Growth in a time of (climate) extremes: Can the Philippines get its act together? (Part 1)

by Lawrence Ang


Yes. You’ve read a lot about it recently. You’ve probably even had a couple of intense, curious, or at the least “interesting” conversations about the Philippines with your family, friends, and colleagues. But, alas, the Philippines isn’t just about its President or its notorious traffic. Right? Right.

So let’s talk about it. Let’s talk about the Philippines.

Annual GDP growth?—excellent at 6-7%. Demographics?—over 52% of the population are of working age, and all fluent English speakers (now that’s a workforce!). A high income country by 2040?—looks like it’s destined to happen. The gears of growth running Asia’s favorite beach destination is so well-oiled that its credit ratings were upgraded to investment grade and above over the last 3 years alone. Not even the recent downturn in the US and Asia markets made this economy flinch. No wonder, it feels unstoppable.

But let’s talk about climate change for a second. Or to paraphrase, the way nature is pulling the rug on emerging economies. The Philippines is, if not the most, vulnerable nation in Asia when it comes to extreme weather events. An average of 20 typhoons ravage the country annually, with droughts interspersed in between. Typhoon Haiyan, recorded history’s strongest supertyphoon ever, claimed at least 10,000 lives in 2013 and resulted in over $225 million of damage across major cities, coastal areas, and agricultural towns—with several communities still recovering 3 years on. It comes as no surprise then that the Philippines has a reputation of being one of most vocal champions of the United Nations Framework Convention on Climate Change and the recently signed Paris Agreement—a product of decades’ worth of global negotiations that limits greenhouse gas emissions to “safe levels” and sets the framework for how the international community will assist developing countries, institutionally and financially, adapt to the new norm of a hotter, more unpredictable, and extreme world.

But here’s the rub. As the Philippines experiences phenomenal growth on one hand, and an uncertain climate future on the other, what does the future hold for Asia’s new tiger economy? Well, it seems, more uncertainty. The country is yet to ratify the Paris Agreement, as of this article’s writing, putting into jeopardy opportunities to receive much needed financial resources from the international community to help the country cope with the effects of climate change. Furthermore, current domestic capacities to implement climate adaptation measures have been left wanting, despite the nation holding the record for having passed some of the most progressive climate laws and policies in the region. A budget issue? Perhaps. A case of a new administration still gauging the benefits of “owning” the problem? Many believe so.

Add to that, there’s the other big elephant in the room—the country’s energy mix. In the nation’s quest to fulfill its ambition of becoming a high income economy by 2040 (with average per capita income expected to reach $14,000), powering the country’s industrialization has become an absolute priority. So much so that the cheapest options on the table, which today are perceived to be coal-fire powered plants, have been deemed as the most convenient and expedient to address the country’s energy woes, notwithstanding the country’s rich renewable energy resources, which admittedly are variable and “peaky”.

But should this be the case? Is a coal-dependent future the smartest way forward? What of natural gas, the world’s emerging “transition fuel”; or solar micro-grids, the energy of the future according to Silicon Valley? Is there a way for the Philippines to stay flexible, enough to take advantage of rapidly innovating energy technologies like cheaper solar and batteries? How much will it cost and who pays? How does all of this affect the country’s ability to compete with its neighbors?

The debate rages on.

In partnership with the Ateneo School of Government, SSG Advisors is developing a policy roadmap for the Philippine government and the nation’s power industry under the “Getting Our Act Together” Project—a multi-sectoral initiative focused on developing concrete policy recommendations towards accelerating an optimal energy mix, climate action, and private sector collaboration. Since the project’s launch in August 2016, several expert workshops and policy dialogues have been held with leaders from the public and private sectors, altogether crystallizing practical policy measures that can immediately be adopted to balance climate and energy in the midst of a rapidly developing Philippines.

The holy grail of an optimal energy mix capable of delivering secure, affordable and sustainable power to all now dominates talks within executive and legislative circles, as it is likely to affect the major decision making processes of jeepney drivers to blue chip investors alike and, at the same time, mirror the country’s seriousness in tackling carbon emissions in solidarity with the rest of the world, small as its footprint may be.

One thing’s for sure, though. As the next global climate conference is just around the corner (November 2016 to be exact), the Philippine government is expected to make major decisions around its ratification of the Paris Agreement and its long-term strategy to power the Philippines. So between now and then, the buzz is likely to enter a crescendo. So let’s keep talking. Until Part 2!

 


lawrence

Lawrence Ang is Director for Asia for SSG Advisors. He brings nearly ten years’ experience at the nexus of sustainable development and private sector engagement in the region. Aside from leading SSG’s partnership building and impact investment advisory work in Asia, Lawrence is currently leading SSG’s efforts, in partnership with the Ateneo School of Government, to develop policy pathways towards establishing a climate-smart development agenda, an optimal energy mix, and an enabling environment for private sector investment in the Philippines.