Gas development bills to burn holes in people’s pockets
‘Unlike during the power crisis of the 1990s, when there was no choice but to bite the bullet, this time there is a choice, a choice called renewable energy’
The passage of House Bill 8456, or the Philippine Downstream Natural Gas Industry Development Act, on August 2 by the House of Representatives is bad news for electricity consumers in the country on many levels. The bill, now pending before the Senate, is part of the priority legislative agenda of the Marcos administration and seeks to promote the importation of gas to solve the country’s energy woes through incentives to industry players.
No less than Department of Energy Secretary Raphael Lotilla has said that gas is expensive. Yet the government has chosen to pursue the path of gas as a “bridge fuel” in transitioning to a fully renewable energy-powered grid. The argument goes that gas is cleaner than coal and is needed to power the country’s grid, which is projected to need 8,000 megawatts (MW) more in generation capacity by 2028.
The truth is that gas is not the way to achieve this. The DOE’s Green Energy Auction Program already has 5.5 GW of new renewable energy sources set to come in. There can be more if only the government will scale up its ambitions beyond the 35% share of renewable energy by 2030 outlined by President Marcos in his SONA.
But what is wrong with gas complementing renewable energy? The most immediate reason is cost. Secretary Lotilla is not wrong: gas is indeed expensive. South Premiere Power Corporation (SPPC) charged Meralco consumers more than P8 per kilowatt-hour in May for electricity from its Ilijan gas power plant. The cost of renewable energy sources? As low as P3 per kilowatt-hour. The difference is staggering. And renewable energy is unaffected by volatility brought by crises and wars that normally introduce exorbitant price increases to fossil fuels like gasoline, coal, and gas. All power comes from local sources, doing wonders for our energy security.
The Institute for Energy Economics and Financial Analysis (IEEFA) identified four long-term risks for gas investments in the Philippines. The first is the extreme volatility of the gas market, which also puts at risk the foreign exchange reserves of the country. Second is the high power prices that will inevitably come from sourcing electricity from a more expensive fuel. Third is the uncertainty of supply as nations scramble to secure gas resources for their own citizens. Finally, there is a risk of over-investment when you have generous incentives for projects that may turn out to be white elephants in the future due to cost, supply, and regulatory concerns. All these risks, again, are not present with renewable energy.
Another reason is the damage to the environment and livelihood of host communities. A gas power plant requires massive cooling, which they get from seawater. Heated water is then returned to the sea, changing the temperature and driving away fish, and killing corals. Massive ships carrying liquefied natural gas (LNG) drive away fishing boats, as their dangerous cargo means all vessels have to be far away when they pass by. There is also the danger of maritime accidents that can damage the critical environment of the Verde Island Passage, as most of the gas projects are located in Batangas. Renewable energy sources do not pose the same problem, as there is no need to import fuel.
There is also the problem of climate change. In the past few weeks, the country has been subjected to nonstop rain soon after the very hot month of July – something that we have taken as the new normal. But this is the effect of climate change – more frequent, stronger typhoons from the continuous emission of greenhouse gases into the air from fossil fuels such as gas. Gas is said to emit less carbon dioxide than coal, but imagine if anyone would feed their children food that has less poison when food without poison is available. Methane, the primary component of gas, is also a greenhouse gas that is more potent than carbon dioxide in trapping heat in the atmosphere.
Finally, there is the problem of incentives. The bill, in its wisdom, will subsidize some of the most profitable companies in the world through incentives. Not only are these incentives unnecessary – these companies will follow the profit and profit is in the high prices of gas – these incentives would be given without conditions to help lower electricity prices for consumers or alleviate the destructive effects of gas on the environment and host communities. More profits for big companies, and misery for everyone else.
The Philippine Downstream Natural Gas Industry Development Act is a clear example of what happens when a government focuses on macroeconomic numbers instead of realities on the ground and scientific data. GDP growth, number of power plants, foreign direct investments – all these numbers mean nothing if we can’t turn on the lights because we always fear what news our electricity bills will bring. And unlike during the power crisis of the 1990s, when there was no choice but to bite the bullet, this time there is a choice, a choice called renewable energy.
Renewable energy has none of the drawbacks of gas and all the benefits. It can be scaled up and down as necessary and can be implemented even in microgrids for the full electrification sought by President Marcos. All it needs is a push from the government, a push the government is giving gas. We can only hope that the Senate will realize the mistake the House made in passing this gas bill, and reverse course.