The Department of Energy (DOE), in collaboration with the United States Agency for International Development (USAID), will study the use of "insurance mechanism" in climate-proofing the country’s energy infrastructure facilities.
According to Energy Undersecretary Felix William B. Fuentebella, “the establishment of an insurance mechanism is needed to safeguard future investments in energy resiliency.”
He explained that “by creating an insurance mechanism that can address the current challenges faced by the sector, future investments in more robust energy infrastructures and systems can be made viable.”
Fuentebella said the DOE-USAID study will initially flesh out the 147 resiliency compliance plans (RCPs) that the relevant energy sector players had submitted – including their respective program and investment planning that will be integrating risk reduction strategies.
“The DOE and USAID will jointly work on a study that will assess the submitted RCPs – the result of which will be the basis for energy framework and roadmap covering sectoral resiliency policies, protocols, program designs, standards, institutional arrangements and financing mechanisms,” the energy official stressed.
Fuentebella noted the submission of the RCPs by the energy firms had been anchored on the prescription of Department Circular (DC) No. 2018-01-0001 or the Energy Resiliency Policy that the DOE had issued in 2018.
Through that edict, the energy department targets to “institutionalize disaster resilience in the energy sector by strengthening energy systems and facilities, quickly restore damaged facilities and provide alternative energy solutions during calamities.”
As the DOE will be pursuing policy-framing work for the durability and reliability of energy facilities in each strike of calamity, DOE Secretary Alfonso G. Cusi said that in the remaining months of the Duterte administration, the Philippines will continue to intensify its plea for 'climate justice' to ensure financial and investment support to climate-proofing solutions across industries in the country will flow in. By far, this is also an initiative that the DOE is expecting to be continued by the next administration.
“Since the changing climate has a lot of devastating effects on the economy, the DOE will continue its bid for ‘climate justice’ by seeking the assistance of developed countries in funding the country’s climate change adaptation measures,” said Cusi.
Nevertheless, in the upgrade of energy facilities so they can withstand extreme weather swings and other natural calamities, primarily earthquakes and flooding incidents, Cusi cautioned that one major policy sphere that the government needs to carefully weigh in would be cost impact on the pockets of consumers.
“Modernizing existing energy systems to achieve the desired level of resilience comes with cost implications,” the DOE secretary stated, adding that “the adoption of energy resiliency standards necessitates financial investments that could have an impact on the cost of energy services in the future.”
Cusi emphasized that “the DOE is keen to study the financial implications of energy resilience to come up with financing options and recommendations that consider the interests of consumers.”
The energy chief further conveyed “because of the significant capital outlay needed to strengthen the resiliency of energy infrastructure, industry participants are currently making voluntary contributions.”
Given such predicament, Cusi qualified that “regulatory support and incentive mechanisms in accordance with existing policies and legislation are regularly provided by the government to encourage the initiatives of energy industry participants.”