The Philippines’ stellar economic growth has been the talk of the world’s investors and financial leaders for the past several years. As the country powers through insurmountable odds — growing at a solid rate of 6.2% in 2018 despite mounting inflation, interest rates, and a depreciating peso— it remains to be seen whether such growth can be sustainable in the long term.
Many challenges await the country’s economic future, from tensions in global trade, talks of the US Federal Reserve raising interest rates, to a worldwide economic downtrend. One such risk involves the Philippines’ current dependence on coal-fired power plants for energy.
As power consumption continues to rise on pace with economic expansion, relying too much on coal in the long-term puts the Philippines subject to its fluctuating prices and over-dependence on a single fuel source. In addition to its negative effects on the environment and to health, it is clear that a more sustainable source of energy is needed to power the country’s future development.
A cleaner, cheaper, and more reliable alternative that can even help the economy in the long-term is natural gas. Here’s how.
Many developed nations are shifting to natural gas
The demand for natural gas has been steadily growing across the globe. Currently, it supplies 22% of the energy used worldwide, making up nearly a quarter of electricity generation in countries like the United States, China, and the Middle East. In the US, natural gas has taken the place of coal in terms of power production. Energy produced by coal has dropped by 44% (866 terawatt-hours [TWh]) compared to natural gas (up 45%, or 400 TWh).
For many countries, natural gas is simply cheaper. Globally, the price of electricity has been rising over the past few years, in line with coal prices rising to as much as $120 per metric ton in 2018.
In fact, the Institute for Energy Economics and Financial Analysis (IEEFA) said in a report in 2017 that the unpredictability of the coal market will drive higher electricity prices and will threaten the industrial strategy of the Philippines.
“Excessive reliance on imported coal is one of the main reasons the Philippines has the highest electricity prices in the Association of Southeast Asian Nations (ASEAN) region,” Sarah Ahmed, an IEEFA energy finance analyst, said.
In the Philippines, the generation charge of natural gas has been cheaper than oil and coal plants contracted with Meralco over the past few years.
The country has plenty of reasons to reduce its reliance on coal. In a recent report, the IEEFA said that rapidly declining costs and technological advances in renewable energy, liquefied natural gas (LNG), energy efficiency, and storage are creating an “enormous opportunity” for greater use of cheaper electricity-generation domestic alternatives to imported coal and diesel in the Philippines.
Shifting to natural gas allows the Philippines to save money, especially as the government continues to promote infrastructure development in areas outside Metro Manila.
Natural gas is readily available
First Gen Corporation, which owns four of the five commercially active natural gas plants in the country, currently sources its natural gas from the country’s Malampaya Gas Field. With proven reserves of about 2.7 trillion cubic feet of natural gas reserves and 85 million barrels of condensate, located some 3,000 meters below sea level, according to data from the Department of Energy, the Malampaya Gas Field is the biggest commercial gas discovery in the Philippines to date. In fact, the country has been using natural gas for almost 20 years, dating back to 2001.
The Malampaya gas field produces 146 billion cubic feet of gas per year. First Gen’s four natural gas-fired power plants: the 1000-MW Santa Rita, the 500-MW San Lorenzo, as well as the 97-MW Avion peaking and 420-MW San Gabriel power plants have added significantly to First Gen’s portfolio of power assets since their commercial operations.
Globally, gas is also very abundant and is traded around the world in the form of LNG. The Philippines can also gain access to LNG once the infrastructure to receive it and turn it back to gas is developed.
Making the transition to natural gas will not only address the country’s rising energy needs but also reduce its dependence on coal.
Natural gas is reliable
Compared to coal-fired power plants, natural gas plants take no time at all to start up and generate electricity. Avion, one of First Gen’s gas plants, can typically reach full load up to 50 times faster than coal-fired power plants.
This efficiency is crucial in the near future, especially when emerging cities like Cebu or Clark drastically increase the country’s overall power consumption. Moreover, the country aims to increase its dependence on Renewable Energy, which while clean and increasingly competitive, can sometimes be intermittent. Given that battery storage is still ways away, power supply would be impacted by times that RE sources are intermittent—for instance, solar panels wouldn’t generate electricity when there isn’t enough sunlight. The speed and flexibility of natural gas enable it to adjust its output and cater to the needed demand when these occurrences of intermittency happen.
Having a stable power supply that can be relied on at a moment’s notice can contribute significantly to the growth of not only these emerging cities, but the whole country as well.
Burning natural gas emits far less carbon than oil or coal
The Union of Concerned Scientists, which works with more than 20,000 scientists and technical experts across the United States, including: physicists, ecologists, engineers, public health professionals, economists, and energy analysts, had this to say about natural gas on its website: “Natural gas emits 50 to 60% less carbon dioxide when combusted in a new, efficient natural gas power plant compared with emissions from a typical new coal plant.”
Because it is the cleanest among the fossil fuels, natural gas can play a crucial role in lowering the Philippines’ carbon emissions. Carbon dioxide (CO2) is one of the major greenhouse gases that contribute to climate change, which in turn causes more frequent natural disasters like super typhoons and drought, as well as causing sea levels to rise.
The enormous economic impact of climate change has already wreaked havoc in the Philippines in the form of super typhoons like Ondoy and Yolanda. These catastrophic typhoons have caused billions of pesos worth of damages in the country, and they are likely to continue if climate change isn’t mitigated.
In 2018, First Gen’s gas plants helped avoid 8 million tons of CO2 emissions. This is equivalent to removing 1.7 million cars from the road in terms of avoided emissions, making natural gas the more sustainable energy source for the future.
Natural gas is better for your health
Hammering home why natural gas is better than other more conventional sources of energy, it also produces negligible amounts of sulfur, mercury, and particulates when burned. Citing data from the U.S. government, the Union of Concerned Scientists noted that for every 10,000 U.S. homes powered with natural gas instead of coal, an estimated 1,900 tons of NOx, 3,900 tons of SO2, and 5,200 tons of particulates are avoided in emissions each year.
Reductions in these emissions translate into public health benefits, as these pollutants have been linked with problems such as asthma, bronchitis, lung cancer, and heart disease.
In the Philippines, where one of the biggest drivers of economic growth is the abundance of skilled human workers, the importance of a healthy population cannot be overstated. Two of the leading causes of death in the country are heart and lung diseases. Lowering the emissions of harmful pollutants in the atmosphere may translate to a population that lives longer and adds more towards the country’s development.
Contributing to safer air, as well as being a cheaper, cleaner, and a more reliable source of energy, natural gas has the potential to change the Philippines into a more progressive and more developed nation. Clearly, switching to natural gas is the next step in the country’s path towards progress.