April 17, 2024

A think-tank said the Philippines, an energy insecure country, needs to further develop its indigenous resources and reduce its reliance on imports.

The policy paper published by the Philippine Institute for Development Studies finds that the country suffers from energy insecurity after it assessed the six elements of energy security–sufficiency, reliability, resiliency, affordability, accessibility, and sustainability.

On energy sufficiency, the Philippines’ share of indigenous sources and self-sufficiency ratio are declining as its reliance on imports is increasing, according to the research issued last month. Moreover, the country’s import sources are not highly diversified, making the Philippines vulnerable to the sudden unavailability of major sources. And while energy efficiency is increasing, it still needs improvement.

On reliability, or the continuous availability of energy, the study notes that the electric power reserve margin is enough, but there were instances when the available capacity dipped so low that the reserve margin became tight. Power interruption is also still a problem, while energy commercialization rate has been stagnant, suggesting slow improvement in the domestic supply chain infrastructure.

Resilience to oil supply shocks is low given the high concentration of the Philippines’ import sources and low average daily inventory. Energy system resilience means being prepared for supply disruptions and having the ability to recover from such disruptions quickly. Research also finds that access to commercial energy, or energy with formal pricing, has been slow in recent years, again implying little improvement in the domestic infrastructure.

On affordability, final energy use is a bigger problem in the Philippines than in other Southeast Asian countries because energy products tend to be more unaffordable in the country, observes the paper. The report mentions data showing that in 2020, the Philippines had the highest retail prices for kerosene and gasoline and a relatively high cost of diesel in the Association of Southeast Asian Nations region. For electricity prices, data indicates that the Philippines had the highest electricity prices in 2020 in ASEAN.

On accessibility, the study says universal access to electricity has still not been attained. “With an electrification rate of 92.96 percent, the Philippines is one of the three countries in the region, alongside Lao PDR and Myanmar, that are still far from achieving universal access,” states the report authored by Adoracion Navarro, Ma. Kristina Ortiz, and Jethro Camara.

Sustainability of energy practices is also a concern as Filipinos are currently on a high carbon dioxide equivalent (CO2 e) emissions path, says the paper. “On average, the level of pollution generated by Filipinos has increased over time,” it adds. Environmental degradation and climate change threaten energy security, especially for future generations.

With these findings, the report titled “Evaluating energy security in the Philippines” pushes for the adoption of policy reforms and specific actions that will beef up energy security.

It recommends the further development of the country’s indigenous resources and reduction of its reliance on imports by clarifying the investment framework for upstream energy development.

“Crafting policies that supplement the regulatory framework for upstream activities provided by Presidential Decree (PD) 87 and PD 1459 is imperative, along with finding ways to hedge against risks from low diversification of import sources,” the authors said.

The paper also suggests improving power reliability and resilience by implementing reforms that will enable grid expansion and modernization. Proposed actions include ensuring adequate contracting of ancillary reserves in the transmission sector and upgrading of infrastructure in the distribution sector.

“Diversifying energy supply sources and ensuring adequate electric power reserve margins are strategies for building resilience. Having inventories of liquid fuel is also a resilience-building strategy,” the report added.

To lower prices, further competition in the electric power market must be promoted, while the demand for petroleum must be reduced by facilitating the clean energy transition in the transport sector.

Other recommendations include improving accessibility to electric power services through better implementation of the electrification program for unserved areas, and improving environmental sustainability by educating users to practice energy efficiency and pursuing a clean energy transition through industry support and green finance. – Press release