To further support the integration of natural gas into the country's energy mix, economists suggested that developing the Philippine Upstream Indigenous Natural Gas Industry (PUINGI), alongside fiscal support, could help improve energy security amid shifting international markets.
In an economic review published by the University of the Philippines, economists argued that fiscal and industrial policies, combined with investment incentives, can support the transition from coal to natural gas.
Economists Dante Canlas and Karl Robert Jandoc cited fiscal policies like carbon taxes or cap-and-trade regulations, as well as subsidies, as mechanisms that would allow natural gas to be more cost-competitive against coal, which currently holds a large share in the country's generation mix.
"As a starting point to reduce greenhouse gas (GHG) emissions in the energy sector, the Philippine Development Plan (PDP) seeks to reduce reliance on coal as the main fuel source in electricity power generation and to shift to renewable fuels, including wind and solar," they stated.
"Given the relatively high cost of renewables at this juncture, the PDP envisions substituting natural gas (NG) for coal as an interim measure. Although NG is also a fossil fuel, it has a lower GHG index than coal," the economists added.
In April, the Department of Energy (DOE) noted that coal supplied nearly 44 percent of the energy mix, contributing 12,406 megawatts (MW).
As the Philippines works to minimize coal reliance, Canlas and Jandoc said that investments through PUINGI would have certain benefits, such as displacing some coal-fired power plants used for mid-merit generation.
If integrated, this could increase dependable capacity from new NG power plants by more than 50 percent, while slightly reducing the dependable capacity from new coal-fired power plants by 13 percent.
Moreover, a policy shift like imposing a tax on the carbon content of polluting sources would further favor NG integration.
"This further gives an advantage to NG power plants since, as mentioned earlier, the carbon emissions of NG power plants are lower compared to coal-fired power plants," Canlas and Jandoc added.
The economists also suggested that the Malampaya gas-to-power project (MGPP) is an example of how industrial policies and government interventions can help grow the upstream natural gas industry.
"Based on lessons learned from the Malampaya gas-to-power project (MGPP), we find profound benefits from developing the upstream natural gas industry in the Philippines, specifically technology innovation, formation of a scientific and technical manpower, and sector complementarity that facilitates learning-by-doing with knowledge spillovers, all of which heighten productivity, the building block of industrialization," they elaborated.
"The Malampaya Fund, established from the MGPP, should be a feature of the soft industrial policy, to be earmarked for developing PUINGI."