IN BRIEF:
• Philippine organizations are continuously advancing towards transitioning to more renewable energy sources while also considering fairness to its end-users.
• Businesses have implemented various strategies and innovations in transitioning to more just energy operations.
Amid the increasing demand for energy accompanying a developing economy, both the public and private sectors in the Philippines continue to advance the transition toward a sustainable, energy-independent economy, adhering to the principles of a ‘Just’ Energy Transition (JET).
JET entails promoting social well-being, including the protection of vulnerable groups, while achieving cleaner and more efficient models to safeguard environmental integrity and create opportunities for new economic growth.
Bringing together industry leaders, policymakers, and sustainability experts, the SGV Knowledge Institute, together with SGV Sustainability, hosted a conference, “Building a Sustainable Future Through Just Energy Transition.” The event covered innovative strategies, best practices, and collaborative frameworks in both the supply and demand side of the power sector. The sector seeks to achieve its ambition to aid economic stability by reducing dependence on global market volatilities tied to imported fuel.
Achieving a just transition requires prioritizing energy independence. Driving investment to utilize indigenous and renewable energy sources is essential for reducing the Philippines’ reliance on volatile fossil fuel imports. The economic implications of relying on external sources for traditional energy components were also highlighted. In July, fuel imports amounted to $1.40 billion or over 12% of total imports, equivalent to more than one-third of the trade deficit.
The conference emphasized the vulnerability and volatility of the Philippine energy system to spikes in energy prices, driven by external factors such as global market shocks, supply constraints, geopolitical tensions, and currency fluctuations. These factors have further triggered increases in interest rates and the cost of capital, while simultaneously reducing foreign investment interest. By diversifying and developing indigenous renewable resources, we can strengthen supply resilience, energy affordability, and accessibility, thereby paving the way for a JET.
SUPPLY-SIDE INNOVATION
Keynote speaker Felix William Fuentebella, Undersecretary of the Department of Energy, highlighted the strategic direction of ‘ARC’: Access and Affordability, focusing on energy provisioning; Reliability and Resiliency of energy infrastructure; and Clean and Sustainable Energy. This approach aims to increase renewable energy capacity and address the energy trilemma of security, affordability, and sustainability. By creating a balance between energy growth, access, and cost, it advances energy self-sufficiency and accelerates the transition to renewable energy usage.
In their respective presentations, a speaker from a regional multilateral development bank highlighted support for indigenous energy such as geothermal through the Geothermal Resource De-Risking Facility, allowing for a financing mechanism and tool to augment risk implications associated with geothermal exploration. Through its financing services, the bank remains committed to helping the Philippines meet climate goals while ensuring inclusive and sustainable development.
On the other hand, ACEN Corp., one of the key players in the energy industry, highlighted the rapid expansion of renewable energy capabilities in both the Philippines and in the Asia-Pacific (APAC) region, while pioneering innovative financing instruments such as transition credits and the Energy Transition Mechanism (ETM).
ACEN highlighted the significant impact of having clean, reliable, and affordable energy. It noted that renewable energy ensures energy pricing stability, unlike traditional sources that are affected by volatile global markets. Additionally, ACEN emphasized the importance of keeping a long-term mindset for both consumer and investors, citing that while traditional coal may still be cheaper in the present, the volatility of coal prices may cause rising costs in the future.
Meralco PowerGen (MGen) President and CEO, Emmanuel V. Rubio, highlighted the importance of addressing the Energy Trilemma (Security, Affordability, and Sustainability), with initiatives such as the MTerra Solar project and LNGPH facility. MTerra is set to be the world’s largest integrated solar photovoltaic (PV) and battery energy storage system (BESS) facility, and LNGPH, the country’s first and most expansive LNG facility to date, reaffirms commitments to further integrate renewable energy initiatives in operations.
REALIZING VALUE IN THE NEW ENERGY ECONOMY
In the latter part of the program, a speaker from a large global development institution emphasized that sustainability is not only a corporate responsibility but a competitive advantage. The institution’s climate-smart investment opportunities in the Philippines were introduced through their 30-by-30 Zero Program, which aims to help financial institutions scale their climate-related lending to 30% of their portfolios while reducing coal exposure to near zero by 2030.
According to Dennis Ng, CEO and Founder of Mober Technology Pte., Inc., Mober’s sustainable journey is embedded in the group’s logistics strategy, powering the country’s green logistics revolution. Mober offers its electric vehicle (EV) fleet mobility solutions to business-to-business (B2B) customers, which helps them curb their scope 1 emissions while also offering the services at price parity compared to non-renewable energy-based logistics service providers. Its zero-emission last-mile delivery for a low-carbon economy aims to optimize e-mobility and increase the integration of renewable energy in logistics operations, while addressing climate and social risks and impacts of going green. Mober’s approach to sustainability transformation is partnering with industry leaders and small trucking companies to make green logistics easier to enter.
LOOKING AHEAD
Indigenous energy sources such as tidal, solar, and wind energy are among the most common renewable sources of energy. However, these energy sources can be disrupted depending on environmental events. Through continuous innovation and emerging technologies such as green hydrogen and nuclear energy, such limitations will be circumvented. Innovations in energy sources will further aid the transition and capacity addition through supporting intermittency commonly attributed to renewable sources, and being able to electrify and decarbonize hard-to-abate sectors.
In parallel, the energy transition demands a shift in consumption, with greater focus on operational efficiency through the reduction of energy waste, such as through strategic electrification of facilities and fleets.
However, achieving JET will require substantial financial investments, with large-scale infrastructure projects often being prohibitive for the private sector to undertake on its own. De-risking support from financial institutions through innovative financing mechanisms such as carbon credits, sustainability-linked loans and guarantees are essential, accompanied by stakeholder capacity building. Supporting communities reliant on the fossil fuel industry necessitates investments in retraining, social safety nets, and development to ensure an equitable transition.
For private and industry leaders, the energy transition is not only a risk mitigation strategy through emissions reduction. It also presents a strategic opportunity in securing a sufficient, reliable energy future, fostering energy resilience in the country. Diverting away from import dependence towards energy independence further strengthens the Philippine energy system, removing volatility and dependencies from global and external knock-on effects, and instilling foreign investor confidence through stable energy market prices.
Strategic planning and innovation are essential alongside the support of expert guidance to navigate challenges and considerations toward a just energy transition. By leveraging professional expertise and experience, businesses can take advantage of the opportunity presented while adapting to regulatory and policy changes.
This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinions expressed above are those of the authors and do not necessarily represent the views of SGV & Co.
Benjamin N. Villacorte is the sustainability leader, and Bonar A. Laureto is a sustainability principal, both of SGV & Co.