Asia urged to rethink energy policy

Countries in the Asia-Pacific region, including the Philippines, must base their national energy policies on the concept that the “era of cheap energy is over” to insulate themselves from threats of possible supply disruptions and other volatilities brought on by global oil prices in the future.

John Westwood, founder and chairman of energy business advisors Douglas-Westwood, noted that the region’s greatest threat is its growing energy demand combined with its huge dependence on imported fuel supplies.

“Just consider oil: Over the past decade, production has grown by 275,000 barrels per day, but consumption by 6.3 million. In the Philippines, the economic crisis has reduced oil consumption by some 20 percent. But [consumption] has grown by more than 75 percent in China, Singapore and Vietnam,” Westwood told the Inquirer via e-mail.

According to Westwood, national energy policies must be anchored on two major fronts to help shield Asian power consumers from supply and pricing volatilities.

“Increasing energy efficiency should be the number one priority. Up-front costs of this are of course higher than the ‘business as usual’ approach, but repay in the longer term by reduced demand and reduced industrial production costs,” Westwood explained.

“Secondly, reduce import dependency by producing more energy locally. Here, renewable energy has a major role to play—biomass, wind and solar energy. And of course, where possible, exploit national conventional and unconventional oil and gas reserves.”

In the Philippines, the Aquino administration has been aggressively pursuing both fronts as it undertakes energy efficiency and conservation programs to generate as much as $60 billion in savings over a 20-year period. This is apart from the Philippine Energy Conducting Round, where investors may explore and develop prospective petroleum and coal areas in the country.

The Philippines is also pushing to triple the capacity generated from renewable energy sources to about 15,000 megawatts by 2030.

Westwood further noted that the vast resources of both conventional and unconventional natural gas reserves would dominate the energy mix over the next century, to be driven by high oil prices and a move away from the use of both coal and nuclear energy.

“In the medium term use of natural gas will grow. In the long term, there will be a progressive move to use more renewable energy,” Westwood said.

“Political tensions and potential supply disruptions for technical reasons will always be an issue, and this means that countries must take a ‘portfolio’ approach to energy and not become dependent on any one fuel type or supplier.”

Natural gas, in particular, was reported to be “gaining traction as fuel of choice for power generation.”

Burning natural gas, according to Westwood, offers two major advantages: One is that it produces less than half of the greenhouse gas emissions of coal; and capital cost of a new gas-fired power plant is lower than using any other fuel.

“It is likely that natural gas will become the dominant fuel of power generation over the next 20 years—but the time frame will be quite different for individual countries,” he said.

In the Philippines, the government has yet to push through with the $2.1-billion Batangas-Manila natural gas pipeline project, which is expected to give the local natgas industry a much-needed boost.