Energizing growth: The role of fossil fuels in economic development

(Part 1 of a series)

This writer has come up with a new series on “Energizing growth,” looking at the role of energy policies in helping sustain or curtail economic growth of countries.

I constructed the accompanying table showing the primary energy consumption (PEC) in exajoules (EJ) of many countries, and the average growth rates of their PEC and gross domestic product (GDP) from 1979 to 2022 or over 43 years. I chose 1979 as the base year because that is within the 1960s and ’70s which was the period with the highest PEC for many European countries.

PEC covers not only power or electricity generation but also fuel for transportation (land, sea, and air). So, the bulk of PEC by countries are from fossil fuels, with a clear example being Singapore. Its PEC of 3.16 EJ in 2022 saw 99% of it coming from fossil fuels: 84% from oil (transportation) and 15% from natural gas (power generation).

I grouped the countries into four: Group A are East Asians plus India and Australia; Group B are North and South Americans; Group C are Europeans, and Group D are Middle East countries and Africans.

The numbers show the following.

One, when it comes to PEC levels, all countries in Groups A, B, and D have expanded from 1979 to 2022. Many Group C countries experienced PEC declines over the same period: Germany, the UK, Italy, France, Poland. I find this mind-boggling.

Two, when it comes to PEC growth, Group A countries have had the fastest expansion over the 43 years covered, 1979 to 2022. Japan is an exception among the Group A as it is infected by the anti-fossil fuel movement in G7, and Group C countries have had the slowest growth, especially Germany, the UK, and Italy. The next slowest is Group B.

Three, when it comes to GDP growth, we see the same trend: Group A has the fastest growth except for Japan, which has been crawling below 1% over the past three decades. Group C has the slowest, growth, especially Italy, Germany, and France.

So, the lessons and policy implications are clear:

One, if countries want faster economic growth, their PEC must expand fast, and since the bulk of PEC is from fossil fuels (oil, gas, and coal), countries should not put a brake on fossil fuel use.

Two, if countries want slow growth, the Europeans, especially Germany, the UK, and Italy, provide clear examples of how, with four decades of actual data in PEC decline and crawling growth, even degrowth. Venezuela in South America is another example of a country exhibiting PEC decline over the last decade and growth contraction over the same period.

Three, the Philippines, in particular, has had the smallest PEC among the countries in the table. There are no reasons to expect that if the country should slow down or cut its fossil fuel consumption that it would be able to sustain high growth. Our main national agenda and priority should be fast, sustained growth to provide more jobs, more bright lights for our people, and higher government revenues to pay off and reduce the ever-rising public debt while sustaining public infrastructure spending.

Meanwhile, here are three notes.

One, check out the recent energy reports in BusinessWorld (written by Sheldeen Joy Talavera): “DoE endorses 86 projects for operating permits” (Sept. 20), “DoE says still on track to hit renewables goal” (Sept. 28), and, “Indonesia assures PHL of continued access to coal” (Oct. 1).

The bulk of those 86 projects are oil plants, peaking plants to avoid blackouts as more intermittent sources enter the grid. Thank you, Indonesia for your generous assurance.

Two, there were short rotating blackouts in some parts of Metro Manila last Sunday evening, Oct. 1. The National Grid Corp. of the Philippines (NGCP) issued a statement that night: “At 6:45 p.m., NGCP monitored a grid disturbance affecting the San Jose-Nagsaag 500-kV transmission line 2 and multiple power plants in Luzon and resulting in automatic load dropping (ALD).”

See that? (A) a “grid disturbance” of a transmission line in Bulacan (San Jose) and Pangasinan (Nagsaag) affected four large power plants in distant Quezon province, and, (B) this all happened on a Sunday night when power demand was low.

I hope that the NGCP will not blame the power plants again and this time admit that it was their fault, that their 500-kV transmission line started it, and that they continue to be unable to modernize and improve their transmission lines.

“Automatic load dropping” means rotating blackouts because the power supply is not there due to a NGCP transmission line (or “highway”) problem. Some electricity consumers and end-users in Luzon were adversely affected. But the bigger victim is the Philippine economy because of the image it presents: that 32 years after the huge and frequent blackouts of 1991-1992, occasional rotating blackouts and yellow-red alerts still continue.

Come on, NGCP. Help the country have a good image when it comes to power generation stability. Please, no more blackouts due to your frequently faulty transmission lines. No more delayed projects that lead to congestion in power-surplus islands and the inability to send electricity to power-deficit islands.

Three, check out this column’s recent “Energy realism” (not alarmism) series: Part 1, “Energy realism: Raising consumption and economic growth” (June 29); Part 2, “Energy realism: G7, BRICS, and other big Asian economies” (July 5); Part 3, “Energy realism: Oil-coal consumption and NGCP’s delayed projects” (July 13); Part 4, “Energy realism: Decarbonization and deindustrialization” (Aug. 17); “Economic basis of net zero is zero” (Sept. 5); and, Part 5, “Why we need more coal, gas and nuclear power plants (Sept. 14).

Bienvenido S. Oplas, Jr. is the president of Bienvenido S. Oplas, Jr. Research Consultancy Services, and Minimal Government Thinkers.

minimalgovernment@gmail.com