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Philippines Puts Brakes on Coal Power Development, Boosts Geothermal

The Philippines’ just-announced temporary moratorium on new coal plants is being met with calls to go further, while its move to loosen restrictions on foreign ownership in order to more easily develop its geothermal potential is stirring complaints from groups that want to see the resource tapped by local companies.

Four years after President Rodrigo Duterte brought coal roaring back into the country’s energy mix—courtesy of policies that prioritized the quick expansion of baseload capacity over long-term sustainability—his administration has done an about-face by ceasing permits for new coal power plants, reports 24Pilipinas.

Citing a recent Fitch Solutions report, Rappler notes that without that change to the country’s power mix, coal’s share would reach 60.2% in 2029.

24Pilipinas says a significant driver behind the abrupt decision to put the brakes on coal is the steadily dropping cost of renewable energy. “The costs trajectory and the current costs of renewable energy…when generated domestically is getting cheaper than imported coal and imported gas,” said Sara Ahmed, energy finance analyst at the Institute for Energy Economics and Financial Analysis (IEEFA).

What remains uncertain is just how many of the coal projects already in development will get the national boot. The Philippine-based Centre for Energy, Ecology, and Development (CEED) says that “while it has yet to release an official order, the Department of Energy’s pronouncements on the moratorium coverage so far should shelve nine coal projects with a total capacity of 5.6 GW, comprising 40% of all pipeline coal capacity.” Climate Home News, meanwhile, draws on data from E3G to predict that a full 8 GW will be on the chopping block.

CEED says it welcomes the moratorium as “the country’s first step in exiting coal,” but is still urging the Philippine government to expand the ban further to include the 8.1 GW of coal capacity remaining in its development pipeline.

“Many of these projects have not or have barely started construction due to the pandemic and years-long resistance from impacted communities, electricity consumers, and other stakeholders,” CEED states. It’s also asking the Duterte government to mandate the early retirement of both “operating old coal plants at the end of their economic lifespan” and of newly operating coal plants by 2030—a total trim of 9.8 GW of installed capacity.

As a reminder to Duterte, CEED adds that the 1.5°C climate stabilization goal in the Paris Agreement is, in fact, written into the Philippine Energy Plan.

Also announced alongside the moratorium on new coal projects is a policy that will relax foreign ownership limits on the country’s already considerable geothermal resource. “As of 2017, the bulk of renewables were in geothermal, at 15.2% share of energy mix,” writes 24Pilipinas.

Describing the decision as “strategic,” IEEFA analyst Ahmed told 24Pilipinas that it “has to do with low-cost international capital,” adding that the exploration risks that attend geothermal development can be eased somewhat by taking “a portfolio approach” and pursuing multiple large-scale projects at once.

CEED, meanwhile, is questioning a department of energy policy that “allows Financial or Technical Assistance Agreements (FTAAs) for large-scale geothermal exploration, development, and utilization projects,” declaring such use to be, in fact, unconstitutional.

“We are likewise cautioned by the countless stories from mining-affected communities that have suffered from irresponsible and destructive FTAA mining operations, while foreign mining corporations reap huge profits and enjoy several fiscal incentives,” CEED adds. It recommends reserving the next round of renewable energy service contracts to Filipino companies only.

Regardless of who ends up developing geothermal resources in the Philippines, the country’s move to close the doors on coal sets a powerful example for its neighbours. “The Philippines is sending a chilling message across Southeast Asia,” CEED declares: “Coal’s so-called last bastion is set to fall sooner than expected.”