Energy Columns in BusinessWorld

* BusinessWorld  September 27, 2021.  Among the big surprises this year has been the huge spike in global prices of fossil fuels as the favored renewables wind and solar continue to produce intermittent, unstable, even declining output. These news headlines last week look like the papers are describing some Third World countries and not UK and Europe: “British Steel warns of up to 50-fold increase in power prices” (Financial Times, Sept. 21), “Energy price rises: Dozens of firms will be left to collapse” (The Times, Sept. 21), “‘Absolutely no question of lights going out’ this winter over hike in energy prices, cabinet minister says” (The Independent, Sept. 21), “Europe’s energy crisis: A switch back to coal is on the cards” (The National, Sept. 24), “Starved of Gas, European Electricity Producers Snap Up Coal” (Bloomberg, Sept. 25). HUGE SPIKE IN FOSSIL FUEL ENERGY PRICES I checked commodity prices as of the end of last week, Sept. 24. Aside from lithium — used mainly for batteries in

* BusinessWorld  Sept. 13, 2021.  The past two weeks, these stories in BusinessWorld caught my attention: “ADB studying feasibility of acquiring, retiring coal plants in PHL” (Aug. 30), “DoF to support shift to low-carbon energy production” (Aug. 31), “ADB urged to rule out investment in fossil fuel” (Sept. 2), “Gov’t think tank backs stimulus to be directed to ‘green recovery’” (Sept. 2). The Asian Development Bank (ADB) is planning to acquire coal power plants in the Philippines, Vietnam, and Indonesia, and retire them early, to be replaced by renewables like biomass, solar, and wind. This a joint lobby by European countries and four private finance institutions — Prudential UK, Citi, HSBC and BlackRock. How much will they spend for this? They will be spending $16 billion to $29 billion for half of Indonesia’s coal capacity, $9 billion to $17 billion for Vietnam’s, and $5 billion to $9 billion for the Philippines’. The Department of Finance (DoF), the Philippine Institute for Develop

*   BusinessWorld  August 30, 2021. After food, air, and water, humanity’s second most useful commodities would be fossil fuels. From fishing and sea transport, farming and land transport, storage, air transport and electricity generation, their value and usefulness are beyond question. Yet fossil fuels are also the most politicized, demonized, most taxed commodities for supposedly causing “environmental damage,” “carbon pollution,” and the “climate crisis.” I checked revenue data for the P5.024 trillion proposed 2022 budget from the Department of Budget and Management (DBM), Budget of Expenditures and Sources of Financing (BESF) 2022. Seven trends can be inferred from the numbers (see Table 1). One, excise tax from petroleum products collected by both the Bureau of Internal Revenue (BIR) and Bureau of Customs (BoC) were huge at P97 billion/year in 2019-2020, and projected to rise further to P108.6 billion/year from 2021-2023. Two, royalties from Malampaya gas are still big — P23.4 bil

* BusinessWorld  August 16, 2021. The 11.8% gross domestic product (GDP) growth in the second quarter (Q2) 2021 was celebrated with fanfare by the government and the ruling political party as “proof” that they are doing the right thing in guiding the economy out of prolonged recession. But this is not a good way to look at it. One, there is the base effect. The GDP contraction in Q2 2020 was so deep, -17%, that any mild increase this year can lead to high percentage increase. Two, the actual GDP level at 2018 constant prices: Q2 2018, P4.72 trillion; Q2 2019, P4.99 trillion; Q2 2020, P4.14 trillion; Q2 2021, P4.63 trillion. So, the actual flow of goods and services in Q2 2021 is even lower than Q2 2018. Three, the GDP level by semester 1: first semester 2021’s P8.886 trillion is even lower than first semester 2018’s P8.936 trillion. And household consumption, which comprises 74% of total GDP, and investments, which make up 19% of GDP, suffered deep contractions in value (see Table 1).

* BusinessWorld  August 02, 2021. There are interesting development in the energy sector as shown in these three recent BusinessWorld reports: “Gov’t return to power generation should not be ruled out, former official says” (July 25); “‘More equitable’ net metering needed for solar” (July 26); and, “Hike in net metering rates to raise power cost — Meralco” (Aug. 2). Story number one is about the opinion of Monalisa Dimalanta, former National Renewable Energy Board chairperson, who supported an earlier proposal by Energy Secretary Alfonso Cusi that government should consider going back to power generation. They want to amend the Electric Power Industry Reform Act (EPIRA) law of 2001. Story number two is about the opinion of Richard B. Tantoco, President of the Energy Development Corp. (EDC) that houses with solar rooftop and who dump their excess solar output “at P4/kilowatt-hour (kWh), but purchases electricity from his DU (distribution utility) at almost thrice the price or P11/kWh” s

* BusinessWorld  July 12, 2021. After the yellow-red alerts and blackout in the Luzon grid in late May to early June caused by many big but old and ageing power plants going on extended maintenance shutdowns and derating, this month the issue has shifted back to amending the Electric Power Industry Reform Act (EPIRA) of 2001 and kill-coal narratives. See these two reports in BusinessWorld: “House bill seeks to allow gov’t to own power plants, halt hydro privatization” (July 5); and, “Climate advocate calls for ban of coal-fired plants to extend to pending projects” (July 11). The first report is about amending the EPIRA law which mandated the government to get out of the power generation business, including the big hydro plants in Mindanao, and encourage more private power generation competition. That House Bill will amend the EPIRA for the worse, not for the better. The second report is about the endless lobby by environmental groups to kill coal power in the Philippines, not just for

* BusinessWorld  June 28, 2021. A beautiful piece here in BusinessWorld about former President Benigno “Noynoy” C. Aquino III (commonly known as PNoy) was written yesterday by my former teacher at UP School of Economics, Dr. Raul Fabella, “PNoy and inclusion.” Sir Raul observed that from 2010 to 2016, “poverty incidence had declined from 26.3% to 21.6%, an almost 5% difference in six years, a remarkable achievement in our neck of the woods and even elsewhere.” I follow this up with additional data. In the table accompanying this piece, my sources are the following: 1. GDP growth, inflation rate, general government gross debt (GGGD) as percentage of GDP — IMF, World Economic Outlook database April 2021. 2. Installed capacity 2.5 to three years gap (IC3YG) in gigawatts (GW), and electricity generation 2.5 to three years gap (EG3YG) in terawatt-hours (TWH) — BP Statistical Review of World Energy 2020. 3. Installed capacity in GW of Indonesia, Vietnam, Thailand — CIA, World FactBook. I got

* BusinessWorld  June 14, 2021. Blackout economics is not a mainstream concept and so I created my own definition and indicators. Blackout economics is simply the improper allocation of limited resources that will lead to blackouts and power outages. Metro Manila and surrounding provinces experienced rotating blackouts of one to two hours per area on June 1. It was bad to go back to candles, no aircon or electric fans on a hot afternoon, and it reminded people of the daily blackouts in the whole country in 1990-1991. Here are the 10 indicators of blackout economics. 1. Frequent use of a price cap or price control.  On May 31, this column’s piece “Net zero carbon emission and net zero growth,” noted that “Intervals with secondary price cap — none in March and April this year but in May there were 57 intervals. This is a prelude to blackouts actually. When prices spike too often, that means supply is not sufficient to meet demand.” And, indeed, the next day, there were actual rotating bl

* BusinessWorld  May 31, 2021. On May 18, the International Energy Agency (IEA) released its very controversial and sensational report, “Net Zero by 2050: A Roadmap for the Global Energy Sector” (224 pages). It is sensational because it proposes the following impractical policies, summarized in a chart in page 20: By 2021, no new coal plants, no new oil and gas fields for development. By 2025, no new sales of fossil fuel boilers (for power plants). By 2030, phase-out of all coal power plants in advanced economies. By 2035, net zero emissions electricity in advanced economies. By 2040, phase-out of all coal and oil plants globally, net zero emissions electricity globally. By 2050, solar and wind must constitute almost 70% of electricity generation globally. These are very impractical policies that are highly detached from the current energy and economic realities of many countries. Again, I briefly survey some countries and, in the table below, I divided them into three groups: Group A,

* BusinessWorld  May 17, 2021. ---------- In 2020, the Philippines was the worst performing economy in Asia with a 9.6% GDP contraction. Nine East Asian economies reported their First Quarter (Q1) 2021 GDP as of this writing, and the Philippines is again the worst performing: China’s Q1 2021 GDP is 18.3%, Taiwan’s is 8.2%, Hong Kong’s 7.8%, Vietnam’s 4.5%, South Korea’s 1.8%, Singapore’s 0.2%, Malaysia’s -0.5%, Indonesia’s -0.7%, and the Philippines’s -4.2%. There are many proposals that are supposedly meant to help the Philippines recover faster. For this piece, I will deal with two of those proposals: 1.) government spending must expand, and, 2.) there should be “green path” to recovery. Among the Opinion pieces here in BusinessWorld arguing for (1) is “Why we need extraordinary government spending” (by Men Sta. Ana, May 16) and arguing for (2) is “How to ensure a green recovery from the pandemic” (by Nazrin Camille D. Castro, April 27). Both arguments are wrong and not based on hard

* BusinessWorld  May 03, 2021.  ------------ The Department of Energy (DoE) released the Philippines Power Statistics 2020 this week and it shows some interesting data on the country’s energy mix. Installed capacity in 2020 has reached 26,250 megawatts (MW) or 26.25 gigawatts (GW), and the four biggest energy technologies are coal, oil-based, hydro, and natural gas. In actual electricity generation, the four biggest sources are coal, natural gas, geothermal, and hydro (see Table 1). There are three interesting pieces of data here. One, coal constituted 42% of total installed capacity in 2020 but its actual power generation was 57% of the total. The big increase in coal generation came from the Mindanao grid starting 2016 (double the 2015 level) through 2019 (double the 2016 level). There are no longer daily “Earth Hours” and regular blackouts in Mindanao. Two, oil-based plants constituted 16% of total installed capacity but contributed only 2.4% of total power generation. This is becau

* BusinessWorld  April 19, 2021. Earth Day was first celebrated on April 22, 1970, 51 years ago, to raise environmental awareness among Americans, and was later adopted in many countries around the world. What later followed were a series of scary climate predictions, all of which were just false alarms.  Below are some stories, headlines, and climate predictions which never materialized. Note that in the 1970s, people were scared of global cooling and a new ice age. This changed to fear of global warming and rising sea levels in the late 1980s, and in the 1990s the anthropogenic or man-made global warming/climate change was solidified. Among the latest climate Armageddon predictions came from US Rep. Alexandria Ocasio-Cortez (AOC) saying that the end of the world will be in 2031 (see Table 1). The UN, former US Vice-President Al Gore, the World Wildlife Fund (WWF), and Greenpeace are among the big institutions and personalities that push climate alarm worldwide. They target global eco

*  BusinessWorld  April 12, 2021. At the monthly briefing by the Independent Electricity Market Operator of the Philippines (IEMOP) last week, it was shown that while average demand from March 2020 to March 2021 increased by 3.2%, average supply decreased 7.7%, resulting in an increase in average spot electricity prices by 76.4%, P1.80/kwh higher. The main reason was the series of plant outages, scheduled and unscheduled, in early, middle, and late March. Among the big power plants that experienced outages last March were Sta. Rita (natgas), Ilijan (natgas), GN Power Mariveles (coal), Sual (coal), Pagbilao (coal), Kalayaan (hydro), Magat (hydro), and Makban (geothermal). One characteristic of the Philippine electricity system is that many big power plants are old, especially hydro, geothermal, and oil plants. Coal plants are generally new except Calaca and it experienced a 10 month shutdown from March 2020 to January 2021. Also last week, the Department of Energy released the list of e

* BusinessWorld  March 29, 2021. Early this year, some sectors resumed their carbon tax-pushing agenda, proposing higher energy prices for many financially struggling companies and households while favoring intermittent renewable energy (RE) like solar-wind. These five reports in BusinessWorld capture this development: 1. “Carbon taxes could sap PHL competitiveness, Energy department says” (March 10). 2. “DoE to endorse 75 RE plants for feed-in tariff program” (March 13). 3. “Environment dep’t agrees PHL not ready for carbon tax” (March 15). 4. “Regulator says power distributors need to tap more renewable energy to meet 2040 target” (March 25). 5. “Diokno warns of risks associated with transition away from coal power” (March 27). Good news in reports number 1, 3, and 5, the leadership of the Department of Energy (DoE) and the Department of Environment and Natural Resources said that the Philippines is not ready for, that it is not advisable to impose, a carbon tax. And the Bangko Sentr