Lawmaker advises against legislated fuel mix policy

“It won’t work. The market should dictate it [and] not for us to legislate,” said Oriental Mindoro Rep. Reynaldo V. Umali, who chairs the House Committee on Energy.

“It is difficult to get out of it once it is legislated,” he told reporters on the sidelines of an industry conference at the SMX Convention Center in Pasay City.

The reelected congressman said legislation that sets how much the country should source its energy needs would limit power generation companies’ flexibility in moving from one technology to another.

Energy Secretary Zenaida Y. Monsada previously said she preferred having a legislated fuel mix policy of sourcing 30% of energy from coal-fired power plants, 30% from natural gas-fueled plants and 30% from renewable energy sources. The rest, she said, could be sourced from other technologies such as diesel- or oil-fired plants.

The Department of Energy’s fuel mix goal is in line with the country’s “contribution” during the climate summit in Paris last December to reduce carbon emissions by 70% from pre-industrial levels by 2030.

Mr. Umali, who is co-chairperson of the Joint Congressional Power Commission and the Joint Congressional Oversight Committee on Biofuels, said the country needs to determine its baseload capacity, which could serve as the basis for setting the mix from other technologies.

A fuel mix policy has become a contentious issue amid calls towards more renewable energy sources, which go against incoming pronouncement that coal-fired plants would remain a necessity for a country that needed to sustain its economic growth.

The Department of Energy (DoE) is not stopping developers from putting up new coal-fired power plants “for now” because the country needs affordable power to support its economy, but it will be imposing stricter standards to comply with commitments to the international community.

In March, Ms. Monsada previously described as “offensive” a call from former US Vice-President Al Gore for action against coal-based power plants in the Philippines.

“As of now we need them [coal plants], and if they comply with the standards, wala kaming magagawa [there’s nothing we can do],” she said. “But definitely we cannot stop coal plants now.”

Industry participants are also divided on the issue. Francis Giles B. Puno, First Gen Corp. president and chief operating officer, said a law on the country’s fuel mix was not necessary.

“It could be a very clear policy,” he said, adding that since the country signed the commitment in Paris, “you have very little room to be able to expand your carbon intensity.”

“That’s the problem. There’s a lack of alignment, there’s misalignment between what the private sector is doing — signing up for new coal — versus the commitment of the government to effectively reduce carbon emissions,” he said. “People are not noisy enough to say: I don’t want that.”

Federico R. Lopez, First Gen chairman and chief executive officer, said a fuel mix heading towards 50% renewables would be “a very good start.” He said the rest could “hopefully” be sourced from lower carbon sources such as natural gas.

Joseph C. Nocos, vice-president for business development at Alsons Consolidated Resources, Inc., said the country’s fuel mix should be dictated by the energy sector’s “load profile.”

“If you look at the load profile and assume for the sake of argument that baseload is 50% and then mid-merit is 30% and [peaking] is 20%… then you’ll have to see what technology is appropriate for that type of a mix,” he said, referring to the dispatch of electricity.

Power plants that supply baseload power such as coal-fired facilities are continuously switched on, while mid-merit plants operate at a maximum of around 12 hours daily or as needed such as natural gas-fired plants. Peaking plants are run by solar or wind power, often limited by available sunlight or wind.

“I think whatever the load profile dictates should also be influenced by the ratio among coal, gas and renewable energy, plus we also have to consider what is already in place and how long would it take for the market to absorb or digest all of these existing capacities,” Mr. Nocos said.

Manuel V. Pangilinan, chairman of Manila Electric Co., previously said the DoE should adopt a policy on energy sourcing that would guide existing power generation companies on how they will embark on future projects.

“We need to know that energy mix so that the private sector would know where to move,” he said. “Should we turn to coal plants… should we turn to gas plants? What are the limits?”

Source: Business World Online