Energy Summit Identifies “Quick Wins”

PRESS RELEASE
5 February 2008

The 2008 Philippine Energy Summit held at the SMX convention center, Mall of Asia from 29-31 January 2008 identified some initiatives that apparently meet with some consensus (“green” initiatives). Some initiatives require additional information or clarification (“yellow” iInitiatives). Other initiatives are contentious and will require extended consultations and negotiations among the stakeholders involved (“red” initiatives).

The “color coding” of initiatives is a way by which DOE is scheduling the further processing of the outputs of the Energy Summit.

In the ADB follow-on workshops held to review the outputs of the Summit, the 120 DOE officials and resource persons from government, the private sector, and NGOs tentatively identified the following initiatives as priority initiatives that can already be pursued (“green” in the DOE lingo).

Power Cost
The top most concern that was raised during the pre-Summit are the following: Facilitating and ensuring true competition in the electric power industry; and making electricity rates competitive for the industry and business sectors. On the first concern, the solution offered was to revisit EPIRA and its implementation that will focus on, among other things, (1) appropriate threshold level of privatization of NPC generating assets and NPC-IPP contracts; exemption of the self-generation facilities in the imposition of universal change and certificate of compliance requirements of the Energy Regulation Commission, and the issuance of detailed Competition Rules.

On making electricity rates competitive, it was proposed that a concept paper on Performance-based Industry Competitiveness Fund be developed jointly by the DOE and DOF to help industry compete globally. There was also an agreement to accelerate open access and retail competition in PEZA economic zones as what the President has directed DOE during the Energy Command Conference in August 2007.

Another strategy that was identified was to better develop targeting of subsidies for the poor, which include the proposal to remove or exempt small island grids and missionary areas from the imposition of universal charge which is currently at P0.04 per KWH.

There is also a consensus that to lower rates, there should be a program to implement efficient electricity system management and consumption. To realize this, it was agreed that the Time of Use (TOU) program and pricing must be accelerated.

Oil Price
Tax is a significant component of oil prices. This has led some sectors to clamor for suspension, scrapping, or calibration of the implementation of RVAT as the major means of mitigating the impact of high prices.

However, tax revenue is the lifeblood of government. A compromise initiative is for government to develop a targeted-expenditures scheme for pro-poor projects from oil tax collections. This can include credit, entrepreneurial, and lifeblood scholarship programs for, say, children of public utility drivers. Tax revenue can also be used to support infrastructure development, improvement, as in the case of highways.

Promoting Renewable and Alternative Energy
The immediate actions recommended to promote renewable and alternative energy include the following: improvement of RE and AE policies anchored on the passage of the Renewable Energy Bill and the National Biofuels Program, the creation of a “one-stop-shop” for sustainable energy projects, the improved access to financial packages, and capacity building initiatives. Strengthening public and private sector partnership in promoting RE and AE is envisioned to serve as the key means for ensuring the installation of some 2,500 MW renewable energy facilities by 2025, and the utilization of biofuel blends of at least 2 percent biodiesel and 10 percent bio-ethanol blends by 2009 and 2011, respectively. This can be complemented by the start of commercial operation of public buses fueled by compressed natural gas and the expansion of taxi operations utilizing auto LPG as fuel.

Promoting Energy efficiency
In the area of energy efficiency, among the priority proposals are a major retrofit program for commercial, industrial, and residential sectors, public transport leasing, the expansion of mass transport systems, the promotion of non-motorized technologies, the rationalized operation of tricycles, and an aviation fuel efficiency enhancement program.

Accelerating investments in oil and gas exploration
Among the issues and concerns that were raised during the workshop by the stakeholders, which consisted mainly of petroleum companies, the principal item was their problem in securing the permits and approvals from various government agencies and local government units (LGU), as well as from the non-government organizations (NGO) and the host communities, in order for their petroleum exploration and development to proceed. The initiative that was presented to deal with this issue is for the Department of Energy to set-up an Energy Investment Center, a unit that would serve as a one-stop shop for petroleum investors that would provide them assistance in dealing with stakeholders on the social, environmental and security issues of their operation and concerns with other government agencies.

Social Mobilization
In the area of social mobilization, one of the key concerns expressed in the Summit was the need for a platform for convergent cross-sectoral actions on energy issues. Among the initiatives that have been identified are the development of a decentralized multi-stakeholder energy planning system, a campaign for a mind and behavior “switch” towards energy conservation, alternative energy, and renewable energy, formulate and advocate an energy policy agenda at both national and local levels, create multi-stakeholder implementation mechanisms, and develop capacity

Performance Monitoring
The main concern relating to performance monitoring is the lack of a cross-sector performance monitoring system for energy. Among the initiatives in this area are the formulation of a cross-sector performance monitoring and feedback plan, the formulation of cross-sector performance indicators and standards, the establishment of a cross-sector performance monitoring and feedback system that will conduct a cross-sector performance baseline, build a database, and establish an awards and incentives system. Also, capacity development in performance monitoring needs to be undertaken for the various stakeholders. An immediate concern to be addressed is how to inject transparency in the sharing of energy information so that it is more widely available to all the stakeholders.

The performance monitoring system will build on existing indicator systems for energy, as well as the Organizational Performance Improvement Frameworks of agencies belonging to the energy family.

Carbon Tax
The Summit generated a lot of controversial ideas about how to solve the country’s energy problems. While seemingly unfeasible, they caught the attention of many as merely being “ahead of their time”. One such example of a “yellow” or “green” initiative is the proposal for a carbon tax. Much of the discussions at the Summit revolved around ways of reducing the prices of oil products by eliminating tariffs and value added taxes on them. A radically different view however also came out of the Summit with a proposal to, instead, raise taxes on all products that emit carbon and abolish income taxes. The logic of this proposal is that taxes on oil products effectively penalize polluters and discourage consumption of polluting products like diesel or coal. Moreover, such higher prices for oil products will encourage development of the alternative fuels that offer the long-term solutions to the country’s energy problem.

The Energy Summit generated more than 100 initiatives to address energy problems. These initiatives came from the various sector represented – the oil industry, industry and export sector, the transport sector, the consumer sector, and the labor sector.

“ One Summit will not solve the energy problems of the country,” Secretary Reyes pointed out. “The Summit was a good start that allowed us to address the energy problems in concert.” In extracting the voluminous and varied inputs from the stakeholders, the DOE has the obligation to give these inputs careful attention and consideration in formulating the country’s energy program of action.