Center for Global Development

50 by 30

The Philippines has committed to an ambitious renewable energy target of 50% by 2030, but is it up to the task?

I guess the question here is should the Philippines be doing this (setting up such an ambitious goal)?

To answer this question, we first need to look at the cost or potential adverse impact of maintaining higher concentrations of carbon dioxide in our atmosphere might have on us. If you accept the argument that man-made pollution is causing climate change, i.e. creating more severe weather disturbances, then the impact associated with these activities is very large indeed.

The Center for Global Development has tried to quantify the effects of severe weather events. In its report, the country ranks 4th most vulnerable country in the world to be directly impacted by extreme weather events. We are ranked below China (1st), India (2nd) and Bangladesh (3rd). If you consult their working paper on the effects of these events, you will find out what that means for the population.

Between 2008 and 2015, the likelihood of severe weather events is placed at 58%. While the impact of these disturbances can be mitigated through higher income and better regulations, about 5% of the total population could suffer. With our population expected to rise above 100 million in the next five years, that means about 5 million Filipinos will be in need of some form of assistance from natural disasters.

Using a small damage cost of 10 thousand pesos per individual, the total bill could be as much as 50 billion pesos. That excludes any damage suffered by the economy. In the first quarter of the year, the Australian economy contracted in part due to the floods that ravaged Queensland. The goal of reaching 7-8% might have to be scaled down by 1-2% points.

So if we are to take some responsibility for fixing the problem, should we not look at our contribution to it first?

Yes of course, and to answer that question, take a look at this map that was posted originally on The Cusp. It shows that the Philippines has a relatively small footprint compared to the likes of China, India and the West. The Philippines accounts for only 67.5 71 thousand kilo tons of green house gases or CO-2 equivalents, while China’s footprint is a hundred times larger 6.5 million in 2007; India’s is 1.7 million 25 times larger. By the way, in 2006, China’s footprint exceeded the US for the first time (6.1 M kt Co-2-e that’s million kilo tons of CO-2 equivalent, compared to 5.7 M kt for the US).

In per capita terms, the Philippines is also a minor contributor with only 0.8 0.78 metric tons of CO-2 equivalent emissions per person compared to twice that amount for nearby Indonesia (1.8 t) which had a comparable per capita income of 3,300 thousand dollars in 2007 2006 (in purchasing parity terms). That means the Philippines uses less than half the emissions to produce one dollar of GDP compared to Indonesia. China on the other hand saw its per capita footprint rise to 4.7 mt per person as its per capita incomes rose to $4,790. India is still way behind with per capita incomes of $2,540 and 1.5 mt of emissions per person.

What all of this means is that the energy mix of the country which has hydro and geothermal assets is much more eco-friendly compared to our close neighbors in the region. This means that each Filipino has contributed much less to the overall problem and yet will suffer an inordinately higher cost. This ought to be an argument for us gaining more grants to mitigate and adapt to climate change.

Which brings us back to the question posed at the start, is the use of a 50% renewable target appropriate?

The answer I suppose is yes if you consider the potential of using solar, wave and wind energy. The Philippines being a tropical country on the typhoon belt should find a way to harness these abundant sources of renewable energy.

Compared with other countries, the Philippine target seems to be well placed. China is eyeing a 40-45% reduction from its 2005 levels by 2020. India is looking at a 20-25% reduction under the same timetable. Most of the rich nations are looking at 20-30% reductions as well.

It then becomes a question of affordability on the part of the consuming public. Since the country already has one of the highest costs of electricity in the ASEAN region, what set of policies would help?

Coal which is the dirtiest but cheapest source of energy and therefore most attractive for a middle income country has to be the first on the hit list, if we are to reduce our carbon footprint. A representative of Greenpeace noted that while the long term goal was ambitious, the government failed to demonstrate its commitment to it by lining up new coal-fired power plants in the near term to address the bulk of increased demand.

As a Productivity Commission report in Australia last month pointed out, to move from less costly but dirty coal to more costly and less polluting power sources such as oil and gas and non-renewable sources requires large interventions on the part of the government. The most efficient way to make the transition is through an emissions trading scheme rather than regulation or direct action policies (like Renewable Energy Certificates, Feed-In Tariffs or capital subsidies), the Commission concluded.

Australia which is eyeing a $15-20 dollar per ton carbon tax as a starting point of an emissions trading scheme to achieve a 5-25% reduction of 2000 based emissions by 2020 is also looking at amending its tax and compensation systems to compensate households for higher energy costs. Treasurer Wayne Swan announced that this would reduce gross national income by 0.1 per cent per capita, making it very affordable.

In order to address the question of affordability, the country will have to look at the question of whether or not to impose either a carbon tax or an emissions trading scheme down the track. China is already considering piloting it in a few of its provinces. Japan and South Korea have plans of introducing an ETS although they have been put on hold. The Western Climate Initiative seeks to adopt an ETS in seven western states of the US and four provinces in Canada. Thirty countries in the EU have already adopted an ETS and so has New Zealand.

If the Philippines goes down the same road, it will have a lot of catching up to do. The goal would be to make the transition less costly to the economy and the populace. That’s as far as mitigation goes. In terms of adaptation, it will have to secure as big a share as it can from the global fund set up to help developing nations. As a middle income country, the Philippines will find it hard to justify more being spent here compared to much poorer nations. Let’s hope that our government is up to the task.