In the last six months alone, the Philippines has seen and felt, more than ever, the effects of climate change. From the oppressive heat wave that struck as early as February, to the series of typhoons that come and go, leaving in its wake thousands of people homeless.

Clearly, irregular weather patterns now come a dime a dozen, and it’s not just happening in the Philippines, but across the Asian region as well. Asian countries have experienced recent impacts of extreme weather events, and these are expected to increase in frequency if climate change continues unchecked.

According to the World Resources Institute (WRI), there is an urgent need to address this issue. The global energy system must undergo a fundamental transformation, and it is imperative that priority be given toward increasing the use of renewable energy and making improvements in energy efficiency worldwide.

‘The future is in the hands of Asia’
The Asian Development Bank (ADB) reported in the Asia Clean Energy Forum (ACF) held last June that 800 million people in Asia live without access to electricity and a significant push is needed to fast-track new business models and policies for clean energy development.

According to ADB President Haruhiko Kuroda, Asians have more to lose from climate change than any other people. “The future is in the hands of Asia, because the climate fight will be won or lost by decisions made in this region,” Kuroda says. He adds that an important key to lowering energy intensity is the elimination of fossil fuel subsidies and a rapid transition to renewable energy. “There is a need to take radical steps to increase energy efficiency and the efficiency of entire economies,” urges Kuroda.

Asia’s historic role is becoming more and more evident to people in the planet, shares Jennifer Morgan, director of WRI’s Climate and Energy Program. “If you look at it from a global perspective, much of the action is really happening in this part of the region,” begins Morgan. “In finance and investment alone, Asia is the fastest growing region, with investment in clean energy climbing to $82.8 billion last year, which is a 33 percent increase from 2009.”

China currently leads the world in renewable energy investment, with others looking to follow its lead. The global wind sector, in particular, attracted nearly $100B out of the total $250B invested in clean energy.

“That ratio is about the same for the last four, five years,” shares Steve Sawyer, secretary general of the Global Wind Energy Council (GWEC), “but what was different in 2010 is that for the first time, the majority of those investments were invested in equipment outside the traditional markets of North America and Europe. Fifty percent of the global market of wind turbines last year was in China—that’s 18.9 gigawatts. If you add India and Thailand to that, Asia is in fact more than 50 percent of the global market.”

It’s a trend Sawyer expects to continue: “A few years ago we predicted Asia will overtake Europe as the leading cumulative market of wind by 2015; two years ago, we said 2014; last year, 2013…and now we’re saying that we expect that to happen by end of next year.”

 

The Philippines and Clean Energy
According to Sawyer, the GWEC’s presence in the recent forum has much to do with the dynamic growing economies in the Asian region. There is enormous manufacturing base in both India and China, which spells tremendous potential. “The Philippines is certainly an interesting one,” he puts in.

“There is a geothermal resource here (in the Philippines) that doesn’t exist in other countries,” asserts Lutz Weischer, research analyst for Two Degrees of Innovation. “That needs to be tapped,” he recommends, “but more than that we’ve found it’s important for countries to also link renewable energy to their development objectives. You need to understand that there are opportunities to build new industries—target setting and planning should serve broader development goals.”

Athena Ballesteros, who leads WRI’s International Financial Flows and the Environment project, shares the company’s excitement toward the Philippines’ Renewable Energy Act. “This year, feed-in-tariff (FIT) rates are out for five or six technologies,” Ballesteros informs.

“I think the Philippines has done significant steps in creating an enabling environment for renewable energy investments. It’s not just the law, but corollary to the law is civil society pressure, which has driven targets for renewable energy higher. Now 30 percent of the total electricity mix has to come from renewable energy, and they’re continuing to increase targets,” says Ballesteros.

 

Challenges
While Asia’s leadership in the clean energy sector is commendable, it still has to keep up with the population growth and demand for energy. “Asian countries need to consider how to increase their renewable energy production while meeting the energy needs of their people,” says Morgan.

Sanjoy Sanyal, country director of New Ventures India, points out challenges of developing economies: “One is that the income stream of people is not only low, it’s also unpredictable; therefore people find it difficult to pay upfront for individual energy products like solar.

Electricity prices are also very high, but the fact that solar manufacturing moved to China is encouraging. India, in particular, actually imports now from China and that is a good sign.”

From a policy perspective, Ballesteros stresses the urgent need for a major paradigm shift. “The Rural Electrification Program has always been anchored and based on traditionally large hydro- and fossil fuel-based sources, which is subject to fluctuation. The disconnect remains to be a very centralized approach in power development planning. Electrification challenges are not integrated in the overall development activity,” informs Ballesteros.

According to a WRI report by Davida Wood, analysts note that in the Philippines there is “a serious tendency to keep marginalized sectors, especially non-industry players, out of energy decision making processes…This lack of transparency and public participation in energy planning and development has led to compromised environmental principles and standards, as well as social conflict resulting in escalating (electricity) costs for the country.”

Now more than ever, there is a need to involve all members of society in the development of clean energy. Entrepreneurs are slowly taking on the issue of energy access, and there is a lot of talk about large solar installations. But being an archipelago with over 7,000 islands, this comes with its own set of storage and distribution challenges. “This is why there is so much potential in decentralized clean energy,” Ballesteros informs.

“For the first time, the world is seeing a critical mass of companies selling individual electricity products. It’s no longer just an issue of technology or price, but more about getting these products to consumers. That’s a really important shift, and is significant to the rural market.”

Published in the Business Agenda section of Manila Bulletin, July 18, 2011. 

Advertisements