Turn away from coal for power needs, gov’t urged

The World Wide Fund for Nature-Philippines has added its voice to the chorus lamenting the government’s increasing dependence on coal for the country’s energy needs, warning that this would become too costly for consumers.

WWF-Philippines vice chair and chief executive officer Jose Ma. Lorenzo Tan said that coal was expensive now and would get more expensive over the next 20 years, especially if acquisition, operations and fuel costs were considered.

Tan pointed to the P7.60 per kilowatt-hour generation cost of the new Panay CBFC coal plant as an example.

This, he said, was higher than the weighted average “feed-in-tariffs (FIT)” for all renewable energy options of P7.44 per kwh, which would not come into force until 2014 at the earliest.

The FIT rates were meant to assure renewable energy developers of future cash flow as electricity end-users would be charged fixed amounts to cover the production of energy from renewable sources.

“As coal prices increase further, the formula prescribed under the Renewable Energy Law mandates that feed-in-tariffs for renewable energy will decrease. Renewable energy technologies, therefore, will become cheaper and cheaper, and contribute more and more to improved national competitiveness,” Tan said in a statement.

In contrast, an “inordinate dependence” on coal plants would only “increase the cost of doing business in the Philippines,” he said.

In the end, Tan said, this would trickle down to the consumers.

Several environmental groups have aired concerns over the government’s approval of investments in coal-fired power plants in recent months.

A consortium composed of power distributor Manila Electric Co., Aboitiz Power Corp. and Taiwan Cogeneration Corp. has announced plans to invest $1.28 billion (roughly P55 billion) to put up a 600-megawatt, clean coal-fired power plant within the Subic Bay freeport zone.

Energy Secretary Jose Rene D. Almendras had said that coal would continue to play a major role in the country’s energy mix until the government could find better and relatively cheaper alternative power sources.

In December, the Department of Energy identified 12 prospective coal areas that could yield 1.806 billion metric tons.

Tan said the International Energy Agency (IEA) had forecast an increasing trend for coal over the next 20 years.

Rising coal cost

He said that last year, the annual average spot coal price in the European Union was $90+ per ton and that the IEA had forecast it to rise to $130+ per ton by 2020 and $170+ per ton by 2030.

“Asian coal prices are generally higher than EU prices. Furthermore, the ‘pass through’ privilege enjoyed by new coal plants in the Philippines allows them to automatically pass these increasing fuel costs to Philippine power consumers,” he said.

Tan said that since the coal sector was unregulated, there were no caps “on coal plant numbers, no prescribed installation targets and no price limits.”

‘Quick fix’

Tan said coal was only a “quick fix” to address the projected energy shortfalls.

“More than a decade ago, we faced a power crisis. We turned to expensive fossil fuel options as a quick fix. We now realize that this was a mistake. Today, we face another power crisis. Let us learn from our mistakes,” he said.

He said that coal-fired power plants had life spans of at least 30 years, hence, the need not to allow a “lock-in to this highly polluting and expensive power source.”

“This will be the legacy of a coal-dependent future. The ultimate loser is the Filipino consumer,” he said.