=== pep-2023-2050-vol3-section-b2-page-023.pdf === The energy sector GHG inventory follows the internationally agreed good practice guidance and methodologies, contained in the 2006 Intergovernmental Panel on Climate Change (IPCC) Guidelines for National GHG Inventories Volume 1 on General Guidance and Reporting, and Volume 2 on Energy. Emissions estimates are computed using the 2006 IPCC Inventory Software. Default emission factors from the 2006 IPCC Volume 2 are used to estimate the emissions. The DOE GHG Inventory Team calculates the Philippine energy sector’s GHG emissions using the overall national inventory of fuel supply or the Energy Balance Table (EBT). Building from the 2010 GHG inventory, the 2015 and 2020 GHG Inventories also examined and incorporated actual consumption data of additional subsectors to enhance the GHG emissions accounting and categorization. The DOE already submitted to the Climate Change Commission (CCC) as part of the NDC the 2015 and 2020 Energy Sector GHG Emission Inventories and Reports. The current initiative is applying the findings of the quality assurance conducted by the experts from the UNFCCC. The Energy Sector 2020 GHG Inventory Report will be incorporated in the validation of the NDC targets assessment, the preparation of the Third National Communication (TNC) and the Biennial Update Report and/or Biennial Transparency Report as required by the UNFCCC and the PA. Energy Sector’s Greenhouse Gas Inventory. The GHG inventory covers the emissions of CO2, CH4, and N2O from the various source categories of the energy sector. Following the 2006 IPCC Guidelines, the total GHG emission of the energy sector is calculated using two approaches, i.e., Reference Approach and Sectoral Approach. The Reference Approach adopted a topdown approach where emissions are estimated using aggregate data of the country’s primary energy supply, while the Sectoral Approach used a bottom-up approach where estimation is calculated using final energy consumption data, energy transformation, and fugitive-related data. Figures 11 and 12 show the 2015 and 2020 CO2 emissions by fuel type using the Reference Approach. The total CO2 emissions from the energy sector accounted for 123,144.96 gigagrams (Gg) of the total CO2 emissions, 56.2 percent or 69,264.13 Gg CO2 came from solid fuels, followed by 37.5 percent or 46,154.64 Gg CO2 came from liquid fuels, and 6.3 percent or 7,726.20 Gg CO2 came from gaseous fuels. Results of the Reference Approach showed the energy sector, including transport, emitted a total of 123,144.96 Gg CO2 in 2020. This reflects a 20.3 percent increase in CO2 emitted from fuel combustion from 2015 to 2020. Figure 10. Contribution of GHG Reduction and Avoidance per Scenario to Attain the NDC Targets Vo l u m e 3 16 === pep-2023-2050-vol3-section-b2-page-024.pdf === Figure 13, solid and gaseous fuels contributed the most to the increase in emissions from 1994 to 2020 which increased around 15 times during the 26-year period. Emissions from gaseous fuels increased with the use of natural gas for power generation, while emissions from solid fuels went up to about 14 times for the same period. Overall, emissions from all fuels increased by around 146.3 percent from 49,999.49 Gg CO2 to 123,144.96 Gg CO2. Figure 13. Historical Energy Sector Greenhouse Gas Emissions, by Gas As similarly exhibited in the Reference Approach, GHG emissions from 1994 to 2020 in the Sectoral Approach also increased by around 150.0 percent from 50,038 Gg CO2e to 129,285.59 Gg CO2e with CO2 increasing the most at 163.6 percent. The CH4 and N2O also increased significantly during the same period by 73.2 percent and 106.0 percent, respectively. Figure 14 shows the historical energy sector GHG emissions by sector. Figure 14. Historical Energy Sector Greenhouse Gas Emissions, by Sector Results of the Sectoral Approach showed the energy sector emitted a total of 129,285.59 Gg CO2e in 2020, showing a 21.8 percent increase from the total GHG emissions in 2015. CO2 continued to be the dominant GHG emitted by the sector, contributing more than 97.0 percent to the total GHG emissions in Table 6. The CH4 and N2O emissions in 2020 reached a total of 4,523 Gg CO2e. Table 6. Historical Energy Sector GHG Emissions (Gg CO2-e) Gas/Source 1994(a) 2000(b) 2010(c) 2015(d) 2020(e) Energy Industries 15,458 21,127 32,803 51,415 74,183 Manufacturing and Construction 8,980 9,015 11,887 13,233 10,275 Transport 15,801 25,792 23,725 30,722 28,896 Other Sectors 7,097 6,564 5,995 7,085 11,398 Fugitive Emissions - - 14 41 10 Sub-total (Energy Sector) 47,335 62,499 74,425 102,496 124,763 Sub-total (Energy Sector excluding Transport Sector) 31,534 36,707 50,700 71,774 95,867 Energy Industries 11 8 49 23 40 Manufacturing and Construction 170 40 55 112 355 Carbon Dioxide (CO2) Methane (CH4) 17 Philippine Energy Plan === pep-2023-2050-vol3-section-b2-page-025.pdf === Table Table 6. 6. Historical Historical Energy Energy Sector Sector GHG GHG Emissions Emissions (Gg (Gg CO2-e) CO2-e) Transport 45 73 125 50 46 Other Sectors 1,533 2,736 1,692 2,048 2,046 Fugitive Emissions 227 3,530 91 372 560 Sub-total (Energy Sector) 1,759 6,387 2,013 2,605 3,046 Sub-total (Energy Sector excluding Transport Sector) 1,714 6,314 1,888 2,555 3,000 Energy Industries 39 84 168 172 289 Manufacturing and Construction 347 88 95 148 453 Transport 42 73 332 477 490 Other Sectors 289 539 257 244 245 Fugitive Emissions - - 0 0 0 Sub-total (Energy Sector) 717 784 851 1,043 1,477 Sub-total (Energy Sector excluding Transport) 675 711 529 566 987 Total GHG Emissions (Energy Sector) 50,038 69,670 77,289 106,143 129,286 Total GHG Emissions (Energy Sector excluding Transport Sector) 33,923 43,732 53,117 74,895 99,854 Nitrous Oxide (N20) (a) Tracking Greenhouse Gases (A Guide for Country Inventories). Manila Observatory,1999. (b) Tracking Greenhouse Gases: An Inventory Manual. DENR, 2011. (c) Sectoral Inventory: Energy. EPPB, DOE, 2019. The 2010 GHG emission’s Gg CO2e was calculated using the Global Warming Potential (GWP) values of the 4th Assessment Report, 2014 (AR4) with 25 and 298 GWPs for CH4 and N2O, respectively. (d) The 2015 and 2020 GHG inventory was calculated using GWP values of AR5 with the 28 and 265 GWPs for CH4 and N2O, respectively. Figure 15 shows the energy sector emitted a total of 129,285.59 gigagrams carbon dioxide equivalent (GgCO2e) in 2020 broken down as follows: 124,762.46 Gg CO2, 108.80 Gg CH4, which is equivalent to 3,046.40 Gg CO2e. and 5.57 Gg N2O, which is equivalent to 1,476.73 Gg CO2e. Figure 15. Sectoral GHG Emission in the Energy Sector in 2020 Under the 2006 IPCC Guidelines, the sources of emissions in the energy sector are classified into three main categories, namely: 1. Fuel Combustion. This category covered GHG emissions from the combustion of fossil fuels such as coal, oil and oil products, and natural gas from four sources: (a) energy industries; (b) manufacturing industries and construction; (c) transport; and (d) other sectors. Vo l u m e 3 18 === pep-2023-2050-vol3-section-b2-page-026.pdf === Energy Industries comprise emissions from fuel combusted by the fuel extraction and energyproducing industries. The GHG emissions from this category include emissions from electricity generation, petroleum refining, and other energy industries, particularly from offshore oil and gas extraction, processing and upgrading of natural gas, and coal mining. In 2020, the GHG emissions from this category accounted for 74,512.26 GgCO2e representing 57.6 percent of the total GHG emissions from the energy sector. The bulk of the emissions were from electricity generation, which emitted 71,196.62 GgCO2e, comprising 95.6 percent of the total emissions from the energy industries. 1.b Manufacturing Industries and Construction cover the emissions from the combustion of fuels in industry, including combustion for the generation of electricity and heat for own use. The subcategories correspond to the International Standard Industrial Classification of all Economic Activities (ISIC). The manufacturing industries and construction emitted a total of 11,082.71 GgCO2e, accounting for 8.6 percent of the energy sector’s total GHG emissions. About a third of the total emissions came from the non-metallic minerals industry, which includes the cement industry. 1.c Transport includes emissions from domestic aviation, road transportation, railways, and domestic navigation. The total GHG emissions from the transport sector reached 29,431.20 GgCO2e, representing 22.8 percent of the energy sector’s total GHG emissions in 2020. The road transportation emitted 26,214.61 GgCO2e, accounting for 89.1 percent of the total emissions of this sector. The water-borne navigation followed next with 2,360.04 GgCO2e, equivalent to 8.0 percent share of the transport total emissions. 1.a 1.d Other Sectors cover GHG emissions from combustion activities, including combustion for the generation of electricity and heat for own use in the commercial, residential, and agricultural/ forestry/fishing sectors. In 2020, the GHG emissions from this category reached a total of 13,689.26 GgCO2e, making up 10.6 percent of the total GHG emissions from the energy sector. The commercial or institutional sector accounted for 7,603.11 GgCO2e, while the residential and agriculture/forestry/ fishing sectors accounted for 5,429.60 GgCO2e and 656.54 GgCO2e, respectively. 2. Fugitive Emissions. This category made up the remaining 0.44 percent of the energy sector emissions in 2020 at 570.16 Gg CO2e. The CH4 emission from coal mining and handling at 560.20 Gg CO2e largely contributed to the fugitive emissions. Flaring from oil extraction made up the remaining emissions at 9.95 Gg CO2e. The amount of flared and vented gas from natural gas extraction industry was encoded in the 2006 IPCC Inventory Software, which considered the amount invalid for being too small and thus, was removed from the calculation. 3. Carbon Dioxide Capture and Storage. The Carbon Capture and Storage (CCS) captures the CO2 that is emitted to the atmosphere and stores it underground or under the seabed. At present, there is no CCS in the country. Hence, this category is not calculated and included in the inventory report. Improvement in GHG inventory is needed particularly in data collection, archiving, and quality. Another area to be enhanced is using quality assurance and quality control (QA/QC) for the process of developing the GHG Inventory. Improvement on activity data and emission factors’ quality is the required priority for the development of GHG inventory, especially in key category sectors where application of higher tier approach is expected. In the energy sector, the focus is on the following: (1) data collection systems; (2) capacity building to upgrade the quality of activity data required; and, (3) development of emission factors for oil and gas, coal, and electricity grid. 19 Philippine Energy Plan === pep-2023-2050-vol3-section-b2-page-027.pdf === National Grid Emission Factor Devised by the UNFCCC and as provided in Article 12 of the Kyoto Protocol, the Clean Development Mechanism (CDM) allows a country party to the UNFCCC, with an emission-reduction or emissionlimitation commitment under the Protocol, to implement an emission-reduction project in developing countries. This Mechanism provides Annex I Parties (industrialized countries and transition economy countries) an additional option to meet emission limitation and reduction targets through certified emission reduction (CER) credits earned from the projects. One CER credit is equivalent to one ton of CO2 (tCO2). In return, the Non-Annex I Parties are assisted in achieving sustainable development by putting up low-carbon technologies and systems in core sectors. EO 320 dated 25 June 2004 designated the DENR as the National Authority for CDM and the DOE to take the lead role in the evaluation of energy related CDM projects. The DOE Department Order (DO) 2011-08-0009 recognizes the National Grid Emission Factor (NGEF) as the CDM reference for energy-related projects and describes the NGEF as the per grid standard amount of GHG emitted related to the activities performed on a particular grid. The NGEF data/information facilitates the processing and approval of energy related CDM projects and serves as the authoritative reference for project proponents, developers, validators, and verifiers. The NGEF serves as a benchmark in computing GHG reduction and equivalent CER credits associated with the grid-connected electricity generated from CDM projects. The NGEF computation includes: (1) identification of relevant electricity systems; (2) qualification for inclusion of offgrid power plants based on capacity; (3) selection of appropriate method to determine the operating margin (OM); (4) calculation of the resultant OM emission factor; (5) calculation of the build margin (BM) emission factor; and, (6) calculation of the combined margin (CM) emission factor. The methodology used by the DOE is in accordance with the tool to calculate the emission factor for an electricity system published by the UNFCCC.6 The following options for steps (2) and (3) are selected based on the respective characteristics of the Luzon-Visayas Grid and the Mindanao Grid. These options apply to both grids. • In step (2), only grid power plants are included in the calculation for both grids because the total capacity of off-grid power plants is less than 10.0 percent of the total capacity of grid power plants in the electricity system. • In step (3), since the low-cost/must-run resources constitute less than 50.0 percent of the total grid generation (excluding electricity generated by off-grid power plants) based on average of five (5) most recent years, simple OM approach will be used to calculate the operating margin emission factor. Table 7 shows the OM, BM, and CM emission factors for the Luzon-Visayas Grid and Mindanao Grid for the periods 2015-2017 and 2019-2021. The OM emission factor covers the group of existing power plants whose current electricity generation would be affected by the proposed CDM project activity. On the other hand, the BM emission factor covers the group of prospective power plants whose construction and future operation would be affected by the proposed CDM project activity. Whereas the CM emission factor is the weighted average of the OM and BM emission factors. Table 7. National Grid Emission Factors for the Luzon-Visayas Grid and Mindanao Grid for the Periods 2015-2017 and 2019-2021 Parameters Luzon-Visayas Mindanao 2015-2017 2019-2021 Difference 2015-2017 2019-2021 Difference 0.7122 0.6935 (0.01866) 0.77968 0.85223 0.07254 0.5979 0.7426 0.14475 0.80450 0.78237 (0.02212) Combined Margin Emission Factor (Wind and Solar), tCO2/MWh 0.6836 0.7058 0.02219 0.78589 0.83476 0.04888 Combined Margin Emission Factor (Other Projects), tCO2/MWh 0.6550 0.7181 0.12020 0.79209 0.81730 0.02521 Simple Operating Margin Emission Factor, tCO2/MWh Simple Operating Margin Emission Factor, tCO2/MWh Build Margin Emission Factor, tCO2/MWh Build Margin Emission Factor, tCO2/MWh Combined Margin Emission Factor, tCO2/MWh Source: DOE Power Statistics as of 2021 DOE National Grid Emission Factor (NGEF) 6 UN Climate Change, “Methodological tool: Tool to calculate the emission factor for an electricity system, Version 07.0.” UNFCCC, 31 August 2018, https://cdm.unfccc.int/methodologies/ PAmethodologies/tools/am-tool-07-v7.0.pdf. Vo l u m e 3 20 === pep-2023-2050-vol3-section-b2-page-028.pdf === As observed, the OM emission factor for the Luzon-Visayas Grid slightly decreased by 0.01866 tCO2/MWh from the 2015-2017 period to the 2019-2021 period, while the BM emission factor increased by 0.14475 tCO2/MWh, resulting in increase in the 2019-2021 CM emission factors to 0.7058 tCO2/MWh with wind and solar projects and 0.7181 tCO2/ MWh with other projects. For the Mindanao grid, the change in the emission factors is rather opposite with a slight increase of 0.07254 tCO2/ MWh in OM and a slight decrease of 0.02212 tCO2/MWh in BM. The 2019-2021 CM emission factors were 0.83476 tCO2/ MWh with wind and solar projects and 0.81730 tCO2/MWh with other projects. Lower emission factors are preferred as these indicate reduced GHG emissions per unit of energy produced and transmitted through the grid. In terms of CER credits, lower emission factors will mean less CER credits that can be earned from a CDM project given a fixed power generation capacity. Philippine Emissions Pathways Calculator The Philippine Emissions Pathways Calculator (PEPC) is a joint project of the DOE and the United Kingdom (UK) Department for Energy Security and Net Zero (DESNZ) formerly known as the Department for Business, Energy, and Industrial Strategy (BEIS). The tool is a free and open source, transparent, and interactive energy and emissions model that was developed in 2009 by the United Kingdom Department of Energy and Climate Change (DECC), now DESNZ, to help the UK Government plan its low-carbon transition in an evidence-based way. It allows users to explore future scenarios and their impacts and to create their own energy pathway to the year 2050 by testing different options for reducing GHG emissions while considering the trade-offs. This tool can be used to engage experts, policy makers, senior officials, politicians, and even the public on how the agriculture, waste, industrial process and product use (IPPU), transport, and forestry and other land use (FOLU), and energy (AWIT-FE) sectors’ GHG emissions could be reduced over time while showing the benefits and trade-offs of the different scenarios/possible pathways. This transparent and evidence-based approach will assist in improving future strategies of the Philippines and aid the policy experts and top decision makers in formulating consistent policies and in identifying appropriate sectoral programs and projects to promote low carbon development starting from the planning process. With its own version of this transparent, interactive energy and emissions model, the DOE aims to: 1. Improve long-term energy strategies; 2. Formulate consistent policies; 3. Identify appropriate sectoral programs and projects to promote low-carbon development starting from the planning process; 4. Support the Implementation and improvements of NDCs; 5. Assess the mitigation actions and targets; and 6. Increase engagement of senior officials, politicians, experts, academics, civil society organizations and the public in determining feasible and credible low-carbon pathways. The DOE has completed its task of building the initial version of the webtool and initiated focused work on the sectoral models of agriculture, waste, IPPU, transport, and forestry. Specifically, a comprehensive model was also developed with the assistance of local consultants. It captures the entire Philippine economy and includes all sectors in the National GHG Inventory. The PEPC includes the following: (1) energy demand, (2) energy supply, (3) transport, (4) agriculture (livestock, rice), (5) FOLU, (6) IPPU (cement and recycled aggregate concrete/RAC), and (7) waste and wastewater. The PEPC was completed and turned over to the DOE on 27 October 2023. The DOE, together with the UK Government, will continue to work with the CCC for the next phase of the project. The PEPC is envisioned to be adopted by the NDC-Technical Working Group as a tool which can support the implementation and improvements of the NDCs. 21 Philippine Energy Plan === pep-2023-2050-vol3-section-b2-page-029.pdf === International Commitments and Partnerships United Nations Framework Convention on Climate Change. The UNFCCC was adopted in 1992 as an intergovernmental treaty and international political response to combat dangerous human interference with the climate system and sets out a framework for action aimed at stabilizing atmospheric concentrations of GHG to avoid “dangerous anthropogenic interference” with the climate system. The Convention, which entered into force on 21 March 1994, has 198 parties. The Philippines is required to submit the following reports to the UNFCCC, namely: (1) National Communication (NC), (2) Biennial Update Report (BUR), and (3) Biennial Transparency Reports (BTR). (1) The NC is a report that each Party to the Convention prepares periodically in accordance with the guidelines developed and adopted by the COP. Specifically, it is a commitment of each Party (in accordance with Article 12, paragraph 1 of the Convention) to provide the following elements of information, as set out in Article 4, paragraph 1 of the Convention such as: (i) National Greenhouse Gas Inventory; ii) Vulnerability and Adaptation; iii) Mitigation; iv) Technology Transfer, Research and Systematic Observation; v) Education, Training, Public Awareness and Information, Networking and Capacity-Building; and vi) Compilation of National Communication and Integration. (2) Like the NC, the Annex 1 and non-Annex 1 Parties to the UNFCCC are required to provide a report on updates of the information presented in the NC through BUR in accordance with UNFCCC COP Decisions 1/CP.16, Decision 2/CP.17, and Annex III of Decision 2/CP.17. The initial BUR must be submitted by December 2014, or in accordance with the Country Party's capability or degree of support, and then every two years as a summary of their NC or as a stand-alone report after that. The submission of the last BUR is in 2024 per UNFCCC COP Decision 1/CP.21, paragraph 98, as BUR will be superseded by a BTR in line with the Enhanced Transparency Framework (ETF) of PA. (3) The BTR is a comprehensive report from all Parties to the UNFCCC on the implementation of the PA, which must be submitted every two years starting in 2024. It shall be submitted by all Parties, and thus shall have common reporting requirements, templates, and timeframes with flexibility considerations for developing country Parties. On the other hand, the NAP outlines adaptation actions, projects, and programs per UNFCCC Decision 1/CP.16 to be prepared by least developed countries and developing countries. Under the Cancun Adaptation Framework (CAF), Parties are invited to plan, prioritize, and implement adaptation actions, projects, and programs with a view of enhancing adaptation actions considering their common but differentiated responsibilities and respective capabilities, and specific national and regional development priorities, objectives, and circumstances. Pursuant to the mandates under the Climate Change Act, the CCC is leading and coordinating the development, finalization, and submission of national reports to the UNFCCC. The DOE, as the lead agency for the energy sector, is responsible for conducting, documenting, reporting, archiving, and monitoring of the energy sector GHG inventory. Likewise, the DOE is responsible for complying with and submitting energy sector reports in compliance with the requirements of the CCC in the submission of our National Reports to the UNFCCC. Specifically, the DOE has been in constant coordination with the CCC in the submission of our inputs to the NDCs and the Energy Sector GHG Inventory Reports, BURs and NAPs, including the NCCAP. Vo l u m e 3 22 === pep-2023-2050-vol3-section-b2-page-030.pdf === Conference of Parties. The COP is an annual event serving as the highest decision-making body of the UNFCCC. The COP meetings provide a forum for countries, international organizations, civil society, and other stakeholders to exchange ideas and strategies for addressing climate change and promoting sustainable development. Each year, the COP’s participants assess progress in climate change and negotiate and implement new obligations for governments to reduce their GHG emissions. During the COP meetings, parties discuss and negotiate various issues, including adaptation, mitigation, finance, and technology transfer, and work to reach agreements on multiple aspects of the mission to tame climate change. The DOE has also been in continuous partnership with the CCC in actively engaging in relevant UNFCCC negotiations such as the meeting of the COP and UNFCCC’s Subsidiary Body for Implementation (SBI) and Subsidiary Body for Scientific and Technological Advice (SBSTA) intersessional meetings. The COP27, hosted by the Arab Republic of Egypt, was held in November 2022. It focused on the negotiation issues and decision areas on Mitigation, Adaptation, Loss and Damage, Climate Finance, Capacity Building, Technology Development and Transfer, Global Stocktake, Gender and Climate Action, among others. The energy sector plays a vital role in providing technical and expert views on what climate change mitigation, adaptation, and disaster risk reduction pathways the country should take. The DOE’s participation in UNFCCC’s meetings is a continuing task to follow and to work on the discussions on the abovementioned workstreams. The DOE actively participated in COP28 held in Dubai, United Arab Emirates on 30 November -13 December 2023, as well as related meetings/conference/dialogues as a member of the Philippine Delegation. The energy sector has long been identified as part of the climate problem and the solution. Thus, the agreed decisions during the UNFCCC negotiations will have a great impact on the energy sector as the current trend on global climate crises solutions goes along the way of the just energy transition. In addition, looking at the energy sector allows us to examine the concrete impacts that international climate law instruments can have on national and local levels of action and decision-making. Kyoto Protocol. Under the UNFCCC, the Kyoto Protocol was adopted on 11 December 1997 and entered into force on 16 February 2005 as the first legally binding climate treaty. Currently, it has 192 Parties, and requires industrialized countries and economies in transition to limit and reduce GHG emissions in accordance with agreed individual targets. Further, the UNFCCC requires those countries to report their PAMs on mitigation periodically. The Kyoto Protocol is based on the principles and provisions of the Convention and follows its annexbased structure. It only binds developed countries and places a heavier burden on them under the principle of “common but differentiated responsibility and respective capabilities,” because it recognizes that they are largely responsible for the current high levels of GHG emissions in the atmosphere. During the first commitment period, 37 industrialized countries and economies were in transition and the European Community committed to reduce GHG emissions to an average of 5.0 percent against 1990 levels. On the other hand, during the second commitment period, Parties committed to reduce GHG emissions by at least 18.0 percent below 1990 levels in the eight-year period from 2013 to 2020. One important element of the Kyoto Protocol was the establishment of flexible market mechanisms, which are based on the trade of emissions permits. Likewise, it also offered an additional means to meet their targets by way of three market-based mechanisms – (1) International Emissions Trading, (2) CDM, and (3) Joint implementation. Paris Agreement. Under the UNFCCC, the PA, a new legally binding framework for an internationally coordinated effort to tackle climate change, was signed and adopted by 196 UN member states at the COP 21 on 12 December 2015 and entered into force on 4 November 2016. The PA requires all countries to submit NDCs and review the aggregate progress on mitigation, adaptation, and means of implementation every five years through a Global Stocktake (GST). Aside from limiting the global average temperature increase, the PA also aims to increase Parties’ ability to adapt to the adverse impacts of climate change and make financial flows consistent with a pathway towards low-GHG emissions and climate-resilient development. 23 Philippine Energy Plan