=== pep-2023-2050-vol1-section-a-page-019.pdf === B. Energy Demand and Supply Outlook Key Findings • The TFEC accelerates by 3.4 percent under the Reference Scenario (REF) to 90.6 MTOE by 2050 – almost three-times its 2022 level of 36 MTOE as the country returns to its pre-pandemic growth trajectory. • The industrialization targets propel the industry sector, which exhibits the fastest growth in its energy requirement, accounting for close to a third (32 percent) of TFEC by 2050. • Transport and household sectors also contribute to the increase in energy demand, while oil and electricity maintain their dominance. • The transport sector bears the bulk of the reduction in energy consumption with target energy efficiency (10.0 percent savings in oil and electricity by 2040), 5.0 percent biodiesel blending by 2026 and a 50.0 percent penetration rate for electric vehicles (EVs) by 2040 under the Clean Energy Scenario (CES). • Aggressive RE targets improve energy self-sufficiency to around 55.0 percent by the end of the planning period under the CES, contributing to the improvement of energy security. • RE also dominates the country’s capacity and generation mix in 2050 driven by the significant capacity additions from hydro, wind (onshore and offshore), and solar across the planning horizon. Aggregate generation output from wind and solar increases significantly and ramps up RE generation share to 65.0 percent (CES 1) and 70.7 percent (CES 2). Voluntary retirement and repurposing of CFPPs also contribute to the remarkable upturn in RE shares. • Deployment of variable RE and improvement of reliability and resilience of the system requires more than 20 GW of Battery Energy Storage System (BESS) capacity projected to be installed by 2050 under the CES, which highlights the importance of integrating energy storage systems (ESS). • The country’s energy transition pathway through RE, nuclear and other new and efficient technologies contributions, and voluntary retirement and repurposing of coal plants potentially provide the largest contribution in decarbonizing the power generation sector, which bring down the sector’s GHG emissions by a cumulative of 282.1 MtCO2e from 2023 to 2050. • The National Determine Contribution (NDC) commitments projected GHG reduction and avoidance under this PEP ranges from 55.0 percent to 66.0 percent vis-à-vis the baseline scenario (PEP 20182040). • The resulting electricity consumption per capita (as supported by 100.0 percent household electrification), share of RE in generation mix and energy intensity, exceed the energy sector targets identified under PDP 2023-2028, Sustainable Development Goal (SDG) 7, and targets under the ASEAN and APEC regional cooperation. • Reductions in economy-wide energy intensity register at 4.0 to 6.0 percent average annual rate between 2030 and 2050 compared to 2022 level, with significant contribution from the transport, cement and iron and steel sub-sectors. However, there is a need to further improve efforts for the food and machinery and equipment sub-sectors to ensure economy-wide reduction targets are met. • Total investment requirement under this PEP stands PhP20 trillion (USD357 billion) under the REF, while aggressive targets under the CES necessitate more investments of almost PhP28 trillion (USD506 billion) to PhP31 trillion (USD570 billion). These investments are expected to provide about 1.4 million to 1.8 million job opportunities for Filipino workers. Vo l u m e 1 10 === pep-2023-2050-vol1-section-a-page-020.pdf === Methodologies and Assumptions The Energy Outlook takes into account the country’s growth trajectory as indicated in the PDP 2023-2028 and aligns with both AmBisyon Natin 2040 and President Marcos Jr. Administration’s 8-point socio-economic agenda with a focus on protecting the purchasing power of families by reducing energy cost and creating more jobs with indigenous resources visà-vis energy security. The country sustained its 7.6 percent expansion in real gross domestic product (GDP) in 2022 with projected peak growth of 8.0 percent by 2028. Towards the end of the planning horizon, the Philippine economy registers annual increments of 7.1 percent. The Energy Outlook also analyzes two (2) possible energy scenarios for the country’s pathway to energy transition – Reference Scenario (REF) and Clean Energy Scenario (CES). The former primarily paints a situation where current energy policies are maintained, while the latter represents the energy sector’s aggressive targets pursued within the planning horizon. REFERENCE SCENARIO CLEAN ENERGY SCENARIO - 1 CLEAN ENERGY SCENARIO - 2 SUPPLY SUPPLY: REFERENCE + SUPPLY: REFERENCE + • Present development trends and strategies • Existing plants and committed power • projects and WESM-registered capacitiesas of May 2023 • 35% RE share by 2030; 50% by 2050 • Indigenous production targets by 2050 • LNG imports in 2023 • More than 50% RE share by 2050 • Capacity targets under NREP • 19 GW of OSW • 40-year technical life for coal plants • Additional nuclear capacity of l,200 MW by 2032, 2,400 MW by 2035 and 4,800 MW by 2050 • More than 50% RE share by 2050 • Capacity targets under NREP • 50 GW of OSW • 40-year technical life for coal plants • Additional nuclear capacity of 1,200 MW by 2032, 2,400 MW by 2035 and 4,800 MW by 2050 DEMAND DEMAND: REFERENCE + • Reduction in economy-wide energy intensity consistent with regional targets o 10% EV penetration rate by 2040 o Current biofuels blending (B2 and El0) o EEC efforts sustained at 5% • Higher reduction in economy-wide energy intensity • 50% EV penetration rate by 2040 • BS and El0 biofuels blending by 2026 • EEC rate on oil products and electricity use improve by 10% in 2040-2050 through heightened EE&C activities The DOE strategic framework builds on achieving access to affordable energy, reliability and resiliency, and clean and sustainable energy (ARC). These strategies are poised to be implemented with the following long-term targets. Reference Scenario (REF) Energy consumption speeds up by 3.4 percent to 90.6 MTOE by 2050 under the REF, or almost tripling its 36 MTOE in 2022, with hefty average shares from transport (32.2 percent), industry (24.4 percent), and household (25.0 percent) sectors. 11 Philippine Energy Plan OUTLOOK 80 60 40 Biofuels Coal Biomass Electricity 2050 2045 2040 2035 2030 2025 2022 2020 2015 0 2010 20 2005 Consumption of oil and oil products registers yearly growth of 3.1 percent and doubles its 2022 level to 43.2 MTOE by 2050 (Figure 3). Transport remains the most oil-intensive sector as gasoline and diesel comprises the bulk of its utilization, with average shares of 24.9 percent and 31.7 percent, respectively. ACTUAL 100 2000 Industrialization targets propel the industry sector’s energy consumption as it rises the fastest at 4.9 percent per year and accounts for close to a third (30.3 percent) of the TFEC by 2050. Efficiency measures implemented drive down energy use in both transport and household sectors, recording growths of 2.7 percent and 2.5 percent, respectively, albeit contributing an aggregate average share of 57.2 percent across the planning period. Figure 3. Final Energy Consumption by Fuel, in MTOE, 2020-2040 Oil & Oil Products === pep-2023-2050-vol1-section-a-page-021.pdf === Electricity posts the fastest growth rate among the fuels at 5.5 percent per year with its consumption rising to 35.1 MTOE by 2050, while doubling its share in TFEC to 38.7 percent in 2050 from 21.9 percent in 2022. The uptrend in electricity utilization results from the government’s attainment of its electrification and connectivity targets, including the increasing adoption of EVs for road transport and fully operational mass rail transit lines across the country. Demand for traditional biomass drops by 1.2 percent a year within the planning period as increasing household income supports the transition to modern, cleaner, and more efficient fuels. Industry consumption of coal grows steadily at 4.2 percent a year reaching 6.1 MTOE by 2050, equivalent to a 6.7 percent share of the TFEC for the same year. This is due to increasing demand for building materials, particularly cement, iron, and steel that are essential for the country’s infrastructure development. The mandated blending of 2.0 percent for biodiesel and 10.0 percent for bioethanol pushes biofuel consumption to double by 2050 at 1.1 MTOE and equates to a 2.3 percent yearly increase between 2022 and 2050. Total Primary Energy Supply. Economic and diversification/decarbonization goals under the Reference Scenario boost the TPES level to reach 140.5 MTOE in 2050—more than twice its 2022 level of 61.6 MTOE, with annual increments of 3.0 percent across the planning horizon. Figure 4. Energy Mix (by Fuel Shares) under the REF: 2030, 2040 and 2050 10% 1% 2% 28% 2% 1% 7% 4% 4% 3% 4% 21% 13% 10% 6% 32% Oil Geothermal 18% 31% 32% Natural Gas 16% 7% 15% Coal 1% 6% 6% 16% 4% Hydro Wind Solar Biomass Biofuels While oil remains the country’s main energy source, its share in the energy mix slightly decreases to 31.0 percent in 2050, down from the 32.2 percent recorded in 2022 (Figure 4). Despite this, it continues to sustain a robust demand from various end-use sectors, particularly transport. Conversely, the coal supply experiences gradual expansion at a rate of 0.6 percent due to its waning utilization for power generation consistent with decarbonization targets throughout the planning period. On the other hand, LNG imports beef up the country’s natural gas supply as levels improve by 8.4 percent annually between 2023 and 2050 amidst declining domestic gas production. With the transition towards cleaner fuels in power generation, the total RE share to TPES rises from 32.6 percent in 2022 to 35.5 percent by the end of the planning period. Aggregate domestic energy production exhibits yearly upticks of 2.1 percent and reaches 54.7 MTOE in 2050. This brings the country’s energy self-sufficiency level to 38.9 percent, while net energy imports account for 61.1 percent of the country’s TPES by the end of the planning period. Total RE supply level more than doubles to 49.9 MTOE by 2050 vis-à-vis its 2022 level of 20.0 MTOE and constitutes 90.3 percent of the domestic energy production during the same year. The total supply requirement for power generation, specifically fuel input, increases annually by 3.5 percent, registering 85.0 MTOE in 2050, representing 60.5 percent of the TPES for the same period. Vo l u m e 1 12 === pep-2023-2050-vol1-section-a-page-022.pdf === Renewable sources comprise half (51.3 percent share) of the fuel input mix in 2050, while natural gas constitutes 29.2 percent. Meanwhile, non-power requirements comprise almost 40.0 percent (39.5 percent) of the TPES in 2050, wherein oil accounts for 77.7 percent, with coal and biomass (including biofuels) contributing around 11.0 percent. OUTLOOK 450 400 350 300 250 200 150 100 Biomass Solar Wind Hydro Natural Gas Oil Based Coal Geothermal 2050 2045 2040 2035 2030 2025 2022 2020 - 2015 50 2010 Total gross generation grows at an annual rate of 5.1 percent, from 111.5 TWh in 2022 to 453.8 TWh in 2050. ACTUAL 500 2005 Peak demand registers a threefold increase from 16.6 gigawatts (GW) in 2022 to 68.5 GW by 2050, corresponding to a 5.2 percent annual average growth rate. The Luzon grid also holds a substantial share in total peak demand accounting for 70.0 percent across the planning horizon. Figure 5. Gross Generation Output by Fuel (TWh), 2000-2050 2000 Power Demand and Supply. The country’s total electricity sales expand at an annual rate of 5.5 percent from its 2022 level of 91.3 terawatt-hours (TWh) to 408.1 TWh by 2050 (Figure 5). The Luzon grid, being the center of economic activities, consistently comprises the largest share (more than 70.0 percent) in terms of electricity sales for the period 2022 to 2050. On the other hand, Visayas’ growth prospects propel its grid electricity sales to increase the fastest at 6.3 percent. Between 2022 and 2050, the generation mix exhibits significant shifts due to milestone policies and strategies (i.e., sustained implementation of the coal moratorium), aggressive promotion of RE technologies (particularly solar and wind, vis-à-vis RE target shares of 35.0 percent by 2030 and 50.0 percent by 2040), and utilization of natural gas as a transition fuel. The aggregate RE generation output increases remarkably by 8.3 percent from 24.6 TWh in 2022 to 230.2 TWh by 2050. Generation from solar and wind registers the fastest annual increase with 17.4 percent and 14.1 percent, respectively. Solar generation ramps up from 1.8 TWh in 2022 to 73.7 TWh by 2050, while wind accelerates from 1 TWh in 2022 to 92.8 TWh by 2050. The combined contribution of both sources accounts for 36.6 percent of total generation by 2050. The significant share of VRE (solar and wind) presents an opportunity for ESS to support grid stability given supply intermittency. The grid requires 65 GWh from battery energy storage systems (BESS) by 2030 and expands further to 466 GWh by 2040 and 1,021 GWh by 2050. The voluntary retirement and repurposing of CFPPs can be contributing factors in the sizeable decline in coal generation output at an annual rate of 0.1 percent resulting in a generation share of 59.6 percent share (66.4 TWh) in 2022 to 14.1 percent share (63.8 TWh) in 2050. With the constraint on coal, natural gas takes on the role as transition fuel and results in more than 8.0 percent uptick in its generation output between 2022 and 2050. LNG becomes vital in ensuring sufficient supply for the country’s power generation requirements with the projected commercial operation of seven (7) LNG projects. The increase in both electricity sales and power generation necessitates an additional generating capacity of 122.7 GW by 2050, thereby raising the country’s total installed capacity to 151.0 GW. This equates to a 6.2 percent annual rate of increase from the 28.3 GW level in 2022. A significant share comes from RE capacities with 70.7 percent (106.7 GW), with wind and solar contributing 21.4 percent (32.3 GW) and 37.4 percent (56.5 GW), respectively, which leads to a remarkable increase in the BESS from 156 MW in 2022 to 3.8 GW by 2050 to make the grid stable. The continued implementation of the coal moratorium impacts the deployment of new coal capacities, except for those already in the pipeline between 2023-2027. The share of coal declines to 9.8 percent by 2050. Having a capacity addition of 21.9 GW between 2022 and 2050, natural gas as a transition fuel contributes 17.0 percent to the capacity mix by the end of the planning horizon. Greenhouse Gas (GHG) Emissions. The country’s total GHG emission doubles, registering 270.1 MtCO2e in 2050 compared to 135.7 MtCO2e. in 2022. 13 Philippine Energy Plan === pep-2023-2050-vol1-section-a-page-023.pdf === As the system shifts to RE and natural gas for power generation, GHG emission in the transformation sector grows steadily at 1.6 percent a year across the planning period, while its aggregate share declines by 45.2 percent in 2050 from 57.1 percent in 2022. The transport sector is seen to contribute 27.1 percent and remains second to transformation in terms of GHG emissions. The GHG emission from coal slows down over the planning horizon at a yearly rate of 0.5 percent, as levels reach 86.6 MtCO2e in 2050 vis-à-vis 2022’s 75.2 MtCO2e. Emission from natural gas accelerates by 8.4 percent annually with its level increasing tenfold from 6.1 MtCO2e in 2022 to 58.0 MtCO2e by 2050. Clean Energy Scenarios (CES) * CES 1 (with 19-GW OSW) The TFEC tapers down slightly to 3.0 percent per year due to the impact of increasing EV penetration rate in road transport, higher biodiesel blending and energy savings on electricity and oil products under the CES compared to the REF. The transport and industry sectors contribute to the reduction with a decrease of 5.2 MTOE in their aggregate levels, while the rest of the end-use sectors (services, households, agriculture) and non-energy use account for the remaining 2.5 MTOE. The consumption of oil and oil products drops by as much as 7.0 MTOE by 2050 with biodiesel consumption rising to 731 kTOE in 2050 from 169 kTOE in 2022 due to a higher blend under CES. The EEC implementation on electricity in other sectors is offset by intensified utilization in the transport sector. The TPES increases at 2.6 percent a year (0.4 percentage points slower than the REF) as levels reach 127.3 MTOE by 2050. The 13.2 MTOE difference between CES 1 and REF represents the impact of the adoption of new technologies (OSW and nuclear) and improved efficiency in new power plants resulting in lesser fuel requirements. In comparison to the REF, the share of RE in CES 1 by 2050 is 41.1 percent or 5.6 percentage points higher than REF’s 35.5 percent. Meanwhile, fossil fuel (coal, oil, natural gas) share declines by 16.5 percentage points from 67.4 percent in 2022 to 51.0 percent in 2050. With the entry of nuclear energy starting 2032, it contributes 7.9 percent to the TPES by 2050. With higher RE supply and entry of nuclear energy in the CES, indigenous energy production improves compared to the REF, while the volume of net energy imports drops by an average of 19.5 percent between 2022 and 2050. By 2050, net energy imports stand at 59.9 MTOE vis-à-vis total indigenous production of 67.4 MTOE. At this level, self-sufficiency advances to 52.9 percent in 2050 or 14.0 percentage points more than the REF’s 38.8 percent for the same period. Aggregate fuel inputs for power generation under CES 1 register a level of 79.2 MTOE and account for 62.2 percent of the TPES during the same period. This exhibits a decrease of 1.7 percentage points compared to the REF for the same year and indicates improved plant efficiencies and the displacement of fossil fuels to make way for the increasing share of renewables. Decommissioning of coal capacities under the CES 1 brings down its share in fuel input mix by 3.5 percentage points in 2050 compared to the REF. The non-power requirement reaches 48.2 MTOE and comprises more than a third (37.8 percent) of the energy mix by 2050, which is 1.7 percentage points less than the REF. Increasing the mandated biodiesel blend from 2.0 to 5.0 percent starting 2025 almost doubles its non-power application in 2050 between the REF and CES. Implementation of efficiency improvements in coal utilization for industrial processes reduces its use by 9.2 percent. Vo l u m e 1 14 === pep-2023-2050-vol1-section-a-page-024.pdf === Power Demand and Supply. Implementation of EEC brings down electricity sales by 4.6 TWh in 2050 from its 408.1 TWh level under CES. As such, the CES 1 requires 129.7 GW of additional capacity to augment electricity needs by 2050. The capacity from RE is seen to account for 74.4 percent of the total equivalent to 114.8 GW. The impact of CFPPs decommissioning is felt in the decrease in installed capacity of around 3.6 GW compared to the REF. Despite the additional capacities, improved efficiencies of power plants under the CES lead to a slightly lower total gross generation level of 443.9 TWh vis-àvis 453.8 TWh under the REF. A higher share of variable REs (VREs) in this scenario results in more BESS (22.0 GW installed capacity) to support grid stability. GHG emission level under the CES 1 will fall by 70.5 MtCO2e in 2050 as compared to the REF. The transformation sector contributes the largest share (69.0 percent) of the difference in GHG emission as a result of energy transition in the power sector. The energy savings to be realized on electricity and oil, as well as fuel diversification in the transport sector results in lower GHG emissions from end-use sectors. * CES 2 (with 50-GW OSW) This Plan also considers further increasing OSW capacity from 19 GW to 50 GW as represented by CES 2 and forms part of initiatives in energy diversification towards low-carbon, clean and sustainable fuels. In terms of TPES level, the CES 2 is lower by 3.9 percent compared to the CES 1 because of more efficient technologies comprising the energy mix by 2050. Wind jumps up its share to 15.5 percent in 2050 from 4.4 percent in 2030 pushing the total RE share to 42.5 percent. The country’s self-sufficiency improves to 54.8 percent compared to the CES 1 of 52.9 percent due to additional OSW capacity, and with a 7.8 percent reduction in the volume of net energy imports. The entry of higher OSW capacity displaces other RE technologies (less capacity addition than CES 2) with lower capacity factors (e.g., solar and onshore wind) and is evident in terms of the total generation. The generation output from wind in the CES 2 expands remarkably from 0.9 percent share in 2022 to 49.5 percent share in 2050 bringing the aggregate RE share to as much as 70.7 percent during the same year. The BESS capacity reaches 24.7 GW under this scenario, which is a bit higher than the CES 1 due to the increased share of VREs. The combined impact of increased clean energy (RE and nuclear) shares and reduction in fossil fuels brings down the GHG emission by a cumulative of 282.1 MtCO2e between 2022 and 2050. Of this volume, lower generation production from coal accounts for a cumulative reduction of 243.0 MtCO2e, while natural gas contributes the remaining volume of 39.8 MtCO2e by 2050. Impact of a 20.0 Percent Bioethanol (E20) Blend under CES 2 as a Hypothetical Scenario Increasing the bioethanol blend to E20 (as a hypothetical scenario) for gasoline improves the country’s position towards energy security, especially in the transport sector. It will further diversify fuel sources, reduce dependence on imported oil, address fuel price escalation, and mitigate GHG emissions. Implementing E20 increases bioethanol demand to 12.1 MTOE by 2050 vis-à-vis E10 blending schedule under CES 1 and CES 2. It also translates to a cumulative reduction in TFEC4 of 4.8 MTOE across the planning horizon. Gasoline demand decreases by 17.0 MTOE, while domestic production of bioethanol increases to 784.6 kTOE by 2050 from 205.7 kTOE in 2022. Meanwhile, cumulative GHG emission reduction due to E20 registers at 49.1 MtCO2e over the planning horizon. 4 15 Due to replacement of gasoline by bioethanol. Gasoline has a higher calorific value than bioethanol. Philippine Energy Plan === pep-2023-2050-vol1-section-a-page-025.pdf === Aligning with PDP 2023-2028’s SDG-7 Targets This plan complements the PDP 2023-2028 with the energy sector exceeding the targets identified and set under the government’s overall plan that envisions achieving affordable, accessible, reliable, and clean energy (under subchapter outcome 4 of the Results Matrix) during President Marcos Jr. Administration. Accordingly, the plan will meet the following goals: • Increased proportion of households with access to electricity. The government targets to achieve a 100.0 percent household electrification target by 2028. • Increased electricity consumption (in kWh) per capita. Electricity per capita grows by 4.0 percent from 999 kWh to 1,262 kWh under the REF, while the two CES (CES 1 and CES 2) show slightly lower levels (1,250 kWh and 1,249 kWh) due to the impact of EEC measures. • Increase the share of renewable energy in the power generation mix. Higher RE capacities under the CES 1 and CES 2 result in RE generation shares that exceed the PDP 2028 target by around 6.0 to 9.0 percentage points. • Decrease energy intensity measured in terms of primary energy and GDP.5 By 2028, the country’s energy intensity level ranges from 2.5 to 2.4 TOE/MPhP (REF to CES 1 and CES 2) and translates to yearly average reductions of around 4.0 to 5.0 percent from 2022 level, indicating an improvement in energy efficiency. C. Energy Transition ENERGY TRANSITION PATHWAY The energy transition pathway is poised to provide access to affordable, accessible, reliable, and clean energy, which will ensure a strongly rooted, comfortable, and secure life for Filipinos. For an efficient energy transition, the approach must be a gradual process, necessitating the enhancement of energy delivery through coordinated reforms and investments across the entire energy sector, all integrated into broader development initiatives. The key components enabling the energy transition pathway are encapsulated as follows: RE EEC EMERGING & INNOVATIVE TECHNOLOGIES ICT ENERGY RESILIENCY 35% of power generation mix by 2030, 50% by 2040, and more than 50% by 2050 10% energy savings on oil products and electricity by 2040 up to 2050 50% EV penetration rate in road transport by 2040; Exploring new and efficient technologies Adopting advanced and smart grid technologies Resilient and climateproof energy infrastructure PH CONTRIBUTION TO GLOBAL ENERGY TRANSITION Offshore Wind Development and Support Port Infrastructure I Marine-Based Energy Resource Development I Rightskilling of Filipino Workforce and International Accreditation Initiative I Mining and Manufacturing of Green Materials I Voluntary Retirement and Repurposing of CFPPs These goals support the Global Renewables and Energy Efficiency Pledge of tripling RE capacity with at least 11,000 GW by 2030 and doubling the global average annual rate of energy efficiency improvements from around 2.0 percent to over 4.0 percent every year until 2030. 5 Energy Intensity refers to the amount of energy needed to produce one unit of economic output. A lower number means improvements in energy efficiency but also depends on the structure of the economy. Highly industrialized economies tend to use a greater amount of energy per unit of economic output. For the Philippines, the Services sector, which accounts for the largest share to GDP, is a less energy-intensive sector. Vo l u m e 1 16 === pep-2023-2050-vol1-section-a-page-026.pdf === Demand-side mitigation measures flatten the TFEC by 12.7 MTOE in 2050 through a 10.0 percent energy savings on oil products and electricity from the implementation of EEC measures, a 50.0 percent EV penetration rate in road transport, and higher biofuel blending. The RE target share of 35.0 percent in the generation mix in 2030 triples the 2022 installed capacity of 8.3 GW to around 26 GW for the REF and CES 1 and to 30.5 GW in the CES 2. Increasing RE shares to 50.0 percent by 2040 and to more than 50.0 percent by 2050 translates to massive additional RE capacities in all the scenarios (REF and CES) coupled with voluntary retirement and repurposing of CFPPs. These targets would allow emerging technologies, such as hydrogen and its derivatives, to serve as alternative energy storage (and fuel) to make variable RE (solar and wind) stable and reliable for the system. On the other hand, nuclear power comprises a total of 4.8 GW by 2050. These measures result in a reduction in energy intensity at 4.0 percent average annual rate by 2030, 6.0 percent by 2040 and 4.0 percent by 2050 compared to 2022 level. Accelerating the development of the energy transition targets requires infrastructure support i.e., information and communications technology (ICT) and port infrastructure to support OSW and marinebased energy resource development projects. Adopting ICT through advanced smart grid technologies as embraced in the SGGP, which is an integral part of this Plan, fortifies the country’s energy infrastructure to be more resilient and climate-proof. These further ensure and enable the country’s long-term vision and commitment to transition. Empowering the Filipino workforce through right skilling initiatives, international accreditation programs, and championing the mining and manufacturing of green materials are regarded as the Philippines' contribution in the global effort towards a just energy transition. POLICY IMPLICATIONS TOWARDS ENERGY TRANSITION A. SUSTAINABILITY OF THE ENERGY SYSTEM The 2023 Energy Transition Report of the World Economic Forum (WEF) ranks the Philippines at 94th out of 120 countries due to low scores in transition preparedness. This poses as a challenge for the energy sector to exert more efforts to support improvements in system performance and readiness for energy transition. WEF 2023 considers two major areas in its assessment of energy transition efforts – (1) system performance (SP) which covers criteria on sustainability of energy system; and (2) readiness which covers policy enablers and mechanisms to improve SP. There are three (3) pillars under SP that are distinctively assessed for this PEP, i.e., equitable, secure, and sustainable dimensions. * Equitable Energy Figure 6. Household Fuel Shares (%) Access to Modern Energy. The household sector’s energy demand mix has been shifting towards modern fuels over the years. Electricity and liquefied petroleum gas (LPG) gradually displace traditional biomass (as cooking fuel) with households progressing towards middleincome class society with greater access to modern energy (Figure 6). 100% Increased access to electricity stimulates its use as a modern fuel. Relatedly, expanding electricity services throughout the country is an outcome of the government’s Total Electrification Program. As of December 2022, 20% 90% 80% 70% 60% 50% 40% 30% 10% Biomass 17 Philippine Energy Plan Kerosene LPG Electricity 2050 2045 2040 2035 2030 2025 2020 2015 2010 2005 2000 0% === pep-2023-2050-vol1-section-a-page-027.pdf === household electrification level already reached 96.17 percent (based on the 2015 census of population), which means that about 25.91 million households are now enjoying the benefits of electricity service, while the remaining 879,232 households are still to be provided with access to electricity.6 Affordability. The resulting trend in generation cost denotes a trade-off between decarbonizing the power sector and reducing the cost of electricity. This is a continuing challenge that needs to be addressed. However, sustaining economic growth (i.e. 7.1 percent annual average between 2022 and 2050) allows for higher disposable income, such that the share of household expenditure on energy declines to 5.3 percent by 2050. The levelized cost of energy (LCOE) or blended rate7 under the REF ramps up at an annual rate of 0.8 percent to PhP6.3/ kWh in 2050 vis-à-vis its 2023 level of PhP5.1/kWh. With RE capital cost exhibiting a learning curve, the increase in blended rate further eases to 0.2 percent and 0.6 percent per year between 2023 and 2050 under the CES 1 and CES 2 scenarios, respectively. Due to steady increases in fossil fuel prices and technology capital cost, the REF’s blended rate stands higher compared to other scenarios, while more RE technologies with higher capacity factor, such as OSW8, contribute to lower blended rate under the CES 1 and CES 2. Economic Development. The country’s energy per capita consumption gradually increases despite the upsurge in income per capita within the planning horizon. This stems from the country’s economic structure wherein the services sector is a major contributor to GDP.9 Figure 7. Energy per capita vs. GDP per capita trajectory of Selected Countries for 2000-2022 compared with PEP 20232050 for REF, CES 1 and CES 2 12.0 10.0 GDP PER CAPITA (KUSD/PERSON) Figure 7 shows the relationship of energy per capita against GDP per capita (or income per capita) of selected ASEAN10 member states, as well as India and China, for 2000-2022 compared with the Philippines’ trajectory under the PEP’s REF, CES 1 and CES 2 for the period 2023-2050. The Philippines is next to India with the lowest income per capita, while China and Malaysia are the highest with around USD 11,600 and USD 11,400 in 2022, respectively. The Philippines’ energy per capita consumption level in 2022 is the lowest among the selected ASEAN countries in comparison at 0.61 TOE/person and increases slowly as income per capita11 grows rapidly, while that of other countries are highly proportional to the increases in their per capita income. 8.0 6.0 4.0 2.0 0.0 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 ENERGY PER CAPITA (TOE/PERSON) * Security of Energy Supply Supply Security. Security of supply improves with the country’s decarbonization target. Higher RE share, production of low-carbon technologies, and the voluntary retirement and repurposing of CFPPs result in reduced fuel imports towards the end of the planning horizon. While the share of indigenous energy production declines from 49.2 percent in 2022 to 38.8 percent by 2050 under the REF, energy selfsufficiency significantly improves under the CES 1 and CES 2 trajectories with 52.8 percent and 54.7 percent, respectively (Figure 76). The household electrification target has been updated based on the 2020 Census of Population in the Electrification Chapter. The LCOE per scenario includes impact of BESS. The LCOE does not include the transmission cost for OSW. Please see Chapter III on Energy Demand and Supply Outlook. 9 See scatter plots within the green dotted circle in Figure 6. 10 Refers to the Association of Southeast Asian Nations. 11 See blue scatter plots encircled with red line in Figure 6. 6 7 8 Vo l u m e 1 18 === pep-2023-2050-vol1-section-a-page-028.pdf === Reliability and Resiliency. Transmission infrastructure should be in place prior to the implementation of RE targets. A reliable transmission infrastructure plays a significant role in integrating large-scale RE facilities. Deployment of large-scale wind and solar generation may only require a few years to put in place, while transmission planning and development would take about 10 years12. Financing RE development is one aspect of project implementation, but without accessible transmission infrastructures, RE facilities will remain as stranded capacities. Designating RE zones simultaneous to the strategic development of new connections and modernization of existing transmission infrastructure addresses investment risks brought by barriers in the development process (Figure 8). The Competitive Renewable Energy Zones (CREZ) vision is to adopt pro-active transmission planning and implementation, and direct RE development to places that optimize the use of indigenous resources and maximize the benefits to the people. Figure 8. Designated RE Zones from CREZ-1 The CREZ process identified 25 RE Zones that are viable for development. These RE zones are also considered in the generation and transmission planning. The CREZ has progressed to include areas for battery storage to enhance the reliability of the grid with more VRE installation. The CREZ will be integrated into the SGGP to include the designated areas for OSW. Integrating ESS to support deployment of VRE and improve reliability and resilience of the system. The total BESS capacity projected to be installed by 2050 Source: Grid Planning and Competitive Renewable Energy Zones (CREZ) in reaches 22.0 GW for the CES 1 and 24.7 GW for the CES the Philippines 2. Meanwhile, pump hydro storage contributes 2.4 GW by 2050 in both CES 1 and CES 2. There is a need to ensure grid stability and reliability as the share of VRE, which are prone to ramp down drastically from 100 percent of their capacity to zero percent at any time, in the generation mix under the CES 2 increases from 21.0 percent by 2030 to 35.3 percent by 2050. The combined share of ESS considered in the capacity mix, which serves as ancillary services of the grid, only accounts for 1.9 percent in 2030 and 4.8 percent in 2050. For this purpose, LNG is seen to have a central role in supporting grid stability and needed flexibility in the power system. There is also an opportunity to produce green hydrogen (and its derivatives) should the awarded OSW services contracts provide a considerable amount of firm capacity for power generation. * Sustainable Energy Energy Efficiency as a Way of Life. The Philippines’ energy intensity registered an annual decline of 2.0 percent from 4.3 TOE/MPhP in 2005 to 3.1 TOE/MPhP in 2022. This translates to a cumulative efficiency gain of around 30.0 percent vis-à-vis 2005 baseline, higher than the APEC region’s 22.0 percent13. The energy sector’s achievement is attributed to the effective implementation of energy policies and the corresponding adoption of energy-efficient technologies and applications. The ASEAN and APEC14 regional cooperation have set forth targets on energy intensity reduction as among its energy goals. The ASEAN Plan of Action for Energy Cooperation (APAEC) 2016-2025 Phase II seeks to reduce energy intensity by 32.0 percent in 2025 from 2005 as the base year and encourage further EEC efforts, especially in transport and industry sectors. The REF (PEP 2023-2050) is seen to reduce energy intensity by 4.0 percentage points higher than the ASEAN’s target in 2025 (Figure 9). APEC also sets its aspirational energy intensity reduction at 45.0 percent by 2035. The CES reaches this target in 2028 or seven years ahead with 46.0 percent reduction under the CES. 12 13 14 19 Source: 2020 National Renewable Energy Laboratory (NREL) et. al. “Ready for Renewables: Grid Planning and Competitive Renewable Energy Zones (CREZ) in the Philippines” APEC is on track to meet aspirational energy goals. (2022, September 22). [Press release]. https://www.apec.org/press/newsreleases/2022/apec-is-on-track-to-meet-aspirational-energy-goals Refers to the Asia Pacific Economic Cooperation Philippine Energy Plan === pep-2023-2050-vol1-section-a-page-029.pdf === 110.0 Reduction in Energy Intensity 2025 from 2025 levels: PH: CES: 37%, REF: 36% ASEAN Regional Target: 32% 100.0 90.0 Reduction in Energy Intensity 2025 from 2025 levels: PH: CES: 60%, REF: 59% ASEAN Regional Target: 45% 80.0 70.0 60.0 50.0 40.0 30.0 20.0 Reduction in 2050vs2005: PH: CES: 79%, REF: 76% 10.0 2050 2045 2040 2035 2030 2025 2022 2020 2015 0.0 2010 Share of Clean Fuel in the TPES. The overall sectoral targets transition the energy system to have an increasing share of clean fuels in the energy mix by 2050. The RE share in this PEP exceeds the Figure 9. Reduction in Energy Intensity as indicator of improvements in energy efficiency 2000 Energy efficiency and fuel diversification measures translate to a significant reduction in energy use per unit of economic output, particularly in energyintensive sectors such as transport, cement, and iron and steel. However, there is a need to further improve efforts for the food and machinery, and equipment subsectors to ensure economywide reduction targets are met. targets set under APAEC, as well as the government’s medium-term development plan (PDP 2023-2028). The share of clean energy, such as RE resources (excluding traditional biomass for cooking) and other emerging technologies (nuclear energy), in the TPES reaches 46.7 percent (CES 1) and 48.3 percent (CES 2) by 2050. However, there is a need to expand decarbonization efforts to non-power sectors like transport and industry. Figure 10. Cumulative GHG Avoidance and Reduction from 2023 to 2050 by Mitigation Measures in MtCO2e 0.0 500 1000 1500 2000 2500 3000 REF B5 + E10 10% CREVI 50% RE GHG Avoidance and Reduction15. The combined impact of decarbonization targets brings down GHG emissions by 2,173.5 MtCO2e (CES 1) and 2,458.2 MtCO2e (CES 2), about 31.6 percent to 35.8 percent of the cumulative baseline emissions from 2023 to 2050, respectively. By end of the planning period, GHG emissions under the CES 1 shrink by 26.1 percent vis-à-vis the REF, while CES 2 brings an additional reduction of 6.8 percent. CES1 10% EEC 50% CREVI 19 GW OSW* CES2 HYP 4,800 MW NPP 19 GW OSW* E20 The ASEAN also recognizes the contribution of RE as an important mechanism to accelerate energy transition by setting up aspirational targets of 23.0 percent share of RE in the TPES and 35.0 percent share of RE in ASEAN installed power capacity by 2025. * Includes emission reduction from RE due to retirement of CFPPs • The total GHG emission still increases despite the existing mitigation measures because of the net increase in electricity production given the hike in its demand in the transport sector. • Mitigation measures under the REF, such as increasing biodiesel blend to 5.0 percent by 2026, 10.0 percent EV penetration rate and a 50.0 percent RE share in the generation mix, result in a cumulative GHG emission avoidance and reduction of about 1,200.2 MtCO2e by 2050 (Figure 10). • Sustaining a 10.0 percent energy savings and a 50.0 percent EV target from 2040 onwards translates to an aggregate reduction of 1,606.6 MtCO2e in GHG emissions by the end of the planning horizon vis-à-vis the REF. With the entry of 19 GW OSW capacities and the 4,800 MW nuclear capacity by 2050, CES 1 pushes the cumulative GHG avoidance and reduction to 2,173.5 MtCO2e by 2050. This further increases to 2,458.2 MtCO2e with the expansion of OSW capacities to 50 MW under the CES 2. These values represent about 31.6 percent (CES 1) to 35.8 percent (CES 2) of the cumulative baseline emissions from 2023 to 2050. GHG reduction is an action that decreases the amount of greenhouse gas emissions compared to prior practices. On the other hand, GHG avoidance is a mitigation action that prevents a carbon-emitting activity from happening (Source: Removal, reduction, and avoidance credits explained. (2023, October). Carbo Direct. https://www.carbon-direct.com/insights/how-docarbon-credits-actually-work-removal-reduction-andavoidance- credits-explained). Further, emissions avoidance could be defined as the full displacement or prevention of GHG emissions expected to be generated by planned GHG emitting actions in energy, transport, manufacturing, agriculture, human induced deforestation, and other GHG emitting development activities (Source: Philippine Submission on SBSTA 56 Agenda Item 13 :Guidance on Cooperative Approaches Referred to in Article 6, Paragraph 4, of the Paris Agreement and Decision 3/CMA.3)., August 2022). GHG reduction initiatives include the use of alternative fuels (biofuel and electricity) for transport instead of petroleum products and the retirement of CFPPs. Meanwhile, decarbonizing the power generation sector through the use of clean and low-carbon technologies, such as RE and nuclear, contributes to GHG avoidance. 15 Vo l u m e 1 20 === pep-2023-2050-vol1-section-a-page-030.pdf === • In addition, these scenarios already incorporate the retirement of CFPPs with total capacities of 3,600 MW for CES 1 and 4,803 MW for CES 2 between 2023 to 2050 that results in a cumulative GHG emission reduction of about 6.1 MtCO2e and 8.1 MtCO2e, respectively. • A hypothetical scenario with a bioethanol blend of 20.0 percent by 2030 translates to an additional reduction of 48.8 MtCO2e, which is 1.9 percent of total GHG reduction. • The GHG avoidance under CES 2 is higher than CES 1 since the added RE capacity displaces more fossil fuel in the generation mix. Carbon per Capita and Intensity. The aggressive targets for energy transition result in carbon per capita levels at 1.4 tCO2e/person and 1.3 tCO2e/ person under CES 1 and CES 2, respectively, while carbon intensity to TPES decreases from a base year of 2.2 tons of CO2 equivalent/TOE (tCO2e/TOE) to 1.6 tCO2e/TOE for CES 1 and 1.5 tCO2e/TOE for CES 2. Figure 11. Energy Sector NDC Assessment vs 2023-2050 PEP Projected GHG Emissions Nationally Determined Contribution (NDC) Assessment. For the past three years, from 2020 to 2022, the energy sector, excluding the transport sector, achieved a total GHG emission reduction of 52.9 MtCO2e. This exceeded by about 15.0 percent of the total NDC target of 45.9 MtCO2e, which includes both conditional and unconditional targets. This was further augmented by equivalent GHG avoidance from RE generation of about 144.2 MtCO2e, exceeding the sector’s target by more than four times or around 214.1 percent. Such is equivalent to almost 56.0 percent (55.8 percent) reduction in the sector’s GHG emissions. For the NDC assessment, the annual average growth rates of the PEP 2018-2040 were used as benchmarks – 6.3 percent for Business-as-Usual (BAU) and 4.8 percent for CES. These were applied to extrapolate the GHG reduction until 2050 for the longterm comparative assessment (only covers energy used for power, industry, and other sectors). The projected GHG reduction of the current plan shows an estimated 54.5 percent for the REF scenario, 63.2 percent for the CES 1, and 66.4 percent for the CES 2 (See Figure 12) based on PEP 2018-2040. Combining GHG reduction and avoidance, the sector will be almost carbon neutral and will only be emitting an average of 3.1 MtCO2e from 2020-2050. If all the programs and projects identified in the CES 1 and CES 2 are realized, the sector will achieve below zero emissions by 2035 and 2032, respectively, based on the PEP 2018-2040 as the benchmark. Figure 12. Comparative Assessment of NDC Targets and 20232050 PEP Scenarios B. TRANSITION ENABLERS Regulation and Political Commitment. Preferential Dispatch of all RE resources in the Wholesale Electricity Spot Market (WESM) encourages additional investments because of guaranteed dispatch to the grid at their full available capacity, allowing recovery of investments. Effective policy implementation implies that the government must go beyond mere legislation and demonstrate the will and commitment to further the development of renewables. Policy Framework for OSW: Executive Order (EO) 21 “Directing the Establishment of the Policy and Administrative Framework for Offshore Wind Development” supports the aggressive development of the country’s OSW potential, which drives the transition from a coal-dominated capacity mix to a RE-centered one. 21 Philippine Energy Plan === pep-2023-2050-vol1-section-a-page-031.pdf === The robust RE target and use of low-carbon technologies in power generation and demand-side showcase the country’s Accelerating renewable energy decarbonization goals even without a commitment yet on netrequires conducive regulatory and zero emission as the government prioritizes energy security and financial environment. reliability of energy supply. Natural gas serves as transition fuel in place of decommissioned CFPPs, while the coal moratorium policy in 2020 covers only new coal power projects. Hybridization of conventional energy (oil and coal) plants is also encouraged in balancing the effect of reduction in their utilization vis-à-vis their vital role in the country’s energy security. Balancing Energy Transition with the Development Agenda. The Philippines is also pursuing industrial policies aimed at boosting economic growth and achieving its development objectives. In charting the energy transition path, certain sectors may require flexibility in terms of meeting their energy requirements. For instance, the government plans to develop downstream industries such as ore processing and refineries within the mining sector. Mining is an energy-intensive activity that requires a stable power supply of its own use, which renewables alone cannot guarantee due to intermittency. Hence, possible policy exemptions must be carefully reviewed to ensure a balanced approach. Finance and Investment. Conducive regulatory and financial environment ensures investor confidence and safeguards the benefits of the Filipinos. This includes allowing 100 percent foreign ownership in RE projects (geothermal, solar, wind, biomass, ocean, or tidal energy) for the promotion, exploration, development, and utilization of the country’s RE resources; providing a sovereign guarantee for financing sustainable energy projects and those under the National Renewable Energy Program (NREP) through the Sustainable Energy Credit Guarantee Facility (SEGF) of the Philippine Guarantee Corporation (PHILGUARANTEE)16; and, issuing a 25-year green bond by private corporations, which amounted to USD6.58 billion worth in 2022, as part of the country’s initiatives and foray into the Green and Sustainability Capital Market17. These initiatives are seen to contribute towards an improved share of investments from RE and low-carbon technology to GDP under this PEP – from 0.4 percent under the REF to 0.5 percent for the CES 1, and 0.7 percent for the CES 2. Education and Human Capital. Global decarbonization efforts are poised to bring profound shifts in the energy sector's employment, which brings a massive and new opportunity for job creation in clean energy, while traditional energy sector jobs are seen to decline. This requires the development of new programs for education, certification, and vocational training along with targeted rightskilling programs for the existing workforce. Cognizant of this, the DOE and the Department of Labor and Employment (DOLE) spearhead the initiative on the Rightskilling of Filipino Workforce to Support the Global Energy Transition. Rightskill Filipinos for full participation in an innovative and globally competitive economy that will support the clean energy future and Energy Transition Program of the country. Innovation. To achieve the targets of this plan, the DOE shall continuously improve its existing electrification strategies, utilize advanced and emerging technologies, and adopt innovative solutions. The “Microgrid Systems Act”, which promotes the use of microgrids to provide uninterrupted power in remote communities with due consideration on the cost-efficient, renewable, and environment-friendly power sources, also guides the government’s electrification efforts. Sustainable Energy Credit Guarantee Facility (SEGF). (n.d.). Philippine Guarantee Corporation. https://www.philguarantee.gov.ph/programs/guarantee-programs/corporate-msme/sustainable energy-credit-guarantee-facility-segf/ Sustainable Finance Market Update as of December 2022. (2022, December 31). Securities and Exchange Commission. https://www.sec.gov.ph/cmsustainable-2022/sustainable-financemarket-update-as-of-december-2022/#gsc.tab=0 16 17 Vo l u m e 1 22 === pep-2023-2050-vol1-section-a-page-032.pdf === Provision of Infrastructure to Accelerate Deployment of Low Carbon Technologies. The aggressive RE targets require the timely development of a green and smart transmission system to integrate and manage the additional RE capacity expected to come online from 2024 to 2050. The SGGP is envisioned as a strategic blueprint for the development, deployment, and operation of a modern transmission infrastructure that supports the integration of clean energy sources and enables a sustainable, reliable, and resilient power grid. On the other hand, the Comprehensive Roadmap on Electric Vehicle Industry (CREVI) aggressive target of re-fleeting 50.0 percent of all vehicle fleets with EVs by 2040 requires infrastructure support for EV charging stations (EVCS). Digital infrastructure readiness. The government shall address concerns on digital infrastructure that supports the deployment of RE and other clean energy sources and technologies. The DOE needs robust network support for the operation of the EVOSS and Smart Grid System, among others. Likewise, the integration of smart grid technology with RE improves the network’s capability to manage the downtimes of VREs and ensures the prompt response of energy storage system, thus ensuring the reliability and resilience of the grid. ALIGNING THE INITIATIVES FOR THE IMPROVEMENT OF THE ENERGY TRANSITION PATH Improving the country’s energy system performance and provision of enabling policies and other factors to further accelerate the positioning of the decarbonization targets and foster energy transition readiness, the following actions and initiatives need to align: Improvement of Energy System Performance Access to Modern Energy. Enhancing energy accessibility down to the poorest of the poor indicates an improvement in the lives of the Filipino people. This is considered under the economic and social agenda of the PDP 2022-2028 and the long-term vision AmBisyon Natin 2040 with the consolidated GDP growth target of more than 7.1 percent and is expected to lift household disposable income. Improved electricity access will be attained by achieving 100 percent electrification by 2028 through interconnection of off-grid areas to the national grid, hybridization, and DES in off-grid areas, as well as improving access of the household to modern fuel (i.e., through productive uses of Renewable Energy for household and other social and economic activities). On the other hand, regular conduct of the Households Energy Consumption Survey (HECS) is essential to capture the updated energy consumption patterns and preferences of households, including access to clean cooking fuels and technologies and to effectively monitor the implementation of electrification targets. This will be further improved through the institutionalization of digitalized data-gathering programs, which are cost-effective ways of collecting timely data. " The realization of “One Nation, One Grid” aspiration is definitely a crucial turning point for this country in ensuring reliable power at all times. - President Ferdinand R. Marcos Jr. 23 Affordability of Energy. Improved access to modern fuel drives economic growth, which will ultimately increase household disposable income. The latter leads to achieving affordability of energy as the share of household expenditure on energy decreases. The current initiative on CSP Policy promotes the power of choice and consumer welfare protection. It envisions reducing the blended rate of the DUs and end-use electricity rates through lower generation costs. On the other hand, consumers can be prosumers through the installation of solar PV for their homes to provide own-use electricity and may avail of net-metering from their DUs. The government also needs to guarantee the effectiveness of financial enablers to reduce financial risk of RE to accelerate its deployment that will result in a more reasonable cost for the consumers. Likewise, the rationalization and graduation of the Universal Charge on Missionary Electrification (UC-ME) subsidy, as well as the review of taxation on energy serve as measures towards reasonably priced electricity supply. Philippine Energy Plan === pep-2023-2050-vol1-section-a-page-033.pdf === Reliability and Resiliency. Reliability and resiliency of energy supply may be sustained with an improved energy selfsufficiency level by making use of indigenous fuels such as RE and domestic resources to lessen the reliance on imported fuels. In line with this, there is a need to pursue the development of indigenous natural gas and ensure the availability of LNG supply to complement VRE for the reliability of the system, while transitioning to clean fuels. Ensuring the timely implementation of the transmission plan for the deployment of large-scale RE is equally important for the integration of RE. The OSW needs to be designated in RE Zones to make it economically viable as this will address the financial barriers for RE deployment. Moreover, putting in place sufficient ESS and operational reserves to support a zero to 100 percent ramp-up of VREs will support the reliability of the system. Clean and Sustainable Energy. Achieving the clean and sustainable pathway leads to diversifying the energy mix to provide a window for nuclear power, OSW, floating solar, and the development and production of green hydrogen. Accelerating the adoption of low-carbon technology requires policy mechanisms for voluntary retirement and repurposing of CFPPs to reduce their share in the generation mix. Such measures temper the reliance on imported coal to ensure the acceleration of RE and other low-carbon technologies. Traditional power plants need to be retrofitted to be flexible, while some of the new ones can be installed in a smaller capacity unit i.e., 100 MW per unit for this purpose, to support VREs and the reliability of the grid. It is also imperative to develop distributed and diverse energy systems, which include microgrids, ESS, and demand response technologies. Alongside these initiatives, it is likewise necessary to conduct comprehensive waste management studies for the entry of sizable capacity of VREs and BESS, and batteries for EVs to craft policies for proper waste disposal. Since aggressive RE targets increase the deployment of solar and wind technologies for power generation, BESS, and batteries from EVs, this may pose concerns on waste materials from these technologies and hazards to the environment. As such, there is a need to anticipate the needed regulation for the disposal of waste and decommissioning of the power plants using these technologies. On the other hand, there is also a need to diversify transport fuel to reduce reliance on imported oil, improve energy security, and mitigate the adverse effects of the volatility of oil prices in the international market to the economy. Measures that can be implemented include increasing biofuels (bioethanol and biodiesel) blending using alternative feedstock including waste, intensifying the promotion and use of EVs in the transport sector, and considering off-grid Solar PV for EVCS to soften the reverse impact of CREVI in GHG emission in the electricity production. D. Energy System The country’s reference energy system (RES), which shows the flow of all energy forms from the primary resources (TPES), oil refining, and power generation to the end-use sectors (TFEC), is illustrated in the Sankey Diagrams for 2022 and 2050 under the REF, CES 1, and CES 2 (Figures 13-16). These diagrams provide a graphical representation of the following: • • • • • How much energy supply is required to produce useful energy for the consumers? How much energy is required for each type of fuel, i.e., oil, coal, gas, and RE? How much energy is required by each sector of the economy? What are the available sources of energy in the country? How much energy is imported from other countries? Table 1 summarizes the major energy data as derived from the energy flows in the Sankey Diagrams for 2022 and 2050. Table 1. Summary Table of Energy Data 2022 2050 Actual (Figure 12) Reference (Figure 13) Clean Energy with 19 GW OSW (Figure 14) Clean Energy with 50 GW OSW (Figure 15) 61.56 MTOE 140.50 MTOE 127.33 MTOE 122.32 MTOE 49.42% 38.92% 52.93% 54.83% Total RE Supply 20.04 MTOE 49.89 MTOE 52.38 MTOE 52.05 MTOE RE Share of TPES 32.55% 35.51% 41.14% 42.55% Total Fuel Inputs to Power Generation 32.72 MTOE 84.99 MTOE 79.15 MTOE 74.14 MTOE Total Gross Generation 9.59 MTOE (115.52 TWh) 39.02 MTOE (453.81 TWh) 38.17 MTOE (443.90 TWh) 38.25 MTOE (444.87 TWh) Energy Data & Indicators TPES Share of Indigenous Energy to TPES / Self-Sufficiency TFEC 35.86 MTOE 90.59 MTOE 82.87 MTOE Major Energy Consuming Sectors and their Shares of the TFEC Transport (34.37%) Industry (30.30%) Industry (30.78%) Most Consumed Fuel and Share of TFEC Oil (50.94%) Oil (47.63%) Oil (43.65%) Vo l u m e 1 24 === pep-2023-2050-vol1-section-a-page-034.pdf === Figure 13. Philippine Energy Flow 2022, MTOE COAL: 0.1 Figure 14. Philippine Energy Flow 2050, Reference Scenario COAL: 0.1 COAL: 0.1 25 Philippine Energy Plan === pep-2023-2050-vol1-section-a-page-035.pdf === Figure 15. Philippine Energy Flow 2050, Clean Energy Scenario 1 with 19 GW OSW COAL: 0.1 Figure 16. Philippine Energy Flow 2050, Clean Energy Scenario 2 with 50 GW OSW COAL: 0.1 Vo l u m e 1 26 === pep-2023-2050-vol1-section-a-page-036.pdf === II. CREATING WEALTH FOR THE FILIPINO With increasing global demand for sustainable energy solutions, it is imperative to balance economic growth, energy productivity, and responsible environmental management. To achieve this, creation and efficient utilization of wealth must be intensified to respond to the requirements of a smooth energy transition with social and climate justice. Such improves the quality of life for the Filipinos towards the realization of having a robust economy and ensuring energy security. Investment Requirements of the PEP The PEP outlines the estimated sectoral energy investment requirements including the projected job generation for 2023–2050, encompassing various scenarios within the energy sector's planning framework. The scenarios comprise three trajectories: 1) the REF; 2) CES 1 underscoring high RE with low OSW utilization alongside nuclear; and 3) CES 2 with high RE and OSW utilization alongside nuclear. 27 Philippine Energy Plan === pep-2023-2050-vol1-section-a-page-037.pdf === Table 2. Total Investment Requirement by Scenario, 2023-2050 (PhP Billion @2022 Prices) SECTOR Upstream REF 2023-2028 CES 1 2029-2050 2023-2028 CES 2 2029-2050 2023-2028 2029-2050 624.85 2,169.33 625.53 2,161.91 625.68 2,162.88 Oil and Gas 345.66 1,978.97 345.66 1,978.97 345.66 1,978.97 Coal 272.75 161.51 272.75 161.51 272.75 161.51 6.45 28.86 7.13 21.44 7.28 22.41 Downstream RE (Pre-Development) 395.10 7,779.33 1,849.71 11,420.42 1,849.71 11,420.42 Oil Depot 50.75 47.88 42.35 42.35 42.35 38.70 Oil Import Terminal - 25.01 - - - - LNG Terminal (FSRU) - 11.14 - - - - Biodiesel - - - 0.70 - 0.70 Bioethanol* 29.49 35.13 23.65 19.64 23.65 19.64 E-Vehicle 297.03 5,829.33 1,717.31 11,072.56 1,717.31 11,072.56 17.83 1,830.84 66.41 288.82 66.41 288.82 Power 1,597.87 7,029.62 1,850.82 9,852.20 1,945.26 13,282.18 Coal 350.55 - 334.38 - 334.38 - Natural Gas 253.42 1,447.04 253.42 977.32 253.42 1,201.88 Oil-based 2.18 - 2.18 - 2.18 - - - - 1,738.60 - 1,738.60 Renewables 928.13 5,526.23 1,197.25 6,392.23 1,291.68 9,441.83 BESS 63.60 56.35 63.60 744.05 63.60 899.88 17.91 32.03 17.91 32.03 17.91 32.03 EV Charging Station Other Technologies EEC Programs Government 0.16 0.40 0.16 0.40 0.16 0.40 GEMP 0.07 0.08 0.07 0.08 0.07 0.08 PELP 0.05 0.03 0.05 0.03 0.05 0.03 VFELP Private 0.04 0.29 0.04 0.29 0.04 0.29 17.74 31.63 17.74 31.63 17.74 31.63 DEs 9.08 16.22 9.08 16.22 9.08 16.22 ESCOs 8.54 15.26 8.54 15.26 8.54 15.26 PELP 0.11 0.07 0.11 0.07 0.11 0.07 VFELP 0.01 0.08 0.01 0.08 0.01 0.08 Total (PhP) 2,635.74 17,010.31 4,343.97 23,466.56 4,438.56 26,897.51 Total (USD) 47.92 309.28 78.98 426.66 80.70 489.05 Note: * All bioethanol supply requirements are to be produced locally Conversion Rate used is PhP55/USD To realize the required investments over the planning period, the government’s role is to be facilitative as embodied in the policy support mechanisms. The DOE envisions private sector participation and the public-private partnership (PPP) mode to be in play. The projected financing requirements indicated in Table 2 comprise the exploration and development of indigenous energy resources, the establishment of energy facilities necessary to ensure the continuous flow of energy supply (e.g., oil storage, LNG receiving terminals, biofuels production facilities, EVs and EVCS, and construction of additional power plants (excluding investment for transmission). Vo l u m e 1 28 === pep-2023-2050-vol1-section-a-page-038.pdf === By 2050, the REF’s total investment reaches PhP19,646.0 billion (USD357.218 billion), while the CES 1 is 41.6 percent higher than the REF at PhP27,810.5 billion (USD505.6 billion). On the other hand, the CES 2 requires a total investment of PhP31,336.1 billion (USD569.7 billion), 12.7 percent higher than the CES 1. These investments are expected to generate more job opportunities for the Filipinos. Under the REF, about 79.9 percent of the employment generation is provided through the construction of RE-based power plants (1,152,533) followed by the EV installation with 8.1 percent (117,243 jobs). Similarly, the CES 1 and CES 2 offer more work for putting up RE-based power plants with 1,437,139 jobs and 1,688,331 jobs, about 66.1 percent and 67.5 percent of the total employment generation by 2050, respectively (Table 3). Following are the highlights of investment and employment opportunities per energy subsector over the planning period: Table 3. Job Generation, 2023-2050 Sector Upstream REF CES 1 CES 2 49,411 65,709 115,173 Oil and Gas - - - Coal - - - 49,411 65,709 115,173 Downstream 144,351 451,300 451,300 Oil Depot 18,474 15,181 15,181 Oil Import Terminal 1,312 - - LNG Terminal (FSRU) 907 - - - 140 140 RE Biodiesel Bioethanol 6,415 4,298 4,298 E-Vehicle 117,243 431,681 431,681 Power 1,245,622 1,654,561 1,930,896 Coal 7,261 7,261 7,261 62,578 45,727 53,930 Natural Gas Oil-based 56 56 56 Other Technologies - 24,480 24,480 1,152,533 1,437,139 1,688,331 23,194 139,898 156,838 EEC Programs 2,615 2,615 2,615 GEMP 921 921 921 PELP 343 343 343 Renewables BESS VFELP 631 631 631 DEs 370 370 370 ESCOs 350 Total 1,441,999 350 2,174,185 350 2,499,984 Conventional Energy Fuels Upstream Oil and Gas. The DOE is committed to boost the petroleum industry by organizing local and international roadshows under the Philippine Conventional Energy Contracting Program (PCECP) to promote exploration and development of oil and gas resources in the country. With the promulgation of Presidential Decree (PD) No. 87, the oil and natural gas industry significantly contributed to economic growth through investments and employment of local experts and professionals for the operation, maintenance, and enhancement of upstream oil and gas infrastructures. Various incentives have been introduced to stimulate interest from potential developers and investors to intensify drilling activities aimed at expanding domestic reserves and increasing production of indigenous oil and gas in the country. The ongoing awarding of Petroleum Service Contracts (PSCs) is expected not only to generate substantial investments for the country but also to create employment opportunities for Filipinos.19 With additional production target outlined in the sector’s roadmap, the projected investment by 2028 reaches PhP41.9 billion for oil and PhP303.7 billion for gas. These investments are anticipated to accumulate to PhP103.3 billion for oil and PhP1,875.7 billion for gas by the end of the planning period. Upstream Coal. While there have been efforts to diversify the energy mix, coal still plays a substantial role in meeting the country's energy demand. Transitioning the coal sector requires reskilling and addressing the social impacts to communities hosting coal mining. Some industries, such as cement and steel production, rely on coal as a fuel source for their operations. As such, the continued development of the country’s coal resource potential, estimated at 2,366.7 million metric tons (MMMT) as of 2022, will still be pursued. By 2050, the projected investment requirement for coal exploration amounts to PhP5.6 billion, while the anticipated investment under the development and production phase is notably higher at PhP428.6 billion. 18 19 29 Forex Rate used PhP55.0/USD Section 31 of PD No. 87 Philippine Energy Plan === pep-2023-2050-vol1-section-a-page-039.pdf === Downstream Industry Natural Gas Industry. Mindful of the anticipated depletion of the Malampaya gas field by 2027, the government introduced the importation of LNG and facilitated the establishment and operation of LNG receiving facilities in the country. It is projected that an additional 3.98 million tons per annum (MTPA) of LNG facilities are needed in the REF to meet the projected natural gas supply requirements by 2050. This is on top of the ongoing LNG projects, which are targeted to be operational between 2023 to 2026. For CES 1 and CES 2, no additional LNG receiving terminals are needed as the ongoing LNG projects are enough to cover the natural gas requirements under the CES. Should the construction of additional LNG facilities be needed, the investment requirement for an onshore LNG terminal is seen at PhP47.3 billion, while the Floating Storage and Regasification Unit (FSRU) requires a relatively lower investment at PhP11.1 billion. The construction of these new LNG facilities is expected to generate 907 jobs. Downstream Oil Industry. The country’s oil demand is projected to reach 442,649 thousand barrels (MB) under the REF and 384,491 MB in the CES by 2050, which includes jet fuel and a marine bunker for international passage. The increase in oil requirements in the planning period implies the necessity to establish additional facilities such as depots and import terminals to accommodate the demand growth. The total depot capacity requirement under the REF is projected to increase significantly from 14,030 MB in 2028 to 27,268 MB in 2050. However, the CES has a lower capacity requirement of 11,708 MB and 22,408 MB in 2028 and 2050, respectively. This depot requirement corresponds to an estimated investment of PhP98.6 billion (REF) and PhP81.1 billion (CES) by 2050, generating additional 18,474 and 15,181 jobs, respectively. On the other hand, the REF only requires additional oil import terminals as the existing total capacity is sufficient to accommodate the requirements of the CES. The REF needs an additional oil import terminal of 6,913 MB by 2049, bringing the total import terminal capacity to 344,281 MB. This entails an estimated investment of PhP25.0 billion by 2050 and creating additional 1,312 jobs for the Filipinos. Biofuels The biodiesel demand in the CES reaches 614.1 million liters (ML) in 2028 and is projected to escalate to 892.1 ML by 2050, doubling the demand projection in the REF, which stands at 260.8 ML and 422.7 ML, respectively. The growth in demand is attributed to the increase in biodiesel blend rate from 2.0 percent to 5.0 percent by 2026. On the other hand, the demand for bioethanol for both CES 1 and CES 2 reaches 759.7 ML in 2028 and 1,035.7 ML in 2050 reflecting a decrease of 9.7 percent and 22.5 percent, respectively, compared to the REF. The decline is due to increasing utilization of EVs. To meet the biodiesel demand within the planning period, the country needs to put up an additional production capacity of 134.6 MLPY (both in CES 1 and 2), considering an 80.0 percent capacity utilization rate. This is in addition to the committed and proposed projects with a Notice to Proceed. By 2050, the production capacity of biodiesel increases to 1,15.1 MLPY. On the assumption that all bioethanol supply requirements are to be fulfilled through local production, about 760.7 MLPY of additional production capacity is needed for both CES 1 and CES 2. However, if only 60.0 percent of the bioethanol supply requirement is produced locally, the additional production capacity decreases by 68.1 percent at 242.8 MLPY under the CES. Expanding the production capacity of biofuels builds new investment prospects and livelihood opportunities within communities. To meet the capacity addition for biodiesel, an estimated total investment of PhP0.7 billion is required under CES by 2050. On the other hand, bioethanol production under REF demands a total investment of PhP64.6 billion by 2050, while the investment for CES is 33.0 percent lower at PhP43.3 billion. These new investments create employment opportunities for Filipinos thereby benefitting 140 workers for biodiesel and 4,298 workers for bioethanol by 2050 under the CES. Vo l u m e 1 30 === pep-2023-2050-vol1-section-a-page-040.pdf === Renewable Energy Providing access to financing and investment for RE projects enables the country's diversification to cleaner and more sustainable energy, as well as drives economic growth and job creation. By 2050, the demand for additional power-generating capacities from RE technologies stands at 98.5 GW (REF), 106.6 GW (CES 1), and 106.9 GW (CES 2). The CES’ capacity requirement is 8.0 percent higher than the REF. This results in further increasing deployment and expanding RE share in the power generation mix for sustainable energy options within the planning horizon. The pre-development of these additional RE capacities involves substantial investments. Under the REF, the projected investment is PhP6.4 billion for 2028 and PhP28.9 billion by 2050. On the other hand, CES 1 necessitates an investment of PhP7.1 billion by 2028 and PhP21.4 billion by 2050. The increase is due to the introduction of the 19 GW OSW. Similarly, the CES 2 needs higher investment with 50 GW OSW, which amounts to PhP7.3 billion by 2028 and PhP22.4 billion by 2050. These investments generate potential employment opportunities of 49,411 jobs in the REF, while the CES 1 and CES 2 foresee 65,709 and 115,173 job prospects, respectively. These employment opportunities signify a positive impact on the labor market, highlighting the socio-economic benefits linked with advancing RE development. Power Development The reliability and sustainability of electricity supply continue to stand as crucial pillars for the economy’s growth. Implementing and operationalizing large-scale power infrastructure projects became indispensable for sustaining and propelling economic development. As the government anticipates a more robust and resilient power system, these initiatives play a pivotal role in ensuring a dependable and enduring foundation for progress. In the planning horizon, expanding the power generation capacity stands as a crucial strategy to uphold the security and sustainability of the country’s energy supply. By the end of President Marcos Jr. Administration in 2028, projections indicate total capacity additions of 18,528 MW (REF), 18,195 MW (CES 1), and 19,656 MW (CES 2), respectively. These expansions require significant capital investments amounting to PhP1,597.9 billion under REF, PhP1,850.8 billion for the CES 1, and PhP1,945.3 billion in the CES 2. Within 2029-2050, the REF anticipates capacity additions totaling 104,180 MW equivalent to an investment of PhP7,029.6 billion. As the nation advances with the accelerated adoption of RE resources, the CES 1 requires a capacity addition of 111,486 MW needing an investment of PhP9,852.2 billion. Similarly, the CES 2 envisions capacity additions reaching 113,277 MW corresponding to an investment of PhP13,282.2 billion. The anticipated capacity additions are expected to bring employment opportunities for Filipinos. Among the three scenarios, CES 2 will create the highest number of jobs with 1,930,896 work opportunities, followed by the CES 1 with 1,654,561 jobs and the REF with 1,245,622 jobs. 31 Philippine Energy Plan === pep-2023-2050-vol1-section-a-page-041.pdf === Alternative Fuels and Technologies The enactment of RA 11697 or the Electric Vehicle Industry Development Act (EVIDA) of 2022 on 15 April 2022 sets the cornerstone for the government's policy framework to drive the advancement of the EV industry in the country. The formulation of CREVI offers essential strategies to effectively balance industry growth and market expansion. By 2050, the CREVI sets a minimum of 10.0 percent EV share of the vehicle fleet for all sectors (except trucks) under the REF, while its aggressive target of re-fleeting 50.0 percent of all vehicle fleets is espoused under the CES 1 and CES 2. These targets represent investments that will not only drive economic growth but also generate a variety of job opportunities for local skilled workers. Under the REF, the total investment in 2028 reaches PhP 314.9 billion comprising PhP 297.0 billion from EVs and PhP 17.8 billion from EVCS. On the other hand, the projected investment of PhP 1,783.7 billion in the CES is 466.5 percent higher than the REF during the same period. This is comprised of PhP 1,717.3 billion for EVs and PhP 66.4 billion for EVCS. From 2029 to 2050, total investment further increases to PhP 7,660.2 billion in the REF (PhP 5,829.3 billion for EVs and PhP 1,830.8 billion for EVCS and PhP 11,362.4 billion in the CES (PhP 11,072.6 billion for EVs and PhP 288.8 billion for EVCS). These investments are expected to create employment with 117,243 under the REF and 431,681 jobs under the CES. Energy Efficiency and Conservation Programs Encouraging energy efficiency practices, promoting behavioral change, and facilitating collaboration among the government, industry, and civil society are crucial steps in advancing the country's journey toward a more resilient, inclusive, and environmentally sustainable energy future. The DOE, working in conjunction with international partners and stakeholders, has initiated a range of programs aimed at promoting EEC across diverse sectors. Within the framework of the Government Energy Management Program (GEMP), the government has allocated PhP0.15 billion for demonstration projects focused on promoting solar PV technology for offices, EVCS demonstrations, and the facilitation of third-party energy audits for government entity buildings. A total of PhP0.26 billion investment may also be generated from the implementation of the Philippine Energy Labelling Program (PELP) by both the government and private sectors, including the procurement of PELP System Development for the government sector, as well as the revenues from the label issuances and infrastructure development. Further, the development and annual maintenance of the web-based Application and Online Database System for Vehicles Fuel Economy Labelling Program (VFELP) could also provide a potential investment of PhP0.43 billion, including the revenues from application for company registration, transport vehicle registration, and fuel economy labeling issuance for vehicle manufacturers, importers, distributors, dealers, and rebuilders. Further, it is estimated that a total investment of PhP25.3 billion from Designated Establishments (DEs) within the planning horizon could yield approximately 370 green jobs for the country. Additionally, an investment worth PhP23.8 billion from Energy Service Companies (ESCOs) is anticipated, generating 350 job opportunities for the country. Vo l u m e 1 32 === pep-2023-2050-vol1-section-a-page-042.pdf === III. TRANSITION FINANCE As the country implements a sustainable energy future in line with the SDGs, another critical issue is climate change and the need for an efficient, effective, and sustainable financial system. Corollary to this, it generates significant investments, jobs, growth, and facilitates the restoration of the ecosystem. International organizations have stressed the importance of sustainable finance as a strategic approach that integrates environmental, social, and governance factors into investment decisions within the financial sector. This entails promoting climate mitigation strategies and mobilizing private finance for clean and resilient growth. The World Bank’s Philippines Economic Update (PEU) in June 2023 acknowledged that elevating the ambition of the Philippines’ decarbonization endeavors and maximizing additional local and global environmental benefits necessitates corresponding international assistance and cost-sharing arrangements.20 Some specific areas identified for further assessment of decarbonization policies and actions are: • Assessing the impact of energy transition on resilience, including a deeper understanding of the geospatial nature of climate risks and their effects on expanding power system planning, along with implementing appropriate riskmitigation measures; • Understanding the necessary financing requirements for an energy transition and effectively allocating risks between the private and public sectors; • Utilizing analytics to enhance the planning and execution of RE and EEC initiatives; • Assessing the impact of accelerated electrification of the transport sector, considering the increased penetration of EVs in the Philippines; • Evaluating carbon pricing as a supportive instrument for facilitating the energy transition; and • Analyzing the socioeconomic impact of phasing down CFPPs in the Philippines. Based on the IEA World Energy Investment 2023 Report, the world must invest about USD 1.7 trillion in clean energy initiatives, including key investments in RE, nuclear, energy grids, energy storage, low-emission fuels, and efficiency improvements, among others. The IEA's investment projection is crafted within a scenario aimed at propelling the world towards achieving net-zero emissions by 2050, thereby aligning with the transition to sustainable energy. Similarly, according to the International Renewable Energy Agency (IRENA) World Energy Transition Outlook, the world needs to invest around USD 131.0 trillion in RE by 2050 to achieve a net-zero emission future. 20 33 Source: The World Bank Philippines Economic Update: Securing a Clean Energy Future -June 2023 Philippine Energy Plan === pep-2023-2050-vol1-section-a-page-043.pdf === Clean Energy Finance Initiatives in the Philippines In the Philippines, several initiatives have been implemented to promote and facilitate clean energy finance. These initiatives aim to attract investment in clean energy projects and support the transition towards a more sustainable energy system. As highlighted in the 2023 Climatescope Report by Bloomberg New Energy Finance, the country ranks fourth among the most attractive emerging markets for RE. This underscores the effectiveness of the Philippines' robust clean energy programs and initiatives. Some of the key clean energy finance initiatives in the country include: • The issuance of BSP Circular No. 1185 series of 2023 on 13 December 2023 amended the regulation on credit exposure limits to a single borrower and rates of required reserves. To support the scaling up of sustainable finance, the policy stipulated the following: a) grant of additional single borrower’s limit (SBL) of 15.0 percent of net worth of loans, credit accommodation, and guarantees for the purpose of financing eligible green or sustainable projects including transitional activities to decarbonization; and b) gradual reduction of the reserve requirements (RR) rate to zero percent against new and outstanding sustainable bonds issued by banks. • In April 2020, the Bangko Sentral ng Pilipinas (BSP) introduced the Sustainable Finance Framework aimed at minimizing risks faced by financial institutions. The framework is envisioned to be integrated by financial institutions into their sustainability principles and embedded in the corporate governance framework, risk management system, and strategic objectives. Successively, the Philippine Sustainable Finance Roadmap was launched in 2021 delineating and facilitating holistic strategies for sustainable finance. • In support of the commitments outlined in the roadmap, the BSP through the Financial Sector Forum (FSF) issued the Philippine Sustainable Finance Taxonomy Guidelines (SFTG) through the BSP Circular 1187 series of 2024 issued on 21 February 2024, which serves as a tool for determining whether an economic activity is environmentally and socially sustainable, as well as guides stakeholders in their investment and financing decisions. Underlying the SFTG are several key principles, such as adopting a phased approach designed for inclusivity and related to key government policies and regional frameworks. Such primarily implies responsiveness to changes and periodic review. A phased approach allows for effective, iterative, cooperative, and user-focused development. It is inclusive in the sense that it offers direction to the financial sector and other potential users with respect to categorizing sustainable finance and investment activities. Moreover, inclusivity means that the taxonomy can be continuously tested, adjusted, and improved to better fit the demand of users. • The Securities and Exchange Commission (SEC) issued corresponding guidelines to promote good governance and support the deepening of the capital market through sustainable investment products. The other SEC initiatives related to sustainable finance are its involvement in the ASEAN Capital Markets Forum (ACMF) and ASEAN Taxonomy Board. • The Philippine Guarantee Corporation (PHILGUARANTEE), as part of its mandate, provides credit guarantees for finances to support trade and investment, infrastructure, agricultural modernization, and energy, among others. • The OECD's Clean Energy Finance and Investment Mobilisation (CEFIM) Programme established the Clean Energy Finance and Investment (CEFI) Roadmap specifically designed for the Philippines. This initiative seeks to unite governmental and private sector stakeholders in crafting a definitive action plan. The roadmap's primary focus is to identify and resolve financial and investment-related challenges within the country's clean energy sector, specifically targeting OSW and EEC in the public building sector. These sectors have been identified as pivotal areas for mobilizing the financial system, aiding the government's transition towards a low-carbon economy. Establishing a robust policy framework and an attractive investment environment become imperative in mobilizing domestic and foreign capital, essential for meeting the country's clean energy ambitions. Vo l u m e 1 34 === pep-2023-2050-vol1-section-a-page-044.pdf === To catalyze the growth of OSW and EEC and unlock investments capable of significantly uplifting local communities and the Philippine economy, the establishment of a Clean Energy Finance Framework is necessary. This framework is essential in aiding the government's ambition to provide a cleaner and more sustainable energy supply for the country. Illustrated in Figure 17 is the framework’s four (4) cornerstones: i. ii. iii. iv. Achieving energy security, Supporting environmental sustainability, Encouraging technological development, and Providing access to financing and investments Figure 17. Clean Energy Finance Framework Ensuring Energy Security Supporting Environmental Sustainability Clean Energy Finance Promoting Technological Development Encouraging Financing and Investment It aims to stimulate private investment by establishing funding channels and support programs, utilizing effective local and global connections. Ensuring Energy Security. As part of its commitment to ensuring energy security, the government recognizes the significant contributions of RE and EEC. Through strengthening these sectors, the government seeks to overcome the obstacles impeding the energy transition. Supporting Environmental Sustainability makes it feasible to channel financial resources and investments toward achieving clean energy and sustainable finance goals. These initiatives will help reduce carbon footprints and achieve the targeted RE contribution to the generation mix. Promoting Technological Development is a key in driving innovation and optimizing the application of efficient technologies. Achieving this necessitates collaboration with both domestic and international institutions, as well as sustained efforts in research and development (R&D). Encouraging Financing and Investment from both the government and private sectors involves expanding access to capital to swiftly mobilize the necessary financial resources. This expedites project development and concurrently fosters potential employment prospects for Filipinos. One effective strategy involves benchmarking foreign investors' programs and considering the implementation of ordinances or circulars to incentivize local bank engagement in domestic initiatives. Private Sector Initiative on Energy Transition Finance As the government continues to utilize policy and finance to realize energy transition, the private sector sees this as guidance for adopting a proactive and adaptable strategy to achieve sustainability and facilitate transition efforts. A case in point is the ACEN pioneering initiative in the early retirement of fossil-fuel plants specifically CFPPs and diesel-based plants. The company has successfully implemented an energy transition mechanism, which facilitated the divestment and early retirement of its 246-MW CFPP in Batangas. This combines public and private investments with the intent of retiring CFPPs earlier than scheduled. The mechanism was underpinned by debt and equity investors – local private banks covering the debt with equity coming from the Government Service Insurance System (GSIS) and private companies. 4 35 Due to replacement of gasoline by bioethanol. Gasoline has a higher calorific value than bioethanol. Philippine Energy Plan