‘Carbon pricing’ eyed to boost RE

BUSINESS leaders are considering recommending ways to promote investments in non-coal-fueled power plants besides the Feed-in-Tariff (FIT) incentives.

Ernesto B. Pantangco, who leads the energy committee of the Management Association of the Philippines (MAP), said on the sidelines of an energy forum that carbon pricing and other ways of accounting for the “true cost” of coal power were under study. Accounting for the unseen costs of coal power, such as its link to respiratory problems in citizens (which may use up public health subsidies), has been pushed by various sectors as a way to lessen the price gap with the currently more expensive renewable energy (RE) sources such as the sun, wind, biomass, water and ocean waves.

Asked whether the National Renewable Energy Board (NREB), an advisory body that helps the government promote RE development, would make similar recommendations, Pantangco said that NREB’s mandate was only to promote RE and not necessarily to involve itself in non-RE technologies.

“We can do that in MAP. In fact we are looking into it,” he said, referring to proposals for so-called carbon pricing and other ways to make RE development more competitive besides offering FIT and other incentives.

Carbon pricing reflects values on the negative impact of coal power on health and environment, among others, and adds these to the price of coal power generation in order to show the so-called true cost of coal usage. This was proposed by environmental groups to show how RE is actually cheaper in the long run since its price is seen to be stable over time and it has little carbon footprint. Coal, on the other hand, is a finite resource and is linked to health problems and environmental pollution.

The term is not new to energy stakeholders and business groups since it has been brought up time and again. Shell Philippines country chair Edgar Chua had said that carbon pricing was one way in which the energy sector, backed by the government, could meet rising energy demand while also reducing greenhouse gases. There must be a shift, he said, from finite resources such as coal to more sustainable resources.

It remains to be seen, however, whether the Department of Energy (DOE) would be open to such a scheme. Energy Secretary Zenaida Monsada had said in a recent press briefing that the “true cost” of carbon was already reflected in the power generation cost, a crucial figure for investors because power offtakers such as Meralco and direct customers such as large manufacturing firms often base their power supply purchases on the price of energy output offered by a power plant operator.