Philippines: Growth Need Not Come at the Expense of the Environment -- World Bank

December 2, 2010

MANILA, December 2, 2010—Economic growth need not come at the expense of the environment. A sustainable economy must rely on energy-efficient technologies and renewable energy sources, and must manage pollution and congestion that often accompany rapid urbanization. These are among the key messages of a report published by the World Bank and the Australian Government. This report was presented at today’s Renewable Energy Conference and Expo Manila 2010, where the H.E. President Benigno Simeon Aquino III and Hon. Secretary Jose Rene Almendras spoke about the commitment of the Philippines government in renewable energy. This Conference is part of the Department of Energy’s efforts for the National Energy Consciousness Month in December.

“The energy sector has to be transformed towards much higher efficiency and more widespread use of clean, renewable energy before it’s too late,” World Bank Senior Energy Specialist Xiaodong Wang, lead author of the report, said. Australian Ambassador Rod Smith said: “Reducing the impacts of climate change through mitigation and adaptation remains a high priority for Australia’s aid program. This AusAID funded report is a useful tool for governments as they look to introduce new ‘green’ technologies and reduce rates of carbon emissions growth over the next twenty years. It also analyses the key challenges that need to be addressed by countries to allow these technologies to be adopted.”

The Philippines is one of the leaders in East Asia and the Pacific (EAP) region to utilize its indigenous renewable resources in power generation, Wang said. She said that the Government must continue to give priority for renewable energy, which currently provides 30 percent of power supply in the country. The Philippines ranks second in the world, only behind the United States, in geothermal capacity. It has an installed geothermal capacity of 2,000MW, which provides 17 percent of the country’s power generation. But much needs to be done to tap the country’s potential for energy efficiency, Wang said, as energy conservation is a short-term “win-win” option for the Philippines. Energy conservation is a cost-effective short-term option to address power crisis in the Philippines, and can also reduce local air pollution, enhance energy security, and mitigate climate change.

The report, entitled “Winds of Change: East Asia’s Sustaining Energy Future”, states that sustaining economic growth without compromising the environment is expected to be the greatest challenge facing East Asia over the next two decades. Growth entails rapid urbanization and, by 2030, the Philippines will have nearly 68 percent of its population living in cities, according to the report. This is not without cost, Wang said. The report notes that energy consumption is expected to double over the next two decades. Energy conservation is important, the report said, and the Philippines would need to reduce its energy intensity by 3.1 percent a year, in order to get onto a sustainable energy path.

Energy conservation as “win-win” option
The report emphasizes the need for energy conservation as a short-term “win-win” option for the Philippines. To tap the country’s potential for energy efficiency requires effective regulations such as efficiency standards, financial incentives, and institutional reforms of a national champion, the report says. For example, adoption of energy efficiency standards to new electric appliances based on the most efficient models on the market today could shave as much as 9.5 percent off residual power demand by 2030, compared to the Business As Usual Scenario in the Philippines.

Sound price-setting methodologies and tools in the power, coal, oil, and natural gas subsectors are fundamental to an efficient, sustainable, and secure energy sector, the report says. The energy price can be a driving force to discourage consumption, mitigate rebound effects, and encourage clean fuels. Prices should (1) remove fossil fuel subsidies, (2) internalize environmental costs through environmental taxes, and (3) provide incentives to invest in end-use energy efficiency.

The report also notes the importance of smart urban planning based on higher density, spatially compact cities and more mixed-use design that also allows growth near city centers and transit corridors to prevent urban sprawl. Smart urban planning also needs to go hand in hand with public transport to prevent more people from opting for private cars, as well as clean energy options such as green buildings and efficient vehicles.

Renewable energy: a long-term, sustainable option
Alongside energy efficiency measures, the Philippines must continue to utilize its rich renewable energy resources, including hydro, wind, biomass, and geothermal. The Government plans to double its current renewable energy capacity by 2030. The Philippines has also adopted its milestone Renewable Energy Act of 2008 which intends to activate renewable energy development by creating an attractive market for energy generation. A sustainable energy growth path requires huge investment, says the report, and this would be a major hurdle. The report estimates that the East Asia and the Pacific region would need a net additional investment of US$80 billion per year to reach such a sustainable path.

Strong political will and international cooperation needed
Policy tools and financing mechanisms exist for such transformations towards energy efficiency and increased reliance on renewable energy sources, the report says, but only strong political will and unprecedented international cooperation will make them happen. The report says that developing countries cannot do it alone and will need substantial concessional financing, technology transfer and institutional strengthening from the developed world.

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