Philippine energy realism and Trump’s energy policies
I attended the afternoon session of Stratbase’s “Pilipinas Conference 2024” on Nov. 7. It was on “Energy transition and green industries.” The keynote speakers were Energy Secretary Raphael Lotilla and Environment Secretary Toni Yulo Loyzaga.
Mr. Lotilla highlighted huge targets for offshore wind, plus the slow introduction of nuclear power in our energy mix. Ms. Loyzaga started with the usual climate fears, talking about the high number of deaths and destruction of property because of too much water and flooding.
On the panel were Manny Rubio, president and CEO of Meralco Power Gen Corp. (MGen); Sandro Aboitiz, chief financial officer of Aboitiz Power Corp.; Paul Everingham, CEO of Asia Natural Gas and Energy Association; Michael Toledo, chairman of the Chamber Mines of the Philippines; and Martin Antonio “Dennis” Zamora, president and CEO of Nickel Asia Corp.
I liked the points made by these three gentlemen — Messrs. Rubio, Aboitiz, and Toledo.
Mr. Rubio emphasized the need for energy security and a balanced mix of reliable baseload with intermittent renewables. He noted that their 3,500-megawatt (MW) Terra Solar facility — the world’s largest contiguous solar plus battery storage facility — is equivalent to 850 MW of mid-merit reliable energy with battery.
I like the kind of energy realism shown by Mr. Rubio, not the usual energy alarmism or hyped-up optimism about renewables that we often hear or read. It is good that MGen has a portfolio of coal and gas plants that can deliver electricity 24/7 even if the sun is not shining at night or is behind heavy clouds, even if the wind is not blowing.
Mr. Aboitiz made similar realistic statements, saying that “the energy transition journey is not linear and is extremely complex, [it] needs alignment with the country’s needs and circumstances, [there is] no one-size-fits-all solution or silver bullet.” He is correct to remind us that we are still “a developing country that aspires for continued growth, to become an upper-middle-income economy and eradicate poverty. Striking a balance between energy security, affordability, and sustainability requires the adoption of a tailor-fit transition strategy.”
He calculates that the Luzon grid alone will need 600-700 MW of new baseload energy per year, and this does not yet consider new power intensive sectors like data centers or the electrification of transportation. Thus, the need for a balanced mix of traditional and renewable energy sources, supported by new technologies in energy storage and emissions reduction.
Meanwhile, Mr. Toledo passionately and articulately highlighted four policy challenges and measures in the mining sector. One, the need for long-term policy consistency from national to local governments. Two, the need to simplify and expedite the approval process for mineral agreements. Three, the need to minimize business continuity risks from local ordinances. And four, the need to have a stable, predictable mining fiscal regime, including a “financial stability clause.”
I agree with all of these four points. I will add that open-pit mining should be encouraged for two reasons: it makes the extraction of ores and metals easier, and the mined-out area can serve as a man-made lake and water catchment. This will help reduce flash flooding.
TRUMP’S ENERGY POLICIES
During his first term as US President in 2017-2020, Donald Trump had a “drill baby drill” policy and significantly expanded US oil-gas production and exports. Take liquefied natural gas (LNG) for instance. US exports were only 0.8 billion cubic meters (bcm) at the end of Obama’s first term in 2012, increasing slightly to 4 bcm at the end of Obama’s second term in 2016. In Trump’s first year, this quadrupled to 17 bcm, and further ballooned to 61 bcm in 2020.
Looking at crude oil, US exports were only 2.68 million barrels per day (mbpd) in 2012, rising to 5.1 mbpd in 2016, and further increasing to 5.9 mbpd in 2017 and 8.1 mbpd in 2020. The Biden administration took off from the high momentum of oil-gas exports under Trump (see the table).
In his second term, Mr. Trump will resume his “drill baby drill” policy and pursue US energy dominance — not just energy security — to be a powerhouse producer of oil, LNG, and coal, plus nuclear technology, and export more to its allies worldwide, helping strengthen their economies. Trump explicitly announced energy deregulation, not energy heavy regulation and rationing, and the streamlining of permitting processes for energy infrastructure. He also intends to repeal the Inflation Reduction Act (IRA), even partially. The IRA is expanding the mandates and favoritism for intermittent renewable power sources like wind-solar, among others.
We should have similar policies here in the Philippines, as should other developing countries. We should prioritize saving our jobs and businesses from high energy prices and big bureaucracies. Not saving the planet or saving climate bureaucracies.
Bienvenido S. Oplas, Jr. is the president of Bienvenido S. Oplas, Jr. Research Consultancy Services, and Minimal Government Thinkers. He is an international fellow of the Tholos Foundation.
