Government and Taxes

Saturday, March 09, 2024

Energy 175, Toronto's bright lights

I arrived Toronto last Monday, March 4 evening (Manila-HK-Toronto). I was on window seat right side, good view of the city because it's my first time to set foot in Canada.

Canada's main source of electricity is hydro, about 60% of total. But for Ontario including Toronto, about 60% is from nuclear. So it is the nuclear energy capital of Canada. Bright lights almost anywhere.

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See also:
Energy 172, Wind energy surprises, energy realism series, October 27, 2023
Energy 173, Nuclear power renaissance, December 15, 2023
Energy 174, NGCP and the big Panay blackout last Jan. 2, January 11, 2024

Wednesday, March 06, 2024

BWorld 683, NAIA privatization is good, legislated minimum wage is bad

NAIA privatization is good, legislated minimum wage is bad
February 20, 2024 | 12:02 am

My Cup of Liberty
By Bienvenido S. Oplas, Jr.
https://www.bworldonline.com/opinion/2024/02/20/576609/naia-privatization-is-good-legislated-minimum-wage-is-bad/

LAST FRIDAY, the Department of Transportation announced the winner of the competitive bidding for the solicited project to upgrade, maintain, and operate the Ninoy Aquino International Airport (NAIA). The San Miguel Corp. (SMC)-SAP Co. Consortium won. The government will get a P30-billion upfront payment and P2 billion/year from then on, plus a share of the revenue from operations: a projected total of P36 billion/year.

It was indeed good news. The country will have a more modern international airport at no cost to taxpayers, and the government will even earn more yearly. Proof of another dynamic market-oriented policy reform.

Cynthia C. Hernandez, the executive director of the Public-Private Partnership (PPP) Center, aired her optimism, She said, “We are thrilled with the successful award of the NAIA PPP project, which marks a significant milestone in the Philippines infrastructure landscape. The achievement exemplifies our commitment to fostering PPP that drives sustainable development and economic growth. With the enactment of the new PPP Code, we are confident that the streamlined process and successful outcome of the NAIA project will serve as a blueprint for future endeavors, catalyzing further investment and enhancing the quality of public services for the benefit of all Filipinos.”

Budget Secretary Amenah F. Pangandaman also expressed satisfaction at this development. She said, “Our fiscal policy has continued to fulfill its combined objectives of fiscal consolidation, investment promotion and high growth trajectory. Crucial to this is the fulfilment of our commitment to spend 5-6% of GDP on infrastructure. In partnership with private businesses and financial institutions, our Build Better More program hastened the awarding of solicited NAIA PPP project. Best results for the country including generating high stream of revenues in the long term.”

When the end of the concession period — which is 15 years, extendable for another 10 years — is approaching (2039 to possibly 2049), the next phase should be closing the airport, privatizing the NAIA land itself, getting the revenues from the sale and using all of it, 100%, to retire some public debt, reducing the country’s annual principal amortization and interest payments.

Our gross public borrowings increased from about P0.8 trillion/year in 2019 to P1.7 trillion/year from 2020 to 2023, the bulk of it from domestic loans (see Table 1).

This year, the programmed interest payment alone is about P670 billion — that is interest alone. It is huge because of the high interest rate regime set by the Bangko Sentral and the high interest rate up to 10.5% for foreign treasury bonds. Paying that huge public debt should partly come from big ticket privatization of government assets, not entirely from the pockets of Philippines taxpayers.

LEGISLATED MINIMUM WAGE IS BAD

There is a new strong lobby for Congress to legislate another minimum wage hike and bypass the tripartite Department of Labor and Employment-Employers-Employees negotiations for wage adjustments. See this report in BusinessWorld: “House looking at wage hike of as much as P400” (Feb. 16).

Here are 10 arguments why a higher legislated minimum wage is wrong.

1. Employment is a private contract between employers and employees, not between government and employees. Each employer, even in the same sector and sub-sectors of the economy, has different financial, technological, locational conditions, and these affect their capacity to pay their employees.

2. A wage is a function of productivity, not the number of children a worker has. Otherwise, many employers will hire only the unmarried or the married who have one or two children only.

3. A wage is differentiated and segmented, not uniform. In the same bus company, not all drivers are paid the same. The most experienced, the most careful staff drive the high-end bus units and are paid more than other drivers.

4. Wage inequality and not uniformity is conducive to job creation and raising productivity. A person with a physical and/or mental disability who desires to work will be happy if he/she is hired for half the minimum wage at fewer work hours and lower output expectations. It is the feeling of being useful that uplifts a person’s dignity.

5. Total wage is higher than the minimum wage. Total wage is the basic (or minimum) wage plus allowances plus the employer’s share in social insurance (SSS + PhilHealth + Pag-IBIG) of employees plus private health insurance/HMO plus occasional perks. Perks include a company-sponsored outing, travel, birthday parties of the bosses, etc.

6. The real minimum wage is zero. If people cannot be hired because of a high state-mandated and legislated minimum wage which is beyond the capacity of small employers to pay, people can become jobless. So, people employ themselves via the informal sector (as a street/ambulant vendor, a tricycle driver, etc.) where there is no fixed and stable income, and the average pay is low.

7. Wage-based employment is declining while revenue-based or task-based employment is rising. Drivers of cars/vans for rent are paid higher when the distance travelled is longer, or driving hours are longer — and people like that.

8. Workers are allies of employers to deal with non-allies or competing businesses. Employers compete for highly skilled, experienced, efficient and high productivity workers and give them higher pay, many times higher than the government-ordered minimum wage.

9. The “expensive to hire, difficult to fire” policy in the long term is anti-worker because employers will hire as few people as possible and use more machines and robots. And more people will end up working in the informal sector.

10. Most workers do not aspire to become employees forever unless they work in big, stable and regionally/globally competitive firms. Most workers now aspire to become startup entrepreneurs someday.

Let wage setting be done at the industry and firm levels, at the micro level, not a national one-size-fits-all level. Government should focus on improving the investment and entrepreneurship environment and more jobs will be created. Workers will never accept a low-paying job if they think they are productive and experienced enough and higher paying opportunities are available.
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Tuesday, March 05, 2024

Climate 106, Triple-dip La Nina and El Nino 2023-2024

There is continuing climate scare of "prolonged El Nino" and related narratives. Here are some charts, actual data. I made this chart from two sources.

From the most recent US NOAA Climate prediction center (CPC) March 3 forecast, they see the current El Nino to end by April 2024, or next month. See the chart.

El Nino-La Nina are always cyclical, natural, and short-term, they cycle back to each other after about 2-3 years. It's those "save the planet" climate policies that create more long-term, multi-decades damage to agriculture and food production.

Food inflation remains high in many countries including the Philippines. They drive overall inflation upwards. All distortions in farming and agriculture transport, trading should be relaxed if not reversed. Like expensive diesel (diesel tax) for tractors, harvesters, trucks to "save the planet", big land conversion agri to solar farms, etc.
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Tuesday, February 27, 2024

BWorld 682, The nuclear option for Asian industrialization

The nuclear option for Asian industrialization
February 15, 2024 | 12:03 am

My Cup of Liberty
By Bienvenido S. Oplas, Jr.
https://www.bworldonline.com/opinion/2024/02/15/575711/the-nuclear-option-for-asian-industrialization/

It was a successful forum we held last week on Feb. 8. The 2nd Ruperto P. Alonzo Memorial Lecture, “The Nuclear Option,” saw about 160 audience members filling the UP School of Economics (UPSE) auditorium. This was not counting the hundreds who tuned in via Zoom, YouTube, and Facebook.

The forum was organized and funded by the UPSE Program in Development Economics Alumni Association (PDEAA) and Philippine Center for Economic Development (PCED).

The main speaker was Energy Undersecretary Sharon Garin, and the emcee and moderator was UPSE alumnus Jay Layug, Jr., who is a Senior Partner of Divina Law. The five panelists were: geologist Dr. Carlo “Caloy” Arcilla, Director of the Philippine Nuclear Research Institute (PNRI); Froilan Savet, 1st Vice-President and Head of Networks of Meralco; Lino Bernardo, Head of Special Projects of Aboitiz Power; Paulo Pagaduan, Senior Lead of Renewable Energy and Just Transition, Asian People’s Movement for Debt and Development; and this writer.

Undersecretary Garin discussed the past, current, and future regulatory environments in the Philippines’ nuclear power development, with a best-case scenario being starting construction of the first nuclear plant by 2028, with it being operational by 2032. I hope this will materialize.

Doc Caloy explained the technical feasibility and security of nuclear energy, saying that most of the public’s fears about it are not based on actual experiences of its safety. The two engineers from the energy companies emphasized the need for power stability and reliability to solve the problem of power insecurity coming from intermittent sources. Mr. Pagaduan explained their advocacy for more renewable power sources and non-support for nuclear power. I discussed the links between nuclear power, security, and GDP growth performance of many countries.

I saw some good data from the World Nuclear Association on the number and capacity of currently operational nuclear power plants by country, power plants under construction, and those planned to be built soon. I added data on actual power generation from nuclear plants over the two-decade period 2002 to 2022. In dealing with the data, I arranged the countries into three: in Group A were the Americas, in Group B the Europeans, and in Group C the Asians.

The US and Canada lead in the Americas both in operational and planned nuclear plants; France and Russia lead in Europe, but France is de-nuclearizing with no new plants being planned while Russia will keep adding new nuclear capacity, huge at 23,500 megawatts (MW).

The Asians, led by China, and with the exception of Taiwan and Japan, will keep adding more nuclear capacity.

It is interesting to note that the United Arab Emirates (UAE), an oil-gas producer and exporter, has three operational nuclear plants and will build another one. Pakistan might soon leapfrog into becoming an industrializing country with six nuclear plants operational plus one being planned. And Bangladesh is currently building two plants with a huge capacity of 2,400 MW (see the table).

Saudi Arabia has two proposed nuclear plants with a capacity of 2,900 MW. They will follow the UAE model — use nuclear power to light their roads, and export more oil gas to earn more revenues.

Other Europeans with modest nuclear power generation in 2022 were: Switzerland with 23.1 TWH; Slovakia with 15.9 TWH; Bulgaria with 16.4 TWH; Hungary with 15.8 TWH; Romania with 11.1 TWH; Slovenia with 5.6 TWH; and the Netherlands with 4.2 TWH.

Now that the Philippine economy is growing fast, with low and declining inflation and unemployment rates, the momentum will be high and power demand will also be high over the short to long-term. Nuclear energy — cheap, stable, reliable, safe — can provide the necessary solution to high energy demand to sustain high economic growth and job creation towards the Philippines’ long-term industrialization.

Once again, I and the rest of the PDEAA board thank the three corporate sponsors of the UPSE PDEAA-PCED forum — Meralco, Aboitiz Power, and Robinsons Retail Holdings. Not for funding the forum but for donating funds for the future PDEAA room in the expanded and modernized UPSE building. Thank you, guys.
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Ukraine War 3, The need for negotiations and stop the fighting

Below are some of my notes/comments this morning in a civil debate with some friends in the "Oplas Perspectives" viber group. Enjoy.
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About potential NATO-Russia war, they should NOT do it. Also the potential Taiwan+US vs China war, they should NOT do it.

Ukraine-Russia war should have stopped weeks or few months after it started. Both sides shd have negotiated and external forces like UK, US should have stepped back. This did not happen and endless deaths and destruction continue until today. Some clear proof of the evil of continued fighting here.

War in Ukraine at 2 years: Destruction seen from space – via radar
Sylvain Barbot February 23, 2024
https://theconversation.com/war-in-ukraine-at-2-years-destruction-seen-from-space-via-radar-223275

Ukraine is the weaker force vs Russia, it should have negotiated in 2021 or earlier.

Taiwan is the weaker force vs China, it should negotiate now before any missile flies.

PH is the weaker force vs China on the SCS/WPS, it should negotiate before jumping into a P2 trillion AFP procurement alone on top of existing hundreds billions AFP budget.

What Russia wanted before the invasion? No NATO membership for Ukraine. Stay neutral, neither pro Russia nor pro-NATO. Is this sooo hard to comply? Plus denazification of Donbas region.

What China wants in Taiwan? Unification, even via long-term transition, maybe by 2070 or 2060. Sooo hard to comply that TW should prepare for large-scale war and destruction?

People want the macho stand. No real negotiation in 2021 or earlier, happening in 2024. Patayan lang endlessly.

Extend that philosophy, PH should not negotiate with CN over WPS/SCS. Just hop on to P2 trillion AFP procurement, plus possibly P1 trillion PCG and PNP procurement. On Top of their hundreds billions pesos existing budget.

Rural infra, who cares? Prioritize purchase of missiles, submarines, battle ships. awww.

Europe should step back from the Ukraine-Russia war. Address their own internal problems -- like so many illegal immigrants, huge annual deficit and public debt, expensive energy due to dependence on wind-solar and foreign oil-gas, etc.

Let Ukraine negotiate with Russia. Stop the fighting now.

Since about 1991, Russian leaders negotiated with NATO. Russia (then headed by Gorbachev?) disbanded the Warsaw Pact, the military alliance like NATO, hoping that in exchange NATO should not expand towards Russia.

Russia fulfilled its promise, NATO did not. Now Estonia, Latvia are NATO members, right beside Russia. Ukraine is even bigger. Length of border with Russia is 2,300 kms. Compare Manila-Davao distance only 964 kms. So finding and anticipating missiles along that 2,300 kms border will be impossible.

There was deliberate but silent invitation by US for Ukraine to join NATO. 2008 Putin negotiated with Obama but the latter did not make a categorical No to Ukraine membership in NATO. Putin asked again Biden in 2021, latter did not give that assurance.

Angela Merkel too indirectly admitted that the Minsk talks were meant to buy time for NATO to train more Ukraine soldiers, transfer more armaments.

In case of war with NATO, if NATO missiles for Moscow would come from Poland, maybe 8 mins flying time to reach Moscow, plus Belarus will see these and alert Russia. But if NATO missiles would come from Ukraine, it's near, it's dispersed, and Belarus won't see them. Estonia and Latvia as unfriendly neighbors, Russia may manage because of the short border length.

Meanwhile, good data from statista here.

by Martin Armstrong, Feb 23, 2024
https://www.statista.com/chart/28489/ukrainian-military-humanitarian-and-financial-aid-donors/

by Katharina Buchholz, Feb 21, 2024
https://www.statista.com/chart/31789/ukrainian-respondents-opinions-about-direction-of-country/

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Peace and Prosperity, not war mongering, Feb. 19, 2024
Ukraine War 2, Two years of war and oil prices, Feb. 24, 2024

Sunday, February 25, 2024

BWorld 681, Low inflation, low unemployment, high growth — this is the Philippines

Low inflation, low unemployment, high growth — this is the Philippines
February 13, 2024 | 12:02 am

My Cup of Liberty
By Bienvenido S. Oplas, Jr.
https://www.bworldonline.com/opinion/2024/02/13/575175/low-inflation-low-unemployment-high-growth-this-is-the-philippines/

Last week, the Philippine Statistics Authority (PSA) released two important monthly reports, on the country’s unemployment rate for December 2023, and the inflation rate for January 2024. They show really good results — unemployment is at a 19-year low, inflation at a three-year low. See these stories in BusinessWorld: “Inflation sharply drops to 3-year low” (Feb. 7), “Jobless rate hits record low in 2023” (Feb. 8).

I am updating this column’s monthly monitoring of global and regional inflation and unemployment data. I have put together in Group A the G7 industrial countries, in Group B are the big South Asian nations, and in Group C are the big East Asian countries (see the table).

Budget Secretary Amenah F. Pangandaman has asserted again the optimistic trajectory of the Philippine economy, saying that “We are now in a low inflation, low unemployment, high growth path, the best situation that any economy can hope for. Our budget priorities will remain on improving both the hard and soft infrastructure for our people that will further raise their productivity, income and social well-being, their overall quality of life in the long term.”

Well said, Madam Secretary. In fact many G7 countries now have higher inflation than the Philippines — the UK, the US, Canada, France, and Germany. And the G7 unemployment rates are all higher than the Philippines’ except for Japan. High inflation, high unemployment, and low growth (even contraction in Germany) is the worst combination that any economy would wish to have.

One disturbing trend globally is that food inflation is higher than overall inflation. For instance, in January 2024, food inflation and overall inflation rates were, respectively: Germany, 4.2% and 2.9%; France, 5.7% and 3.1%; Italy, 5.9% and 0.8%; South Korea, 5.9% and 2.8%; Taiwan, 4.1% and 1.8%; Indonesia, 5.8% and 2.6%; and the Philippines, 3.5% and 2.8%.

These countries’ agriculture, climate, and energy policies have made big contributions to this ugly trend. Imposing high taxes on diesel (used by tractors, harvesters, trucks, irrigation pumps, fishing boats, etc.), for example, raises the cost of farming and transportation of produce. The Philippines’ diesel tax until 2017 was zero, then it became P6/liter after the TRAIN law of 2018 (RA 10963) was passed. And then there is land conversion from agriculture to solar farms.

Also last week, on Feb. 5, the Development Budget Coordination Committee (DBCC) held its first meeting this year, with new members Finance Secretary Ralph Recto and Special Assistant to the President for Investment and Economic Affairs Frederick Go, joining the old members, Economics Secretary Arsenio Balisacan, Budget Secretary Amenah Pangandaman, and the Bangko Sentral representative.

Secretary Recto postulated that economic targets should be revised towards more realistic levels and rates. See another story in BusinessWorld: “Growth, fiscal goals need to be ‘more realistic,’ says DoF chief” (Feb. 12).

Given the declining trend in growth globally, a mild reduction in the Philippines’ growth target, from 6.5%-7.5% to 6%-7%, is not a bad idea, to avoid future disappointment if targets are high and not attained a few months later.

There are three important policy measures that I think must be held and sustained.

One, control spending and limit public borrowings, from P2.2 trillion/year average in 2020-2023 to below P1.8 trillion/year in 2024-2028. This way, the target of reducing the Debt/GDP ratio, from 60% in 2023 to possibly 40% to 45% by 2028, has a higher chance of being attained.

Two, distortionary policies in agriculture and energy must be revisited if not reversed. This is to help reduce food inflation and, hence, overall inflation rates.

And three, avoid any new tax hikes in 2024 and possibly beyond. The Philippines’ current situation of high growth (3rd highest GDP growth in 2023 among the top 40 largest economies in the world), low inflation, and low unemployment (as discussed above) happened without any tax hikes.

On controlling spending, I want to mention that we should not entertain the lobby of the country’s defense establishment and their allies in media, academe, and think tanks, to purchase $36 billion (P2.016 trillion at P56/$) worth of military hardware (submarines, new battleships, missiles, and jetfighters). Excluded in their P2-trillion costly and impractical budget are spending for ammo, spare parts, and training. The Philippines should focus on diplomacy and negotiations, not war mongering.

And not only the military establishment but also the police, coast guard, and other agencies will be lobbying for their own trillions of pesos for additional acquisitions and manpower expansion. The Philippines may not prosper anymore as the agencies will just invent new spending, new borrowings, and new taxes.

If the military and various agencies push hard for their trillions of extra spending, one possible option is the massive, large-scale privatization of the land and assets of the Armed Forces of the Philippines, the Philippine National Police, and the Philippine Coast Guard. Use the proceeds of this privatization for their costly modernization, don’t pick the money from the taxpayers’ pockets.
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Economists and their bashers, quotes from Thomas Sowell

On July 16, 2009, The Economist (I call it The Statist) pilloried economists with a paper, "What went wrong with economics" https://www.economist.com/leaders/2009/07/16/what-went-wrong-with-economics. They wrote, "In the public mind an arrogant profession has been humbled...."

Two days after that I wrote a blog post about it. I said,

Economics' simplest definition is that "it is the study of proper allocation of limited resources"...

So, what's wrong or what went wrong with economics?

Nothing.

What's wrong with economists?

They sometimes behave like politicians throwing away subsidies, expensive welfare programs and various political favors.

What's wrong with this article?

The author forgot the definition of Economics when he took Econ. 11 several decades ago.

https://funwithgovernment.blogspot.com/2009/07/whats-wrong-with-economics.html

I followed it up, "What's wrong with economics, part 2" (Dec. 6, 2010),
https://funwithgovernment.blogspot.com/2010/12/whats-wrong-with-economics-part-2.html

So why did modern economics – as practiced by known economists – go into the policy of endless borrowing, endless taxation, endless welfarism and subsidies, knowing that resources (money from taxpayers especially) are limited, while those who seek welfare and subsidy, those who seek corporate bail-outs, those who seek rackets in governments, and even those who simply want to steal in government, are unlimited?

The quick answer would be the central planning mentality of many – but not all – economists.

Recently, another economist-bashing article,

Economists pilloried for getting forecasts wrong
February 4, 2024
https://bilyonaryo.com/2024/02/04/economists-pilloried-for-getting-forecasts-wrong/money/

“Many economists are actually a tribal clique,” she said, referring to a lack of openness to other scientific disciplines.

“They quote each other — men more than women but that’s another story,” the former IMF chief and French finance minister said. “But they don’t go beyond that world because they feel comfortable in that world.”

-- Christine Lagarde, former European Central Bank (ECB) President, former IMF Managing Director, former France Finance Minister.

That article to a certain extent is correct. Many economists are braggart, mayabang, especially those from the multilaterals and the big global banks. And Ms Lagarde is part of this cabal and now she criticizes the cabal, hehe.

Multilaterals like the IMF, WB, ADB, are into global economic central planning.

Same way, the UNEP, UNWMO, UN IPCC, the above multilaterals, are into global ecological central planning and energy rationing.

The WHO and above multilaterals are into global health central planning.

All central planners invent certain narratives. Like energy/oil crisis, hunger/food crisis, NCDs/smoking crisis, virus crisis, garbage/plastic crisis, climate crisis,... And there is only one solution -- more government, more UN and multilaterals as saviors.
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Among my favorite economists, Thomas Sowell (US) @ThomasSowell. Among his recent tweets:

Jan 31, 2024
There was a time when we honored those who created the prosperity and the freedom that we enjoy. Today we honor the complainers and sue the creators. Perhaps that is inevitable in an era when we no longer count our blessings, but instead count all our unfulfilled wishes.

Feb 6
There was a time when most Americans would have resented the suggestion that they wanted someone else to pay their bills. But now, envy and resentment have been cultivated to the point where even people who contribute nothing to society feel that they have a right to a "fair share" of what others have produced.

The most dangerous corruption is a corruption of a nation's soul. That is what this administration is doing.

Feb 9
When slavery is mentioned, too many people automatically think of whites enslaving blacks. That is not even one-tenth of the story of slavery, which existed on every inhabited continent. The very word "slave" derives from the word for some white people who were enslaved on a mass scale—the Slavs—for more centuries than blacks were enslaved in the Western Hemisphere.

Feb 10
There is nothing that politicians like better than handing out benefits to be paid for by someone else.

Feb 14
I don't understand how people who cannot predict the weather five days in advance can predict the climate decades from now.

Global warming, due to greenhouse gasses, is the latest in a long series of one-factor theories about a multi-factor world. Such theories have often enjoyed great popularity, despite how often they have turned out to be wrong.

Feb 17
Liberals try to show their concern for the poor by raising the level of minimum wage laws. Yet they show no interest in hard evidence that minimum wage laws create disastrous levels of unemployment among young blacks in this country.

Feb 25
One of the reasons it has taken so long for some people to finally see through Barack Obama is that people do not like to admit, even to themselves, that they have been played for fools by a slick-talking politician.

Saturday, February 24, 2024

BWorld 680, The nuclear option to energize growth

The nuclear option to energize growth
February 8, 2024 | 12:02 am

My Cup of Liberty
By Bienvenido S. Oplas, Jr.
https://www.bworldonline.com/opinion/2024/02/08/574259/the-nuclear-option-to-energize-growth/

The 2nd annual Ruperto P. Alonzo (RPA) Memorial Lecture will happen today, 3 p.m., at the University of the Philippines School of Economics (UPSE) in Diliman, Quezon City. The topic is “The Nuclear Option” and the economic implications. The event is jointly sponsored and funded by the UPSE-based Program in Development Economics Alumni Association (PDEAA) and the Philippine Center for Economic Development (PCED). PDE is a dear program of the late Prof. Ruping Alonzo who passed away in 2017 — today would have been his 76th birthday.

The main speaker will be Energy Undersecretary Sharon Garin, the panelists are Dr. Carlo Arcilla, Director of the Philippine Nuclear Research Institute (PNRI); Froilan Savet, First Vice-President and Head of Network of Meralco; Lino Bernardo, Head of Special Projects of Aboitiz Power; Paolo Pagaduan, Senior Lead for Renewable Energy and Just Transition, Asian Peoples’ Movement for Debt and Development (APMDD); and this writer as a PDE alumnus, batch 33rd (SY 1997-1999). The panel moderator will be Jay Layug, Senior Partner of Divina Law and a UPSE alumnus.

So, why the “nuclear option”?

NUCLEAR POWER AND INDUSTRIALIZATION

1. Almost all major industrial countries in the world have been powered partly or largely by nuclear energy since the 1960s and ’70s. The United Kingdom (UK) opened its first nuclear plant in 1956, and by 1965 its nuclear power generation was already 15.1 terawatt-hours (TWH) or 15,100 GWH. In 1965, the United States of America (US) was already generating 3.1 TWH through nuclear power, while that of France was producing 0.9 TWH.

2. Nuclear power is generally safe, cheap and highly reliable. Since the 1970s, there was only one major nuclear accident with high fatality, in Chernobyl, Ukraine in 1986. The latest nuclear accident in Fukushima, Japan in 2011 after a big earthquake and tsunami has zero fatality.

3. Even when some Western countries have reduced their nuclear power capacity, more Asian countries are turning to nuclear power to sustain their growth. From 2002 to 2022, these Asian countries have increased their nuclear power generation: China from 25 to 418 TWH, South Korea from 119 to 176 TWH, and India from 19 to 46 TWH. Major oil-gas producer and exporter United Arab Emirates quickly expanded its nuclear power generation from zero in 2019 to 10.5 TWH in 2021 and 20.1 TWH in 2022. Pakistan had 22.3 TWH generated by nuclear power in 2022.

4. Many countries that started “denuclearization” experienced slower GDP growth. In Table 1, one can see that France, the UK, Germany, Spain, Japan, and the US have shown this trend. In contrast, countries that expanded their nuclear power generation have experienced faster growth (at least 2.7% yearly), namely China, South Korea, India, and Pakistan. Taiwan has seen a trend in growth deceleration too, but it is still at 3.2% in the last decade.

WHY THE PHILIPPINES NEED NUCLEAR ENERGY, BADLY

5. Particularly for the Philippines, we need nuclear because it was coal power that saved us from possible daily “Earth Hours” every day for the past few decades and yet government has banned the building of new or greenfield coal plants since 2017. From 2008 (when the renewable energy law or RA 9513 was enacted) to 2022, the average increase of power sourced from wind was only 69 GWH/year, from solar, 94 GWH/year, and from biomass, 130 GWH/year. Power from geothermal and natural gas (Malampaya) was flat and even declining. Coal power was expanding by 3,620 GWH/year.

The implied capacity factor (ICF) — which compares the installed capacity with the actual generation — of intermittent renewables is low: 28% for wind, 25% for biomass, and 14% for solar. And yet they are favored by law and pushed by many sectors in the country and the world. Coal has a higher ICF of 61%, natural gas has an ICF of 55% (see Table 2).

The mothballed Bataan Nuclear Power Plant (BNPP) could have contributed some 4.6 TWH/year, assuming a capacity factor of 85%. That is bigger than the combined generation of solar plus wind of only 2.9 TWH in 2022. Small modular reactors (SMRs) and even micro modular reactors (MMRs) will greatly help many power-deficient on-grid islands and off-grid islands and provinces like Palawan, Mindoro, Masbate, Marinduque, Camiguin, Batanes, and so on.

I will discuss more of this in the PDEAA forum this afternoon. The event is open to the public and media, with no registration fee for both physical and online participants and will be streamed live on the UPSE Facebook page.

Again, the event is organized and funded by the PDEAA and PCED. But to be transparent, the PDEAA solicited some corporate donations and support, not for this particular forum but for the future PDEAA room at the expanded UPSE building. Our initial supporters are the Aboitiz Power Corp., Manila Electric Co. (Meralco), and Robinsons Retail Holdings, Inc. Thank you, guys, for your generosity and support. Your companies will be recognized inside that room once it is finished.
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