Energy favoritism by legislation

* This is my article in BusinessWorld on March 12, 2019.

bw

Going through the Economy section of BusinessWorld last week, I checked these four energy-related reports:

  1. “NGCP declares ‘yellow alert’ for Luzon power grid” (March 06);
  1. “Bill tapping Malampaya fund to pay down Napocor debt hurdles bicameral session” (March 08);
  2. “First Gen’s Batangas LNG terminal project cleared by DoE” (March 08); and
  1. “Power-line obstruction bill could still pass before Congress closes” (March 11).

Report #1 refers to low reserves on March 5 of only 624 MW, available capacity was only 10,115 MW due to unscheduled shutdowns by some (aging?) power plants while peak demand hit 9,491 MW.

Report #2 refers to the “Murang Kuryente” proposal, under House Bill (HB) 8869 and Senate Bill (SB) 1590, to allocate P208 billion of the net national government share in the Malampaya fund to pay off Napocor’s stranded contract cost (SCC) and stranded debt (SD).

Report #3 is about DoE Secretary Cusi signing a notice to proceed (NTP) for First Gen Corp. to build a liquefied natural gas (LNG) import terminal. Two other entities with similar proposal were issued NTP by the DoE: Phoenix Petroleum and China Oil (CNOOC), and Australian firm Energy World Corp. Ltd. (EWC) in Quezon province.

Report #4 is about HB 6276 and SB 2098 penalizing the construction of structures that interfere with power transmission.

On report #1, it is ironic that government targets fast GDP growth of 7-8% and yet we still experience occasional near-deficiency in power during the hot months of March to May. It is not possible to have sustained fast growth if there is insufficient and limited supply of stable electricity.

From 2000 to 2017 or in just 17 years, the expansion in electricity generation in terawatt hours (TWH) and GDP size are as follows: China, 4.8x and 9.9x; Indonesia, 2.8x and 5.7x; Vietnam, 7.2x and 7.1x; Philippines, 2.1x and 3.9x. Philippines’ power generation is small (see table), there is no valid reason why certain groups would oppose fast expansion of the country’s power generation capacity if the power source is against their ideological beliefs.

Energy_031219

On report #2, under SB 1590, SCC refers to the excess of the contracted IPP costs and the actual selling price, SD is any unpaid financial obligation of Napocor. The good news is that the bill will reduce power prices for the consumers as the universal charge in our monthly electricity bill will significantly decline if not be erased. The bad news is that the SCC and SD of Napocor/PSALM will keep rising because PSALM will keep subsidizing the cost of its contracted energy by selling low and buying high and still look “financially healthy.”

The Implementing Rules and Regulations (IRR) should put a cap on the amount of SCC and SD to avoid endless, bottomless complacency by NPC/PSALM. Over the long-term, these government corporations should (a) learn to sell power rates at true costs, and (b) fade away as there are many government agencies that regulate private generating companies (DOE, ERC, SEC, BIR, LGUs…).

On report #3, there is a draft substitute HB on “Downstream Natural Gas Industry Development Act” with some lousy, anti-consumer provisions. For instance in Chapter IX (Incentives), Section 34 (Natural Gas Portfolio Standards), it mandates that “all distribution utilities shall be required to allocate ten percent (10%) of its electricity capacity from natural gas.”

Proponents and lobbyists of this bill or section intend to rob Philippine electricity customers. Even if they price their natgas to high levels, DUs and customers have no choice since they are coerced to buy minimum amount of natgas power. If the claim by one big natgas company that “natgas is cheap and competitive compared to coal” is true, then there is no need for this bill. That claim therefore is a lie, hence a need for legislation to arm-twist DUs and customers nationwide.

Related to report #4 is the Energy Virtual One Stop Shop (EVOSS) under SB 1439 and HB 8417. The bicameral meeting was finished and the bill may have been signed by President Duterte already. It is among the very few laws to reduce red tape by bureaucrats. For instance, Section 13 states: “Failure of the mother agency and its attached bureaus, offices and agencies both on the national and local level, including GOCCs, to release its action on applications duly filed with complete supporting documents within the prescribed time frame shall be deemed approved for such application…”

The IRR will soon be issued, the reform should cover all power gencos with no exception and favoritism.

The Arangkada Philippines Project (TAPP) document on Power made Recommendation #15, “new generators to enter the market with plants that are profitable at a much lower cost per kWh, creating an abundant supply of baseload.” Amen.

The economics of coal

* This is my article in BusinessWorld last February 25, 2019.

bw

Most anti-coal activists would resort to disinformation and deception to advance their ecological leftist agenda and in the process, deprive energy consumers of the opportunity to have cheaper, stable and reliable 24/7 electricity, badly needed to sustain fast growth and generate more jobs for the people.

One paper spreading fake news is an opinion piece, “Consumers should not pay the price for risky coal deals” by Sara Jane Ahmed published in BusinessWorld last week, February 20, 2019. I quote three of her statements.

(1) “Coal has become toxic… In India, China, Malaysia, and, most recently, Vietnam, a trend of cancellations and delays involving new coal plants has emerged.”

Coal remains attractive not only for the four countries mentioned but other major economies in the world, including “greenies” US, Germany, Australia and Japan. Until 2017, these four developed countries were reliant on coal power from 31% to 61% of their total electricity generation. For India, China, Malaysia and Vietnam, coal reliance was 45% to 76%. In the Asia-Pacific overall, coal supplied 60% of total electricity production.

Table1_022519

The real “toxic energy” would be candles and gensets because of frequent blackouts. Candles mean more fires and destruction of property while gensets running on diesel mean more air and noise pollution.

(2) “SMC Global Power Holdings Corp., plans to forge ahead with the construction of a 300-megawatt (MW) coal plant in Negros Occidental…. insurance and reinsurance companies… will no longer insure coal.”

San Miguel Energy sees the power deficiency in Negros so its main insurance for building a coal plant is that its output will be quickly used by the 5M consumers (4.4M in 2015) as electricity demand keeps rising.

The main source of electricity in Negros is geothermal from Palinpinon, Negros Oriental (by EDC). Before and even after the many solar farms were constructed in Negros, regular and rotating blackout was the norm.

Luckily there are saviours somewhere — the coal plants from Cebu (Toledo and Naga). Negros imports energy from Cebu which has similar population as Negros but power generation is nearly 2x that of Negros. An anti-coal ideologue opposing a new coal plant in Negros but silent about coal plants in Cebu and Iloilo that give lights to Negros.

Table2_022519

(3) “coal as it becomes “stranded”… happening with increasing regularity to coal plants, including those from our neighboring countries, which are becoming obsolete in the face of cheaper renewables…”

Dr. James Roumasset, a famous environmental and energy economist from the University of Hawaii and frequent visitor and writer in Philippines economics events, made this observation:

“If stranded costs are really happening with regularity, it’s because of uneconomic mandates and subsidies favoring renewables. In California, this is called the “missing money” problem. But a more accurate term would be “stolen money.” Those “progressive policies” rob from the IPPs and poor consumers and give (a far lesser amount) to rich consumers who can afford panels and to politically well-connected renewable providers.”

The Arangkada Philippines Project (TAPP) in its paper, “Seven Big Winner Sectors: Power” made a good Recommendation #12, “Develop a power plant on an isolated island such as Semirara with a supply of indigenous coal and deepwater access to international coal sources… close the loop of Bicol, Samar, Leyte, Cebu, Negros, Panay, Semirara, Mindoro and Batangas.”

 

Amen to that. We should have 24/7 electricity even if the Sun does not shine, even if the wind does not blow, even if a bad El Niño would reduce water supply in hydro dams.

Growth and electric cooperatives

* This is my column in BusinessWorld last February 19, 2019.

bw

On the Philippines’ GDP growth rates, the good news is that from 2010 to 2018, the Philippines has been growing above 6% yearly except in 2011. High growth was experienced in 2010 with 7.6% (recovery from 2008-2009 global financial turmoil) and 2013 (election year) with 7.1%.

The bad news is that these growth rates are not enough. The Philippines, with 106 million people, has a GDP size in 2017 of only $314 billion while neighbors with their smaller populations had similar or larger GDP sizes: Malaysia (32M) has $312B, Singapore (5.8M) has $324B, Thailand (69M) has $490B. We need to grow 7-10% per year for many years before we can even catch up with Thailand or Malaysia (Source: IMF, World Economic Outlook [WEO] October 2018).

Among the important factors to have high and sustained growth is to have high and rising supply of cheaper and stable electricity. There are numbers that show a correlation between GDP growth and electricity consumption growth especially for developing countries like the Philippines (see Figure 1).

Figure1_021919

Among the ASEAN 6, a similar pattern can be observed, also with China and Japan. The Philippines’ low GDP size is reflected in its low electricity consumption in tera-watt hours (TWH) (see figure 2).

Figure2_021919

There are many factors why our electricity supply and consumption is low compared to our neighbors, like the thick, expansive bureaucracies and permits required before one can explore and develop new power plants.

We focus on the role and “mis-role” of electric cooperatives (ECs). Since they are geographical monopolies granted with congressional franchise to distribute electricity, they can help expand or restrict power demand. If an EC for instance is mismanaged and does not pay the power generation company (genco), even if the genco has big plans to expand power capacity, it cannot do so.

The Department of Energy (DoE) has issued two media releases related to problematic ECs dated February 01 and February 06. It noted that many ECs are failures in expanding rural electrification because of “inefficient management, corruption, unnecessary political interference, institutional conflicts.”

So DoE will conduct a performance review of ECs, especially those that burden their communities with persistent and unresolved brownouts, because they have heavy debts and do not pay their power supply. Underperforming ones will be assisted while non-performing ones will be recommended for cancellation of their franchises.

DOE has identified 17 ECs that are chronic failures to provide satisfactory services to their customers as stipulated in their congressional franchise. Seven are from Regions IV-B and V — ALECO (Albay), CASURECO III (Camarines Sur), FICELCO (Catanduanes), MASELCO (Masbate), OMECO (Occidental Mindoro), ORMECO (Oriental Mindoro), and PALECO (Palawan). Other problematic ECs are PELCO (Pampanga), BASELCO (Basilan), LASURECO (Lanao), SULECO (Sulu), ZAMCELCO (Zamboanga), and DANECO (Davao del Norte).

Then certain islands have rising missionary subsidies — which are then passed on to all electricity consumers nationwide via high universal charges.

In three previous articles in this column, “Unstable power supply due to problematic electric cooperatives” (February 08, 2017), “How the bureaucracy works against cheap and stable electricity (March 08, 2017), and “Corporatization of electric cooperatives can reduce system loss” (September 29, 2017), it is argued that ultimately all ECs should be corporatized and depoliticized, be registered as corporations with SEC, and not with NEA.

Solar para sa pulitika, Rice Tariffication para sa masa

* This is my column in BusinessWorld last February 12, 2019.

bw

The cronyist “Solar para sa Bayan Corporation” (SPBC) franchise bill (HB 8179) was magically passed by the House of Representatives despite opposition by many groups in the energy sector. Among the oppositors is the Developers of Renewable Energy for AdvanceMent, Inc. (DREAM), the umbrella organization of all RE associations in the Philippines.

As I did in my letter to Sen. Grace Poe, arguing for the junking of HB 8179, DREAM said the bill is unconstitutional and should not be passed. In particular, (1) it violates the equal protection clause under Article III, Section 1 of the 1987 Constitution. The proposed SPBC franchise has no substantial distinction with other generators that will not be granted a similar franchise. (2) It violates the fundamental right to due process of law under the Constitution. And (3) it violates the proscription against unfair competition.

Nonetheless, a Senate Committee Report 659 was passed last week, February 7, 2019, and some outlandish provisions from the original bill have been tamed. Among the changes is that the operational coverage “in any… areas throughout the Philippines” has been limited to only 13 provinces.

Note three things here: (1) SPBC claims it is competitive yet it requires a Congressional franchise and a franchise by nature is a monopoly, (2) EPIRA law of 2001 has unbundled energy components and players are classified as transmission, generation, distribution, supply companies; SPBC is a generation, distribution and supply company rolled into one, and (3) first time that a franchise will have implementing rules and regulations (IRR).

BusinessWorld reported (“Court challenge looms for Solar Para Sa Bayan franchise,” February 08, 2019) that the Coalition for Rural Electrification (CoRE) warned that such a franchise bill may not hold up to a court challenge. Good. It is shameless that this bill was rushed at the House and the Senate where a member is the mother of the company owner as we all know. If it becomes law, the measure should be called as Solar para sa Pulitika Corp.

Meanwhile, on another front, there is a last-minute lobby by various protectionist groups who insist that expensive rice is good for the country and the poor. They oppose SB 1998 or the Rice Tariffication bill, removing quantitative restrictions (QR) and replacing it with a 35% tariff rate on imported rice from ASEAN, and 40% or higher on imported rice outside of ASEAN.

The protectionists’ main argument is that rice liberalization will lead to the demise of the local rice industry as there will be a huge influx of imported rice from our neighbors.

This is outright disinformation, deception and lie. Even if we wanted to import one-half or even one-fourth of our domestic rice consumption, it is not possible, it is not going to happen.

Data from the UN Food and Agriculture Organization (FAO) show that Philippine rice production has been steadily rising and the average productivity per hectare has also been rising, from only 2.2 tons per hectare in 1980 to 4.0 in 2017.

The two big rice exporters in the world, Thailand and Vietnam, have actually experienced a declining or low expansion in rice output. Thailand’s output declined from 35.7 M tons in 2010 to 33.4 M tons in 2017. Over the same period, Vietnam’s output increased a little from 40 to 42.8 M tons.

Myanmar and Cambodia can be the next group of rice exporters but they also have a rising demand and population (see table).

Rice_021219

So the Philippines’ rice importation will be limited and restricted even if it wants to import more and there will be no such demise in the local rice industry. Rice trade liberalization should proceed, and NFA’s distortionist monopoly of power to regulate rice imports should be removed.

The 35% tariff is actually high. Why should a P30/kilo potential landed price of rice from ASEAN neighbors be made P40.50/kilo to many poor Philippine households? That 35% should go down through time, down to zero for rice imports from ASEAN.

Universal charges and Solar sa Bayan franchise bill

* This is my article in BusinessWorld last February 01, 2019. It is a web version only and not published in the print edition due to space constraints that day.

bw                        

 The Philippines’ expensive electricity is largely caused by 9-10 different charges slapped on our monthly electricity bill. As mentioned in an earlier paper in this column, “Walang forever, universal charge in electricity and PSALM” (January 15, 2019), these are: generation charge, transmission charge, distribution charge, supply charge, metering charge, system loss charge, universal charge, feed in tariff allowance (FIT-All), VAT and other taxes.

The universal charge (UC), currently 37.9 centavos per kWh, is composed of four items – Napocor’s Stranded Contract Cost (UC-SCC) and Stranded Debts (UC-SD), Missionary Electrification (UC-ME) and Environmental Charge (UC-EC). The SCC is now the biggest item of these four but SD will shoot up in the coming years because there is still P466.2 billion of Napocor’s remaining debt.

So the bad news is that UC fund administrator, Power Sector Assets and Liabilities Management Corporation (PSALM), projects that it will collect UC 86.0 centavos per kWh from 2020 – 2026.

But there is good news, a pending legislation, SB 1950 or the “Murang Kuryente” bill by Sen. Sherwin Gatchalian, which proposes to use the net government share from Malampaya royalty to pay the UC-SCC and UC-SD. The Committee Report was passed on 2nd reading in the Senate on Wednesday, January 30.

In a presentation during Stratbase-ADRi’s “Energy Outlook” forum on September 28 last year, Senator Gatchalian showed these numbers if Malampaya fund collection of P204 billion is used to pay the UC-SCC and UC-SD.

Consumer savings of using Malampaya fund for UC, in centavos per kWh

US-SCC-and-SD

That 84.74 savings would spare a household with average monthly consumption 200 kWh  of P169/month or P2,034/year in savings, equivalent to one sack of rice.

But consumers still have to pay, in centavos/kWh: (a) 1.26 balance for UC-SCC and SD, (b) 15.61 UC-ME, and (c) 0.25 UC-EC, or total 17.12. Over the long term, these should be abolished too. Modern technology will allow isolated islands to have reliable, 24/7 electricity off-grid by tapping various energy sources, both conventional and renewables.

On January 24, the Senate Committee on Public Services conducted a public hearing on various franchise bills that were passed on 3rd reading in the House of Representatives. Among those bills is HB 8179 or the Solar Para sa Bayan Corp. (SPBC) franchise.

I wrote to Senator Grace Poe, Chairperson of the Committee. I pointed out certain sections of the bill that are cronyism-seeking and anti-consumers. I post portions of my letter below:

Section 1, “… franchise to construct, install, establish, operate, and maintain… distributable power technologies (DPTs) and minigrid systems… in any areas to be determined by the DOE, which shall include unserved areas and underserved areas throughout the Philippines… access to any transmission or distribution system… eligible to become a member of the wholesale electricity spot market…”

Why grant a nationwide, unlimited scope, coverage and execution for this special corporation? It can choose any area in the Philippines like a fast-growing tourism and industrial zone and do business there on the pretext that it is an “underserved” area. It can overlap service provision with existing DUs even though such overlap is not allowed that is why they are given a specific, non-infringing area franchise.

Why automatic membership in WESM? Currently, only ERC-authorized players can become WESM members. The bill allows SPBC to ignore ERC requirements for WESM membership.

Section 5. “… The grantee shall charge reasonable and just power rates for its services to all types of consumers…”

Solar + genset power is not cheap, it will be expensive to the public. Solar + battery is also not cheap. Solar does not generate electricity at night, or hardly generates power at daytime when there are thick clouds and heavy rains. The company will be relying on gensets running on non-greenie diesel power.

Section 15“The grantee shall submit an annual report to the Congress of the Philippines…”

SPBC really intends to go around ERC regulations and go straight to Congress. ERC monitoring is more technical and focused while Congress monitoring is less technical and scattered with so many political concerns.

Overall, HB 8179 is deceptive. SPBC’s marketing and selling point to the public is that it is a greenie solar power-generation company. But its franchise bill says that it is a nationwide, unlimited generation-distribution company.

A good solution for this kind of bill is to junk and reject it. But it is not practical politically because it was passed quickly at the House of Representatives, which indicates the measure’s wide political connection.

A compromise solution is to limit the unlimited scope, denationalize the nationwide coverage which the bill seeks. Put it under the technical monitoring and permitting of the ERC, not under Congress. No automatic membership in WESM so that it must get ERC authorization first, and when it misbehaves after being admitted it can be kicked out of WESM too.

‘WALANG’ forever: Universal charge in electricity and PSALM

* This is my article in BusinessWorld last January 15, 2019.

bw

We have the 2nd or 3rd most expensive electricity in Asia (after Japan and Hong Kong or Singapore) mainly because there are many charges that are imposed on our monthly electricity bill. The biggest item is the generation charge (goes to power generation plants) plus eight other items: transmission charge, distribution charge, supply charge, metering charge, system loss charge, universal charge, feed-in-tariff allowance (FIT-All), VAT and other taxes.

This column has discussed many times the FIT-All or guaranteed high price for renewables for 20 years, also competition in power generation that are reflected in WESM prices, the transmission charge, system loss charge, others.

I get intrigued by the universal charge (UC) because it contains four items (UC-ME, UC-EC, UC-SCC, UC-SD) that seem forever. UC is provided in the EPIRA law of 2001, Section 34, to be paid by all electricity consumers nationwide.

The UC fund administrator collected by the distribution utilities, electric cooperatives and other electricity suppliers is the Power Sector Assets and Liabilities Management Corp. (PSALM). It has three functions under the EPIRA law: (a) privatize NPC generation and Transco transmission assets, (b) manage liabilities of NPC debts, obligations of electric coops to NEA and other agencies, and (c) administer the collection and disbursement of UC funds.

Below are the current UC rates, UC remittances received by PSALM until September 2018, and its petition to avail huge funds.

EnergyRates_011519

What are these four components?

  1. SCC — excess of the contracted cost of electricity by the National Power Corp. (NPC) over the actual selling price of the contracted energy output.
  1. SD — financial obligations of NPC which have not been liquidated by the proceeds from the sales and privatization of NPC assets.
  1. ME – subsidy for steady supply of electricity in small island provinces and far-flung areas.
  1. EC — for watershed rehabilitation and management.

So PSALM is sitting on and administering a huge pile of cash from us electricity consumers. Some problems and issues that I see here.

Universal Charge (UC) Rates, Remittances, and PSALM Availment

One, those old SCCs and now SDs, these were contracted since the early 90s during the power crisis and consumers have been paying for them. After about 27 years they are still there? The UC rates do not even decline through time and we have to keep paying for them forever? Wow, very lousy.

Two, the ME subsidy for small island provinces and far away areas, they are forever too? Why can’t they have their own baseload, 24/7 power plants (coal, hydro, geothermal, etc.) and just augment with big gensets running on diesel during peak hours, so that the ME subsidy can be eliminated?

There is a moral hazards problem by NPC-SPUG (small power utility group) here. The agency might dislike that those areas will have their own baseload plants because that will ultimately eliminate their agency, their jobs and perks. Even then, those existing NPC gensets are not enough so those islands suffer regular brownouts, which adversely affect their tourism, commercial and industrial businesses.

Three, PSALM is a generation player, it manages and operates NPC plants that are not yet privatized and joins the competition for power supply. It can “sell low” at a loss, then raid the UC funds to recover its losses and appear to be financially healthy.

This creates a moral hazards problem too. PSALM will have little incentives to hasten the privatization of the remaining NPC plants. It can become a forever bureaucracy funded by forever UC subsidies. PSALM becomes another anti-competition factor in the Philippine electricity market.

 

To have cheaper electricity, we should do away with all subsidies as much as possible. Power plants that sell expensive electricity, whether conventional or renewable, base load or peak load, let them sink. Remove UC, remove FIT-All, over the long-term. Consumers interest of cheaper, stable electricity should be paramount over all other business, bureaucracy and taxation interests.

CHR investigates ‘carbon majors’ by using more fossil fuels

* This is my article in BusinessWorld on January 8, 2019. The chart below is not included in the article due to space constraints, I just re-included it here.

bw
The Philippines’ Commission on Human Rights (CHR) has accepted the petition by Greenpeace and other environmental groups in mid-2016 and it has launched the “National Public Inquiry on the Impact of Climate Change on the Human Rights of Filipino People and the Responsibility of the Carbon Majors Therefor, If Any.”

Most of the climate investigations were done in their Quezon City office but some were also done in the provinces and abroad.

On Aug. 30, 2018, I sent a Freedom of Information (FOI) request to the CHR, asking among others the following information:

  • Amount of public resources spent and to be spent on each investigation and hearings abroad.
  • Funding, how much: (1) Paris meeting in December 2015; (2) Sept. 24-28, 2018 in New York City; (3) Nov. 5-9, 2018, London School of Economics.

On Sept. 13, 2018, CHR Commissioner Roberto Eugenio “Totsie” Cadiz, Chairman of the National Inquiry on Climate Change (NICC), replied to my FOI request, saying that, regarding funding, “(1) Paris trip was partially funded by the Business and Human Rights Resource Center (BHRRC)…. costs to CHR Regular Fund for the various meetings amounted to P124,396.80. (2) NYC trip September 2018 will be funded by the European Union through its GoJust facility… The budget allocated by GoJust for this activity is P523,600.00. (3) London trip November 2018, CHR is still looking at potential donor agencies.”

Commissioner Totsie Cadiz is a friend. In 2017 I went to his office and over coffee and cookies, we talked about this thing and I verbally expressed my dismay why the CHR would investigate companies for their phony “crimes” of causing less rain and more rain, less flood and more flood, less storms and more storms, less cold and more cold. Totsie asked me to send a written position paper. In their letter last September, he reiterated the invitation for me to participate in CHR’s inquiry.

On Oct. 29, 2018, I sent Commissioner Cadiz a formal position paper, seven pages, and argued that “I think the Commission has demeaned the main purpose of its creation, that it focus on civil and political rights.”

I attached charts, numbers, news reports, photos and other facts showing that climate change is natural and cyclical. Nature-made, not man-made.

  1. 4.5 billion years, warming-cooling cycle and CO2 levels.
  1. 500 million years of unrelatedness between atmospheric CO2 and temperature.
  1. 420,000 years, Vostok ice cores, temperature and CO2 level.
  1. 2,000 years temperature reconstruction for N. Hemisphere.

The CHR has fallen into the trap set by Greenpeace and other environmental groups of using lots of scare-alarm-Frankenstein tactics about the “man-made” climate change. Among these tactics are the following:

  1. “Last chance to save the planet” warnings.

From 1992 to 2018, there are almost yearly news reports on this. Below are five examples.

  1. “FEATURE: Last chance to save the planet?,” New Scientist, May 30, 1992.
  1. “A Global Warming Treaty’s Last Chance,” TIME, July 16, 2001.
  1. “Climate talks ‘last chance’ to avoid catastrophe,” NZ Herald, Dec. 2, 2007.
  1. “Climate change: Paris ‘last chance’ for action,” BBC, April 22, 2015.
  1. “Global Warming and Climate Instability: One Last Chance to Save Ourselves,” Global Research, March 12, 2018.
  1. Predicting climate apocalypse, all failures.
  1. “Arctic summers ice-free ‘by 2013,’” BBC, Dec. 12, 2007.
  1. “NASA Climate Scientist Says ‘We’re Toast,’” CBS News, June 24, 2008.
  1. “Gore: Polar ice cap may disappear by summer 2014,” USA Today, Dec. 14, 2009.
  1. Exaggerated warming predictions by computer models.

The UN IPCC climate models have produced on average about 2x more warming compared to actual rates in global surface temperature and deep ocean.

ch

Source: http://www.drroyspencer.com/2018/12/the-five-questions-global-warming-policy-must-answer/ December 18, 2018.

HYPOCRISY OF THE ANTI-FOSSIL FUELS LOBBY

People who lambast fossil fuels use lots of fossil fuels via frequent jet-setting and global travels. The double talk can be avoided if they use solar planes, or wind-powered giant kites, or witchcraft-powered brooms but they don’t. Three examples here.

  1. Greenpeace. It has launched several polyster airships with big bold slogan, “Say No to Fossil Fuels” — when those airships use propane, a fossil fuel. In addition, Greenpeace people have frequent global travels to sustain campaigns in their 26 global offices covering all seven continents except Antarctica.
  1. United Nations. The UN Conference of Parties (COP) annual and global meetings attract on average some 30,000 people: from national and local governments, multilaterals, media, NGOs. COP 1 in 1995 Germany, COP 2 in 1996 Switzerland, COP 3 in 1997 Kyoto Protocol Japan, 1998 Argentina, 1999 Germany, 2000 Netherlands, 2001 Morocco, 2002 India, 2003 Italy, 2004 Argentina, 2005 Canada, 2006 Kenya, 2007 Indonesia, 2008 Poland, 2009 Denmark, 2010 Mexico, 2011 South Africa, 2012 Qatar, 2013 Poland, 2014 Peru, 2015 France, 2016 Morocco, 2017 Germany, 2018 Poland.

On Nov. 30, 2015, New York Daily News report “Paris climate change conference creates its own massive carbon footprint”, it noted that “A whopping 300,000 tons of carbon dioxide will be churned out during the two-week climate change summit in Paris… an estimated 50,000 people, including media and world leaders, gather to discuss ways to wean the world off fossil fuels…”

  1. CHR. As mentioned above, they have made the following jet-setting travels: (a) December 2015 in Paris, (b) Sept. 27-28, 2018 in NYC, (c) Nov. 7-9, 2018 in London. Then (d) 3rd week of January 2019, The Hague, Netherlands.

The CHR is wasting its time, wasting taxpayers’ money by hearing such phony claims while exhibiting the double talk on high fossil fuel use and carbon emissions. There are thousands of cases of Filipino people whose civil and political rights have been violated by the past and current administrations, tens of thousands of human lives unjustly ended by the continuing dirty “drugs war.” CHR personnel and other resources should focus there.

Top 10 energy news of 2018

* This is my column in BusinessWorld last December 28, 2018.

bw

My list of top energy-related news that transpired this year, five global and five national.

GLOBAL

1 Despite endless noise in the world to “decarbonize” and “end fossil fuels,” reality shows that the noise is just jokes and drama. The world is still 85% dependent on fossil fuels for transportation (including the frequent jet-setting of global “planet saviors”) and electricity generation.

Also, the top six largest economies in the world based on gross domestic product (GDP) size at purchasing power parity (PPP) values are also the world’s top six largest energy consumers.

2 High coal use for power generation is inevitable for huge population countries like China and India, two countries that experienced large-scale reduction in poverty. The same is also true for industrial economies like the US, Japan, Germany, and S. Korea. The anti-coal movement tries to deny this fact but cannot escape it (see table).

EnergyConsumption_122818

3 World oil prices rose late 2017 until October 2018 and collapsed this November-December. WTI crude fell at $43-46 a barrel. Dubai crude reached almost $85 in early October and collapsed to below $60 a barrel in late December.

4 The philosophy of high oil and carbon taxes to “save the planet” was pricked big time in France. The Yellow Vest movement strongly and categorically declared that cheaper oil is more important than “fight (man-made) climate change” political concerns.

5 “Non-news” to many media outlets but actually good and big news to consumers: NO major energy catastrophes in 2018, no major oil spills, no gas blowouts, no reactor meltdowns, no major infrastructure destroyed by natural disasters.

NATIONAL

6 High inflation was triggered primarily by high oil tax hikes under the Tax Reform for Acceleration and Inclusion (TRAIN) law; higher coal, tobacco and sugar taxes also contributed. Dutertenomics led by the Department of Finance and National Economic and Development Authority remain deniers of this fact so they will proceed with the second package of oil and coal tax hikes starting January 2019.

7 The feed-in tariff (FIT) or guaranteed high price for 20 years of wind-solar and other renewables keeps rising. What was only 4 centavos/kWh in 2015, became 12.40 centavos in 2016, 18.30 centavos in 2017, and 25.32 centavos starting June 2018. This contradicts the renewable energy (RE) lobby’s claim that RE is getting cheaper.

8 The creation of an Independent Market Operator (IMO) as explicitly provided in the Electric Power Industry Reform Act (EPIRA) of 2001 finally became a reality. Officially announced by Energy Secretary Alfonso G. Cusi in June 2018, the Independent Electricity Market Operator of the Philippines (IEMOP) was created with Atty. Francis Saturnino “Nino” Juan as its first president.

9 Uncertainties remained in the implementation of the Retail Competition and Open Access (RCOA) provision of EPIRA law after the Supreme Court issued a temporary restraining order in 2017. Voluntary participation of contestable customers with 750-999 kW consumption became wobbly and many Retail Electricity Suppliers (RES) with expiring licenses still cannot get new ones, reducing competition. IEMOP recommended the voluntary registration of contestable customers as trading participants in the WESM (Wholesale Electricity Spot Market) in lieu of their mandatory WESM registration.

10 Electricity prices have stabilized in recent years. The load-weighted average price (LWAP) at WESM in P/kWh: P5.37 in 2012, P4.19 in 2013, P4.65 in 2014, P3.64 in 2015, P2.81 in 2016, P3.28 in 2017, and around P3.45 in 2018. Low electricity prices in 2016 followed by a rise in 2017-2018 are consistent with world oil prices.

So what is the outlook for 2019?

World oil prices are projected to remain low next year but local oil prices will rise due to part two of oil tax hikes under the TRAIN law.

Electricity prices in the country are supposed to remain low and stable but will be spoiled by the upward distortion by part two of oil and coal tax hikes.

Cheap energy is good but Dutertenomics thinks this is wrong so the government must make energy become more expensive. Lousy and idiotic “public service.”

The LNG bill

* This is my article in BusinessWorld on December 14, 2018.

bw

To have cheaper, stable energy sources, especially in electricity generation, there should be maximum competition and minimum taxation, distortion and government favoritism among players using different technologies and energy sources.

So if an energy or environment tax should be imposed, it should apply to all energy technologies and sources. If a subsidy should be given, it should also apply to all energy technologies.

This does not happen in the Philippines and many other countries in the world. There is always a double standard, like high taxes, unguaranteed dispatch to the grid for some technologies, and high subsidies and guaranteed dispatch to the grid for wind-solar and other new renewables.

Among power plants using fossil fuels — oil, coal and natural gas — there is also favoritism. Oil and coal are slammed with higher excise taxes to make them more expensive while natural gas has no excise tax, which makes it artificially cheaper.

Now another favoritism scheme is being prepared in Congress. I saw at least two reports in BusinessWorld on the subject this year:

  1. “Gov’t may need to finance natural gas infrastructure” (June 21)
  2. “LNG bill to require guaranteed offtake of import shipments” (Dec. 6)

If report #1 is done, it will compromise Philippine taxpayers. Firms put up big hydro, geothermal, coal plants using their own money and they are fine. But construction of liquefied natural gas (LNG) infrastructure — terminal, storage, regasification facilities — will be passed to taxpayers, before private natural gas plants can use the gas for their power generation.

If report #2 is done, it will compromise Philippine energy consumers. If LNG prices go up, consumers must pay for it even if cheaper energy is available during that period.

It is also related to constant lobby that government should set the energy mix, which is wrong. Setting the energy mix should be done by the market, by the energy consumers and suppliers, and not by the government.

Anti-coal hysteria and drama in the Philippines, among the reasons that renewables and natural gas are favored, is based on the wrong premise that the country’s coal use is high. Far from it. Compared to our neighbors, we have low coal use (see Table 1).

Energy_121418

Another reason for renewable energy and gas favoritism is the belief that the Philippines is poor in environmental sustainability in its energy development. This too is wrong.

The World Energy Council (WEC) publishes an annual study, the World Energy Trilemma Index. WEC is a United Nations-accredited global energy body with over 3,000 member organizations in over 90 countries, from governments, private and state corporations, academia, nongovernmental organizations and energy stakeholders.

The Trilemma Index is composed of three factors:

  1. Energy Security — reliability of energy infrastructure, ability of energy providers to meet current, and future demand
  1. Energy Equity — accessibility and affordability of energy supply
  1. Environmental Sustainability — energy efficiencies and energy supply from renewable and other low-carbon sources

Out of 125 countries covered, the Philippines ranked 74th overall; 96th in energy equity because of our expensive energy prices; and 1st in environmental stability (we’ve come in first for several years now) because of the country’s high input from geothermal and big hydro, energy sources that are available all year round (see Table 2).

The Department of Energy itself and Energy Secretary Alfonso G. Cusi are using and citing the WEC annual reports and take pride in our #1 global ranking in environmental sustainability. The Secretary has adopted a technology-neutral energy mix policy — it is the good and right thing to do.

Debating with Mr. RE

* This is my article in BusinessWorld last November 27, 2018.

bw

In a paper, “Setting up the debate with Mr. Coal,” published in BusinessWorld yesterday, Mr. RE and climate scam Eddie O’Connor of wind-solar lobby made new wild claims but did not answer the points I made against his previous paper.

In my paper, “Corrupted science to justify renewables cronyism” in BusinessWorld last Oct. 11, I made these points that the RE/climate scam did not respond to:

(1) “Earth’s climate history is one of natural warming-cooling cycles since the planet was born some 4.6 billion years ago.” I showed there a chart, ”450 Million Years of Unrelatedness between Atmospheric CO2 and Temperature.”

In his paper yesterday, O’Connor showed a chart of ocean heat content the past 50+ years. Sorry but planet Earth was not born in the ’60s as starting point of temperature measurement. Here is another chart showing warming-cooling cycle (see Figure 1).

Figure1_112718

(2) “Solar price of P9/kWh at P54/US$ is not 2.9 cents but 17 cents/kWh. Wind price of P8.5/kWh at P54/$ is not 4.1 cents but 16 cents/kWh.”

In his paper yesterday, Mr. O’Connor made other wild and fake claims:

(1) “Of course, the developers of wind and solar agree to abolish mandatory dispatch.”

This is lie #1. Mandatory dispatch was put in the RE law of 2008 (RA 9513) because it was demanded by the solar-wind developers. Cost upon dispatch includes the total price (capex and opex; WESM price + FIT-All) and not just the marginal price. In 2018, the total price of solar is P9+/kWh, the total price of wind is P8.50/kWh, data from ERC.

(2) “Regarding abolishing the feed-in-tariff. It is not hard to agree to this, as it is already abolished.”

Lie #2. FIT is still there, not abolished. The FIT-Allowance in our monthly electricity bill has been rising from 4 centavos/kWh in 2015 to 12.40 in 2016, 18.30 in 2017, and 25.32 centavos /kWh since June 2018 billing.

(3) “I am alarmed, indeed devastated by the disappearance of some 60% of species by 2020 due to global warming.”

Lie #3. In a paper published in Nature this year, Steinbauer and 52 other scientist-co-authors reported “a continent-wide acceleration in the rate of increase in plant species richness, with five times as much species enrichment between 2007 and 2016 as fifty years ago, between 1957 and 1966… consistent across all [continental regions], with no single region showing the opposite pattern.” (See Figure 2.)

Figure2_112718

(4) “I am afraid that Mr. Oplas is a latter day flat earther for denying climate science.”

Lie #4. I believe in climate change and global warming, they are true, they are happening. What I do not believe is that they are “man-made.” On the contrary, the climate/RE scam and square-earther is the big denier: (a) deny that global warming has many precedents and not ‘unprecedented’; (b) deny that climate change is natural and cyclical; (c) deny that global cooling can happen after global warming phase; (d) deny that natural factors — the Sun, galactic cosmic rays, water vapour, clouds, geological degassing, AMO/PDO in the ocean, etc. — are big factors for climate change.

Finally, square-earthers (e) deny that coal remains a big if not biggest source of electricity for many Asia-Pacific economies (see Figure 3).

Figure3_112718

Square-earthers produce lots of lies and fake stories to fool the public so that the people will keep subsidizing their expensive, intermittent solar-wind energy.