Philippines Embarks on a Comprehensive Energy Transition

Strategic Insights -

As the government aims to power all government buildings with solar energy, powering over a million households with solar home systems, and streamlining the approval process of the Net Metering Program, the country is witnessing significant developments in its energy transition. The infrastructure is evolving, with new technologies emerging, and the government is implementing policies to support the shift towards a more sustainable energy mix.

Key Takeaways:

  • The Philippine government is working on the Government Energy Management Program to improve energy efficiency in public buildings and is incentivizing private actors to do the same through programs like Net Metering and RCOA.
  • The use of LED lights, inverter motor-driven air conditioners, and refrigerators in individual homes can help decrease each family's energy footprint, with 80% of households in the Philippines having adopted LED lighting.
  • The transport sector is gradually shifting towards electrification, with the share of electric vehicles (EVs) in all car sales increasing globally from 2% in 2018 to 14% in 2022, 18% in 2023, and 20% in 2024, according to the IEA.
  • The availability of charging points for EVs remains a challenge, particularly in developing countries. The proportion of EVs in total car sales in the Philippines is only 4% in 2024 and projected at 7% in 2025.
  • The industry pillar is also transitioning, with the share of renewable energy in global electricity generation growth rising from 23.5% in 2003-2007 to 81.1% in 2024, as recorded by the IEA.
  • The power sector is leading the decarbonization effort, with renewables and nuclear making up 32% and 9% of global electricity generation, respectively.
  • Fossil fuels remain the largest source of power globally, with emerging markets and developing economies relying heavily on coal as their primary source, posing challenges to balance sustainability with energy security and energy equity.

Statistics:

  • In 2024, global electricity consumption in the buildings sector grew four times faster than the previous year, driven by rising demand for air conditioning and new data centers, and accounted for nearly 60% of total growth in electricity consumption, according to the IEA.
  • 90% of energy demand from the transport sector is still met by oil products, due to their high energy density, convenience, and cost competitiveness.
  • Electricity use in industry grew by almost 4% in 2024, pushing it to account for nearly 40% of total growth in electricity demand, according to the IEA.
  • Industrial coal consumption in the Philippines is expected to grow by 4.2% annually to 2050, driven by increasing demand for building materials, particularly cement, iron, and steel.

Sources:

  • Shell plc
  • International Energy Agency (IEA)
  • Philippine government
  • INQUIRER.net (citing various sources)