* This is my article in BusinessWorld on December 14, 2018.
To have cheaper, stable energy sources, especially in
electricity generation, there should be maximum competition and minimum
taxation, distortion and government favoritism among players using different
technologies and energy sources.
So if an energy or environment tax should be imposed, it
should apply to all energy technologies and sources. If a subsidy should be
given, it should also apply to all energy technologies.
This does not happen in the Philippines and many other
countries in the world. There is always a double standard, like high taxes,
unguaranteed dispatch to the grid for some technologies, and high subsidies and
guaranteed dispatch to the grid for wind-solar and other new renewables.
Among power plants using fossil fuels — oil, coal and
natural gas — there is also favoritism. Oil and coal are slammed with higher
excise taxes to make them more expensive while natural gas has no excise tax,
which makes it artificially cheaper.
Now another favoritism scheme is being prepared in
Congress. I saw at least two reports in BusinessWorld on the subject this year:
1. “Gov’t may need to finance natural gas infrastructure”
(June 21)
2. “LNG bill to require guaranteed offtake of import
shipments” (Dec. 6)
If report #1 is done, it will compromise Philippine
taxpayers. Firms put up big hydro, geothermal, coal plants using their own
money and they are fine. But construction of liquefied natural gas (LNG)
infrastructure — terminal, storage, regasification facilities — will be passed
to taxpayers, before private natural gas plants can use the gas for their power
generation.
If report #2 is done, it will compromise Philippine
energy consumers. If LNG prices go up, consumers must pay for it even if
cheaper energy is available during that period.
It is also related to constant lobby that government
should set the energy mix, which is wrong. Setting the energy mix should be
done by the market, by the energy consumers and suppliers, and not by the
government.
Anti-coal hysteria and drama in the Philippines, among
the reasons that renewables and natural gas are favored, is based on the wrong
premise that the country’s coal use is high. Far from it. Compared to our
neighbors, we have low coal use (see Table 1).
Another reason for renewable energy and gas favoritism is
the belief that the Philippines is poor in environmental sustainability in its
energy development. This too is wrong.
The World Energy Council (WEC) publishes an annual study,
the World Energy Trilemma Index. WEC is a United Nations-accredited global
energy body with over 3,000 member organizations in over 90 countries, from
governments, private and state corporations, academia, nongovernmental
organizations and energy stakeholders.
The Trilemma Index is composed of three factors:
1. Energy Security — reliability of energy
infrastructure, ability of energy providers to meet current, and future demand
2. Energy Equity — accessibility and affordability of
energy supply
3. Environmental Sustainability — energy efficiencies and
energy supply from renewable and other low-carbon sources
Out of 125 countries covered, the Philippines ranked 74th
overall; 96th in energy equity because of our expensive energy prices; and 1st
in environmental stability (we’ve come in first for several years now) because
of the country’s high input from geothermal and big hydro, energy sources that
are available all year round (see Table 2).
The Department of Energy itself and Energy Secretary
Alfonso G. Cusi are using and citing the WEC annual reports and take pride in
our #1 global ranking in environmental sustainability. The Secretary has
adopted a technology-neutral energy mix policy — it is the good and right thing
to do.
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See also:
BWorld 272, The ASEAN Prosperity Initiative, December 11, 2018
BWorld 273, UAAP basketball tickets and Philippines inflation, December 22, 2018
BWorld 274, The ASEAN single aviation market, December 23, 2018
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