The Freeman energy forum; avoiding carbon tax

As mentioned in this column last week, I attended The Freeman energy forum on the theme, “Powering Cebu,” at Waterfront Hotel in Cebu IT Park. The Freeman is a leading regional newspaper in Cebu and Central Visayas, and is part of the Philippine STAR Media Group.

The opening message was given by Miguel G. Belmonte, president and CEO of the Philippine STAR Media Group. He emphasized the economic dynamism of Cebu and the region, the fast demand in power and the challenge of significantly expanding energy infrastructure.

Department of Energy Assistant Secretary Mario Marasigan discussed the lineup of big wind power, onshore and offshore that are projected to provide big power supply into the future.

Niel Martin Modina, assistant vice president for Visayas System of National Grid Corp. of the Philippines, showed maps of new transmission lines dotting and connecting major economic corridors of Luzon, and between major islands of Visayas and Mindanao.

Engr. Raul Lucero, president and COO of Visayan Electric Co.(VECO) mentioned that the Philippine Energy Plan itself projected that peak demand in Visayas would leap from 2,464 megawatts in 2023 to 10,678 MW by 2050. The power situation in Cebu is critical to the economic fate of the Visayas as it is the connection hub of energy transfers from Luzon and Mindanao to reach the rest of the Visayas.

He then discussed their consumer app “MobileAP” that will “enable customers to track their electricity consumption, help raise their appreciation of the industry, and understand that they have a huge stake in the energy transition in the Visayas and the rest of the country.”

Engr. Don Paulino, chief engineering and projects officer of Aboitiz Power Thermal Group, discussed the need for Cebu to grow its power plant capacities “using all forms of technologies especially reliable, continuous, and affordable electricity coming from baseload sources that would also support the entry of more renewable energy.”

The energetic and fast-talking engineer is correct because Cebu’s high demand and Visayas grid’s perennial low reserve margins should be an important factor for people there to realize that what is needed are more baseload thermal plants.

Cebu Gov. Gwen Garcia gave a long, passionate extemporaneous speech about their past experiences of power failures, of dependence on geothermal power from Leyte because Cebu did not have enough domestic supply of power. She argued many years ago that Cebu should have more embedded power plants in the island, within Cebu itself. Many manufacturing, hospitality and hotels, IT and IT-BPM industries are all energy intensive and they are in Cebu and are Visayas’ growth drivers and help Cebu become more globally competitive.

She mentioned a few times environmentalist groups that oppose Cebu having many thermal coal plants. For the charming and frank governor, priority should be the jobs and businesses of her people in the province and neighboring islands that do business with Cebu.

Jay Yuvallos, president of the Cebu Chamber of Commerce and Industry; Alfredo Reyes, president of Hotels, Resorts and Restaurant Association of Cebu, and Fred Languido, editor of The Freeman, joined the panel discussion and provided more in-depth analysis and experiences as local business and media leaders who see the economic realities on the ground. I enjoyed listening to sharing local perspectives on Cebu’s real needs in business and electricity.

Overall it was a fantastic, dynamic and high caliber forum. No heated or antagonistic debate, only sincere dialogue and sharing of ideas and business outlook. The room was full with enthusiastic audience.

Congratulations, The Freeman and PhilStar Group, for holding that wonderful and intellectually engaging forum.

Recently there have been lobby especially from the ADB that the Philippines should impose a carbon tax. See for instance these reports this year: “ADB: Carbon tax has potential in Philippines” (PhilStar, May 7), “Philippines seeks P28 billion ADB loan to ramp up climate action” (PhilStar, Aug. 30), “Carbon tax seen generating essential revenue for Asia-Pacific, ADB says” (BusinessWorld, Oct. 31).

I think the ADB and other multilaterals, some business and environmental groups are wrong in pushing this lobby. Consider the following.

The Asian Development Fund (ADF) has a total fund of $35.39 billion. The top five contributors to ADF are: Japan 38.2 percent, US 13.7 percent, Australia 8.0 percent, Canada 6.0 percent, Germany  5.7 percent (Source: ADB, “Donor Contributions on Asian Development Fund”).

Now see the coal power generation of these five countries in terawatt-hours (TWH) in 2023: US 738 TWH, Japan 304 TWH, Germany 129 TWH, Australia 126 TWH, Canada 24 TWH.

Other Asians have these coal power generation in 2023: China 5,754 TWH, India 1,471 TWH, Indonesia 217 TWH, South Korea 203 TWH, Vietnam 130 TWH, Taiwan 119 TWH, Malaysia 81 TWH, and Philippines only 74 TWH.

The ADB should tell its four big country donors – Japan, US, Germany and Australia – to significantly cut their coal power generation and be at the level of the Philippines with only 74 TWH, before pressing the Philippines to have a carbon tax.

I hope that the economic team will ignore this irrational lobby by the ADB. A carbon tax is inflationary and can lead to premature closure of some cheap, reliable and dispatchable on demand thermal plants. Which can lead to thin power reserves and power failure.

Recently I bumped into Manny Rubio, the president and CEO of MGen Power Corp., and I asked him about his company’s plans for the Visayas grid. He replied that “MGen is considering expanding our Toledo Power Unit in Cebu to supplement existing 83.6 MW capacity. We are also evaluating modifications to our oil-based plants to offer competitive ancillary services in the co-optimized market.”