Ronald Goseco l December 15, 2023 l The Manila Times
CHRISTIANS from many backgrounds celebrate the Advent season with reflections on hope, peace, love and joy. The overhang of several events makes it challenging for many. The global economy is still reeling from supply chain bottlenecks brought about by the two conflicts in Ukraine and the Middle East. Markets and geopolitics make everyone nervous and unsettled. The recovery from the pandemic could have been smoother without these conflicts. The business mood is downbeat, with high interest rates and high debt levels. The recession that many economists forecasted seemed to have been averted, though, and many industries actually flourished. One of these is the emergence of clean energy. This was led by solar energy and electric vehicles (EVs). These provide a glimmer of hope and good tidings for a year that was dominated by news of war.
According to the International Energy Agency’s (IEA) recently released World Energy Outlook 2023, investments in clean energy have risen by 40 percent since 2020 with the strengthening of the economic case for mature clean energy technologies. Energy security also became an important factor because energy itself became a weapon of war. Although not all clean technologies are thriving, there are strong examples of an accelerating pace of change. In 2020, the IEA said one in 25 cars sold was electric; in 2023, this is now one in five. More than 500 gigawatts (GW) of renewable generation capacity are set to be added in 2023, which is a new record. More than $1 billion a day is being spent on solar deployment. Manufacturing capacity for key components of a clean energy system, including solar PV modules and EV batteries, is expanding fast. This momentum is why the IEA concluded in its Net Zero Roadmap that a pathway to limiting global warming to 1.5 degrees Celsius, though difficult, still remains achievable.
At the COP28 climate talks, the Philippines co-signed a pledge to triple the world’s renewable energy capacity and double energy efficiency. The Department of Energy said that this move is aligned with the government’s target of increasing the share in the country’s renewable generation mix to 30 percent by 2030 and to 50 percent by 2040. The current power generation in the Philippines heavily relies on fossil fuels, with the country generating 60 percent of its electricity from coal. According to a report by the Center for Energy, Ecology and Development, the Philippines should end its coal dependency by 2035 and almost phase out gas-fired generation by 2040 to meet the 1.5 degrees Celsius goal. According to this report, 152 terawatt (TW) hours will be required by 2050 to meet future electricity demand and phase out fossil fuels. Weaning off fossil fuels and shifting to renewables should also reduce electricity costs.
Two conglomerates are spearheading the energy transition in the country. Aboitiz Power recently announced plans to tap low-cost and long-term funding to retire some of their coal plants and reinvest the proceeds to renewable energy. According to them, they are now targeting a total of 4,600 MW of clean energy and a 50:50 balance between their renewable and thermal capacities by 2030.
Ayala’s ACEN, on the other hand, completed the world’s first Energy Transition Mechanism transaction last year. This enabled the early retirement of the 2X135 MW South Luzon Thermal Energy Corp. (SLTEC) coal plant and its transition to clean technology by 2040. At the recent COP28, ACEN CEO Eric Francia announced an earlier retirement of this plant. It will be tapped as a candidate plant for transition credits to accelerate its retirement 10 years ahead of schedule. He signed an agreement with collaborative partners Monetary Authority of Singapore and the Rockefeller Foundation to implement this project. There was a high degree of excitement when this was announced because it will be the world’s first again, and it will be a model not just for the Philippines but for the rest of the world.
To accurately calculate and set pricing for the transition credits in SLTEC, the Verra methodologies will be enforced. This is currently the world’s most widely used greenhouse gas crediting program. Verra also sets the global standards for climate action and sustainable development. Due diligence on the facility will be carried out in the first quarter of 2024, and ACEN’s decision on the application of transition credits is expected by April. This program also considers a just energy transition, which prioritizes social equity. This aims to ensure that the benefits and burdens of this transition are distributed fairly among the communities, employees and other stakeholders, including lenders and owners, to address social and environmental justice concerns.
The pathway to limiting global warming to 1.5 degrees Celsius is starting to look possible. The emphasis now will be on the collective efforts needed to achieve this sustainable future.
Ronald Goseco is a Finex Foundation trustee. His opinions are his own.