The energy transition in the Philippines needs to be done gradually—and not force a sudden stop in the use of coal-fired facilities, on which the country continues to be largely dependent—as this otherwise threatens economic growth prospects, according to Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno.
In an interview with Diokno, New York-based think tank GlobalSource Partners asked the BSP chief whether he supported restrictions on power companies’ access to financing, particularly those that own coal-fired plants.
Coal-fired power plants are the largest source of greenhouse gas emissions in the Philippines and account for 54 percent of the country’s energy mix.
“While we are mindful of the need to transition away from dependence on fossil fuel, we need to manage it carefully so as not to compromise our country’s energy security nor contribute to inflation,” Diokno said.
More preparation
“It would also not be fair to pressure discontinuance of operations of fully-functional coal power plants. Perhaps, we can commit over time to heavier reliance on renewable energy and ‘no more’ new coal plants,” he added.
Diokno said the energy transition needs further discussion, especially on a reasonable number of years to ditch dirty fuels.
“For our part, we are doing what we can for climate change adaptation, with a new green and sustainable facility in Clark [Pampanga], away from sea level Metro Manila,” he said.
In June 2021, the BSP launched a design competition for its planned new currency production facility dubbed Security Plant Complex in New Clark City.
The new complex will be built on 31 hectares of land and will house structures for currency and security documents production, executive offices, information technology, security, training, wellness and sports activities.
Energy transition
Last November, the Philippine government, through the Department of Finance, along with the Asian Development Bank and the government of Indonesia, launched the Asian Development Bank’s multibillion-dollar Energy Transition Mechanism (ETM), which is intended to fund the early retirement of coal-fired power plants.
During the pilot phase lasting two to three years, the ETM will raise the financial resources needed for the retirement of five to seven coal plants in Indonesia and the Philippines, while facilitating investment in alternative clean energy options within these countries.
According to Finance Secretary Carlos Dominguez III, the ETM has the potential to accelerate the retirement of coal plants in the Philippines by at least 10 to 15 years on average.
Dominguez also said the Philippines would have an opportunity in Mindanao to pilot the ETM project as the government was in the process of rehabilitating the state-owned Agus-Pulangi hydropower plants to improve their generating capacity.
As the Agus-Pulangi power plant complex, composed of seven hydropower plants, maximizes its generating capacity, the government expects to proceed with its plan to gradually acquire coal-fired power plants in Mindanao and repurpose them through the ETM facility.