DUBAI, UAE -- The strategy of the Philippines in line with the COP28 Global Stocktake for energy transition will differ to a great extent, because it will be opting for coal plants’ phasedown, instead of the intensified call of the United Nations Framework Convention on Climate Change (UNFCCC) for total phaseout of coal-fed generating assets.

This policy direction of the country has been sounded off by Energy Undersecretary Felix William Fuentebella as Statement of Support on Accelerating Managed and Just Coal Phasedown at the ongoing COP28 Climate Change Summit.

That approach, he said, is anchored on the energy investment paradigm of the country which is generally private sector driven, hence, decision points are primarily in the hands of these investors.

“The Philippine government is encouraging a voluntary early and orderly decommissioning or repurposing of existing coal-fired power plants, while securing a stable supply and addressing the climate emergency by ramping up our renewable energy target of 50 percent share by 2040,” the energy official noted.

As explained by the department, the Philippine power sector set-up “is unique compared to other countries, most especially in Southeast Asia. It is market driven and privately-owned, with the regulator’s role limited to ensuring the competitive environment for the sector.”

On that frame then, the agency emphasized that “decisions by private businesses to retire coal-fired power plants and shift to full renewable energy are also purely market-driven and based on the economics of which projects will provide the most return to investors.”

Given that the Philippines is not leaning on subsidy mechanisms for its deregulated power sector, the Department of Energy (DOE) is worried over prospects of rising electricity rates as an offshoot of energy transition strategies to be pursued.

“The costs of transition, as well as the need for greater investment infrastructure, will be fully borne by our already overburdened electricity consumers if we will not find strategic ways to shift the burden,” the department stressed.

Nevertheless, the DOE qualified that “our energy transition is beyond coal retirement. It also entails expanding our people’s access to electricity in remote islands, building a smart and green grid and improving the distribution systems, putting up more energy storage systems, and making energy affordable for all.”

During an Energy Transition panel discussion spearheaded by the Asian Development Bank (ADB), DOE Director for Energy Policy and Planning Bureau (EPPB) Michael Sinocruz indicated that in the coal phasedown and repurposing track, there would still be components of the existing facilities that may be used in the plant site, so that will yield economies of scale even if these would be converted to other technologies – these will include the switchyards as well as other control systems used in these power facilities.

“There are some facilities that we can still use like the switchyard, the transmission line from the power plant going to the main topping point and other facilities. We can make use of these when we repurpose the coal power plant to a cleaner fuel, so there might be reduction in terms of cost on repurposing these facilities,” he expounded.

He similarly conveyed that ammonia co-firing and eventual conversion of the coal plants to hydrogen-fed facilities are among the targeted pathways forward – that is when these technologies would already reach commercial-scale price points, to ensure their affordability into the Filipino consumers’ pockets.

Circling back to the phaseout scheme being advocated for coal-fired power plants, the DOE specified that it is fully supporting ACEN’s pioneering effort on the early decommissioning of its 246-megawatt South Luzon Thermal Energy Corp (SLTEC) facility, being its voluntary move into the energy transition route.

“This is consistent with our view that it must be voluntary and must make business sense in a power sector like the Philippines that is privately-owned, market driven and un-subsidized. ACEN has our full support for this initiative, and we will explore ways to facilitate this program through access to climate financing,” the energy department said.

The agency stated it is also encouraging “every effort to incentivize the business owners and institutions that will participate in similar undertakings and work towards energy transition.”

It added “in all of these, adequate and timely access to climate financing is crucial for the Philippines to equitably and effectively pursue its energy transition.”