Beyond Energy 101: The Energy Summit as a High-Powered Learning Event

PRESS RELEASE
5 February 2008

The 2008 Philippine Energy Summit held from 29-31 January 2008 at the SMX Convention Center, Mall of Asia, was a veritable high powered hands-on seminar on energy and its links to the economy, the environment. There were in-depth reports on the impact of current oil price trends at the global, regional, and national levels. The security threats to supply, high prices, and environmental harm caused by fossil fuels were addressed. Briefings on the energy situation in the world , the region, and in the Philippines were provided by a cast of national and international experts and officials of international organizations.

Thomas Crouch, Deputy Director General of the Southeast Asia Department of the Asian Development Bank (ADB), reported that world energy demand is forecasted to grow by 1.6% until 2030. 70% of that growth is expected to come from increased energy demands of emerging economies. At the same time, import dependence for oil and natural gas is also anticipated to rise.

Crouch said that a “fossil fuel supply based solution alone is not sustainable” to address energy security. Apart from contributing to greenhouse gas emissions, energy investment requirements are huge since newly found deposits are smaller, deeper and harder to reach. As such, the ADB’s energy strategy is to promote energy efficiency and renewable energy.

Mr. Sohail Hasnie, a Senior Energy Specialist at the ADB, presented a proposal to switch to energy efficient lights. Global electricity demand for lighting can be reduced by 40% by using energy efficient lights. This would translate to cash benefits in terms of savings in generation investment, fuel costs, and carbon credits.

According to Dr. Cayetano Paderanga Jr., Chairman of the Institute for Development and Econometrics Analysis Inc., sectors of the Philippine economy that will be most affected by high oil prices are petroleum refineries, manufacturers of asphalt, lubricants and miscellaneous products of petroleum and coal, air transport, public utility, and public transport operations.

The export industry in the Philippines has also been severely affected by high oil prices. Mr. Sergio Ortiz-Luis Jr., President of the Philippine Exports Confederation and Employers Confederation of the Philippines, said that the proportion of exporting companies has decreased in the last year. “More businesses in the Philippines (68%) cited energy costs as having a major impact on cost pressures than anywhere else in the world,” Ortiz-Luis added.

Oil companies for their part stressed that they could do nothing about oil supply and the resulting international prices. According to Mr. Edgar Chua, Country Chairman of Shell Philippines, the country can mitigate the local impact through demand management, fuels diversification and supply security, emergency preparedness, and oil price risk management.

Another available alternative is to subsidize oil prices. However, Mr. Neil Atkinson, Senior Consultant of KBC Market Services in London, reported that “social policy objectives can be met more efficiently without subsidies, but some mistakenly see no subsidy as abandonment of objectives. A social security system targeted at poorer sections of society is more cost effective than subsidies. Poor people often don’t have access to personal transport so [they] benefit less…”

Representatives from the consumer and transport sectors also highlighted the impact on their respective sectors. Consumer and Oil Price Watch Chairman Raul Concepcion proposed safety nets for poor consumers such as removing the 12% VAT for LPG, increasing the lifeline rate subsidy for Meralco customers, and accelerating the CNG/LPG program for Metro Manila buses and jeepneys.

Additional proposals for the transport sector were put forward by Atty. Vigor Mendoza, chairman of the United Transport Koalisyon. These include expanding the anti-colorum campaign outside Metro Manila, increasing the number of gas stations giving discounts, and reducing fees and other charges imposed by Department of Transportation and Communication (DOTC) frontline offices.

In addressing the imperative of energy security and sustainable development, experts analyzed the energy options available to the Philippines. Mr. Jesse Ang, acting country manager of the International Finance Corporation, reported that the country has not had significant domestic oil production and it relies on imports for much of its coal consumption. In view of this, other options were considered such as renewable, solar, and nuclear energy. A key factor in the analysis is the impact of energy consumption on climate change.

Renewable energy (RE) presents opportunities for a new business model for the energy sector. According to Mr. Jose Lorenzo Tan, Vice Chairman of the World Wide Fund for Nature Philippines, renewable energy provides better profits, better utility, better reliability and it helps stabilize global climate. Workshops in promoting RE expanded the dialogue to include RE regulatory framework and policy direction, market and financial barriers, and technology options.

On the legislative front, Senator Miriam Defensor-Santiago, chair of the Senate Committee on Energy, reported that the Senate will look into measures that would provide incentives for clean coal technologies, place a premium on alternative fuels bills, increase the efficiency of biomass fuel use, subsidize capital costs for rural grid electrification, among others. Santiago added that she sees no more obstacles in the Senate’s passing of the Renewable Energy Bill.

On the other hand, Senator Juan Ponce Enrile discussed consumer protection in light of the proposed amendments to the Electric Power Industry Reform Act (EPIRA). Enrile heads the energy sub-committee on EPIRA amendments. The said committee is now preparing its final position on the acceleration of open access, National Power Corporation’s stranded debt and contract cost recovery, cross-ownership and market power abuse, the power of the Energy Regulatory Commission to grant provisional authority to increase charges, and the magna carta for residential electricity consumers.

Congressman Miguel Arroyo, who heads the Energy Committee in the House of Representatives, also informed participants on the House’s proposed amendments to the EPIRA. “House Bill No. 3124 addresses key bottlenecks which have hindered the full implementation of EPIRA law, in the areas of the privatization of state power generation and transmission assets, establishment of a wholesale electricity spot market and removal of cross- subsidies built into power rates,” Arroyo said.

The plenary presentations and other proceedings of the Energy Summit can be downloaded at www.doe.gov.ph/esummit. The materials are immediately made available to the general public as part of the continuing and enhanced social mobilization effort of the Department of Energy.