Evidence-Based Policy Making: Analysis and Policy Recommendations for how the Philippines can manage a Cost-Effective Clean Energy Transition.

doi:10.21203/rs.3.rs-2446174/v3

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Evidence-Based Policy Making: Analysis and Policy Recommendations for how the Philippines can manage a Cost-Effective Clean Energy Transition.

https://doi.org/10.21203/rs.3.rs-2446174/v3

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The purpose of this research was to assess different scenarios for a cost-effective clean energy transition in the Philippines. This was done by using the Open Source Energy Modelling System (OSeMOSYS), which is a modelling software that can be used to project future energy capacities for a country, among other relevant factors such as capital investment and carbon emissions. The six scenarios modelled were least cost (LC), coal phase out (CPO), Philippines energy plan (PEP), combined energy plan (CEP), nationally determined contribution (NDC) and net zero (NZ). The key findings indicated that the CEP scenario was the most cost-effective scenario as the emissions are over 50% less compared to the LC scenario, as well as phasing out coal by 2050 and supporting the goals of the Philippines Development Plan. However, the ambitious NDC and NZ scenarios should be worked towards if funding can be secured to support them. For the Philippines, the main focus must be on the phasing out of coal, as well as a particular focus on certain renewables and the importance of finance, among other factors. This study therefore presents a discussion based on the results about the most crucial factors and what can be done to make an energy transition successful.

Climate Analysis and Modeling

Philippines

Renewables

Energy Transition

Least Cost

Net Zero

Policy

The clean energy transition is of global significance, but there is a need for more work to be done on a national scale, such as in the Philippines. The scale of effort is highlighted by the fact that global funding needs to be roughly 4 trillion USD annually (IEA 2021). Energy transitions can occur in various ways, due to the many renewable energy technologies that are becoming increasingly cost competitive and accessible. Therefore this study models multiple clean energy transition scenarios that the Philippines could implement to decarbonise its power sector.

The overall aim of this research study was to model multiple scenarios to gain a better understanding of how the Philippines can manage a clean energy transition in conjunction with increasing energy demand, particularly focusing on the financial feasibility of each scenario. The research questions from the outset were:

What could the energy mix look like under different energy transition scenarios for the Philippines?
How can the energy transition in the Philippines be a successful process?
How feasible, in terms of finance, is each energy transition scenario for the Philippines?
How great has the impact, direct or indirect, of COVID-19 been on the energy transition for the Philippines?
How feasible is it to reduce carbon emissions to align with the Philippines NDC or potential Net Zero target?

The Department of Energy (2022a) released power statistics for 2021. These outlined how coal produced 58.5% of energy, gas 17.6%, oil 1.5% and all renewables 22.4%. Although it is reported that oil makes up a larger proportion of the energy mix at around 34.6%, with natural gas and renewables only 5.5% and 16.5% respectively (Villaseran 2022). However, these statistics do not outline whether energy was also imported or included in these statistics. In 2020, it was stated that 47.4% of energy was imported in the Philippines (Department of Energy 2020), whilst recently it has been reported that 56.8% of energy was imported in 2021 (Villaseran 2022). Although, the Philippines historically has been a big producer of renewable energy, as it was once the world’s third biggest producer of geothermal energy (Sussman et al. 1993) and it still contributes 10.1% of the energy supply (Department of Energy 2022a). However, the Philippines has used coal as its way of increasing development and growing the economy, leading to a fall in renewables production which made up 45% of total production in 1990 (IEA 2022). There is however a contemporary focus on increasing renewable development, such as the ‘Philippines Energy Plan 2020-2040’ (Department of Energy 2022b). This plan was created to achieve inclusive and equitable economic growth through the development of secure, sustainable and resilient energy policy. Within this plan is the National Renewable Energy Programme, which outlines goals for renewable production, with one of the main aims being to have 35% renewable production by 2030 and 50% by 2040. As well as this, there is the ‘Philippines Development Plan 2017-2022’ (National Economic and Development Authority 2022). This 10-point plan has been recently updated to account for newly emerging threats, mainly focusing on supporting the country through economic recovery amid the COVID-19 pandemic and recession. The plan aligns with ‘AmBisyon Natin 2040’ (National Economic and Development Authority 2016), meaning our ambition 2040, represents the collective long-term vision and aspirations of the Filipino people of how they want their society to evolve over the next twenty five years.

Furthermore, in 2022 a new president was elected in the Philippines, Ferdinand ‘Bongbong’ Romualdez Marcos Jr. This election is seen by many as a historic win and a huge comeback for the Marcos family political dynasty, as his father was ousted in 1986 following a public revolt (Johnson and Jalil 2022). One of his first important actions has been to reaffirm ties with China (Sarmiento 2022). This political context is important from an energy transition perspective for two reasons. Firstly, President Marcos Jr., as a newly incumbent president with political capital, has a great opportunity to make real change as to which new policy is created and which actions are taken against climate change. Secondly, China can become a crucial ally in terms of attracting investment for renewable projects, among other factors. Finally, he has also shown a statement of intent by reinforcing the moratorium agreement on coal power plants that came into place in 2020, this is to ensure investors do not receive mixed signals (Argus 2022).

Firstly, the fundamental ideas and theories that support the basis of this research are within clean energy transition literature. The clean energy transition has a breadth of aspects to be considered, which include policy, politics, COVID-19, net zero, just transition and energy security. As well as this, understanding the role finance plays within energy transitioning must not be understated.

Various interesting studies have already been undertaken about the Philippines. Firstly, Mondal et al. (2018) uses the TIMES energy modelling tool to look at the future of energy and low-carbon strategies. In this study they compared a reference scenario to four alternative scenarios: carbon tax, targeted renewable-based power generation, limited coal share in supply-mix, and renewables subsidy. One of the headline findings was that all alternative scenarios modelled would allow the Philippines to meet their own goals and also their NDC (Mondal et al. 2018), although this is now outdated. As well as finding that existing feed-in tariff (FiT) schemes would help promote renewables and reduce system costs. Furthermore, Cabalu et al. (2015) and Pojadas and Abundo (2022) also conducted studies that were cost focused. Cabalu et al. (2015) found positive changes to GDP with increased renewables and reduced emissions, whilst Pojadas and Abundo (2022) focused on the Bohol province, one of eighty one provinces in the Philippines, emphasising the need for government subsidisation for the success of the utility-scale solar PV and wind farms project they suggested.

The term energy transition can be viewed as a pathway of transformation of the global energy sector away from fossil fuels to renewables, with the aim of creating a net zero society but not all energy transitions will entail this. Whereby net zero is the balance of emissions produced and removed from the atmosphere, which itself has become the next global agenda (Seto et al. 20221) as it can actually provide an opportunity to support economic recovery amid COVID-19 (Allan et al. 2021). Leach (1992) highlighted the difficulties that developing countries face compared to developed countries, whereby access to modern fuels and equipment was an issue faced that could be improved through means such as subsidies. Today renewables provide an opportunity to developing countries, as they can sustainable development through renewable investment. Politics and policy are important factors in terms of how successful an energy transition can be. This is mainly because policy is key to immobilising change towards reducing emissions, such as how governments attract investment, and politics may determine how they can change. As well as this, the implementation of new technologies and the removal of others in theory could lead to the dismantling of long-standing business models and policies that are inherently deep rooted within governments (Markard 2018). However, change can be difficult depending on the core values of longstanding policy makers (Milchram et al. 2019). Moreover, social movements can pose a threat to political structures and policies, such as recently when there was social backlash to a potential new coal power plant opening in the Philippines (Delina 2021a). Delina (2021b) also discussed the current coalscape of the Philippines, with two movements fighting for and against coal. The difficulty lies with many wanting to move away from coal, but Delina (2021b) stated they feel coal will still be a major part of infrastructure for decades despite the moratorium agreement. From a contemporary point of view, COVID-19 has indirectly added further complications to the energy transition, due to the policy changes that has had to or will have to undergo (Steffen et al. 2020), therefore policy makers are required to be proactive to account for these changes. There have however also been some benefits from COVID-19, such as remote working and sanitation reform, which will provide benefits during an energy transition (Klemeš et al. 2020). Whilst in terms of the Philippines' promising relationship with China, they were the first to show signs of economic recovery (Wang and Zhang 2021) and this could work in the Philippines' favour. Finally, an energy transition is not just about policy and energy reform, it is underpinned by making sure society isn’t negatively impacted, such as the transition of workers to new employment (Cha 2017), ensuring that any transition is a just transition.

Energy security is also a crucial component of the energy transition and important to nations like the Philippines, that often rely on imports. It can be described as ‘equitably providing available, affordable, reliable, efficient, environmentally benign, proactively governed, and socially acceptable energy services to end users’ (Sovacool et al. 2013:11). As well as this, APERC (2007) discussed energy security under ‘The 4 A’s of Energy Security’, which are availability, accessibility, acceptability and affordability. Thus, energy security is not just about providing consistent energy for a country, but also other benefits such as supporting economic growth (Le and Nguyen 2019). This emphasis on economic development connotes the critical role finance has to play within the energy transition.

The falling costs of renewables are making them a more plausible power option globally (IRENA 2022). The IEA (2021:15) stated that a new energy economy is emerging which ‘will be more electrified, efficient, interconnected and clean’, but more needs to be done to disrupt the current order. Despite this there is a likely risk of turbulence in energy markets in the future (IEA 2021), such as the contemporary issues surrounding Russia. There are also various ways of mobilising finance, these include green finance, blended finance or feed-in tariff (FiT) schemes. Green finance is a broad term financing environmentally friendly development. Whereby the green attributes to the allocation of financial resources that are used towards factors such as clean energy, green building and energy efficiency, whilst the finance aspect attributes to the investment through different financial instruments (Akomea-Frimpong et al. 2021). Globally, there are various ways to utilise green finance, such as the Green Climate Fund. Specifically, in Asia, green finance is crucial for sustainable development as ‘two-thirds of global energy-demand growth will occur in Developing Asia by 2040’ (Azhgaliyeva and Liddle 2020:83). As well as this, it is important the government uses their own policy to attract investment. Blended finance is an option for policymakers as it allows the government to work with investors to create the best incentives that work for both parties, as shown in table 1. Then as for FiT schemes, the usage of them hasn’t been as successful, as renewables dropped from 45% to 21% in the energy mix since 1990 (Lagac and Yap 2020), but there is potential for success using them.

3.1 OSeMOSYS

Energy modelling has emerged as an extremely useful tool for policy makers. This is due to open-source datasets, accompanied with many different open source tools, making modelling more accessible globally. This study is conducted using the Open Source Energy Modelling System (OSeMOSYS). OSeMOSYS is a fully developed systems optimisation model that can assess long-term energy planning. Unlike other established energy systems models, it likely requires less time commitment to build and operate, and is potentially easier to learn (Howells et al. 2011). It was designed to provide an open tool that can be used by anyone, increasing their human capacity in terms of understanding energy models (Strachan and Pye 2009; as cited by Howells et al. 2011). OSeMOSYS is designed to represent energy carriers and technologies within an energy system. Technologies are defined by costs, (capital, fixed and variable), operational life and capacity factors (Howells et al. 2011). Whilst OSeMOSYS is used to produce the results, data are inputted via the Climate Compatible Growth (CCG) clicSAND interface, which provides an organised open source data file. With results being produced through clicSAND or via OSeMOSYS Cloud. For this study the Philippines starter data kit, provided and produced by CCG, was used (Allington et al. 2021).

3.2 Temporal Structure

The modelling period is from 2015 to 2070. Within the model, each year is split into eight timeslices: four seasons, each with two 12-hour dayparts. Each day is from 0600–1800 and night is 1800–0600 hours. Season 1 is December to February, season 2 March to May, season 3 June to August and season 4 September to November. The eight timeslices represent each season, such as summer day and summer night.

3.3 Model structure

In terms of the model structure there are ten commodities and accompanying technologies: coal, oil, gas, biomass, solar, wind, hydropower, geothermal, concentrated solar power and nuclear. As for nuclear, despite a closed plant reopening in June (Hilotin 2022), it is not included in this study due to being a least-cost focused study as the construction costs are far greater than other options. Despite there currently being no concentrated solar power (CSP) plants in the Philippines, it is included as a generation option. Solar power is represented by three types of generation: Solar PV utility, utility scale with 2-hour storage and solar PV with storage. Wind is also represented by three types of generations: onshore, offshore and onshore with storage. Hydropower is also split into three: large (>100MW), medium (10–100MW) and small (<10MW). Natural gas is also split into two technologies: a combined cycle gas (turbine) plant and simple cycle gas (turbine) plant. Then finally, there are two other technologies: transmission and distribution. These represent the improvements to the grid to make it compatible with increasing capacity. Moreover, there are many parameters that define the technologies in the model: capacity factor, availability factor, capacity to activity unit, operational life, residual capacity, capital costs, fixed costs and variable costs. Capacity factor represents the capacity available per timeslice as a fraction of total installed capacity, from 0.1 to 1, whereby a higher value signifies more availability. As well as this operational life represents how long each power plant will last before being retired. A reserve margin of 15% is used and a discount rate of 0.1, as they are the conventional values always used. Finally, Figure 1 shows the reference energy system (RES) for the Philippines, showing the linkages between commodities and consumption.

In terms of capacity, the data within the SAND were updated to represent current figures. Residual capacity, the currently installed capacity that the model has no choice to include when it decides what to invest in, was updated in two ways. Firstly, the Department of Energy Power Statistics (2021) were used to update current installed capacity, with installed capacity for 2021 shown in Table 2. Secondly, the data were further updated to better represent future project installation and their retirements (Table 3).

3.4 Costs

Costs within the model are split into three: capital, fixed and variable. Capital costs are the amount of investment needed per unit of capacity. The Renewable Power Generation Costs report (IRENA 2022) was used to update the model values, whereby table 4 shows the cost of renewable plants per kW in 2021. Crucially, the average capital cost of CSP plants in 2021 was $9091 per kW; however, from 2010 to 2020 it had previously dropped from $9492 to $4746. The large rise in costs was due to only one CSP plant opening globally in 2021 (IRENA 2022), which had higher than usual costs. Therefore, due to the trend of falling costs of CSP, the 2020 value is used as the baseline for projecting future costs. As well as this, IRENA (2022) also found that solar PV has dropped around 7.5% in costs each year since 2010 making it the cheapest renewable energy source, whereas others have increased such as large scale hydropower at almost 6% a year since 2010. Furthermore, using the percentage change per year in capital costs for renewables, future cost projections up until 2030 were made and these values were used for the rest of the modelling period.

Fixed costs relate to the operational and maintenance costs for a technology per unit of capacity. Fixed costs of renewables are falling and projected to continue to do so, making them more competitive. This is the case even for the most expensive renewables, which as of 2021 are wind and concentrated solar power. Solar is the cheapest of all renewables due to the low maintenance needs of plants. In terms of fossil fuels, oil is the cheapest, and coal costs are similar to that of renewables.

Then finally, variable costs are the fuel costs. These are the extraction and importation of fuels used in power plants, which relate to coal, gas, oil and biomass. Importing is more expensive than extracting fuels, and oil is the most expensive in both cases, whilst coal is the cheapest fuel to import and biomass is the cheapest fuel to extract. Also, it is important to note that most renewables have no variable costs; there is no fuel cost, except for biomass which is still small.

3.5 Energy Demand

The energy demand statistics come from the Department of Energy Power Statistics (2021). The total energy demand is split into residential, commercial and industrial. Figure 2 shows the growth of the total energy demand from 2015 to 2070. Furthermore, projections of energy demand beyond the data available were based on the 5.97% average annual increase of demand from 2003 to 2021 in the Philippines. Finally, the 2019 demand figures are used as the baseline to project future demand from 2022. This is because 2020 and 2021 were COVID-19 years, so using 2019 gives a more realistic figure for demand without the impact of COVID-19.

3.6 Modelled Scenarios

There were six scenarios modelled.

Least Cost (LC): no constraints applied to find cost optimal solution, except no nuclear; this was also used as the baseline.
Coal Phase Out (CPO): gradual phase out of coal power plants and production by 2050.
Philippines Energy Plan (PEP): forcing the model to make renewables generate 35% of total demand by 2030 and 50% by 2040, which are the goals directly from their policy.
Combined Energy Plan (CEP): combination of the CPO and PEP scenarios.
Nationally Determined Contribution (NDC): modelling the NDC of 75% emission reductions by 2030.
Net Zero (NZ): net zero emissions by 2050.

When comparing all six scenarios that were modelled, it is important to look at the installed capacity across the modelling period. Figure 3 shows the total capacity the model has decided to invest in, whereby investment was only allowed to begin from 2022. Firstly, it is clear to see that coal is the most cost-effective power plant to invest in, due to its relatively cheap capital costs and longer operational life compared to other energy sources, which is why it dominates the LC scenario throughout the modelling period and is still over a sixth of total capacity in 2070 for the PEP scenario. The CPO scenario shows that natural gas would be the next most cost-effective option after coal for the Philippines to invest in, as well as the CEP scenario whereby natural gas accounts for around one third of the total capacity from 2050. Then in terms of the more ambitious scenarios, NDC and NZ, renewables begin to dominate even more than in the CEP scenario. However, the NDC scenario, despite requiring a 75% reduction in emissions from 2030, still includes natural gas as it produces far less emissions than coal. The NDC scenario also has the most diverse energy mix, which includes the emergence of CSP. Finally, the NZ scenario is much less diverse as it is dominated by solar PV, wind and CSP, as well as a far larger total capacity in comparison with all scenarios at almost 1300GW by 2070, such as the CEP which was only around 600GW by 2070. This is because of the capacity factors of the energy sources invested in, such as solar being lower than natural gas and therefore a higher capacity is required.

Although it is important to analyse the energy sources the model decides to invest in, it is also important to assess which energy sources produce the most power. Figure 4 shows, as expected, that for the LC scenario coal produces over 80% of total production across the modelling period. Whilst in the PEP scenario, coal still produces around 40% of total power in 2070. As for the CPO scenario, natural gas practically replaces coal in terms of production, which although reduces emissions still highlights the difficulty of moving away from fossil fuels. This is further highlighted by the NDC scenario, as natural gas rises to over 50% of production by 2050, but the energy sources producing power are more diverse for the NDC scenario. Then with the CEP scenario, despite natural gas only representing around a third of total capacity, it is closer to 40% of total production from 2050 to 2070. Also worthy of note is that biomass plays an important role for the less ambitious scenarios, LC, CPO, PEP, CEP, but not for the NDC and NZ which is down to the high emissions it produces despite being a renewable energy source. For the NZ scenario, renewables begin to dominate from 2035 and production is 100% from 2050, as it aligns with net zero by 2050, with wind, solar PV and CSP being the main producers as they were with capacity.

Moreover, Figure 5 shows comparatively the total costs across the modelling period for each scenario. The NZ scenario is clearly the most expensive, as over 2.5 billion USD is required in investment, as there must be a complete overhaul of the energy mix and as well as the large investment needed into concentrated solar power. Whilst the NDC scenario in comparison to the others is also expensive, requiring around double the amount of investment the CEP scenario requires. Here the scenario that appears to be realistic as well as cost-effective is the CEP scenario, this is because it phases coal out of the energy mix and also meets the targets of the National Renewable Energy Programme (Department of Energy 2022b), whilst not costing over three times the amount the LC scenario does, like the NDC scenario.

Then finally in terms of emissions, Figure 6 shows each scenario's emissions per year across the modelling period. Importantly the LC scenario is the scenario with the most emissions and also the first to hit 1 million tonnes of CO2 emissions in a year at around 2053. Clearly the NZ scenario is the best in this respect, as it reaches net zero by 2050, which shows that despite not having a net zero plan currently in place it is possible for the Philippines, even with increased energy demand. The NDC scenario shows large reductions compared to the LC scenario, as it is constrained to produce no more than 25% of those scenarios emissions. Lastly, when comparing the CPO, PEP and CEP, the CEP is the slightly better scenario, but the main takeaway point from this is that reducing the usage of coal is the main key to reducing emissions in the Philippines.

There are many factors to consider around the feasibility of an energy transition for the Philippines. Such as the need for a just transition to ensure that society reaps the benefits equally, or how COVID-19 has disrupted the economy and even the potential to introduce a net zero target for the Philippines. But firstly, the key element to begin the energy transition in the Philippines is the phasing out of coal. However, as coal currently produces 58.5% of the total energy supply in the Philippines (Department of Energy 2022a), this will not be an easy task. Seeing as the Philippines already has a national renewable energy programme of its own, with targets of 35% renewable production by 2030 and 50% by 2040, the CEP scenario is a great way to align with these current policies whilst also forcing coal eventually to be removed from the energy mix. The costs of coal may be lower than some renewables, but as stated by IRENA (2022) renewables are becoming more competitive than ever. In 2020 there was a moratorium agreement that no more coal power plants, beyond the ones approved, would be allowed to be built and some unapproved planned plants were possibly to be scrapped (Farand 2020). However, due to the effects of the COVID-19 pandemic and rising energy demand, it has come under dispute. This dispute is part of a wider coalscape, where the complications are described by Delina (2021b). With two factions emerging, namely pro and anti-coal. Delina (2021b) also stated that coal will be a major energy supplier for the Philippines beyond the 2050s, despite the agreement, as coal infrastructure is already deeply rooted as shown by table 2 where coal capacity is far greater than any other source. As things stand, coal continues to be crucial for energy supply in the Philippines, which is down to the agenda of policy makers requiring increased national development and keeping up with energy demand (Manych and Jakob 2021). Despite the success of coal in supporting development, they must begin to look elsewhere. This is mainly down to renewable energy sources becoming more cost competitive, so policy makers in the Philippines must move away from the traditional use of coal and begin to invest in more environmentally friendly sources. Positively, recent developments have seen the new President say the moratorium agreement is to stay in place (Argus 2022), which should not only make a statement to his supporters but also help to not send mixed signals to investors through constant policy change. If they invest in new renewable technologies, they can also look to move away from importing fossil fuels, which overall will help to achieve their goals of the Philippines Development Programme and AmBisyon Natin 2040. However, moving from coal to renewables isn’t as simple as doing it, people working in the coal industry must not be left unemployed ensuring there is a just transition. For example, in 2022 the number of people working in the mining and quarrying industry reached a total of 338,000. As much as energy in the future should be without coal, it does not mean people’s livelihoods should be ignored. Therefore, there needs to be a plan of action for supporting the displaced workers, which should more than likely be new employment around clean energy projects. This will be made possible by investors and policymakers working together to ensure workers rights are upheld throughout the transition.

The CEP scenario (Figure 3 and 4), as well as all other scenarios, highlight how various constraints placed on the model show that for an energy transition in the Philippines there must be a diverse energy mix. Firstly, biomass burning is likely to play a role in energy transition scenarios that focus on the removal of fossil fuels without focusing solely on carbon emissions. Although in 2021 the average capital cost was competitive relative to other sources at 2353 per kW (IRENA 2022), biomass should only be viewed as a short-term option to produce renewable energy, due to the negative impacts it can have on human health and the environment. Wang et al. (2020) assessed biomass as an energy source in G7 countries, finding that although the use of biomass has supported development, it has increased their ecological footprints and reducing usage would improve environmental quality. Additionally, Xu et al. (2022) found that in China there was a higher risk of death for people who used biofuels in their homes in comparison with clean fuels, which was largely down to the exposure to indoor air pollution. Secondly, Solar PV is becoming the most competitive renewable energy source in terms of cost (IRENA 2022), and maintenance costs are low already as solar technologies are designed to work efficiently and not require constant attention. Solar PV is crucial to the energy transition and with costs falling rapidly, it should be a fundamental power option in power systems globally. However, there are some issues such as low capacity factors and land use (Adeh et al. 2019); therefore when opting for solar infrastructure, policy makers must ensure land use is thoroughly thought out to reduce impacts such as loss of agriculture. Then finally, Concentrated Solar Power (CSP) becomes crucial for the more ambitious scenarios such as the NDC or NZ, where emissions must be drastically lower whilst also meeting energy demand. This is partly down to it becoming more competitive in terms of cost, although still expensive in comparison to all other renewable energy sources as shown in table 3, whereby capital costs halved to $4,746/kW from 2010 to 2020 (IRENA 2022). Crucially, CSP plants have far higher capacity factors in comparison to other renewable energy sources, such as Solar PV which can only provide power in hours of sunlight, meaning CSP plants provide a more consistent energy supply. Therefore, despite their high costs, investment is justified due to their potential. They do have similar drawbacks to regular solar PV, but they can also be paired with other energy sources to create hybrid plants. Finally, like Solar they can be used with other energy sources to create hybrid systems, whereby high-renewable hybrids produce the least carbon emissions (Pramanik and Ravikrishna 2017).

In terms of finance, cost-effectiveness is what is most important for a country going through an energy transition, like the Philippines. For example the LC scenario is the cheapest, however this doesn’t mean it is cost-effective, as with it come other issues such as far greater emissions. The more ambitious scenarios, being the NDC and NZ, both require over 1.5 billion USD in capital costs alone. For a country like the Philippines whose total energy budget for 2023 has recently been unveiled at just under 40 million USD (Simeon 2022), funding these ambitious scenarios will be difficult. Therefore, the CEP scenario is the most cost-effective, whilst being realistic, because carbon emissions are more than 50% lower in comparison with the LC scenario, as well as phasing out coal by 2050 and meeting the goals of the Philippines Energy Plan. However, if enough external investment, such as the Green Climate Fund, from whom the Philippines have already received 89.6 million USD for six projects (Green Climate Fund 2022), can be found then the NDC and NZ scenarios will provide far greater benefits and should be explored.

The results highlight a diverse, renewable dominant, energy mix is possible for the Philippines. As well as this, the more ambitious scenarios are possible with the support of external investment, which without will be difficult to achieve. All aspects considered, to have any successful energy transition, policy makers must ensure that they take a holistic approach considering all affected parties.

Therefore there are multiple policy recommendations I suggest for the Philippines:

Phasing out coal should be a number one priority, as it is the key to reducing emissions and ensuring they remain low as energy demand begins to increase.
The Combined Energy Plan (CEP) scenario should be used as the minimum scenario, as it would be a huge step towards achieving energy security, as well supporting the Philippines Energy Plan 2020-2040 and the vision of Ambisyon Natin 2040.
The NDC, although very ambitious in terms of the time span, should be placed as a priority if there is enough funding and time to quickly increase the amount of renewables producing energy in the Philippines.
A Net Zero is possible for the Philippines, as shown by the results, therefore policy makers should look into the feasibility of securing funding to be able to support it.
Financial incentives or instruments, such as green finance or blended finance, should be used to attract investment into renewables.
Solar PV is key for the less ambitious scenarios, whilst concentrated solar power is key to the more ambitious scenarios; both should be high priority energy sources within energy transition policy.
Making the transition a ‘just transition’ to ensuring society is not negatively impacted.

Despite the results of this study having many key findings that will be useful for policy makers, there are still some limitations to this study. In terms of the modelling there are multiple limitations. Firstly, due to the nature of the software, the data input is manual and therefore you must make sure data entry is checked multiple times. However, the model would not run if data was very inaccurate, so the error would likely be small. As well as this, the demand figures used for the future are projections based on the past, so they do not take into account future uncertainty amid disruptions. Moreover, the cost for each renewable energy source stays the same after 2030, which is slightly unrealistic as costs could change.

This research study can be taken further in a number of ways. Firstly, this particular study could be reassessed in the future, to further build on these modelled scenarios to see how viable they would be and what new potential scenarios could be modelled. As well as this, this research could become more specified by looking into it on a local or regional scale, similar to how Mondal et al. (2018) focused on one singular province. Moreover, there are more energy transition scenarios that could be modelled for the Philippines depending on aims and goals, such as the inclusion of Nuclear. Finally, there are various discussion points within this study, such as the impacts of the new presidency on energy policy or whether the energy transition has been a just process, that could be assessed in the future in the form of a social study asking Filippinos themselves their thoughts on such topics

The authors declare that they have no known competing financial interests or personal relationships that could have influenced the work reported in this paper.

Acknowledgements

This material has been produced under the Climate Compatible Growth (CCG) programme, which brings together leading research organisations and is led out of the STEER centre, Loughborough University. CCG is funded by UK aid from the UK government. However, the views expressed herein do not necessarily reflect the UK government's official policies. This work was developed with the Energy Transition Council (ETC), which assisted in identifying needed research areas and connected to relevant stakeholders for a discussion on essential aspects of research. This paper was edited by Simon Patterson (CCG, Loughborough University).

U4RIA Compliance

“This work follows the U4RIA guidelines (Source) which provide a set of high-level goals relating to conducting energy system analyses in countries. This paper was carried out involving stakeholders in the development of models, assumptions, scenarios and results (Ubuntu / Community). The authors ensure that all data, source code and results can be easily found, accessed, downloaded and viewed (retrievability), licensed for reuse (reusability), and that the modelling process can be repeated in an automatic way (repeatability). The authors provide complete metadata for reconstructing the modelling process (reconstructability), ensuring the transfer of data, assumptions and results to other projects, analyses and models (interoperability), and facilitating peer-review through transparency (auditability).”

Credit Author Statement

“Kane Alexander: Conceptualization, Investigation, Data Curation, Writing- Original Draft, Writing- Review & Editing, Visualisation. Rudolf Yeganyan: Project Administration, Supervision. Mark Howells: Supervision. Carla Cannone: Supervision, Resources. Naomi Tan: Supervision.”

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Evidence-Based Policy Making: Analysis and Policy Recommendations for how the Philippines can manage a Cost-Effective Clean Energy Transition.

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