’ largest source of power.

Department of Energy data covering the first half of 2017 show that in terms of power capacity, coal has the biggest portion at 35% followed by renewable energy at 32.5%. In terms of gross power generation, fossil-based generation such as oil, gas and coal account for approximately 72% while the remaining 28% is taken up by renewable energy, which is predominantly geothermal and hydropower.

By 2040, the primary energy mix, although subject to change, will most likely consist of 41.6% coal, 32.2% oil, 9% biomass, 7.1% geothermal, 4.1% natural gas, 3.1 % other technology, 1.9% hydro, 1.1% biofuels and 0% solar/wind.

Although the Department of Energy’s goal is to promote a low-carbon economy by increasing renewable energy capacity, conventional power sources such as coal, LNG and fossil fuels will still need to be maintained to support the DoE’s target of additional power capacity of 43,765 Megawatts by 2040.

By taxing one of the main sources of reliable and affordable power in the Philippines, the cost of electricity will increase, creating an additional burden on consumers at all levels.

Consumers are again left with conflicting policies.

Hannah Viola, Convenor, CitizenWatch Philippines