Energy Transition in Developing Countries by Monalisa Dimalanta

02-08-2021
Monalisa Dimalanta

 

The journey towards Energy Transition differs across countries, and it is highly anchored on the social, economic and ecological priorities of their respective governments and constituents. 

Developed countries have accelerated their efforts at shifting to sustainable energy sources, with investments pouring from both public and private sectors. However, it is not the same story when it comes to developing countries where priorities are more on access to and affordability of electricity than sustainability of energy systems.

To further explain the developing countries’ journey to Energy Transition, we invited Atty. Monalisa Dimalanta, a renewable energy expert  and former chairperson of Philippine government advisory body National Renewable Energy Board (NREB). The NREB  has a mandate to recommend policies to the Philippines Department of Energy and monitor the implementation of the Republic Act No. 9513 or the Renewable Energy Act of 2008.

During her stint at NREB, she was instrumental in the Philippines’ first green auction scheduled in October called the Green Energy Auction Programme. Atty. Monalisa is currently a senior partner of a major law firm and an Energy Law professor at one of the top universities in the Philippines.

Read her insights below on the Energy Transition journey of developing countries, with the case of the Philippines as a major reference. 

 

How would you describe the overall trend in the Energy Transition journey of developing countries such as the Philippines?

In most developing countries, the challenge on their  Energy Transition journey is two-fold: energy security and energy equity. 

The environmental sustainability aspect is not really the primary consideration for most developing countries. The primary driver is making sure that there is enough electricity to fuel an economy that is hungry for power, because they need that to get the economy going. At the same time, they also need to make sure that electricity prices will not put pressure on the cost of products and services provided by businesses to consumers.

That is the main contrast with developed countries where they can afford to either put all three considerations at the same plane or prioritise environmental sustainability. This is because they have already locked in energy security and affordability for their jurisdictions or constituents.

However, the Philippines has a quite unique energy systems journey. The Philippine power industry started off with renewables. When the National Power Corporation (Napocor) was established in the 1930s, the clear mandate was to develop hydropower resources in the country. For decades, from the 1930s to 1970s, it was hydropower that was powering the economy. And when Napocor’s mandate was expanded in the 1970s, geothermal energy was added. It was like that, a combination of hydro and geothermal powers, for many decades until the early 1990s when there was an introduction of fossil fuel plants. 

So, for the Philippines, the Energy Transition journey is more of a return to where things started --- the abundance of renewable resources in the country. And this is what differentiates some of the developing countries with developed ones, specifically those with limited natural resources to support renewable energy generation.

 

Is the 2050 Net Zero Target feasible for most, if not all, developing countries? If not, what could be a realistic target for them? 

To answer this, I would like to cite this very perceptive statement from the World Energy Council Secretary General and CEO Dr.  Angela Wilkinson where she said that the Energy Transition is not a single race, it’s not like everybody is racing to Net Zero by 2050. She explained that every country has its own journey and its own pathway, and we need to respect each country’s own pace. I think it is real that everybody is desiring to achieve Net Zero, but when do we get there might be different for each country. 

To be honest, I do not think it is feasible for the Philippines to get to Net Zero by 2050. For one, it takes time to develop renewable energy sources. Solar energy sources are easy to develop, but they cannot fully support the country’s power requirements. Geothermal and hydrothermal energies could cover the country’s power needs, but it takes time to develop these types of projects. 

And second, what do you do with all these non-renewable energy assets that are still in the system? Do you retire them? When do you retire them? If they can be repurposed, repurpose with what? These are all the questions we need to answer. And we are not even talking about funding. That is a different concern altogether.

 

What are the major factors that affect the pace of Energy Transition in developing countries? Resources? Political/legal environment? Private sector participation? 

I think all of the above, but at different degrees in certain points in time. 

For instance in the Philippines, the fact that there is an election forthcoming already injects uncertainty to some policies that are already in place and whether there would be continuity. Since we are a purely private sector-driven industry, that puts the private sector at bay. They are on a wait-and-see mode at this time. Once a new Chief Executive has taken oath and certain policy directions are announced,  you immediately see the private sector diving towards these policies. This political limbo in between administrations  is dampening investor confidence.

And this is not unique to the Philippines, especially in the region. For instance, Indonesia is also vulnerable to policy changes depending on the political climate. I think for most developing countries, it is the nature of the beast. Politics and policies go hand in hand. That’s part of doing business in developing countries.

 

What do you think should be the priority policies for developing countries to ensure that the shift to renewable energy is equitable and sustainable? Support for renewable companies? Subsidies for consumers to participate in the energy generation? Less regulation for international firms to invest in renewable energy in the country?

I'm an advocate for less regulation, particularly for renewable energy. Most renewable energy technologies are scalable smaller in scale and easily deployed. For archipelagic countries like the Philippines, the deployment of renewable energy  in such small sizes makes it ideal for electrification, promoting energy access and making it more affordable. You can suit the size depending on the demand, and scale it over time. 

However, this easy  movement and scaling of fit-for-purpose technologies is hampered by heavy-handed regulations. With this heavy-handed regulatory environment, you need the regulator's consent to turn left or right. By the time you receive the regulator's approval, the demands have grown or prices have changed, then your projections are already off. This, or the opportunities are gone because new solutions were already explored by the community.


So, for renewable energy to grow in adaptation, regulator agencies need to let go or adapt a startup mentality where we put a premium on agility and responsiveness.

 

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