=== pep-2023-2050-vol1-section-c-page-065.pdf === Natural Gas. Natural gas production remained on the downtrend, reduced further by 7.4 percent in 2022 to 2.6 MTOE (112.2 billion standard cubic feet (BSCF)), which represented a 4.2 percent share to total domestic energy production. Implementation of Malampaya gas supply restrictions on Ilijan and San Gabriel Power plant from January to May of 2022, with the expiration of Ilijan Power plant’s Gas Sales and Purchase Agreement (GSPA) on 5 June 2022, resulted to its diminished supply levels during the year. Renewable Energy Geothermal. Geothermal’s share to the total indigenous energy supply stood at 29.5 percent in 2022, while its equivalent volume increased by 4.1 percent to 9.0 MTOE from previous year’s 8.6 MTOE. Meanwhile, a total of 24 geothermal projects with a combined potential capacity of 870.6 MW39 were awarded as of 2022. Biomass. Total biomass40 supply reached 7.73 MTOE in 2022 or 0.1 percent more than its 7.72 MTOE registered in the previous year. It contributed 25.4 percent to the total indigenous energy supply for the same period. The bulk of the increase in biomass supply is attributed to its higher utilization in power generation which was supported by 611 MW41 of installed capacity. On the other hand, an additional capacity of 186.2 MW is expected from around 28 biomass projects awarded as of 2022.42 Hydro. Hydropower production went up by 9.8 percent from previous year’s level of 2.3 MTOE to 2.5 MTOE in 2022, boosted by the above-normal rainfall conditions due to the La Niña phenomenon that persisted until the end of 2022. Hydropower contributed an 8.3 percent share to the total indigenous energy supply, supported by its aggregate capacities of 3,745 MW43. A total of 12,272.5 MW44 potential capacity from 362 hydropower projects was awarded by end of 2022. Solar. Preference for solar as a viable energy source has grown rapidly in recent years consistent with the government’s push for sustainability. For 2022, solar supply levels posted an outstanding increase of 24.0 percent from its year-ago level of 126.4 kTOE to 156.7 kTOE in 2022, albeit a minimal share of 0.3 percent to TPES for the same period. In 2022, solar installed capacity reached 1,530 MW,45 and its potential capacity of 21,413.6 MW46 from 156 solar projects was awarded during the period. Wind. Wind energy supply posted a sizable decline of 18.9 percent in 2022 from its previous year’s level of 109.2 kTOE due to derating in its dependable capacity for 2022. While its share of the country’s energy mix for 2022 was marginal at 0.1 percent, interest in wind energy development has been revitalized due to its colossal potential resources, which is aligned with the country’s effort on energy transition goal. The total installed wind capacity reached 427 MW47 with a potential capacity of 45,631 MW48 from 21 energy projects awarded as of 2022. Biofuels. Biofuels supply mirrored the uptrend in demand for gasoline and diesel consistent with the implementation of the mandated blending schedule. As such, the domestic supply of biodiesel and bioethanol climbed by 5.7 percent and 2.9 percent, respectively. In 2022, the country has 12 biodiesel producers with combined capacities of 677.949 million liters/ year (MLPY) and 13 bioethanol facilities with 466.0 MLPY in operation. Four (4) biodiesel and two (2) bioethanol producers were also accredited for the construction of production plant projects. https://www.doe.gov.ph/sites/default/files/pdf/renewable_energy/awarded_geothermal_2022-12-31.pdf Includes charcoal, fuelwood, rice hull bagasse, agriculture, animal and municipal wastes https://www.doe.gov.ph/sites/default/files/pdf/electric_power/04_LVM%20Grid%20Summary_Rev1_0.pdf 42 https://www.doe.gov.ph/sites/default/files/pdf/renewable_energy/awarded_biomass_2022-12-31_own-use.pdf 43 https://www.doe.gov.ph/sites/default/files/pdf/electric_power/04_LVM%20Grid%20Summary_Rev1_0.pdf 44 https://www.doe.gov.ph/sites/default/files/pdf/renewable_energy/awarded_hydropower_2022-12-31.pdf https://www.doe.gov.ph/sites/default/files/pdf/renewable_energy/awarded_hydropower_2022-12-31_own-use.pdf 45 https://www.doe.gov.ph/sites/default/files/pdf/electric_power/04_LVM%20Grid%20Summary_Rev1_0.pdf 46 https://www.doe.gov.ph/sites/default/files/pdf/renewable_energy/awarded_solar_2022-12-31.pdf 47 https://www.doe.gov.ph/sites/default/files/pdf/electric_power/04_LVM%20Grid%20Summary_Rev1_0.pdf 48 https://www.doe.gov.ph/sites/default/files/pdf/renewable_energy/awarded_wind_2022-12-31.pdf 49 https://www.doe.gov.ph/renewable-energy/biodiesel?page=1 39 40 41 Vo l u m e 1 56 === pep-2023-2050-vol1-section-c-page-066.pdf === II. Net Energy Imports50 The volume of net imported energy reached 31.1 MTOE in 2022, 7.6 percent higher than its year-ago level of 28.9 MTOE. Of the total volume of net energy imports, oil and oil products accounted for more than half (62.5 percent share), while coal and ethanol contributed 36.8 percent and 0.7 percent shares, respectively (Figure 34). Volatile international prices due to lingering tension between Russia and Ukraine failed to prevent the country’s import propensity since heightened economic activities created a strong domestic demand for oil products. This situation pushed the aggregate volume of oil imports by 13.8 percent to 21.3 MTOE in 2022 from the previous year’s 18.7 MTOE. Crude oil, with a 27.4 percent share of total oil import volume for 2022, exhibited a marked increase of 46.0 percent to 5.8 MTOE vis-à-vis 4.0 MTOE in 2021 encouraged by the enhanced operation of Petron’s Bataan refinery. The relatively slower increase in the international price of gasoline prices vis-àvis diesel51, coupled with increased demand from the aviation industry, served as the impetus for the 5.1 percent increase in imports of finished petroleum products to 15.4 MTOE in 2022 from its previous year’s level of 14.7 MTOE. The import market for the Philippines remained unchanged with South Korea, Singapore, and China as top sources of finished oil products, while the Middle East supplied all the country’s requirements for imported crude (Figure 35). Figure 34. Net Energy Imports, by Fuel (% Shares), 2022 19.2% 36.8% 0.7% 12.2% 62.5% 0.7% 21.6% 3.4% 5.5% Crude LPG Diesel Gasoline Fuel Oil Other Products Figure 35. Top 4 Countries as Import Source and Export Destinations for 2022 Top Energy Import: 38.7 MTOE Total Energy Exports: 4.4 MTOE Top Import Markets Level (Shares) Top Export Markets Level (Shares) 48.6% 43.6% Indonesia China 16.9 MTOE (43.6%) South Korea 4.7 MTOE (12.3%) Singapore 3.4 MTOE (8.9%) Saudi Arabia 3.1 MTOE (7.9%) 2.2 MTOE (48.6%) South Korea 3.2% 8.6% 12.3% 1.2 MTOE (26.3%) Thailand 0.4 MTOE (8.6%) 26.3% 7.9% Brunei 0.1 MTOE (3.2%) 8.9% Total oil exports went down by 28.4 percent to 457.3 kTOE in 2022 compared to the previous year’s level of 638.9 kTOE. Exports of finished oil products decreased by 29.1 percent as volume was directed to meet domestic consumption. Reduction in oil output of the Galoc oil field led to a 24.1 percent decline in crude exports, while the downtrend in Malampaya condensate also declined further by 7.8 percent during the year. The top export markets with almost a quarter share each were China (22.7 percent), Brunei (22.3 percent), and Thailand (22.2 percent). Amplified demand for coal as a fuel for power generation necessitated the 4.7 percent increase in coal imports to 17.3 MTOE in 2022 from previous year’s volume of 16.5 MTOE. Indonesia continued to contribute most of the country’s coal imports with its 97.7 percent share, while Australia, Vietnam, Russia, and Thailand shared the remaining 2.3 percent. Coal exports decreased by 23.7 percent to 3.7 MTOE from its 2021 volume of 4.9 MTOE due to moderate movement of domestic coal production and slower demand from China, the country’s top export destination, as it curbed its coal importation to encourage local production52. South Korea has emerged as a strong export market for Philippine coal with a 30.5 percent share, next to China’s 55.8 percent share of total export. The uptrend in the country’s transport sector demand for petroleum products contributed to the 22.9 percent increase in bioethanol imports from its 2021 level of 125.9 kTOE to 154.7 in 2022. This is derived as total primary energy supply (TPES) less indigenous production. Alternatively, it can also be calculated as the sum of imports and stock change (+/-) less exports and international bunkers (aviation and marine) Mean of Platts Singapore (MOPS) for gasoline per barrel was US$78.3 (2021) and US$111.1, while for diesel it was US$77.3 (2021) and US$134.5 (2022) 52 China's hunger for coal sparks debate on self-sufficiency and imports (https://www.spglobal.com/commodityinsights/en/marketinsights/blogs/coal/032723-blog-chinas-hunger-for-coal-sparksdebate-on-self-sufficiency-andimports#:~:text=China%20imported%20293.20%20million%20mt,its%20requirements%20through%20domestic%20production) 50 51 57 Philippine Energy Plan === pep-2023-2050-vol1-section-c-page-067.pdf === D. ENVIRONMENTAL IMPACT Total greenhouse gas (GHG) emissions for 2022 increased by 4.0 percent to 135.7 million tons of CO2 equivalent (MtCO2e) or 4.0 percent more than previous year’s 130.4 MtCO2e. The gradual removal of COVID-19 restrictions throughout the year encouraged the rebound in economic activities and returned GHG emissions to pre-pandemic levels (Table 4). Table 4. GHG Emission, by Sector: 2021 vs 2022 Sector CO2 Emission (MtCO2e) 2021 Total GHG Emission*** (MtCO2e) Total NonCO2 Emission (MtCO2e) 2022 2021 2022 2021 Total GHG Emission (% Change) 2022 2021-2022 Electricity 73.59 75.98 0.29 0.30 73.88 76.28 3.25 Transport 31.32 35.18 0.22 0.24 31.53 35.42 12.32 Industry 12.44 12.88 0.07 0.07 12.50 12.94 3.52 Other Sectors* 12.05 9.81 0.08 0.06 12.13 9.88 (18.55) 186.59 Energy** Total 0.40 1.15 0.00 0.00 0.40 1.16 129.80 135.00 0.65 0.68 130.45 135.68 4.01 Change in Distribution % Distribution Electricity 56.70 56.28 44.56 44.39 56.64 56.22 (0.41) Transport 24.13 26.06 33.24 35.82 24.17 26.10 1.93 Industry 9.58 9.54 10.32 9.90 9.58 9.54 (0.05) Other Sectors 9.28 7.27 11.78 9.39 9.30 7.28 (2.02) 0.54 Energy Total 0.31 0.85 0.10 0.50 0.31 0.85 100.00 100.00 100.00 100.00 100.00 100.00 *includes emissions from the services, households, and agriculture **includes losses incurred in oil refining ***Updated using GWP Values, Fifth Assessment Report (AR5), and EF based on 2006 IPCC Guidelines (Tier 1) Power generation accounted for more than half (56.2 percent share) of the total GHG emissions during the year. Increased output from coal-fired power plants resulted in a 3.3 percent increase in GHG emissions to 76.3 MtCO2e compared to the 73.9 MtCO2e recorded in 2021. Among end-use economic sectors, transport remained the biggest GHG emitter with a 26.1 percent share to total GHG emissions. Full seating capacities implemented for public transport, as well as eased mobility restrictions, pushed the sector’s GHG emission to a double-digit hike of 12.3 percent to 35.4 MtCO2e in 2022 from its yearago level of 31.5 MtCO2e. Amplified industrial production raised the sector’s GHG emission by 3.5 percent to 12.9 MtCO2e in 2022 (9.5 percent share) from its 2021 level of 12.5 MtCO2e. On the other hand, the decline in energy consumption of the agriculture, services, and household sectors weighed down their aggregate GHG emission (7.3 percent share), as it drastically fell by 18.6 percent from 12.1 MtCO2e in 2021 to 9.9 MtCO2e in 2022. Emissions from refinery production and own use of energy tripled from 0.4 MtCO2e in 2021 to 1.2 MtCO2e in 2022. Vo l u m e 1 58 === pep-2023-2050-vol1-section-c-page-068.pdf === Table 5. GHG Emission, by Fuel: 2021 vs 2022 Sector CO2 Emission (MtCO2e) 2021 Total NonCO2 Emission (MtCO2e) 2022 2021 Total GHG Emission*** (MtCO2e) 2022 2021 2022 Total GHG Emission (% Change) 2021-2022 Oil 49.49 54.07 0.31 0.33 49.81 54.40 Coal 73.71 74.83 0.33 0.34 74.05 75.17 1.52 Gas 6.59 6.11 0.01 0.01 6.60 6.11 (7.36) 129.80 135.00 0.65 0.68 130.45 135.68 4.01 Oil 38.13 40.05 47.85 49.33 38.18 40.09 1.91 Coal 56.79 55.43 51.17 49.78 56.76 55.40 (1.36) (0.55) Total % Distribution Gas Total 9.22 Change in Distribution 5.08 4.52 0.99 0.88 5.06 4.05 100.00 100.00 100.00 100.00 100.00 100.00 ***GWP Values and EF based on Fifth Assessment Report (AR5) and 2006 IPCC Guidelines (Tier 1), respectively By type of fuel, coal remained the major source of GHG emissions with a 55.4 percent share of the total GHG emissions in 2022. Steady demand for coal as fuel input in power generation led to a 1.5 percent increment in GHG emissions from coal as it reached 75.2 MtCO2e in 2022 from its year-ago level of 74.0 MtCO2e (Table 5). Aggregate consumption of oil and oil products resulted in 54.4 MtCO2e or 40.1 percent of total GHG emissions in 2022. Intensified utilization of gasoline, fuel, and aviation fuels contributed to the 9.2 percent increase year-on-year in GHG emissions from oil. The downward trend in the use of natural gas for both power and non-power applications reduced the fuel’s GHG emissions by 7.4 percent during the year. Consistent with the commitment of the country to its Nationally Determined Contributions (NDC)53, different mitigation measures pursued in the energy sector resulted in the avoidance of 18.1 MtCO2e or 11.8 percent of the total hypothetical54 GHG emission in 2022 as shown in Figure 36 and Table 6. Combined increments in generation output from geothermal, hydro, biomass, and variable RE (wind and solar) pushed avoided GHG emission from the power generation sector by 5.1 percent to 4.5 MtCO2e (2.9 percent of total GHG avoidance) vis-à-vis 4.3 MtCO2e from the previous year. On the other hand, demandside management measures succeeded as GHG avoidance went up by 16.5 percent to 13.6 MtCO2e (8.9 percent share to total avoidance), with marked improvements from efficiency in electricity and fossil fuel consumption, as well as in biofuel blending. These developments contributed to a 13.4 percent increase in overall avoided GHG emissions for the year. 53 54 59 Figure 36. Actual GHG Emission, Hypothetical GHG Emission and GHG Avoidance: 2000 – 2021 Note: Hypothetical GHG Emission is equivalent to Actual GHG Emission plus GHG Emission Avoidance; GHG Base year is CY 2000 GHG Emission Level Philippines | Climate Promise (undp.org) Refers to actual GHG emission plus total avoidance; or the level of GHG emission if there were no mitigation measures being adopted. Philippine Energy Plan === pep-2023-2050-vol1-section-c-page-069.pdf === Table 6. CO2 Avoidance from the Mitigation Measures (in ktCO2e) GHG Reduction Measures 2021 Reduction Impact* % 2022 Reduction Impact* % % Change DEMAND SIDE 11,703.05 7.99 13,629.80 8.86 16.46 Efficiency in Electricity Consumption (EEC) 3,372.92 2.30 3,866.53 2.51 14.63 Efficiency in Fossil Fuel Consumption (EEF) 6,381.16 4.36 7,397.03 4.81 15.92 Biofuel 1,948.97 1.33 2,366.24 1.54 21.41 CNG/NG 0.00 0.00 0.00 0.00 11.46 4,252.64 2.90 4,468.24 2.91 5.07 Total Avoidance (Demand+Supply-EEC) 15,995.70 10.90 18,098.04 11.77 13.43 Actual GHG Emission 130,449.12 135,679.36 4.01 Hypothetical GHG Emission (Actual + Total Avoidance) 146,404.82 153,777.39 5.04 SUPPLY SIDE Fuel Diversification in Power Generation @2018 GDP &EF** *Refers to the percent reduced emission (Total Avoidance / Hypothetical GHG Emission x 100) **Includes efficiency in Power Generation and EEC E. ENERGY – ECONOMY AND ENVIRONMENTAL INDICATORS55 The Philippine economy has effectively returned to its pre-pandemic trajectory signaled by the robust 7.6 percent expansion in gross domestic product (GDP) for 2022 – the fastest among the emerging economies in the ASEAN region and its best performance in almost four decades. The government’s effective pandemic risk management and removal of restrictions resulted in strong domestic demand, which was met by expansions of 9.2 percent and 6.5 percent in the aggregate GVA in the services and industry sectors, respectively, and represented the bulk of GDP at 91.1 percent share. Domestic trade, manufacturing, and construction 55 GDP figures as based on the PSA National Accounts of the Philippines (NAP), as of April 2022 (rebased 2018) Vo l u m e 1 60 === pep-2023-2050-vol1-section-c-page-070.pdf === each posted notable growth contributions of 8.7 percent, 4.9 percent, and 12.1 percent, respectively, which offset the minimal decrease of 0.5 percent registered in the agriculture, fishery, and forestry (AFF) sectors for the year. On the demand side, household consumption and investment lifted the economy, as each posted sizeable increments of 8.3 percent and 13.8 percent during the year. Intensity. Energy intensity serves as an indicator of how much energy is used to produce one unit of economic output such that the rate of improvement in energy intensity is used as an indicator for improvements in energy efficiency. For 2022, the country’s economy-wide energy intensity stood at 3.1 tons of oil equivalent per million pesos of real GDP (TOE/MPhP) or 2.6 percent less than its year-ago level of 3.2 TOE/MPhP. Electricity intensity fell by 2.3 percent to 5.6 watt-hours per peso (Wh/PhP), while oil intensity increased by 3.4 percent to 8.1 barrels/PhP (bbl/PhP) attributed to its increased utilization in the transport sector (Figure 37). Figure 37. Energy Indicators: 2021 vs 2022 Major economic sectors likewise exhibited reductions in their respective energy intensity. The services sector, which includes the transport subsector, went down by 3.4 percent to 1.5 TOE/MPhP. Industry, household, and agriculture sectors also reported cutbacks of 2.4 percent, 6.5 percent, and 32.3 percent in energy use per million pesos, respectively. These improvements in energy intensity meant significant achievements in programs and policies implemented under Republic Act 11285 or the Energy Efficiency and Conservation Act of 2019, as well as continued compliance under the Sustainable Development Goal (SDG) 7.3.56 56 61 Sustainable Development Goal 7.3 target calls for global progress on energy efficiency by doubling the rate of improvement in energy efficiency globally by 2030 (https://www.seforall.org goal-7-targets/energy-efficiency) Philippine Energy Plan === pep-2023-2050-vol1-section-c-page-071.pdf === Elasticity. As the country’s rate of economic expansion outpaced its energy requirement, economy-wide energy-toGDP elasticity declined to 0.6 units in 2022 vis-à-vis 0.7 units from the previous year, while electricity-to-GDP was slightly lower at 0.7 units. These low elasticity values showed that the quantity of energy (overall) and electricity is less responsive to changes in economic output. On the other hand, oil-to-GDP stood at 1.5 units because of the strong domestic demand for oil and oil products that prevailed during the year. Per Capita. Per capita levels of energy, electricity, and oil improved as pandemic restrictions were lifted during the year. Energy use per person rose by 3.4 percent to 0.6 TOE, while electricity (1.0 MWh/person) and oil (1.4 BBL/person) were higher by 3.8 percent and 9.9 percent, respectively than their 2021 levels (Figure 37). Progress in per capita levels would imply that a greater proportion of the Filipino population had improved access to energy, including oil and electricity, during the year. GHG Emission Indicators Carbon intensity of energy supply, measured as the ratio of total GHG emission over total energy supply, remained constant at 2.2 tCO2e/TOE, while the GHG emission per capita increased by 2.7 percent to 1.2 tCO2e/person during the year attributed to the increase in energy per capita (Figure 38). Consumption of oil products with a lesser carbon footprint contributed to the 4.9 percent decline in GHG intensity of oil consumption to 2.6 tCO2e/TOE, while GHG intensity of power generation was lower by 1.8 percent at 0.68 tCO2e/MWh vis-à-vis the previous year given the higher generation output from aggregate RE sources. Lastly, GHG emission per unit of economic output of a hundred thousand pesos went down by 3.3 percent to 0.68 tCO2e/PhP100k, which indicated advances in the country’s transition towards cleaner energy resources. Figure 38. Environmental Emission Indicators: 2021 vs 2022 Vo l u m e 1 62 === pep-2023-2050-vol1-section-c-page-072.pdf === CHAPTER II Energy Demand and Supply Outlook A. ENERGY DEMAND AND SUPPLY OUTLOOK I. Methodologies and Assumptions Socioeconomic Targets PDP 2023-2028: A Plan for Economic and Social Transformation The Energy Outlook incorporates socioeconomic assumptions consistent with the growth trajectory embodied in the medium-term Philippine Development Plan (PDP) 20232028 and anchored on the long-term vision of AmBisyon Natin 2040 that enables economic and social transformation for a prosperous, inclusive, and resilient society. The country sustains its 7.6 percent expansion in real gross domestic product (GDP) for 2022 and achieves its peak growth momentum of 8.0 percent by 2028. Moving towards the end of the planning horizon, the Philippine economy records average annual increments of 7.1 percent until 2050. Source: DOF Website This Energy Outlook uses other socioeconomic variables for assumptions and references consistent with previous editions. These include population, inflation rates, peso-dollar exchange rates and oil prices that are based on the (a) 2020 Census of Population (POPCEN) of the Philippine Statistics Authority (PSA), (b) Development Budget Coordinating Council (DBCC), (c) International Monetary Fund (IMF) and (d) World Oil Outlook (WOO) 2045 of the Organization of Petroleum Exporting Countries (OPEC). 63 Philippine Energy Plan === pep-2023-2050-vol1-section-c-page-073.pdf === Energy Demand and Supply Assumptions Scenario Building This Energy Outlook analyzes two (2) possible energy pathways for the country – the Reference Scenario (REF), which is also the Business-as-Usual (BAU) scenario wherein current energy policies are retained, and the Clean Energy Scenario (CES) which sets aggressive targets for the energy sector until 2050 (Table 7), The Outlook also considers the Association of Southeast Asian Nations (ASEAN) and Asia-Pacific Economic Cooperation (APEC) regional targets on renewable energy (RE) shares57 and improvement in energy intensity58, as well as the attainment of Sustainable Development Goals (SDG) Goal 7 of ensuring access to affordable, reliable, sustainable, and modern energy for all. It sets 2022 as the base year, with 2023 as the first projection year. Table 7. Demand and Supply Targets for Energy Outlook 2023-2050 Scenario Assumptions Reference Scenario (Business-as-Usual) Clean Energy Scenario (Alternative Scenario) Energy Demand • Energy consumption levels support accelerated economic expansion. • Economy-wide energy intensity reduction in consistent with regional targets ͟ Penetration rate of electric vehicles (EVs) for road transport: 10.0 percent by 2040 onwards ͟ Current blending schedule for biofuels: 2.0 percent biodiesel and 10.0 percent bioethanol ͟ Current efforts on energy efficiency and conservation (EEC) maintained Assumptions from the Reference Scenario, as well as the following: • Higher economy-wide reduction in energy intensity ͟ Penetration rate of EVs for road transport expands to 50.0 percent by 2040 onwards ͟ Biodiesel blending increases to 5.0 percent starting 2026 ͟ Energy savings from oil products and electricity use improve by 10.0 percent in 2040-2050 through heightened EEC activities Energy Supply • Current development trends and strategies continue. • List of Existing Power Plants and Committed Power Projects as of May 2023; WESM Registered Capacities as of May 2023 • Reserve margin based on current reserve requirement (regulating, contingency and dispatchable reserve) • RE share in generation mix: at least 35.0 percent by 2030 and 50.0 percent by 2040 onwards ͟ Capacity targets under the National Renewable Energy Program (NREP) ͟ Capacity by grid under the Competitive RE Zone (CREZ) ͟ Awarded contracts for RE • Indigenous production targets by 2050: Oil – 61.3 million barrels (MMB) at 2.3 MMB/year, Gas – 5.1 trillion cubic feet (TCF) at 0.2 TCF/ year, Coal – 191 million metric tons (MMT) at 6.5 MMT/year • LNG imports augment domestic natural gas supply starting 2023. Assumptions from the Reference Scenario, including the following: • RE share in generation mix by milestone years: 35.0 percent by 2030, 50.0 percent by 2040, and more than 50.0 percent by 2050 ͟ Offshore Wind (OSW) awarded contracts scenario options * 19 Gigawatt (GW) by 2050 (CES 1) * 50 GW by 2050 (CES 2) • OSW by grid location59 • Nuclear capacity: 1.2 GW by 2032; 2.4 GW by 2035; 4.8 GW by 2050 • Technical life for coal plants sets at 40 years Note: Reference date for energy and energy-related data, including socioeconomic indicators, used in the simulation for this Energy Outlook is 07 July 2023. Under the ASEAN Plan of Action for Energy Cooperation (APAEC) 2016-2025 aspirational targets: 23.0 percent share of RE in Total Primary Energy Supply (TPES) and 35.0 percent share of RE in installed power capacity by 2025. Meanwhile, APEC targets to double the share of RE in the energy mix by 2030 (with 2010 as base year). APEC target of 45.0 percent reduction in energy intensity by 2035 with 2005 as the base year period; and APAEC target of 20.0 percent energy intensity by 2020 and 32.0 percent by 2025 based on 2005 levels. 59 World Bank. (2022). Offshore Wind Roadmap for the Philippines. Energy Sector Management Assistance Program. NW, Washington, DC: 57 58 Vo l u m e 1 64 === pep-2023-2050-vol1-section-c-page-074.pdf === Methodologies and Energy Models Energy Supply and Demand Outlook of this plan uses extensive energy modeling methodologies and tools. Final Energy Consumption Forecasting of final energy demand employs econometric models using Simple Econometric Simulation System, Expanded (Simple E2, version 14) – an add-in application for MS Excel developed by the Institute of Energy Economics, Japan (IEEJ). The Simple E2 integrates and controls native functions in MS Excel to provide various estimations, such as ordinary least squares (OLS), auto-regression, and non-linear. Groups (system) of equations, which can be simultaneously done, including forward-looking models, and can include various forms of regression models and defined equations. Energy models also consider relevant factors and information that impact energy consumption by sector, such as: • The Transport demand model separately estimates the four (4) modes of transportation such as road, rail, air, and water. The model for road transport uses the number of vehicles as a function of GDP, while the estimation of vehicle fleet employs the Winfrey Survival Model combined with average passenger and vehicle-kilometer traveled and fuel economy to derive energy consumption. The model for rail transport utilizes the number of passengers for the Philippine National Railways (PNR) and Metro Rail Transit/Light Rail Transit (MRT/ LRT) lines and urban population as indicators. On the other hand, the indicators for water and air transport include the number of passengers, kilometer/ton-kilometer flown, cargo throughput, and sub-sectoral valueadded. The Outlook also incorporates the expansion plans and new projects/programs of the Department of Transportation (DOTr) with the development in other related sectors, notably local tourism. The transport energy demand model of the Economic Consulting Associates (ECA)60 which was also adopted for the 2050PH Calculator serves as a reference/validation model. • The Industry demand model comprises energy-intensive and less-energy-intensive industry models. The energy-intensive industries cover food processing, sugar, paper and pulp industries, cement manufacturing, chemicals, basic metal, and machinery and equipment. Other manufacturing activities, mining, and construction fall under less-energy-intensive industries. Macroeconomic variables such as gross value added (GVA), commodity prices, population, as well as specific industry production targets and sectoral roadmaps serve as predictor variables in the regression models on a per fuel basis for each of the mentioned industry sub-sectors. • The Household sector model considers socio-economic indicators, such as household final consumption expenditure (HFCE) and household population from the PSA in projecting energy consumption. Correlation between household cooking fuels (liquefied petroleum gas or LPG, electricity, kerosene, and traditional biomass) serves as the basis for the substitution effect on household fuels. The 2011 Household Energy Consumption Survey (HECS) data is the basis for traditional biomass demand. • The Services and Agriculture sectors demand models utilize GVA for trade and services, and agriculture, fishery, and forestry (AFF), respectively, aside from other socio-economic factors. Electricity demand models utilize gross regional domestic expenditure (GRDP), sectoral GVA per region, number of households and population through a bottom-up approach with disaggregation by grid (Luzon, Visayas and Mindanao). Peak demand estimates use the 2016 to 2022 average load factors by grid, i.e., 70.2 percent for Luzon, 70.2 percent for Visayas and 68.7 percent for Mindanao. Electricity demand is based on sales, which is the volume of energy sold by the distribution utilities (DUs) to their customers, and also covers those directly connected customers. Fuel displacement for gasoline and diesel (and even ethanol and biodiesel) vis-à-vis electricity due to penetration of EVs based on the Comprehensive Electric Vehicle Industry (CREVI) Roadmap, and higher biofuel blend use direct estimation with data/indicators on average mileage, fuel economy and vehicle population. 60 65 Led by Prof. Ronwaldo del Mundo of the University of the Philippines’ (UP) College of Engineering Philippine Energy Plan === pep-2023-2050-vol1-section-c-page-075.pdf === Power Demand and Supply Outlook For the power outlook, the DOE relies on the Power System Planning and Market Simulation Software (PLEXOS) developed by the Energy Exemplar for Capacity Expansion Model (CEM). The CEM provides optimized projections of generation output and capacity consistent with the assumptions in Table 8 and in conjunction with the scenario-specific assumptions from Table 7. On the demand side, the projected electricity sales including transmission and distribution losses (system losses) and own use of power plants are summed up to get the total power generation output. Table 8. Power Demand and Supply Outlook Assumptions Particulars Inputs Electricity Demand • • • 2022 Hourly Demand from NGCP 2023-2050 Demand Forecast 2016-2022 average load factors of the Luzon, Visayas, and Mindanao grids for peak demand estimates Generator Parameters • • • • • • List of Existing Power Plants and Committed Power Projects as of May 2023 WESM Registered Capacities as of May 2023 Operating parameters of existing power plants based on generation companies’ submissions. Reserve provision classified as Regulating, Contingency, and Dispatchable Reserves Fuel Costs (Coal, Gas, Oil, and Uranium) NASA MERRA weather data to generate Solar and Wind Profiles New Build Options • Large Gas, LNG Internal Combustion Engines, Biomass, WTE, Geothermal, Ground-mounted Solar, Roof-mounted Solar, Floating Solar, On and Offshore Wind, ROR, Impounding Hydro, Pumped Hydro, battery energy storage system (BESS), Nuclear, and Other Technologies are used for new build options Costs are based on the 2022 National Renewable Energy Laboratory (NREL) database CREZ parameters and Awarded Service Contracts as of June 2023 are set as limits for RE • • Limitations • • • Considers 3 major nodes for analysis: Luzon, Visayas, and Mindanao RE Targets set to 35.0 percent share by 2030 and 50.0 percent by 2040 onwards in REF and more than 50.0 percent by 2050 under CES. Interconnection between Leyte to Luzon HVDC and MVIP Energy Outlook Simulation and Scenario Building The Low Emissions Analysis Platform or LEAP (Long-range Energy Alternatives Planning System) developed by Stockholm Environment Institute (SEI) as an integrated modelling tool, incorporates the results of the models for energy demand and power outlook and reflects the current and future scenarios of resource extraction and production, and socioeconomic development. LEAP provides estimates for an overall energy outlook for each scenario as specified in Table 7. This tool also computes greenhouse gas (GHG) emissions using default emission factors and global warming potential with a time horizon of 100 years (GWP-100) by the Intergovernmental Panel on Climate Change (IPCC). Vo l u m e 1 66 === pep-2023-2050-vol1-section-c-page-076.pdf === II. Reference Scenario A. TOTAL FINAL ENERGY CONSUMPTION The country’s TFEC61 returns to its prepandemic levels in 2023 and records a level of 37.3 million tons of oil equivalent (MTOE). By 2050, TFEC reaches 90.6 MTOE at a rate of 3.4 percent per year across the planning horizon (Figure 39). Of the 54.7 MTOE increase between 2022 and 2050, the industry sector requires more than one-third (37.2 percent), followed by the transport sector with 24.5 percent share. Households and services sectors account for 19.1 percent and 15.9 percent, respectively, while agriculture sector and non-energy use have the least contributions with an individual share of less than 2.0 percent. Across the planning horizon, key growth sectors – industry, agriculture, and services, register the fastest increase in their respective energy consumption levels. The industry sector, with an average share of 24.4 percent (Figure 40), leads with its 4.9 percent expansion as continuing growth in demand for industrial materials and the government’s thrust for industrialization propels its energy requirement. Adoption of new agricultural innovations results in a 4.5 percent rise in energy use in the agriculture sector, while a robust and competitive business environment contributes to the 3.9 percent uptick in energy demand of the services sector. Efficiency measures slow down energy use in the transport and household sectors as they post 2.7 percent and 2.5 percent growths, respectively, albeit contributing a combined average share of 57.2 percent across the planning period. On the other hand, the volume of coal and oil products for non-energy use advances by 1.9 percent between 2022 and 2050. Figure 39. Total Final Energy Consumption by Sector (MTOE), 2000-2050 Figure 40. Total Final Energy Consumption by Average Shares Per Sector (Percent), 2022-2050 Non-Energy 3.8% Transport 32.2% Agriculture 1.2% Industry 24.4% Services 13.4% Households 25.0% Total Final Energy Consumption, by Fuel Oil consumption increases by more than twice its 2022 level to 43.2 MTOE by 2050, expanding yearly at 3.1 percent (Figure 41). Despite the country’s continued reliance on oil products, its aggregate share to TFEC drops to 47.6 percent by end of the planning period vis-à-vis 50.9 percent in 2022. Transport holds its position as the most oil-intensive sector as its consumption of gasoline and diesel accounts for bulk of the total oil demand, with average shares of 24.9 percent and 31.7 percent, respectively. TFEC is the total energy consumed by the end-users such as households, industry, transport, services, and agriculture. Final energy is those that consumers purchase or receive such as electricity, and petroleum products (i.e. gasoline, diesel, kerosene, etc.). These are energy products and fuels that are converted from the primary energy form, i.e., fuels and energy source (RE) to electricity, crude oil to petroleum products., which incur losses during the conversion process due to their thermal efficiencies. These losses make the difference between TPES and TFEC. For further details, see pp. 23-25 of the Overview for the process flow of energy forms. 61 67 Philippine Energy Plan === pep-2023-2050-vol1-section-c-page-077.pdf === Figure 41. Final Energy Consumption by Fuel, in TOE, 2020-2040 Electricity demand accelerates the fastest at 5.5 percent per year, as levels rise almost five times from the 2022 level to 35.1 MTOE by 2050. Achievement of the government’s targets on electrification and connectivity, growing preference towards electric vehicles (EVs) for road transport, and new operational mass rail transit lines across the country almost doubles the electricity’s share in TFEC to 38.7 percent in 2050 from 21.9 percent in 2022 (Figure 42). Electricity use in the transport sector speeds up by 14.5 percent, while industrial establishments and households account for a combined share of 51.4 percent out of the 27.2 MTOE additional electricity consumption between 2022 and 2050. Demand for traditional biomass shrinks at a yearly rate of 1.2 percent across the planning horizon consistent with the transition to cleaner and more efficient fuels. Households, despite being the major user of traditional biomass, particularly for cooking and heating purposes, exhibit a yearly reduction of 2.4 percent from 2022 to 2050 as rising incomes support the growing preference for modern fuels such as electricity and LPG. On the other hand, biomass waste demand from food processing and sugar manufacturing subsectors, as well as from food service exhibit a moderate uptrend each year of 2.3 percent and 0.5 percent, respectively. Figure 42. Total Final Energy Consumption by Fuel Shares (Percent), 2050 Coal 6.7% Biomass 5.7% Oil & Oil Products 47.6% Electricity 38.7% Bioethanol 0.8% Biodiesel 0.4% The aggregate consumption of coal for non-power applications (i.e., as fuel and/or raw material for various industrial processes) grows steadily by 4.2 percent to 6.1 MTOE by 2050 and represents a share of 6.7 percent to TFEC for the year. As the country’s infrastructure development accelerates further, it sustains coal consumption in the cement and iron and steel subsectors to meet the demand for building materials. Physical connectivity infrastructures such as roads, bridges, seaports, airports, and mass transport accounts for 83.0 percent of the Build Better More (BBM) program. Consistent with the government’s decarbonization efforts is compliance with the mandated blending of 2.0 percent for biodiesel and 10.0 percent for bioethanol. It brings the level of aggregate biofuel consumption to double by 2050 at 1.1 MTOE and equates to a 2.3 percent yearly increase between 2022 and 2050. Total Final Energy Consumption by Sector Transport. Continuing the gains from the Build, Build, Build (BBB) programs to Build Better More (BBM) programs further expand infrastructure development nationwide, with high-impact priority projects that boost inter-connectivity and support the rising momentum of economic activities and regional development. As such, the energy requirement of the transport sector grows by 2.7 percent and reaches 25.7 MTOE by 2050. It contributes an average share of 32.3 percent to TFEC across the planning horizon (Table 9). Vo l u m e 1 68 === pep-2023-2050-vol1-section-c-page-078.pdf === Table 9. Transport Final Energy Consumption, By Fuel (MTOE) Fuel Type Oil Products 2022 2030 2040 Levels % Shares Levels % Shares 11.79 95.67 15.68 95.44 Levels 20.49 2050 2022-2050 % Shares Levels % Shares AAGR (%)* Avg. % Shares 94.90 24.29 94.37 2.61 95.09 LPG (Auto-LPG) ** *** ** *** ** *** ** *** *** *** Aviation Gasoline 0.00 0.03 0.01 0.04 0.01 0.05 0.02 0.07 5.57 0.05 Gasoline 5.19 42.10 6.56 39.90 8.45 39.13 9.71 37.74 2.26 39.30 Jet Fuel 0.34 2.75 0.69 4.18 1.02 4.73 1.33 5.16 4.99 4.41 Diesel 5.94 48.17 8.12 49.41 10.74 49.76 13.00 50.51 2.84 49.75 Fuel Oil 0.32 2.62 0.31 1.90 0.27 1.23 0.23 0.89 -1.22 1.58 Biofuels 0.52 4.25 0.66 4.04 0.86 3.99 1.00 3.90 2.35 4.00 0.98 Biodiesel 0.12 0.95 0.16 0.98 0.21 0.98 0.26 1.00 2.85 Ethanol 0.41 3.30 0.50 3.06 0.65 3.01 0.75 2.90 2.20 3.02 Electricity 0.01 0.08 0.09 0.52 0.24 1.11 0.45 1.73 14.47 0.90 12.32 100 16.43 100 21.59 100 25.74 100 2.67 100 Total *Average annual growth rates (AAGR), **values less than 0.01 MTOE, ***percent less than 0.1 percent Energy utilization for road transport accounts for 89.0 percent share of the sector’s energy demand between 2022 and 2050 with the realization of key infrastructure flagship projects (IFPs) that provide upgraded roads, bridges, and urban mobility options.62 Strong domestic tourism and trade activities drive the 5.0 percent and 2.1 percent acceleration in air and maritime transport, respectively. As new and additional mass railway systems come online across the archipelago, rail transport demand expands by 4.8 percent each year. The transport sector relies heavily on oil products with an average share of 95.1 percent of its total energy demand between 2022 and 2050 (Figure 43). Rising disposable income, improved purchasing power and efficient transport network are factors that contribute to robust vehicles sales. These developments result in yearly hikes in the volume of gasoline and diesel demand of 2.3 and 2.8 percent, respectively, across the planning timeline. Gasoline contributes an average share of 39.3 percent, while diesel accounts for 49.8 percent share of the transport sector’s total energy demand. Consumption of fuel oil for inter-island maritime transport declines by 1.2 percent each year, while auto-LPG remains unpopular as its demand levels remain below 1.0 MTOE throughout the planning horizon. Figure 43. Transport Final Energy Consumption by Fuel (MTOE), 2000-2050 Cognizant of the efforts towards low carbon transitioning of the transport sector, the government pushes for the increased utilization of alternative fuels, such as biofuels and electricity. Sustaining the mandated blend of 2.0 percent biodiesel and 10.0 percent bioethanol from 2022 to 2050 moves the country’s aggregate biofuel demand towards 1.0 MTOE level in 2050, growing at 2.4 percent a year. Meanwhile, the CREVI sets forth the required policies for the commercial scale roll-out of EVs to achieve a 10.0 percent penetration rate by 2040 onwards under its Business-as-Usual (BAU) scenario, including putting up of necessary infrastructure for EV Charging Stations (EVCS). These developments, along with the operation of new rail systems across the country, propels the transport sector’s 62 69 List of Physical Connectivity Infrastructure Flagship Projects (IFPs) https://neda.gov.ph/infrastructure-flagship-projects/ Philippine Energy Plan === pep-2023-2050-vol1-section-c-page-079.pdf === electricity demand to reach 446.2 thousand tons of oil equivalent (kTOE) by 2050 from 10.1 kTOE in 2022, which translates to yearly increases of 14.5 percent. Households. Both the PDP2023-2028 and AmBisyon Natin 2040 blueprints envision the country’s transition from a low-middle to upper-middle income economy through inclusive and sustainable economic growth and accelerated human capital development for better job opportunities. These social gains translate to increased household income that encourages greater preference for modern energy sources. As household energy consumption increases by 2.5 percent and registers 20.7 MTOE level by 2050 (Figure 44), the combined share of electricity and LPG stands at 85.4 percent vis-à-vis 14.5 percent aggregate share of traditional biomass and kerosene during the same period. (from left to right): Perspectives of the Bataan-Cavite Interlink Bridge and New Manila International Airport (NMIA) in Bulacan; Portion of the Metro Manila Subway Project in Valenzuela (July 2023) and the Port of Calapan at Oriental Mindoro [Sources: ABS-CBN News, Department of Transportation (DOTr), Philippine Ports Authority (PPA)] Figure 44. Household Final Energy Consumption by Fuel (MTOE), 2000-2050 Household electricity demand posts a yearly increase of 4.6 percent, which translates to more than three-fold growth from 2022 level of 3.0 MTOE to 10.7 MTOE in 2050. With the achievement of the DOE’s target of 100 percent household electrification by 2028 and the emerging prominence of “future ready” smart homes and cities as innovative, convenient, and eco-friendly living solutions, electricity takes on the role of primary fuel for most household activities. Significant gains among the number of prosumer households that are availing themselves of the government’s net-metering program, including the shift to solar rooftop installations, ensure better access to affordable, reliable, sustainable, and modern energy. Access to clean and modern fuels (electricity and LPG) improves as households transition from low- to uppermiddle income groups. The households’ LPG requirement rises six (6) times its 2022 level of 1.3 MTOE to 7.1 MTOE in 2050 (Table 10). The passage of Republic Act (RA) 11592 or the LPG Industry Regulation Act, which aims to regulate the domestic LPG gas industry and ensure consumer protection against malpractices, induces the 6.3 percent growth in the fuel’s utilization, primarily for cooking and heating purposes. Smart living spaces and solar PV installations for households (left): Twin Oaks Place in Greenfield District in Mandaluyong City touted as the “first future-ready” home in the country; (right) solar net-metered community at Imperial Homes Corp.’s Via Verde Trece Martires development in Cavite. [Sources: Greenfield Development Corporation, Manila Standard] Traditional biomass continues to be an important fuel among households and accounts for a 14.6 percent share in the demand mix for 2050 due to the practice of using multiple stove-and-fuel combinations called “fuel stacking”. However, with shift towards modern and clean fuels such as electricity and LPG, traditional biomass consumption decreases by 2.4 percent between 2022 and 2050 and levels drop significantly from 6.0 MTOE in 2022 to 3.0 MTOE by the end of the planning horizon. Kerosene exhibits the same declining trend as its utilization contracts by 6.3 percent per year. Vo l u m e 1 70 === pep-2023-2050-vol1-section-c-page-080.pdf === Table 10. Household Final Energy Consumption, By Fuel (MTOE) Fuel Type 2022 2030 2040 2050 2022-2050 Levels % Shares Levels % Shares Levels % Shares Levels % Shares AAGR (%) * Avg.%Shares Oil Products 1.31 12.72 1.97 16.06 3.76 23.52 7.07 34.07 6.20 21.20 LPG 1.27 12.27 1.94 15.83 3.75 23.42 7.06 34.03 6.33 21.03 Kerosene 0.05 0.44 0.03 0.23 0.02 0.09 0.01 0.04 -6.34 0.17 Electricity 3.04 29.46 4.18 34.13 6.81 42.56 10.65 51.33 4.58 39.39 Biomass 5.96 57.82 6.10 49.81 5.43 33.92 3.03 14.60 -2.39 39.41 10.31 100 12.24 100 16.00 100 20.75 100 2.53 100 Total *Average annual growth rates (AAGR) Key Growth Sectors: Industry, Services and Agriculture The country’s robust economic growth momentum until 2050 hinges on the strong expansion of key growth sectors – industry, services, and agriculture. In addition to continuing policy reforms, the Regional Comprehensive Economic Partnership (RCEP), which opens a gateway of opportunities for increased market access, enhanced investment opportunities, and strengthened regional supply chains, presents an opportunity for the country to leverage its competitive advantages in priority sectors, while fostering innovation and technological advancements. These developments drive the uptrend in the energy requirement of the industry, services and agriculture sectors throughout the planning period. (top) Factory equipment for battery production and (bottom) software for energy management are among the technologies envisioned under the industry 4.0. (Source: Bosch Media Service) Industry. Consistent with its thrust for industrialization under Industry 4.0, the government seeks to revitalize local industries by encouraging innovations and technology adoption (artificial intelligence (AI), smart manufacturing, 63 etc.), as well as businessmatching and servification or embedding services into industries to add greater value to local products. These goals necessitate the 4.9 percent annual rate of expansion in the aggregate energy requirement of the industry sector – the fastest among end-use economic sectors throughout the planning period (Figure 45). Electricity plays an important role in transitioning to Fourth Industrial Revolution (FIRe) or Industry 4.0 and accounts for more than half of Industry’s energy requirement by 2050. 63 71 Figure 45. Industry Final Energy Consumption by Fuel (MTOE), 2000-2050 As the sector’s demand level rises to 27.4 MTOE in 2050, it contributes close to one-third (30.3 percent) of TFEC during the year. With all industries using electricity to fuel their production processes, its aggregate utilization expands sixfold from 2022 level of 2.5 MTOE to 14.7 MTOE by 2050 and translates to a 6.6 percent annual rate of increase. Electricity plays an important role in NEDA. (2023). PDP2023-2028 briefer. Philippine Development Plan. Retrieved September 19, 2023, from https://pdp.neda.gov.ph/wpcontent/uploads/2023/01/PDP-2023-2028-Briefer.pdf Philippine Energy Plan