Crafting a sustainable energy program for the Philippines
by Roberto Verzola, Philippine Greens
I have been asked by the Freedom from Debt Coalition (FDC) to help formulate an alternative energy program for groups critical of the government’s current energy program. Unfortunately, time was short for such an ambitious project, which really requires at least a year, probably more, of hard work.
So I will instead share with you several elements which I consider essential for a sustainable energy program:
1.reliance on energy flows (income) rather than stocks (capital);
2.energy efficiency: matching the working temperatures of energy sources (supply-side) and end-uses (demand-side);
3.more attention to small-scale, decentralized vs. large-scale, centralized systems;
4.full-cost accounting that internalizes social, health, environmental and other costs;
6.solar energy and the hydrogen economy; and
7.changing mindsets: living within our means.
Many of the ideas raised here have been covered in detail by several authors, the most important of whom are Amory Lovins (Soft Energy Paths and other works), Barry Commoner (Poverty of Power and other works) and Herman Daly (Steady State Economics and other works). They are essential reading for those who want to help draft an alternative energy program.
Energy flows vs. stocks
The analogous economic concepts for energy flows and stocks are income and capital, which you are probably more familiar with. It is criminal, as you know, for the national leadership to be selling off our assets – hard-earned capital accumulated by generations of the country’s leaders – and using the proceeds for the day-to-day expenses of the government. Sooner or later, we will obviously run out of assets to sell. Even a sidewalk vendor knows that for her life to get better, she must live on her income, however limited it might be, preserve her starting capital and engage in gradual capital accumulation, to lay the foundation for improved income in the future.
We are faced with a similar problem in the energy sector: we currently rely heavily on energy stocks (fossil fuels) which have been accumulated over millions of years. Once used up, they will be gone forever. On the other hand, the government has given little attention towards developing the energy flows — principally solar. wind, small-scale hydro and biomass — that can provide the country with a potentially endless source of power and energy. These constant energy flows offer us sufficient renewable resources for our energy requirements.
A sustainable energy program must definitely shift its emphasis from depletable energy stocks to renewable energy flows.
Energy efficiency: matching the working temperatures of sources and end-uses
Energy efficiency involves not only improvements in the efficiency of energy sources, the efficiency of transmission and distribution systems, or the efficiency of demand-side equipment. It also involves matching the working temperatures of sources and end-uses.
The working temperature of an energy source or end-use is an indication of its energy quality. The higher the temperature, the higher the quality. Why is a higher temperature considered higher quality? Because more useful work can be extracted from higher temperatures than from lower temperatures. More useful work can be extracted from a 1,000-degree furnace than from 50-degree warm water. The energy from a furnace has higher quality because it has more potential energy.
It is important to determine the energy quality of various energy sources and end-uses, because energy is used most efficiently when the temperature provided by the energy source is close to the temperature required by the end-use. In such a case, little energy is actually used to provide the service represented by the end-use. On the other hand, when the working temperatures of the energy source and the end-use are highly mismatched (such as using a 5,000-degree nuclear reaction to provide 50-degree warm water for bathing or even 100-degree boiling water for cooking), then much of the energy from the source is wasted. Not only is it wasted, the waste heat is also considered an environmental pollutant.
A sustainable energy program needs to determine the quality of energy required by each of the thousands of end-uses we put energy to, and to match with the end-use the energy source tapped to meet a particular energy service. This way, we not only improve the efficiency of our energy utilization, but we also reduce the overall cost of energy, a benefit that most of us will surely welcome, if the cost savings are reflected in terms of lower prices.
A research opportunity awaits groups concerned with drafting a sustainable energy program: very few such end-use studies have been done, and fewer still for the common energy end-uses in developing countries. So today, much of the energy we use is consumed inefficiently, because of widespread mismatches in the energy quality of our energy sources and end-uses. We end up paying for this inefficiency because energy companies obviously pass on to consumers the cost of all those heat being wasted due to the mismatch.
Large-scale, centralized vs. small-scale, decentralized systems
Is there anything inherently wrong with large-scale, centralized systems? For some of us, at least, there is. Highly centralized energy systems dynamically interact in mutually supportive ways with highly centralized economic and political systems. Those who control such highly centralized systems enjoy disproportionate economic and political power, even under societies that are nominally democratic. The nature of the technology itself dictates highly-centralized operations from the time the nuclear fuel is mined and purified to the time the nuclear wastes are disposed, due to several reasons: 1) the complexity of nuclear power plants, 2) the potential for nuclear accidents to cause widespread and long-term damage, and 3) inseparability of nuclear power with issues involving nuclear proliferation and nuclear terrorism, . No wonder the nuclear industry is known for its authoritarian, highly-secretive methods.
Small-scale decentralized energy systems, on the other hand, are more consistent with the ideals, principles and practices of democracy. The sun’s rays, the wind and the rain are accessible to all, rich or poor, city or country. Every household can potentially extract energy from them and generate power for household use. Even if the hi-tech requirements of photovoltaic manufacturing may require some medium- to large-scale facilities, the photovoltaic modules themselves may be used in small-scale facilities for decentralized deployment.
Lovins gives some of the advantages and benefits of small-scale systems: “1) virtual elimination of the capital costs, operation and maintenance costs, and losses of the distribution infrastructure; 2) elimination of direct diseconomies of large scale, such as the increased need for spinning reserve on electrical grids; 3) major reductions in indirect diseconomies of large scale that arise from the long lead times of large systems; and 4) scope for greatly reducing capital cost by mass production if desired.”
The best example, and perhaps a useful model, of decentralized energy extraction is nature’s way of doing it. Nature’s miniature solar power plant is chlorophyll, which is present in the leaves of most plants. Note how a bare piece of rock or plot of soil is gradually colonized by chlorophyll-bearing plants, from lichens to mosses, to grasses, to shrubs, to trees, to forest – a highly-decentralized bottom-up process of increasingly full utilization of the available energy from sunlight. This energy, stored in plant matter, fuels the rest of the living world, including human societies. Even the non-renewable fuels from fossils were once plants storing up the sun’s energy in their leaves and bodies.
The dynamics between centralized and decentralized systems is also played out in the interconnection of power systems into a single nationwide –or even ASEAN-wide – grid. Proponents of a unified grid claim that interconnection will improve system efficiency and reduce wastage. Putting all energy consumers into a single grid also paves the way for larger and larger power plants to be set up.
As Lovins pointed out, a unified grid brings in new types of inefficiencies. By encouraging consumption far away from the source, it leads to higher transmission line losses. By encouraging larger and larger power plants, it then requires larger “spinning reserves” (stand-by plants than can take over at a moment’s notice if a large power plant goes down). By encouraging dependence on what seems to be a highly reliable system, it also increases the cost of catastrophic failure.
“Interconnection” is the expression in the energy sector of the corporate demand for the “free movement of capital”. It is an aspect of globalization, the trend to place greater and greater sections of the world under corporate rule.
A sustainable energy program must be just and equitable. It cannot allow the present practice of energy companies to externalize their costs and pass them on to host communities, the public or the environment. The true social, health and environmental costs of various energy options must be fully accounted for, and either absorbed by the companies selling them or reflected in energy prices, to be absorbed by the consumers benefitting from their use.
Full-cost accounting is a very challenging requirement but it must be done. It is challenging because it can make companies and economies less competitive vis-a-vis those companies and economies that continue to externalize some of their costs and are therefore able to enjoy higher rates of profit or offer lower prices and therefore capture a bigger share of the market.
Mechanisms must be developed to balance the playing field and enable companies and economies who switch to full-cost accounting to remain competitive.
Normally, it goes without saying that energy planning should prioritize the least-cost options, especially under a regime of full-cost accounting where the various social, health and environmental costs are already accounted for in the price of energy.
Yet, incredibly, governments often show bizarre biases against least-cost options. The reason: corruption. It is the higher-cost options which promise higher commissions. This was the reason the price of the Bataan Nuclear Power Plant kept going up. It was in the interest of both the supplier and the government negotiators to increase the price. It meant higher profits for Westinghouse and higher commissions for Disini and Marcos. Corruption is also the reason why bureaucrats prefer large-scale energy projects to small-scale ones, even if lower-scale projects may offer lower costs and other benefits. Large-scale projects entail large-scale commissions; small-scale projects entail small-scale commissions, if at all.
Today, even without full-cost accounting, energy efficiency and conservation measures are often already the least-cost options for making more megawatts available to consumers. Yet, these measures do not get the higher priority. In many instances, wind power is already competitive to fossil fuels, yet the government continues to budget very little for wind power.
The government should institutionalize least-cost planning in energy. This requires an accurate and regularly-updated database of energy technologies and their capital, O&M, overhead, social, health, environmental and other costs. It is too bad if the government does not compile these information, but a sustainable energy program absolutely needs it. In the private sector, on the other hand, least-cost planning should be based on full-cost accounting, not on externalization of costs.
Solar energy and the hydrogen economy
In a general sense, solar energy also covers wind and rain, aside from solar heating. For this paper, only one example will be cited: the direct conversion of sunlight to electricity using photovoltaic (PV) technology.
As an argument against it, it is often said that sunlight is too diffused and spread out to make available high quality energy for our use. The high quality energy (i.e., high temperatures) available from fossil fuels and nuclear power, the argument goes, make them superior sources of energy compared to the sun.
As Commoner has pointed out, this is a false argument. Through properly designed collectors, sunlight (as well as water and wind) can be concentrated to attain the same working temperatures that fossil fuels and nuclear power attain. The diffused nature of sunlight is in fact an argument in its favor, because it makes solar power highly flexible, enabling it to provide varying quality levels of energy to suit the end-use.
Were it not for the institutional bias against solar energy, it would be a relatively cheap source of electricity today. PV cells are made of silicon, using the same materials and manufacturing processes used in electronic integrated circuits, those miniature components used in computers and consumer electronics. And the prices of these components are going down all of the time. Or more of them are being packed together at the same price.
Consider the LCD projector. Five years ago, they sold for as much as P250,000 per unit. Today (2007), you can buy one for P30,000. Computing power which would have cost you several hundred thousand to several million pesos a decade ago now cost only a few tens of thousands of pesos. Silicon is cheap (it is made from sand, but has to be extremely pure). Also, it is getting cheaper all the time. And PV cells are made of the same material.
Then why have PV prices not gone down and in some instances have even gone up? (We got a 75-watt PV system in the late 1990s for P27,000; today, I am being quoted P63,000 for an 80-watt system). The main reason: stagnant demand. Deeper reasons include the bias against the decentralized nature of the source, which makes it hard to monopolize or control.
If governments deployed PV units for street lighting, for instance, (where they could be competitive today), the major increase in demand will enable PV manufacturers to drop their prices quickly. This would stimulate more demand, leading to more price decreases. As PV units become more affordable, more people will use them. Eventually, PV units should become cheap enough to replace the GI sheets in our roofs.
It only takes political will from governments to bring cost of PV units down. The good news is that PV cells are now being manufactured locally. Imagine the possibilities of PV prices went down as much as LCD projectors did.
Farther into the future, the PV revolution would usher the transition from the present carbon-based economy to the hydrogen economy. This would come about when solar power became cheap enough to break down water into its components hydrogen and oxygen, which can then be conveniently stored and used in fuel cells to generate electricity or to power vehicles. The building blocks of such a hydrogen economy are now being developed in research centers and some of these are now in commercial production. This should give us confidence that a promising sustainable future awaits us if we hasten the transition to solar power.
While Denmark and a few other countries have shown that a society’s energy supply need not grow as fast as its GNP to attain a satisfactory standard of living, the truth remains, as Daly pointed out, that neither the economy nor its supply of energy can grow indefinitely.
No sustainable energy program can succeed in a society that continues to “live byond its means”. This profligate attitude is the dominant mindset today among our national leaders. The national deficit, the ballooning national debt, the selling of our national assets, and the wasteful lifestyles of top-ranking bureaucrats are all manifestations of this mindset. This mindset can be found even among the middle class and the poor, because it is fostered by corporate-controlled media that live on advertising and conspicuous consumption.
For an alternative energy program to be truly sustainable, a parallel effort to change mindsets must be conducted that will gradually instill the value of “living within our means” among our leaders and among the public. This can only be done by example. If our leaders show the way, the public will follow.
Living within our means suggests a slower growth rate. The change in mindset we need goes beyond this. Eventually, as Daly explained, only a steady-state economy can be sustainable. Such an economy can be attained if we learn the concept of “enough”. Speaking of values and mindsets, this is the most challenging change of all.
What else need to be done
A sustainable energy program should go beyond enumerating its essential components. The R&D requirements (some of which have been touched in this paper) must be met; the strategies for bringing about each component must be worked out; interrelationships between the components to enhance mutual support must be fleshed out; the sources of investment and financing must be identified; and a detailed plan of activities and budgetary allocations must be spelled out.
Much still need to be done, before a sustainable energy program can be developed for the Philippines. But do them, we must.
20 November 2007
[This paper was presented at the National Congress of the Freedom from Debt Coalition (FDC) on November 19-20, 2007.]