Are we ready for our energy future?
My honest answer to that question in the headline is… you’ve got to be kidding. We aren’t even ready for our energy present, how can we be ready for our energy future?
The Department of Energy is not what it was in its inception and I say this not just because I was part of its early days. I just have the impression there aren’t enough people there who know what they are doing or if they do, they aren’t doing it or telling us about it.
These thoughts came to my mind as I struggled to keep myself awake in an early morning forum on the future of energy by a specialist from Shell’s head office in London. I was yawning as the DOE Usec, who is actually a very nice man who respected the work we did during our time, was delivering his opening remarks. Then he mentioned energy independence.
That triggered my adrenalin to flow. Did he really say energy independence? Does he know what energy resources we have? Maybe what they should focus on is energy security because that is one thing they can do something about.
Indeed, listening to Shell’s chief political analyst, Dr Cho-Oon Khong deliver his lecture on what they call The New Lens Scenario made me more anxious that we are not doing much to address our future energy security. They don’t have a Gary Makasiar and a Tony Anciano in DOE today to do the meticulous planning of the paths to take to secure our energy future.
I was sitting next to the DOE Usec and even he admitted the best energy plan we have had was the one Gary and Tony prepared just before EDSA. If the Cory administration followed it, we wouldn’t have had those economically disastrous blackouts in the late ‘80s and early ‘90s.
I won’t cover most of the presentation of Dr Cho in this column because it would seem almost irrelevant to our situation today. As I told the forum when my views were sought as a member of the panel of reactors, our energy problems are so existential, so here and now that the world of energy 50 years hence would be so beyond us.
The Shell presentation started with a description of an environment that was familiar to those of us who lived through the first world energy crisis. That crisis forced us to draft our very first energy plans in the 70s.
“The current business environment bears many similarities to that of the early 1970s. The world has entered a lengthy period of macro-economic volatility, in the wake of the financial crisis of 2007-8.
“And, just like 40 years ago, economic uncertainty has triggered political upheavals: the crisis has accelerated the shift in economic and political influence from West to East. Businesses and policymakers must also contend with new uncertainties.”
In our case, the Yom Kippur War triggered an Arab oil embargo that affected us to the extent of the reduction in offtake imposed on our multinational oil suppliers. Shell, Caltex, Esso and Mobil in turn applied commensurate reduction in supply to us, the equal misery formula.
In drafting our energy plan, we had to undertake our first ever inventory of what energy resources we had within the country. We also had to use diplomacy to secure oil supply via government-to-government agreements.
Shell’s attempt to view Energy Scenarios to 2050 brings us to a still very troubled world and how energy supply plays a geopolitical role. Shell sees two distinct scenarios in the decades ahead: “Mountains” and “Oceans”.
In “Mountains”, Shell sees “weaker economic growth slows the pace of global energy demand – relieving some of the pressure on the world’s energy resources. Another critical feature of “Mountains” is that governments implement firm, proactive and co-ordinated energy policies…
“New energy resources are unlocked, as governments introduce policy frameworks that incentivize large-scale supply investment. This further eases the pressure on the world’s energy resources.”
In “Oceans”, Shell sees global energy demand surging on the back of strong growth in the emerging economies, rising by up to 80% by 2050. “But, in contrast to “Mountains”, governments lack the stability or authority to introduce far-reaching energy policies. And there’s weaker proactive international co-operation to address resource and environmental stresses.
“So high energy prices and civil society, rather than policies, shape the evolution of the global energy system for several decades. Prices remain high because energy supplies struggle to keep pace with demand. One reason is because governments fail to introduce policy frameworks that promote the development of new resources.”
I don’t know about “mountains” and “oceans” because I see elements of both scenarios existing today. There are threats and opportunities that go with them and it is up to us how to navigate these troubled waters. I am also afraid about giving bureaucrats presentations on long term scenarios because it distracts them from the more pressing issues they can’t or do not want to address today.
It is, for instance, purely academic to talk about how renewable energy is expected to provide a good share of the world’s electricity production mix in 2015 when we should be worried about potential blackouts not just in Mindanao but also in Luzon between now and then if not earlier.
Government has not given a clue how it will motivate the private sector to invest in power plants that must be put on line soon to prevent power shortages. Under Epira, government can no longer build power plants. Or, how safe is it to have the State Grid of China in charge of the technical aspects of our national power grid? We have not been told what really happened when we had our last Luzon Grid failure.
It was interesting to learn from the Shell presentation that natural gas will be a major source of energy in our future. But that should also get us worried that Malampaya gas is only good up to 2023, or maybe up to 2030, if the step out development proves positive.
The next big source of natural gas for us is at the Recto Bank. But unless we go into some agreement with China that puts the sovereignty issue on the back burner, that’s inaccessible.
Of course we can go and import natural gas, but we have neglected to build the infrastructure to receive and distribute natural gas. The only effort to introduce the use of compressed natural gas (CNG) to power land transportation was stillborn. The buses arrived, but not the gas. Shell was part of the problem in that one.
Geothermal? Of course we have a lot of geothermal out there but a good part of the reserves available for commercial development are already being used. There may theoretically be an equivalent amount still untapped, but these may not be as significant or as suitable for production for various reasons.
Coal is our immediate answer if we want to avoid the blackouts specially at the Luzon Grid. But environmentalists are not convinced government has the regulatory capacity to make sure our Clean Air Act is not violated by coal plants.
Nuclear is an option, but we have a strong emotional feeling against nuclear energy. I have no real problems even with using the now mothballed nuclear plant in Bataan, but can government properly regulate it? Fukushima is a failure of regulation more than anything. Our government is scared to even bring up nuclear energy in any discussion.
We are too dependent on the use of petroleum products for land, air and water transport. If we developed our train system powered by electricity, we can insulate a good part of our transport needs from external energy factors. But our train system, commuter and long haul, are in shambles.
Government must show more leadership in responding to the current needs of the energy sector before it can dream how our energy future looks like. I like how Shell asked “How can I prepare for, or even shape, the dramatic developments in the global energy system that will emerge in the coming years?” I agree that this should be a concern of every citizen.
Frankly, I am not sure our bureaucracy is up to the challenge of the present, much less the future of energy. They can’t even deal with a simple enforcement problem: smuggled oil. How can they be expected to make intelligent choices about policies to help make the alternative scenario most likely to benefit the country happen?
But thank you Shell, for a very enlightening morning. It was worth my spending over an hour in rush hour traffic to get to the venue, 45 minutes of which just trying to get to Makati from Bonifacio Global City.
Management
From Ruth Marbibi.
It’s not whether you win or lose, but how you place the blame.
Boo Chanco’s e-mail address is bchanco@gmail.com. Follow him on Twitter @boochanco
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