Wednesday, August 24, 2005

Alternative Energy

Commentary : Surviving the oil crisis

Alvin A. Mejia
Inquirer News Service

OIL is a basic commodity in modern society. It literally runs our lives. Come to think of it, it controls our lives through its price. With oil prices rising to new heights and as global demand grows faster than global oil production, it's about time we aggressively promoted alternative energy resources to break us free from the shackles of oil.

We are witnessing aggressive bullish movements in oil prices. The New York contract for light sweet crude oil closed at $66.80 per barrel last Aug. 12. Oil traded below the $50 per barrel mark a year earlier. Oil firms in the Philippines have continuously increased the prices of their petroleum products and we expect them to move together with the bullish world market. We shouldn't be surprised to see a domino effect on the prices of food, transportation and electricity soon.

In the midst of the current oil crisis, President Gloria Macapagal-Arroyo calls on every Filipino to conserve energy and keep in mind the survival of the nation. Government institutions are ordered to cut their energy consumption and the public is encouraged to use bicycles or walk to get to their destinations.

We agree that these are necessary measures to help us survive this particular wave of the impending energy crisis. But our position in this global trial could have been much better if had we been able to maximize the development of our renewable energy resources. Had we been keen on putting up the foundations to do so, we could have been a major player in the world of renewable energy generation. Which is actually part of the Philippine Energy Plan of the Department of Energy.

We aim to achieve energy independence and reach the 60-percent self-sufficiency level by the year 2010 and increase our renewable energy-based capacity by 100 percent in 10 years. The Philippines also aims to be the world's leader in geothermal energy as well as the largest wind power producer in the South East Asian region. Solar, hydro, biomass and wind energy resources are now aggressively being developed throughout the country and we need all the funding we can get to support the development of these projects.

Funding from the Clean Development Mechanism (CDM) will provide a big boost to the efforts to realize these projects. This is one of the global cooperation schemes established by the Kyoto Protocol, which aims to mitigate the process of climate change and help developing countries attain sustainable development. Participating industrialized countries, which are major contributors of greenhouse gases (GHGs) that speed up the global warming process, have agreed to achieve a 5.2-percent reduction of their 1990s emission levels to be realized in the 2008-2012 commitment period.

Under the CDM framework, GHG emission-reduction activities such as the development of renewable energy projects can be implemented anywhere in the world by these industrialized countries. The CDM erases the geographical boundaries in terms of fulfilling GHG reduction commitments for the industrialized countries and allows the channeling of funds to developing countries where putting up these projects is more cost-efficient.

We have gone far in terms of establishing the Clean Development Mechanism here in the Philippines. Efforts toward capacity building are being done, projects are being constructed and institutional foundations are being laid down. However, the rules and regulations for the national approval process for the CDM authority have not been promulgated by the Department of Environment and Natural Resources (DENR). We cannot fully establish the CDM in the Philippines without a framework of approval for projects that could come under the CDM. The absence of this framework brings uncertainty and impairs our national capacity to compete with other countries that are now leaving us behind.

The Philippines, like many other developing countries, is inclined toward developing small-scale renewable energy projects since there are not too many options open for us. The CDM defines small-scale projects as those that generate less than 15 megawatts of energy. These small-scale projects can finally bring power to those areas that are too far to be reached by the country's electricity grids since they are easier to set-up. However, it is difficult for the proponents of these small-scale projects to get funding from banks and ordinary investors because of their size and the low credit rating of the proponents. These projects need to be put under the CDM but uncertainty lurks, as the foundations for the mechanism have not been laid.

The CDM is a tool we can use to help our environment, attain sustainable development and achieve energy independence. We have the potential to be a major player in the world of CDM and renewable energy. We have to be creative in forming long-run survival strategies amid this oil crisis. We urge the promulgation of the national approval process for the CDM national authority. It is a matter of national survival.