KUALA LUMPUR, Malaysia – Is the Philippines betting on the wrong horse with liquefied natural gas (LNG) expansion?
As the world shifts towards renewable sources of energy, the Philippines is eyeing to become a major LNG player in the Asia-Pacific region.
This is not to say that the push towards renewables is lacking. On the contrary, there are many renewable projects in the pipeline. But alongside this is the increase in LNG projects with top conglomerates trying their hand in the game.
Touted by industry players as a bridge fuel or transition fuel, LNG is criticized by environmental advocates and think tanks as just another dirty fossil fuel that hampers the path to cleaner energy. Energy Secretary Raphael Lotilla himself recognizes the nature of this fuel.
“Natural gas is methane, so therefore it will not be classified in any way as renewable energy,” said Lotilla during the budget hearing of the department at the House of Representatives in August. “That’s conventional fuel. It’s fossil fuel.”
We cannot completely rely on renewables, said Lotilla, because supply is “constantly changing.”
“We want to be frank with our people that at this time, we still need fossil fuels to balance the variable renewable energy.”
Recent months have seen the gradual materialization of this goal, marked by the alliance formed by three powerful Filipino tycoons in creating the largest LNG facility in the country pegged at $3.3 billion. The feared depletion of the Malampaya gas field is pushing the government to import LNG more.
In the Natural Gas Development Plan, government predicts demand for natural gas will increase four times from 2020 to 2040. In one of the Department of Energy’s (DOE) scenarios, natural gas will take over coal as the major fuel for power generation by 2040, from 19.2% in 2020 to 40.3% by 2040.
In the scenario where renewable sources are prioritized, natural gas comes second, taking over one-fourth of the energy mix.
Whichever way the wind blows, natural gas is set to occupy a big chunk of the country’s energy mix in the near future.
The Philippines’ energy mix in 2022 consisted of coal (31%), natural gas (4.2%), renewable energy (32.7%), and oil-based solutions (32.2%), according to the US International Trade Administration.
Meanwhile, there’s a decline in LNG demand
This push for LNG, however, runs counter to what’s happening in other parts of the world.
The European Union (EU), the top import market for LNG, is seeing a decline in LNG demand.
What’s causing this? Aside from higher prices triggered by the Russian-Ukraine crisis, the region is focusing on meeting its “ambitious decarbonization goals,” according to a 2024 report of the EU Agency for the Cooperation of Energy Regulators.
The EU is not alone in this trend. Asian countries are also experiencing a decline in domestic demand.
This year, South Korea scrapped big ticket LNG terminal projects due to an environment that analysts described as “weakening demand, overinvestment risks.”
Building LNG terminals is incompatible with long-term climate goals. The share of LNG-fired power generation will decrease from 2023’s 26.8% to 11.1% by 2040, an analysis from the Institute for Energy Economics and Financial Analysis said.
If a country like South Korea is looking at a cleaner future, then it would eventually have to abandon LNG infrastructure which generates dirty fossil gas.
Japan, which used to be the top LNG importer in Asia (in close competition with China and South Korea), now sees a rapid fall in domestic LNG demand as nuclear, wind, and solar power generation increases.
So, why are we turning to LNG?
If this is the trend, then why is the Philippines pursuing LNG?
It could be attributed to two things: developed countries offloading their surplus LNG supply in Southeast Asia, and what the Philippine government perceives as the need to diversify sources of power.
“As the Korea and Japan gas demand [are] expected to go down, now they are trying to build their influence in the Southeast Asian market,” said Dongjae Oh of Seoul-based think tank Solutions for Our Climate (SFOC), in an energy conference on September 3.
As developed nations’ demand for LNG falls, they’re looking to resell excess supply in Asia.
This is what’s happening with Japan, which has now set its sights on South and Southeast Asian countries.
How does this work? LNG contracts can be flexible when it comes to destination. Japanese LNG buyers could divert the supply overseas.
As an example of these efforts in opening the LNG market in Southeast Asia, Tokyo-based electric utility company JERA signed an agreement in 2023 to provide support for the Philippines’ full-scale adoption of LNG.
Rich nations pursue a cleaner future and pass down technology they no longer want to poorer countries. As they say, one man’s trash is another man’s treasure.
“It’s a classic case of post-colonialism,” Gerry Arances, executive director of Center for Energy, Ecology, and Development (CEED). CEED, along with a coalition of other groups, has often referred to the promotion of LNG in the country as a “detour.”
“Old technologies that exacerbate further climate change are being peddled [in developing countries]– which can no longer be used in the developed countries,” he said.
Countries like Japan, the United States, said Arances, have business interests and they exercise leverage too as strategic allies of the Philippines.
At risk: environment and communities
Five gas-fired power plants and two LNG terminals are located in Batangas, a hundred kilometers south of the capital.
In its vicinity is the Verde Island Passage (VIP), dubbed as the “epicenter of marine shorefish biodiversity.”
Environmental advocates have consistently warned and protested the buildup of LNG facilities in the area, saying it would disrupt marine life, endanger resources with the waste generated, and affect fisherfolk’s livelihood.
These concerns are not lost on corporations themselves that had entered into a memorandum of understanding with DOE and the Department of Environment and Natural Resources to pool resources and protect the waterway. (READ: Tycoons’ massive LNG facility and the Verde Island Passage: What’s it all about?)
But if the companies involved were sincere in helping, they should stop fossil gas expansion altogether, environmental groups pointed out.
“These three conglomerates can show their sincerity in protecting the VIP by stopping their fossil gas expansion plans, prioritizing instead the development of clean energy from renewables and helping contribute to building the resilience of marine and coastal biodiversity and communities,” Arances said back in May. – Rappler.com