TOWARD INCLUSIVE AND SUSTAINABLE ENERGY DEVELOPMENT: ISSUES AND CHALLENGES EPDP Conference 2016 Sarah Lynne Daway and Lotis Quiao The Need for Inclusive and Sustainable Energy Development Aspects of Inclusive and Sustainable Energy Development Key Issues and Challenges Climate Change, Renewability, and Efficiency Other Key Challenges Towards “Filipino 2040” UPecon Foundation Cover photos from: www.supremeco.com www.biztekmojo.com galleryhip.com www.mainframegroup.net www.feed.org.ph www.cnbc.com TOWARD INCLUSIVE AND SUSTAINABLE ENERGY DEVELOPMENT: ISSUES AND CHALLENGES EPDP Conference 2016 Sarah Lynne Daway and Lotis Quiao* *Sarah Lynne Daway is a research fellow at the Energy Policy and Development Program and an assistant professor at the University of the Philippines Diliman Lotis Quiao is a consultant at the Energy Policy and Development Program This study is made possible by the generous support of the American People through the United States Agency for International Development (USAID) under the Energy Policy and Development Program (EPDP). EPDP is a four-year program implemented by the UPecon Foundation, Inc. The contents or opinions expressed in this paper are the authors’ sole responsibility and do not necessarily reflect the views of USAID or the United States Government or the UPecon Foundation, Inc. Any errors of commission or omission are the authors’ and should not be attributed to any of the above. 2016 EPDP PROGRAM COMMITTEE Dr. Majah-Leah Ravago Research Fellow [email protected] The Energy Policy Dr. James Roumasset Research Fellow Development Program [email protected] (EPDP) hosted a two-day international conference Dr. Raul Fabella Research Fellow entitled, “Toward [email protected] Inclusive and Sustainable Energy Development” Prof. Ruperto Alonzo to provide a venue for Research Fellow [email protected] the airing of ideas and concerns. Dr. Rolando Danao Research Fellow [email protected] It is the primary aim of this note to be an honest Dr. Dennis Mapa broker of the issues Research Fellow [email protected] and challenges that were presented at the Dr. Ujjayant Chakravorty conference. Research Fellow [email protected] Dr. Nori Tarui University of Hawaii-Manoa Associate Professor [email protected] EPDP Conference 2016 Toward Inclusive and Sustainable Energy Development RATIONALE Energy remains a crucial element of economic growth and development. It is a key input to economic production. Energy provides power, heat for industrial processes, and transportation that are critical to competitive and well-functioning economies. On the other hand, energy supply disruptions, such as the electricity shortage experienced by the Philippines in the 1990s, take a heavy toll and alter the trajectory of a country’s economic growth. As the Philippines adopts the framework of inclusive growth provided in the Philippine Development Plan of 2011-2016, one of the main development policy frameworks is boosting the competitiveness of our industries. Inclusive growth means a sustained high growth that generates mass employment and reduces poverty. Clearly, the energy sector plays a pivotal role in achieving inclusive growth. Further, energy is highly interwoven with other key development concerns, including food security, water, resource management, and the environment. Due to perceived future energy scarcity and its impact on the country’s economic growth, the country’s need for evidence-based public policy on energy is both compelling and urgent. As several challenges continue to beleaguer the energy sector, the international conference brought energy issues to the forefront of policy and academic discussions in the Philippines. More than 250 policymakers, industry leaders, practitioners, experts, academics, and other stakeholders gathered in this 2-day event that re-surfaced and articulated policy and research issues in energy. Various attendant issues such as pricing, electricity markets, energy resources mix, project financing, sustainable development, policy infrastructure within and amongst regulatory and policymaking institutions, vagaries of climate and other uncertainties, and energy security were among the many highlights in this international discourse. OBJECTIVES The chief objective of the conference was to develop and promote knowledge, research, and best practices that can be used by policy makers, academics and other stakeholders in designing and implementing efficient energy programs with the ultimate aim of delivering more cost-effective, sustainable, environmentally-sound, and reliable service. While the primary participants of the conference were policymakers, academics, practitioners, and stakeholders based in the Philippines, the conference also attracted participants from various parts of the world. It is hoped that institutional policy development will be guided by the articulations emanating from the discussions on the various thematic and issue papers. The Need for Inclusive and Sustainable Energy Development It is a generally accepted truth that a modern society that seeks to promote the common good must want of an inclusive and sustainable energy development strategy. Energy is both an indispensable commodity in modern living and a necessary factor in the well-functioning of all modern production sectors: agriculture, services, and most especially, industry. Former Socioeconomic Planning Secretary Arsenio Balisacan declared that the proper infrastructure support, especially for inclusive and sustainable energy, is key to the Philippines’ bid for a higher and more inclusive long-run Dr. Susan Brems, USAID Mission Director, wished the participants a growth trajectory that generates wide-ranging fruitful learning experience during her opening remarks. employment, reduces abject poverty, and will catapult the country into the high-income range priority areas to inform and aid the formulation by 2040. At the same time, there is also the of coherent, evidence-based, and results- country’s commitment to the 21st Conference oriented energy policies and strategies. Indeed, of Parties (COP21) to contribute to the global it was two days well spent in such erudite and reduction of greenhouse gas (GHG) emissions to expert company, where various imperative avert the consequent climate-change disasters, issues related to inclusive and sustainable primarily through the increased utilization of energy development, such as electricity markets renewables and the more efficient use of energy. and pricing, energy resources mix, project financing, policy infrastructure within and The Herculean task of urgently and among regulatory and policymaking institutions, appropriately addressing the issues and climate change and other uncertainties, were challenges in the energy sector requires brought to light. a concerted effort amongst the different stakeholders. In recognition of this compelling It is the primary aim of this note to be an need, the Energy Policy Development Program honest broker of the issues and challenges that (EPDP) hosted a two-day international were presented at the conference. But first, it is conference entitled, “Toward Inclusive and incumbent upon us to unpack what is meant by Sustainable Energy Development” to provide “inclusive and sustainable energy development” a venue for the airing of ideas and concerns in the Philippine context and in line with the of the brightest experts from the academe, conference presentations and succeeding government, private sector, and other discussions. We then move on to identify the stakeholders in the energy sector both from key priority issues and challenges that must the Philippines and abroad. The goal of the be addressed in devising an inclusive and conference is to collaboratively identify key sustainable energy development strategy. “Proper infrastructure support is key to the Philippines’ bid for a higher and more inclusive long-run growth trajectory that generates wide-ranging employment, reduces abject poverty, and will catapult the country into the high-income range by 2040.” 2 Aspects of Inclusive and Sustainable Energy Development Inclusive energy development entails the aspects of affordability and availability of energy to all sectors of society, including the poor and far-flung areas. Sustainable energy development mainly involves the aspects of reliability, sufficiency, and “A favorable combination of efficiency – that hinge on reliability and optimal fuel mix – of energy. This implies continuously sound energy policies and meeting the instantaneous consumption demand for energy in the short-term and meeting the regulations is a condition growing energy needs of a developing economy sine qua non for inclusive in the long-term. As such, an inclusive and sustainable power supply will involve scrupulous and sustainable energy forward-looking technical planning and demand forecasting to motivate fitting and timely development.” investments in the energy sector.2 Given the complexities and rigor involved in the delivery of the aforementioned technical aspects of energy, a favorable combination of sound of Hawaii Manoa and EPDP program advisor energy policies and regulations is a condition said, “Too many objectives spoil the broth.” It sine qua non for inclusive and sustainable is thus not our aim to tackle all the issues that energy development. Sound energy policies were raised, as such an endeavor would be and regulations should also work to ensure the intractable. We only lay out the key issues that smooth functioning of the electricity