Renewable Energy Policy Of The Philippines Environmental Sciences Essay

This article provides background for the current petroleum reserves scarcity problem, importance of sustainable energies, as well as the advantages and shortcomings of renewable energies development. In addition, it covers the review of renewable energy policies of four different countries, namely Malaysia, Philippines, Indonesia and Vietnam. The article also summarizes results of this study by comparing approaches taken by the governments of the abovementioned nations to solve the energy scarcity issue. Although these four developing countries take different approaches in addressing the problem, they share a common ultimate objective by reducing dependence on fossil fuel and the amount of hazardous gases, including greenhouse gases and toxic gases, discharged into the atmosphere. While certain renewable energies such as biomass energy and wind power have a tendency to generate negligible amounts of carbon dioxide, others, however, are environmental friendly. Thus, the renewable energies developed by these countries are fairly promising and will bring significant benefits to the countries if managed wisely. Lastly, this article also attempts to draw a conclusion on the study of the four policies based on key aspects such as natural resources available and the countries’ vision and propose some recommendations for further development.

Keywords: Renewable energy, Sustainable, Environment

1. Introduction

Energy drives nearly all parts of modern life such as the transportation sector and electricity generation. Most primary energies are derived from petroleum [1]. Overreliance on petroleum has become a serious global issue in the 21st century. According to the US Department of Energy (US DOE) report, petroleum reserves are diminishing at a faster rate than the discovery speed. Based on current oil reserves, the current consumption rate and projected consumption rate are 1354 billion barrels, 86.1 million barrels per day (in year 2007) and 92.1 million barrels per day (in year 2020) respectively [2]. Current petroleum reserves are expected to be depleted within the next four decades.

The situation is worsening with the rapid growth of motorization, transportation and industrialization activities. This has led to a steep rise in crude oil prices due to high demand for fossil fuel [3]. Prior to 2000, the crude oil price in NYMEX was generally under USD20/barrel. With a higher demand than supply, the price rose to USD60/barrel in 2005 and subsequently shot up to USD100/barrel in 2011 [4].

To maintain the standard of living, searching for alternative energy resources to replace the current primary fuel source is inevitable. Furthermore, the use of alternative energy does not only solve the depletion of petroleum problem, but also generates significant environmental [5-7], economic and social benefits if managed with due regard to sustainability constraints [8].

In addition, efforts on efficiency improvement in energy production and use should not be neglected [9]. In fact, this effort should receive early attention as these objectives are easier to attain , require less investment during the commissioning stage than at the optimization stage and are environmentally friendly in meeting the needs of every developing country [10], [11].

The purpose of this study is to analyze and compare four developing countries’ renewable energy policies in Southeast Asia. In addition, advantages and shortcomings of the policies are also identified and discussed in the later section. Further, a summary is drawn up regarding to the countries’ existing policies and frameworks. Lastly, suggestions for improvement on the policies are also included in this study for future review.

2. A broad look at the renewable energy policy of different developing countries

Every developing country has its own unique renewable energy policy. Although some countries share a common objective or interest, none of the renewable energy policies can be identical to other renewable energy policies. For instance, the Philippines, a country which has few natural resources is mainly focusing on geothermal power in its renewable energy policy. Indonesia, a country which is rich in natural resources, on the other hand, has a more diversified renewable energy policy. In other words, the renewable energy policy of a country varies according to the country’s direction and natural resources available. In addition, efficiency of energy generated, energy used and environmental impacts are also taken into consideration during the review stage in certain policies. Although these factors do not directly affect or contribute to the development of renewable energies, impacts related to these factors should not be underestimated. Ignorance (on these issues) may lead to more serious catastrophic consequences to the world as some of the impacts pose significant threats to the global economy, food security, air quality and the condition of humans health [12].

2.1 Renewable energy policy of Malaysia

Traditionally, Malaysia, a country which is known for having vast amounts of petroleum resources, relies heavily on oil and gas (84%) and hydropower (16%) [13] for electricity generation. However, due to maturity of some oil reservoirs, production of oil has decreased gradually from 862 thousand barrels per day in 2004 to 713 thousand barrels per day in 2010 [14] and 630 thousand barrels per day in 2011 [15]. This problem has forced the government of Malaysia looking for viable renewable energies. To expedite the process, the government of Malaysia has established a fund, known as the Green Technology Financing Scheme (GTFS) amounting MYR 5 billion [16] as an effort to identify alternative green energy and develop green technology. Four key renewable energy sources have been identified, namely hydropower, solar power, wind energy and biomass energy. All these energies are expected to replace petroleum in the next 50 years.

However, current researches on alternative energy are mainly concentrating on palm oil based biomass and biofuel with palm oil methyl esters being the preferred fuel. According to a preliminary estimation, palm oil biofuel could generate up to 20% of the country’s electricity by 2020 [17] and expect to replace the non-renewable fuel source, petroleum.

Nevertheless, combustion of biofuel is always associated with greenhouse gases discharge such as carbon dioxide (CO2). Global atmospheric CO2 concentration has reported been increasing over the past century from 280ppm to 390ppm [18]. Malaysia was reportedly discharged 164.2 million tonne CO2 or 5.98 tonne CO2 per capita in 2009 [19]. It is estimated about 235.6% higher than the figure reported in 1990. A steep rise of CO2 discharge signifies the increase of environmental and health problems such as drought, rise in sea level, heavy downpours or flooding, increase mortality of wildlife, intense heat waves and increase risk of respiratory and cardiovascular diseases [20-22]. Although some parties claim that development of biofuel could reduce emission of greenhouse gases compared to fossil fuel combustion, the economic, environmental and social benefits of the current generation of biofuels vary [19]. The data does not take into consideration that deforestation for planting of palm trees used for biofuel production can result in one-time releases of CO2 which could be very large [19].

Furthermore, use of palm oil as feedstock in biodiesel production is also not economically feasible. Production cost of biofuel has escalated with increasing demand on palm oil due to the use of palm oil as edible oil in cooking. Although there are scopes to increase yield, massive conversion of palm oil to biodiesel will reduce reserves and eventually lead to higher palm oil prices [23]. In addition, increase in demand of palm oil would also drive global food prices higher and increase the competition for edible oil. It is undeniable that the abovementioned problems can be solved with increases palm oil production, but production increases have required rapid expansion of the area planted under oil palm [24], giving rise to serious concerns over deforestation and habitat loss as well as the drainage of peat lands. While short term governmental support such as tax exemption, regulatory intervention and promotion campaign play an important role in the biofuel development, the long term sustainability prospect pertaining to the environmental impact and economic is uncertain.

2.2 Renewable Energy Policy of the Philippines

The government of the Philippines, however, focuses their effort mainly on geothermal energy development. It can be clearly seen from the country power generation statistic that the geothermal energy accounts for 12% of the country’s total electricity generation [25]. With the total capacity of 2000MW geothermal power plant in operation, Philippines is considered as the world’s second largest geothermal power producer [26]. This figure is far higher than the amount of energy generated by any other types of renewable energy. The effort on geothermal energy development is expected to be continued as it provides a promising future to the country.

The reason why the government of the Philippines maintains its existing policy is due to present of numerous volcanos in Philippines. According to Sussman et. al., Philippines islands are complex assemblage of island arcs which have been accreting between two tectonic plates. Two opposing subduction zones have generated a series of volcanoes which extends the length of the Philippines, from northern Luzon to southern Mindanao. Most of the known high temperature (>240°C) geothermal systems in the Philippines are associated with these volcano [27].

At the same time, the government of the Philippines also attempts to develop biomass energy. Philippines is known as an agricultural country which produces abundant of biomass resources [28] such as rice straw, coconut shell and sugarcane residues. These resources are believed to have a large contribution to biomass energy production as it could supply continuous stream of feedstock for biomass energy generation.

Although researches on other types of energy such as biomass energy and hydropower are also given a fair consideration, progress of the researches remains modest. The problem is mainly due to lack of financial support from the Philippines’s Department of Energy and private investors. Limited financial resource available is a great barrier for the development of biomass energy. In addition, lack of incentives is another factor that hinder biomass energy development as the production cost is considerably higher than fossil fuel price [29].

2.3 Renewable Energy Policy of Indonesia

Indonesia, a country which is rich in natural resources, intends to reduce its dependence on the fossil fuel and aims to reduce the depletion rate of fossil fuel reserves[30], by diversifying its focus on solar energy, wind energy, ocean wave energy, geothermal energy and biomass energy generation [31].

Below are the policies related to Renewable Energy development [32]:

Green Energy Policy (Ministerial Decree No.2/2004)

Small Power Generation using Renewable Energy (Ministerial Decree No. 1122 K/30/MEM/2002)

Geothermal Law (Law No. 27/2003)

Regulation on Electricity Supply and Utilization (Government Regulation No. 03/2005)

The government of Indonesia also encourages private sector and community participations through a small renewable power purchase tariff [26]. Through this programme, renewable power producers are given freedom to develop their own renewable power plants such as micro hydro power plants, mini wind farms and solar power plants in rural area.

In addition, the government of Indonesia also invests a vast amount of money on biomass [33] and biofuel development. One of the examples is combustion of rice husk and biodiesel. The country produces an average of 50 million tonnes of rice husk each year. These rice husks have a very low commercial value and limited application. Hence, the government of Indonesia propose to build some rice husk and biodiesel power plants adjacent to rice mills or palm oil plantations to supply energy to the local community. Based on preliminary estimation, the country would enjoy an additional 1600MW power generated each year from the biomass energy generated [26].

However, combustion of biomass is not environmentally friendly. Some of the hazardous compounds generated such as smoke, particulate matter, carbon monoxide, volatile organic compounds are carcinogenic or may cause cancer. Furthermore, emission of carbon dioxide and methane may also lead to global warming problem. According to World Health Organization estimation, more people in the developing world die each year from conditions related to air pollution which is mostly from inefficient, solid-wood-burning stoves [34]. According to a study conducted by World Health Organization, air pollution from solid fuel use was responsible for almost 2 million annual deaths and 2.7% of the global burden of disease in the year 2004 [35]. This makes biomass combustion the second biggest environmental contributor to ill health, behind unsafe water and sanitation [35].

Although the promising geothermal power and hydropower are also given a fair consideration, development of the areas seems to be difficult as potential investors are deterred by the lack of financial viability guarantee and unstable political circumstance [26]. Moreover, distribution or supply of electricity to remote areas or communities is not economically feasible and the state-of-art technology involved of this energy is more expensive than energy produced by conventional hydrocarbon fired plants [30]. Thus, the proposal of building a large scale hydropower plant has been postponed for years.

2.4 Renewable Energy Policy of Vietnam

Unlike other developing countries, Vietnam is currently on the rapid economy growth track and is enjoying economic prosperity which it has never experienced before. A decade after the end of the Vietnam War, Vietnam underwent an intensive economic reform known as Doi Moi or socialist-oriented market economy which encouraged foreign and private investments in various industries or sectors [36], [37]. Since then the economic performance of Vietnam had started to escalate and experienced a more intensive growth than ever before [38]. This growth has mainly been the results of the strong performance of five sectors, namely manufacturing, fishery, agricultural, tourism and services industries. Although the economy of Vietnam, like other countries, has also encountered several economy setbacks such as the Asian Financial Crisis, the Burst of the Bubble of Information Technology and the Subprime Economic Crisis, the country’s economy has recovered very rapidly each time after the crisis and has managed to attain average GDP growth of 6 to 9% annually [39].

Improvement of economic performance has indirectly driven up the country’s energy demand. According to the data provided by the Institute of Energy of Vietnam, energy or electricity generated were estimated around 21TWh, 40TWh and 67TWh for the years of 2000, 2004 and 2008 respectively [40], [41], with fossil fuel as a primary source of fuel. Based on the figures provided above, the average annual growth rate of energy demand was estimated at about 15% for this period. Despite having abundant fossil fuel reserves, it is noteworthy that the population of Vietnam [42] also increased in line with economic growth [38]. In addition, Vietnam’s transportation sector is still undergoing explosive growth. By making the assumption that the rate of growth in energy demand remains constant, the total energy or electricity required by 2030 will be 654TWh [36].

This situation has forced the government of Vietnam looking for sustainable alternative energies. Failure to search for more renewable energies will eventually turn Vietnam into net importer [38], which will give its economy a hard hit as high oil price could lead to a higher manufacturing and living costs. Furthermore, IMF and Citigroup predicted that Vietnam will be subjected to further currency devaluation [43] in years ahead due to inflation problem. All these factors will lead to a more severe economy setback if they fail to develop more sustainable energies to replace the scarce fossil fuel.

Electricity supply in Vietnam currently is virtually provided by the local government as more than three quarters of the power plants in Vietnam are operated by either government organizations under the governance of the Ministry of Industry and Trade, Vietnam[41] or organizations which the government has stake or indirect interest in the companies. In short, most of the power plants are state-owned properties. These power plants are basically established under the first Power Development Master Plan, which is introduced to support the economic reformation [44]. Majority of the electricity supply to the northern and southern regions of Vietnam is generated using fossil fuel such as oil and gas (48%) and coal (17.9%) [39], which is considered unsustainable to both environment and economy. Electricity supply to the central part of Vietnam, on the other hand, is mostly generated using hydropower, which is accounted for 27.4% of the electricity supply in Vietnam [39] and is cleaner than fossil fuel combustion. Use of hydropower can be explained by the number of rivers available in Vietnam, which has about 2400 rivers of 10km long [41]. This enables the country enjoying the free and clean resource without compromising its sustainability policy. However, the potential of hydropower is still not fully exploited in Vietnam. Based on rough estimation, up to 70TWh of hydropower electricity could be generated annually [36]. The figure is higher than the country’s current energy need. Thus, the government of Vietnam is currently reviewing the existing strategy and master plan to develop hydropower for the period up to 2015 [45]. The plan of developing hydropower is not a sole solution, but certainly a wise move.

In addition to the development of hydropower, the government of Vietnam also explore the possibility of utilizing wind power to generate electricity. In comparison to other countries, Vietnam has a better potential for wind energy development [46] as the country has a higher average wind speed of 7 to 9 m/s at a height of 65m [40]. Another reason encourages the country to develop hydropower is that it provides a competitive generation cost advantage. An estimation based on current wind power generation, with the cost of 8 US cents/kWh [40], indicates that the generation cost of wind power is at least 50% cheaper than other renewable energies. Moreover, wind farms can also be utilized to cultivate crops [47]. In other words, installation of wind turbines would not deter the development of the agricultural sector. This is particularly important to the country as the agricultural sector contributes significantly to its GDP. Furthermore, agricultural activities are bread and butter for people of the country. According to the Federal Research Division, agricultural activities account for the employment of approximately 60% of the nation’s workforce [48]. Thus, development of wind power could bring double benefits to the country. Although wind power generation is also associated with CO2 emission, the emission rate of CO2 from wind turbines is 100 times lower than that of coal combustion, which is insignificant or negligible.

A part from the abovementioned energies, the government of Vietnam also explored other potential renewable energies such as solar power, biomass energy [49]. Solar energy is a very promising renewable energy for Vietnam as it is located very close to equator and receives up to 4500 hours sun light every year. Likewise, generation of electricity using biomass is also sustainable as Vietnam is rich in organic and natural resources such as forest, plants, agricultural by-products and edible oil.

However, development of renewable energy was very slow and the move was not well received by the community previously. This was mainly due to factors such as limited understanding of renewable energies, lack of expertise support in this field and ignorance about importance of renewable energy to the country. Thus, the updated revised Master Plan for Nation Power Development of Vietnam has already included design principles for the implementation of the Vietnam Competitive Generation Market [50] to increase potential of renewable energy development. In addition, renovation of management is also taken into consideration to attract foreign investors [37] and foreign talents. Meanwhile, the Ministry of Finance also shows a strong support on the plan by increasing tax imposed on profit gained by power plants through oil, gas and coal combustion.

3. Conclusion

In conclusion, energy is essential to every country’s development. However, overreliance on fossil fuels in energy generation has become a critical issue. Following the footsteps of the developed countries, most developing countries in Southeast Asia have started reviewing their sustainable energy policies and searched for viable renewable energies to replace the scarce resources. While some countries choose to focus on biomass energy or wind power research and development, others, on the other hand, take a more diversified approach. These policies are mainly designed according to the resources available and each country’s vision. For instance, Malaysia allocates more financial resources on biofuel development as the country possesses vast amounts of palm oil plantation or land. While the Philippines choose to maintain its exploration effort on geothermal energy and biomass developments as country is located in the western part of the Pacific Rim, which is the weakest part of the earth crust [51]. This gives the country the advantage of using the magna of the earth crust to generate steam and electricity. Indonesia, a country which is rich in natural resources, tries to variegate fuel resources by exploring different potential energies. Their counterpart, Vietnam, however, chooses to invest on hydropower development as it has more than 2400 rivers with 10km long [41]. In addition, efficiency of energy generated and environmental impacts are also taken into consideration during policy review stage as legislators believed that under-estimation of the impacts related to these factors may lead to catastrophic impairments to environment and economy.

It is undeniable that development of all these renewable energies would reduce human dependence on fossil fuel, however the long term prospect for these energies is uncertain. For instance, combustion of biofuel may not be environmental friendly as well as economically viable in the long term. Thus, a more comprehensive evaluation should be taken into consideration during the policy review stage. In addition, present energy strategy should adapt to new criteria which must be followed in future energy system development [52].