* This is my column in BusinessWorld on August 21, 2019.
“The whole aim of practical politics is to keep the
populace alarmed (and hence clamorous to be led to safety) by menacing it with
an endless series of hobgoblins, all of them imaginary”
— H. L. Mencken, December 1921
The main purpose of climate alarmism is to expedite
government environmental and energy taxation to further expand government and
the United Nations (UN). Scare the public endlessly, like declaring a “climate
crisis/emergency” whatever the weather and climate: less rain and more rain,
less flood and more flood, less storms and more storms, less cold and more
cold.
There is a legislative proposal to impose a “climate tax
on electricity” (CTE) for residential customers under HB 1245 of Congressman
Luis Raymund Villafuerte, Jr. The proposed CTE will be P1 per kilogram of
carbon dioxide (CO2) emission. It claims that since CO2 emission comprises
0.553 kg per kWh of electricity, then CTE = 0.553 x electricity consumption in
a month.
In our house for instance, our average electricity use
from May to July was around 280 kWh/month. If the Villafuerte bill becomes a
law, then we must pay P155/month extra for this CTE, on top of feed in tariff
allowance (FIT-All) of around P65-P70/month that goes to the favored and privileged
mostly solar-wind companies.
This year, we experienced frequent “yellow alert”
warnings (thin reserves) from the National Grid Corporation of the Philippines
(NGCP) for five months, March to July. There were few days where “red alert”
was raised, meaning short rotating black-outs were made to forcibly reduce
power demand.
The good news is that new big power plants will begin
operation in the Luzon grid starting August-September 2019 until 2021.
I made a short-term projection of power supply-demand,
limited to the Luzon grid due to space constraints. Peak demand from 2015-2018
was rising by 5.7% a year on average, so for 2019-2023, I projected a 5.5%
annual increase due to GDP growth deceleration recently. From there, I computed
the projected reserves (see table).
Now, since most of those new big power plants run on
fossil fuels especially coal, then Rep. Villafuerte and allies will likely push
their lousy and idiotic proposal to further raise the cost of already costly
electricity in the country. The Philippines has the third most expensive
electricity in Asia next to Japan and Singapore.
Note also that the high reserves percentage can be
deceiving because many existing power plants are old, especially coal and hydro
plants, they tend to experience unscheduled and forced outages, and extended
maintenance shutdown. Thus, actual reserves can be lower than these
projections.
The House Committee on Ways and Means and Congress as a
whole should junk this and related bills that intend to make electricity more
expensive.
Things can worsen though if the triumvirate of the
Department of Finance, Department of Budget and Management, and National
Economic and Development Authority support this bill in the name of helping
“save the planet.” Recall the hike in the excise tax on oil under the TRAIN law
by P6/liter over 2018-2020 was pushed by the triumvirate to finance various
welfare programs and partly to “save the planet” by discouraging more oil use.
Oil consumption of course did not decrease because it is a necessary and useful
commodity that is used in many sectors and machines from tractors and fishing
boats to cars, busses and airplanes.
The triumvirate should learn their lesson that more
expensive energy means higher inflation, which helped pull down overall GDP
growth. They plus the Department of Energy should call for the junking of this
and related bills in Congress.
Cheaper electricity, lower inflation, sustained high
growth, more investments and job creation, no additional and distortionary
energy taxes, these should be the primary goals of the administration in its
last three years.
---------------
See also:
BWorld 359, Why is Philippines’ GDP growth decelerating? August 18, 2019
BWorld 360, Rule of law and property rights, Hong Kong vs China, August 19, 2019
BWorld 361, PCC, LTFRB, MMDA and transportation woes, August 25, 2019
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