Promoting Renewable Energy: How Fares the Philippines?

Abstract

Sustainability is a key component of energy security. To help achieve the global long-term goal of zero-carbon emissions by 2050, the Philippine government has implemented laws, policies, and programs to increase the share of renewable energy (RE). An important example is the feed-in-tariff (FiT) scheme. The share of RE in electricity generation, however, has fallen from 45.4% in 1990 to 21% in 2019, a clear indication that the interventions have not been effective. Main constraints to the expansion of RE are formidable, which include market-based factors, technology inertia, market failure, and political economy issues. Even if policies are designed to overcome these constraints, there has been a delay in the implementation of some of them; but more importantly, many of the interventions do not adhere to the principles underlying sound industrial policy. In particular, policies should abide by the principle of embeddedness, which refers to the coordination between the public sector and private firms that allows the former to be aware of the constraints and opportunities of the latter. To address this problem, policymakers must incorporate said principles and streamline future interventions by anchoring them to three aspects: the moratorium on greenfield coal plants, the study on Competitive Renewable Energy Zones (CREZ), and the serious consideration of incorporating nuclear power in the energy mix. Meanwhile, the COVID-19 pandemic has provided an opportunity to “build back better”. Studies have shown that some “green” fiscal recovery measures have strong multiplier effects and, at the same time, promote sustainability. An example is retrofitting buildings to enhance energy efficiency. The experience of other Southeast Asian countries in designing interventions can be useful but policymakers should acknowledge that one size does not fit all.