ENVICC PartIV Energy

REVIEWER,
SY 2016-2017
Atty. Joyce Tan
International Environmental Law
GLOBALIZING CARBON LOCK-IN Its importance will ultimately depend upon the capacity of
biogeochemical cycles to absorb increasing atmospheric
Introduction concentrations of carbon dioxide without unwanted climate
disruption.
A climate policy paradox exists.
This paper extends the arguments surrounding carbon lock-in to the question
o On one hand, there is substantial scientific consensus that climate
of countries currently undergoing development of their economies and
change is a real and present threat to humans and other species.
national energy infrastructures.
On the other hand, there is evidence that technologies exist which
o It has been claimed that that developing countries can potentially
can lower the carbon intensity of economic activity in a cost effective
leapfrog (i.e., allows developing countries to skip over the historic
manner (e.g., energy efficiency innovations, renewable energy
development phases that industrial countries have passed through
applications).
and move directly to state-of-the-science technologies) industrial
o Paradox: If such technologies exist, are cost effective and help
country experiences and move directly to low or zero carbon energy
minimize climate-forcing emissions, why are not they diffusing more
systems.
rapidly?
o Such assertion is challenged in this paper arguing instead that
Why are not government policies to promote them, about
developing countries are likely to be subjected to similar lock-in
which there is substantial scientific and social consensus,
conditions.
more aggressive or effective?
A reasonable explanation for this paradox is that there are barriers or inertia Avoiding carbon lock-in through technological leapfrogging
in the systems responsible for climate forcing emissions that constrain
apparently rational choices on the part of economic and political actors. Industrialized countries are subject to carbon lock-in because of their highly
o Carbon lock-in: a condition that has arisen through the historic evolved TIC while researchers have asserted that developing countries have
development path developed by industrialized countries an opportunity to avoid this condition because they have not yet built out their
o Techno-institutional complexes (TIC): a concept which encompass national energy infrastructures.
the following: o Such late comer status theoretically allows these countries to
(1) large physical infrastructures themselves and leapfrog straight to superior climate friendly technologies and
(2) the managing organizations, infrastructures.
(3) institutions and cultural practices that build and perpetuate o Climate-relevant leapfrogging:
them. Considers the adoption of zero emission technologies
o TIC emerge through a path dependent process driven by increasing Reason: the combined goals of stabilizing the atmospheric
returns to scale, which can foster the emergence of numerous carbon dioxide concentrations at a doubling pre-industrial
sources of quasi-irreversibility or lock-in. levels (560ppm) while simultaneously allowing a world
Experience shows that no technological system remains in place indefinitely population of 8-10 billion to share in this emission rate will
and in the presence of increasing returns, there is always potential that new require the diffusion of effectively zero-emission
innovations will displace currently dominant technologies. technologies or solutions.
o Recent agent-based simulation modeling supports the intuition that Due to little evidence of leapfrogging in the energy sector, there is a need to
increasing returns can act as double-edged sword: rely on other sectors to provide analogues for comparison.
Driving innovations toward market standardization and o Telecommunications sector is frequently referenced by academics
lock-in while and the media as a successful case of technological leapfrogging by
Simultaneously holding out the potential to destabilize the developing countries.
lock-in condition by the emergence of new technologies. A set of countries has passed over the historic industrial
o While previous articles have argued that carbon lock-in inhibits country approach of installing costly landline
alternative innovations from obtaining critical market mass, it is telecommunications network and instead has moved
recognized that carbon lock-in only delays an inevitable directly to cellular telephony (e.g., China, India, Indonesia,
technological transition. South Africa, Mexico).
REVIEWER, SY 2016-2017
Atty. Joyce Tan
International Telecommunications Union: It is easier to start

o These countries will continue building energy and transportation
from scratch than to have a transition period where there infrastructures over the coming decades relying heavily on
are old and new technologies that need to be brought multinational corporations for the required technological capital.
together. o The types of energy capital transferred has historically depended on
o A number of parallels between mobile telephony and zero emission the following:
distributed energy generation technologies (e.g., solar, wind (1) Capabilities of technology vendors
turbines, potentially fuel cells) indicates that there may be similar (2) Preferences of the organizations financing development
opportunities for developing countries to experience leapfrogging in projects
energy technologies. (3) Host government development policies
Both can be built largely without a physical network of wires Capabilities of technology vendors: Most energy technology available for
and other long-distance transmission assets. transfer is in the hands of large, profit-driven multinational corporations. Thus,
Both are also modular, allowing capacity effectively current technology vendors should not be expected to facilitate leapfrogging.
expanded as demand increases. o Such firms have a preference for marketing their existing profitable
They can be installed quickly and can cover geographically technologies rather than pushing for the adoption of alternatives.
challenging or remote areas where the user density is low. o Organizational studies have shown that large established
However, one of the keys to the rapid adoption of cellular networks by companies are often incapable of commercializing alternative
developing countries is the fact that the technology had been substantially technologies that can make their current products obsolete.
developed, refined and commercialized by industrial countries decades o Issues surrounding the transfer of intellectual property rights can
before the developing country investments. further inhibit the process.
o Extensive adoption in industrial countries moved the technology into Preferences of the organizations financing development projects: The way in
a period of self-sustaining growth, resulting in accumulated which projects in developing countries is financed also creates challenges.
technological learning that has reduced uncertainty and costs, while o Three sources: (a) public sector, (b) private sector, and (c)
increasing reliability and service quality. bi/multilateral institutions (e.g., World Bank).
o The accumulated learning and refinement generated within industrial o With privatization and shrinking of deficit spending, private financing
countries have been a key factor in facilitating the rapid transfer to is taking in on an increasingly important role.
developing countries. Private financing for energy projects needs to compete with
Except for possibly wind turbines, distributed energy technologies have not alternative investments and is evaluated on the basis of
yet experienced large-scale adoption or commercialization and are a long relative returns.
way from becoming mature commodity products. Currently, the energy investments that provide the highest
o It can be argued that their potential development is currently being rates of return and are thus most attractive to private
impeded in industrialized countries by the condition of carbon lock- lenders are extraction projects that generate oil and
in. hydrocarbon products for export to industrialized countries.
o Leapfrogging appears possible when the technological leaders, Private lenders are risk-averse and require returns within a
which in most cases are industrial countries, have already relatively short period of time which biases away private
developed and deployed the technology successfully because funds from carbon saving technology investments.
developing countries lack the capacity for autonomous technological o While some of the multilateral banks and export credit lending and
development and remain dependent on industrial countries for their investment insurance agencies have begun investing in alternative
technology. technologies, their policies in general continue to favor traditional,
albeit cleaner, fossil fuel energy projects.
The transfer of carbon lock-in? One analysis estimated that 40% of these institutional
investments have gone to support fossil fuel power plants
There are other reasons to question whether industrializing countries like
and oil and gas development.
China and India will escape carbon lock-in.
Atty. Joyce Tan
It is recognized that many multilateral funding agencies are

o It is important to note that electricity generation generally constitutes
fundamentally banks that must respond to market centralized emission sources (e.g., power plants) while automobile-
pressures and have their loans repaid. based transportation constitutes decentralized or dispersed sources.
Host government development policies: Many countries are promoting rapid This distinction obviously conditions the applicability of
industrialization through the adoption of policies, regulatory frameworks, and potential technological solutions.
development strategies that have proven successful in industrial countries. Strategic niche management is a policy approach that seeks to foster such
o In this context, fossil fuel based energy technologies appear to be market transforming innovations. (Discontinuity approach)
proven low relative cost solutions that can respond to the demands o It is process oriented towards creating and managing spaces in
of rapid industrialization and quickly provide needed power. which new technologies can be used and developed.
o Adoption can become path-creating choice that can set a positive o These protected spaces allow for the initial experimentation and
feedback to ongoing reinvestment in fossil fuel based energy learning about technological characteristics, system needs, market
technologies. It will favor ongoing and expanding investments in demands and organizational and institutional dependencies needed
readily available fossil fuel based technologies. to usher an innovation to the point of self-sustaining growth.
A general rule may be that latecomers can catch up and adopt established, o A frequently cited example of SNM is the Danish wind turbine
even state-of-the-art technologies, but they usually do not surpass the industry that now commands 50% of the global market and
technological leaders. generating $3 billion annually.
o Rapidly industrializing countries may prefer proven off-the-shelf o The assertion is that similar SNM efforts could provide other zero-
prosperity they see created by the growth of industrial country TIC. carbon and renewable energy technologies with the breathing space
o Successful replication could be seen as a low risk path to create that facilitates their nurturing to an increasing returns tipping point.
wealth, jobs, and economic growth, which are desperately needed in o On one hand, research shows that established companies
developing countries. controlling dominant designs tend to consider niche markets
insignificant because large enterprises require large markets to
Policy implications generate the growth expected by shareholders and to support
existing cost structures.
The processes of technology transfer and the policies of rapid
o On the other hand, because they do not threaten politically important
industrialization appear to favor the adoption of existing, proven fossil fuel
constituencies, governments could find fostering niche markets
based energy and transportation systems by developing countries.
politically attractive. SNM policies could provide response to political
o It has been argued that carbon lock-in may become globalized and
pressure for action on climate change.
that large developing countries, if they are successful at rapid
Carbon capture and storage are based on a suite of techniques that capture,
industrializations, will become carbon copies of their industrialized
store and manage the carbon dioxide released by the use of fossil fuels.
neighbors.
(Continuity Approach)
The paper reviews four existing climate policy proposals from the perspective
o Continuity policies are ideally near-term approaches with speed of
of techno-institutional lock-in namely, (a) strategic niche management (SNM),
implementation resting on the acceptance of the TIC structure and
(b) carbon capture and storage (CCS), (c) carbon capture ready designs
established development path.
(CCR), and (d) air capture of carbon dioxide (AC).
o For reasons of scale, most CCS recommendations focus on the
o Discontinuity: refers to the most disruptive options requiring the
capture of carbon dioxide emissions from centralized sources (e.g.,
replacement of entire systems with an alternative climate friendly
electric power stations).
infrastructure.
o Current sequestration efforts rely on the injection of concentrated
o Continuity: refers to approaches that are less disruptive and seek
carbon dioxide streams into geologic formations, often to enhance
the modification of select components while maintaining the overall
resource recovery, but other sequestration possibilities exist
system architecture.
including deep ocean disposal or mineralization to carbonate.
o End-of-pipe (EOP): refers to the least disruptive alternatives which
o If deemed practicable, CCS could become a continuity strategy that
make no change to the system but treat offending emissions
preserves much of the existing power infrastructure including grids,
production facilities, transmission assets and end use technologies.
Atty. Joyce Tan
o Retrofitting existing plants for carbon capture appears to incur a centralized or dispersed sources, allowing the continued operation
substantial energy penalty and thus inflicts a possibly prohibitive of existing systems without disruption.
economic cost. However, some analysts indicate that the new plant o Construction of a parallel, independent air capture infrastructure
designs can capture carbon dioxide without an energy penalty. avoids contrivances or inefficient alterations of existing systems,
o CCS appears to be of interest to fossil fuel energy companies allowing both the energy and capture systems to be simultaneously
because it can preserve much of their existing investments in optimized.
technology, know-how and durable capital. o It could be made congruent with the Polluter Pays Principle by
o Environmentalists criticize CCS on the basis of long-term safety and requiring industrialized countries, which have liberated most of the
the impacts of diverting investment away from alternative renewable anthropogenic carbon dioxide now in the atmosphere, to pay for the
energy approaches. CCS does not get rid of fossil fuels that to many mitigation of the atmospheric pollution they have created.
critics is the real issue.
o CCS could be framed as part of a bargain or political deal among Conclusion
environmental groups advocating moves towards the hydrogen
The approaches in the preceding sections have elements that facilitate their
economy and current TIC beneficiaries seeking to maintain the
implementation in the face of carbon lock-in. However, just because they may
value of their assets and investments.
face less relative inertia does not mean they will be easy to implement.
Carbon capture ready designs rely on pre-investment to build CCS-ready
While carbon capture is technologically a continuity approach, it may be quite
facilities that can accept the future installation of carbon capture and
disruptive from the perspective of our species shared existential and
sequestration technology, thus maintaining the option of rendering plants
philosophical schema.
carbon neutral in the future. (Continuity approach)
By undertaking carbon capture, humans take control of a major climate
o It is a continuity approach that could potentially align public and
variable, consciously and voluntarily. Our potential ability to turn the global
private interests, possibly through an international mechanism
thermostat up and down at will could create existential questions about
designed to fund the required incremental costs (e.g., Global
humankinds relationship vis--vis the natural world.
Environment Fund, Joint Implementation and Clean Development
Mechanism of Kyoto Protocol).
Air capture of carbon dioxide (End-of-pipe Approach)
o CCS and CCR solutions deal with future emissions and do not
address the carbon dioxide already in the atmosphere, or the
possible changes already underway. Dealing with already emitted
carbon will require capturing and sequestering carbon dioxide from
the air.
o Currently, biomass sequestration is the only practical form of air
capture but researchers have theoretically demonstrated the
feasibility of the industrial capture of carbon dioxide from the
atmosphere.
o AC researchers envisage a system based on a series of collectors,
approximately the size of windmills, strategically located near carbon
sequestration sites. These collectors could take the form of football
goalposts with horizontal slats (like Venetian blinds) strung between
the posts.
o AC could be scaled up to nearly any level of removal deemed
necessary. Capture facilities could be located anywhere in the world,
presumably close to the most cost effective disposal sites. Perhaps
most importantly is the fact that air capture can deal with both
Atty. Joyce Tan
ESCAPING CARBON LOCK-IN Climate change: EOP in climate change complicated by the

fact that the release of carbon is fundamental to release
Summary energy, not un unwanted by-product
EOP is costly because of this
This article follows Unruhs first article Understanding carbon-lock-in and
explores the climate policy implications. For better understanding of the Another option id carbon sequestration (creation
relevance of the government institution and policy changes in breaking of biomass to absorb carbon), but still, carbon
through carbon lock-in created by techno-institutional complex (TIC), read the dioxide emissions need to be reduced by 70% just
first article before this one. to stabilize CO2 in the atmosphere not
anymore EOP because requires great system
Introduction:
change
o Why resort to policy approaches in addressing carbon lock-in?
o 2. Continuity modify selected components or processes of the
Because it is the integration of the technological systems of
system, but maintain overall system architecture
electricity generation and transportation with government
Working within the limits created by path dependent
institutions. for policy reasons (like national security, universal
technological evolution and limiting change to a selected
service, etc. discussed as formal justifications through public
number of offending subcomponents/parts of the system
policy in the first article) that overrides market forces and signals
Only incremental innovation
TIC.
Example: Edisons light bulb used the same terminologies
o Basically, this means that public institutions play a big role in
used in gas lighting and mounted the bulbs in the same
solidifying technological systems into place, thus the article
lines used in gas transmission (effect: minimize costs of
introduces possible ways to overcome lock-in.
transition)
o This is in comparison with science and technology. While science
evolves faster than government institutions, it is the latters changes Wind turbines or solar panels can be continuous
that allow for new technological solutions. by connecting them to existing electricity
o Because private and public institutional decisions are made with distribution grids
limited foresight, the unintended (negative) consequences (of fossil- Climate change: attractive option in this case
based energy systems) become lock-in along with the TIC. Maintenance of current major system features,
o Sources of lock-in: only replacing, for example, fossil fuels with
Technological renewable energy
Organizational o 3. Discontinuity replace the system entirely
Industrial Complete abandonment or replacement of an existing
Societal system
Institutional Radical change or intersystem innovation
Example: relating to the wind turbine example replacing
Policy Approaches:
o greater the change, greater the resistance the grid altogether with system of distributed/localized
o Three generic policy approaches: generation
o 1. End-of-pipe (EOP) make no change to the system but treat Climate Change: example electricity grid to decentralized
emissions distribution, reduce massive investments in long distance
Attractive because it contemplates the least impacting distribution; switch to public transportation
solution/minimal change to the system. o Notes:
Leave existing infrastructure and treat the offending by- Continuity and discontinuity is a scale dependent
products/output of the system phenomenon: it depends on the system analyzed
Accounts for 75% pollution control investment (Example: fuel cells continuous for highway builders but
Controls waste but does not change underlying process discontinuous for engine manufacturers)
Atty. Joyce Tan
Performance trade-offs: system-wide performance must be

How is market breakthrough possible in an already
sacrificed for the sake of backward compatibility entrenched system in the market?
In red above: applicability to climate change Through specialized niches, where innovations
BUT TO ADVANCE POLICY APPROACHES, there is a emerge in small market segments wherein their
need to overcome the lock-ins first as systems are too unique attributes are valued (ex. Solar powered
entrenched. wrist watches or calculators)
Overcoming Lock-in These can be nursed and potentially overtake the
o System-exogenous annealing forces, or those forces working dominant design
outside the present system, are required to provide the impetus of Problem: How to find a niche for new technology?
change (examples are major crises or external shocks) o Through demonstration. For examples,
o Since the techno-institutional system created a stabilizing Edisons light bulb demonstrated in a
equilibrium from the inside, there is a need for an outside force to ship. Everybody agreed it was a safer
displace these systems. alternative to gas light which produced
o Extraordinary events which may occur to overcome lock-in: fire and smoke.
Crisis in technology Another problem: niche markets effective only
Regulation when there is enough time to allow market
Technological breakthrough conditions to mature. Consider this vis--vis rapid
Changes in taste environmental degradation.
Niche markets o Institutional change
Scientific results Government policy is important in inducing changes to the
o Exogenous technological forces technological systems BUT for such pressures to arise,
Technological breakthroughs: Innovation scholars tend to institutional priorities have to be realigned first, but this is a
model technological evolution as long periods of slow process.
incremental innovation punctuated by episodes of rapid Without a solid mandate, policy makers find it difficult to
change undertake institutional change so that social change will
Here, the breakthrough is so compelling that it drives precede institutional change in a democracy (Examples:
current users to switch to new technology conservation movement, environmental movement)
The problem is that it takes substantial performance But when does large-scale reorientation of social priorities
improvements to induce users to go for the alternative (ex. occur?
QWERTY keyboard) One possibility is when a number of influential
In climate change, while there are potential superior members of society recognize or are convinces
technological solutions, we dont know where they will be that continued expansion of current system s no
coming from longer possible.
Incumbent drivers wont change, they will In climate change, the feedbacks like warming
advocate the present system seas, deforestation, release of methane from ice
We rely on entrepreneurial entrants who operate But when does feedback translate to action?
outside the system as an exogenous force When there is social recognition of environmental
We also rely on market breakthrough damage (necessary but not really sufficient).
phenomenon where a market space within the TIC More than recognition, an additional triggering or
can develop to create a supply and demand for focusing event may be necessary to drive
new technology, creating increasing returns on institutional change (Examples: DDT impacts, acid
both sides rain problem, ozone hole enlargement)
o Summary of policy approaches:
Atty. Joyce Tan
niche approaches cost effectivity (incentives and down models tend to assume, these technologies cannot be
disincentives) saving money when the total, economy-wide costs of their
recognition of environmental degradation scientific adoption are considered.
research and public education to create critical mass or Carbon savings is not economical.
social consensus for policy action, and to counter members
of TIC/national news media who produce uncertainty However, there are evidence that profitable energy-saving opportunities exist,
focusing event alternative explanations for their failure to diffuse have focused on the idea of
barriers to adoption.
Firm and consumer decision making

UNDERSTANDING CARBON LOCK-IN Emphasize bounded rationality
Informational asymmetries
Carbon Lock-in
Arises through a combination of systematic forces that perpetuate fossil fuel- Moral hazard
based infrastructures in spite of their known environmental externalities and the Principal-agent conflicts
apparent existence of cost-neutral, or even cost-effective, remedies.
These barriers to adoption are has microeconomic effects and there are other
Techno-Institutional Complex macro-level forces that can create systematic barriers to the adoption of carbon-
Arises because large technological systems, like electricity generation, distribution saving technologies at the level of technological systems and social
and end use, cannot be fully understood as a set of discrete technological artifacts institutions.
but have to be seen as complex systems of technologies embedded in a powerful
conditioning social context of public and private institutions. TECHNOLOGICAL SYSTEMS
Barriers to the Diffusion of Carbon-Saving Technologies most fossil fuel energy technologies can be better understood as part of
larger technological systems that provide wanted energy services to
problem arises from production and consumption patterns of the diverse consumers
human societies of the earth Adoption of the gas-powered internal combustion system
application of carbon-based energy technologies especially in the Electricity infrastructures
transportation, electricity, industrial and commercial sectors
fossil fuel energy extraction, combustion and technologies LOCK IN INTERDEPENDENT TECHNOLOGICAL SYSTEMS
Solution: switch to non-fossil fuel renewable sources of energy There is technological lock-in at the firm level
Network externalities systematic relations among technologies,
Economic Modeling Methods infrastructures, interdependent industries and users
Through interdependent technological systems, the externalities are
Bottom up (Engineering based) multiplied among many subsystems.
frequently identify numerous off-the-shelf a technologies and Three major types of network effects:
management practices that either do not require fossil fuels as o Industry and inter-industry forces of coordination
an energy source or use fossil fuels more efficiently o Reinforcing effects that can arise from private mechanisms
o Examples (Non-carbon) available for financing the development and diffusion of
Hydrogen fuel cells, Wind and solar energy technological systems
o Examples (Efficient Technologies) o Networks of private and associations and educational
Variable speed motors, lighting, fuel-efficient institutions, which develop in response to social and market
auto designs needs created by the expanding system, will be considered.
Top down (Economic Based) Given these dependencies, risk adverse firms may not gamble on a new
if we assume that the economy is functioning efficiently, as top- technology when they are uncertain about the preferences and potential
Atty. Joyce Tan
responses of other firms and supporting industries. sectors.

o account for approximately one-third of global carbon emissions
COEVOLUTION OF TECHNOLOGICAL SYSTEMS WITH PRIVATE o when combined, can reach from one-half to three-quarters of
INSTITUTIONS total emissions in many industrialized countries
TIC exist and can create carbon lock-in, then additional, higher level
forces of lock-in have been at the firm and industry levels explanations for the policy difficulties and failures of carbon-saving
formal and informal societal institutions can emerge alongside technology diffusion can be found.
technological systems and impact their evolution o Techno-institutional lock-in implies that there are systematic
o collective interests and needs that can be fulfilled through the forces that make it difficult to change the development path of
establishment of technical, aficionado and professional existing techno-institutional systems.
associations o Even with the growing of evidence of substantial environ-
o creation of powerful political forces to lobby on behalf of a given mental risk, these forces can create pervasive market, policy
technological system. and organizational failures toward the adoption of mitigating
unions and industry associations emerge to provide representation for policies and technologies.
o Difficulty in removing outdated, even counterproductive, subsidy
the various professionals that service the technological system.
programs --- symptoms of carbon lock-in.
Other societal institutions can impact the formation expectations,
Effects of Lock in extend to social institutions and customs as well
preferences and attitudes of the public towards an emerging dominant
o Human dependence on technology, transportation, etc.
design.
Collective Action Arguments
as the acceptance of a technological system increases it can become an
increasingly integral part of daily life, which can lead to the emergence of o In order to resolve climate change issue, large numbers of
behavioral institutions that socialize public use. dispersed individuals have to take coordinated actions
o diverse beneficiaries of climate protection policies have much
greater difficulty in coordinating their responses.
LOCK-IN OF PUBLIC INSTITUTIONS
lock-in forces can also involve formal government institutions

o ability of institutional policy to override market forces
o Once established, institutions tend to become locked-in and
undergo only incremental change for long periods.
government support is usually focused, not on supporting a specific firm, BORN AGAIN: THE DEBATE ON LOCK-IN AND CCS
but on supporting the technological system.
Nils Markusson
TECHNO-INSTITUTIONAL COMPLEX (TIC)
Summary
at the macroeconomic scale, technological systems and institutions can What is Lock-in?
become intimately inter-linked, feeding of one another in a self-
referential system Lock-in is the concept that in cases where a variant of a piece of technology
emerge through synergistic coevolution gets an early head start from other variants of the same technology, it can
o technological increasing returns gain advantages from actors adapting to its presence on the market, making
o emergence of dominant technological, organizational and it hard for the other varieties to ever catch up.
institutional designs.
Ex. Betamax losing to VHS. QWERTY keyboard layout being pretty much the
only layout you know.
CARBON LOCK-IN
Sometimes it is seen that these end up winning even though they are
sometimes actually inferior to other variants of the same technology.
Technological, organizational and institutional forces of lock-in have
Lock-in is often not the result of any conscious decision, but rather the
been illustrated in both the transportation and electricity generation
emergent result of man actors decisions.
Atty. Joyce Tan
For analysts who believe in a transparent and orderly world, lock-in infrastructure for CO2 transport and storage, with the associated skills,
represents a sub-optimal outcome, and should be avoided. institutions, and sunk investments, will likely add to momentum of the existing
In contrast, those who think that technological innovation is a somewhat system.
unpredictable and messy process thinks that lock-ins become a necessity. The lock-in can be distinguished between two levels of analysis:
According to Hughes, this is the technological momentum you get when the o Energy system (CCS-reinforced lock-in to a system dominated
relevant actors and institutions are well aligned and contribute to the same by fossil fuels)
goal of getting a technology variant developed and used. o CCS technology (CCS locked-in to a limited range of
Lock-in becomes a problem if and when someone wants to change technology varieties)
something about the technology and the way it is being used, and discovers Some authors have also tried to analyse if CCS can also contribute to the
the obduracy of an already entrenched socio-technical system. solution to the problem, as opposed to just reinforcing the lock-in. The
challenge is dual: first identifying potential pathways where CCS technology
What is CCS? can form part of non-fossil energy systems and second to assess how likely
the transition may be.
CCS is the abbreviation for carbon capture and storage.
Shackley and Thompson approached the problem of assessing the flexibility
There are many different technological varieties. Some are more mature than
of CCS, defined as its ability to fit into different applications contexts, using a
others. range of apparently technical or social criteria. The showed that while CCS is
It can be categorized also into the variety of CCS systems by gas or CO2 less flexible that landfill gas fuelled power production technology, it is more
source. flexible than nuclear fission technology, and argue that the lock-in is therefore
It can also be applied to different kinds of sources such as fossil fuel plants, not as deep as it could have been.
biomass plants, other industrial plants, and even air capture. Flexibility is seen as the opposite of lock-in but complete flexibility is
The main focus to date is on fossil fuels. impossible.
So what is the problem? The question, when devising ways out of carbon lock-in is not so much
whether CCS technology is flexible as whether the energy system is.
Our society as a whole is adapted to fossil fuel use; Unruh coined the term The energy system is not particularly flexible.
carbon lock-in to describe this.
What exactly is being locked in? The answer ranges from individual projects
or industrial plants to our entire society or at least the energy system
aspects of it.
There is also a variety of uses, in terms of whether it is CCS technology itself
that is getting lock-in to a variant, or whether it is the effects of CCS
technology on the overall energy system that are in focus.
Carbon lock-inn is a corner stone of the case typically made for CCS. The
very difficulty of seeing how we could stop using fossil fuels anytime soon,
given not least the existing stock of power plants and on-going investments
as well as consumption patterns dependent on cheap energy, is here used as
an argument for trying to clean up coal and gas.
The reluctance on behalf of companies, governments and consumers to not
maximise the use of profitable investments is one contributing mechanism,
among others, to the carbon lock-in problem we collectively face.
It has also been suggested that CCS is part of the problem rather than the
solution. Most analysts argue that adding CCS abatement to fossil fuelled
power plants would likely make it difficult to rid the energy system of fossil
fuels. Adding in more investment including an entire (almost) new network
Atty. Joyce Tan
RENEWABLE ENERGY ACT OF 2008 (RA 9513) hot brines; (ii) steam and other gases, hot water, and hot brines
resulting from water, gas, or other fluids artificially introduced into
Section 3. Scope. - This Act shall establish the framework for the geothermal formations; (iii) heat or associated energy found in
accelerated development and advancement of renewable energy resources, geothermal formations; and (iv) any by-product derived from them.
and the development of a strategic program to increase its utilization. o "Green Energy Option" refers to the mechanism to empower end-users
to choose renewable energy in meeting their energy requirements.
Section 4. Definition of Terms: o "Missionary Electrification" refers to the provision of basic electricity
o "Biomass energy systems" refer to energy systems which use biomass service in unviable areas with the aim of bringing the operations in
resources to produce heat, steam, mechanical power or electricity these areas to viability levels.
through either thermochemical, biochemical or physico-chemical o "Non-power applications" refer to renewable energy systems or
processes. facilities that produce mechanical energy, combustible products such
o "Biomass resources" refer to non-fossilized, biodegradable organic as methane gas, or forms of useful thermal energy such as heat or
material originating from naturally occurring or cultured plants, animals steam, that are not used for electricity generation, but for applications
and micro-organisms, including agricultural products, by-products and such as, but not limited to, industrial/commercial cooling, and fuel for
residues such as, but not limited to, biofuels except corn, soya beans cooking and transport.
and rice but including sugarcane and coconut, rice hulls, rice straws, o "Ocean Energy Systems" refer to energy systems which convert ocean
coconut husks and shells, corn cobs, corn stovers, bagasse, or tidal current, ocean thermal gradient or wave energy into electrical or
biodegradable organic fractions of industrial and municipal wastes that mechanical energy.
can be used in bioconversion process and other processes, as well as o "Solar Energy" refers to the energy derived from solar radiation that
gases and liquids recovered from the decomposition and/or extraction can be converted into useful thermal or electrical energy.
of non-fossilized and biodegradable organic materials. o "Wind Energy" refers to the energy that can be derived from wind that
o "Co-generation systems" refer to facilities which produce electrical is converted into useful electrical or mechanical energy.
and/or mechanical energy and forms of useful thermal energy which
are used for industrial, commercial heating or cooling purposes through Section 5. Lead Agency. - The DOE shall be the lead agency mandated
the sequential use of energy. to implement the provisions of this Act.
o "Distributed generation" refers to a system of small generation entities Section 6. Renewable Portfolio Standard (RPS). - All stakeholders in the electric
supplying directly to the distribution grid, any one of which shall not power industry shall contribute to the growth of the renewable energy industry of
exceed one hundred kilowatts (100 kW) in capacity. the country.
o "Distribution of Electricity" refers to the conveyance of electricity by a o National Renewable Energy Board (NREB) shall set the minimum
Distribution Utility through its distribution system. percentage of generation from eligible renewable energy resources and
o "Distribution Utility" (DU) refers to any electric cooperative, private determine to which sector RPS shall be imposed on a per grid basis within
corporation, government-owned utility or existing local government unit one (1) year from the effectivity of this Act.
which has an exclusive franchise to operate a distribution system.
o "Geothermal energy" shall be considered renewable and the provisions Section 7. Feed-In Tariff System. - To accelerate the development of emerging
of this Act is therefore applicable thereto if geothermal energy, as a renewable energy resources, a feed-in tariff system for electricity produced from
mineral resource, is produced through: (1) natural recharge, where the wind, solar, ocean, run-of-river hydropower and biomass is hereby mandated.
water is replenished by rainfall and the heat is continuously produced
inside the earth; and/or (2) enhanced recharge, where hot water used
Section 9. Green Energy Option. - The DOE shall establish a Green Energy
in the geothermal process is re-injected into the ground to produce Option program which provides end-users the option to choose RE resources as
more steam as well as to provide additional recharge to the convection
their sources of energy. Section 10. Net-metering for Renewable Energy. -
system. Subject to technical considerations and without discrimination and upon request
o "Geothermal Resources" refer to mineral resources, classified as by distribution end-users, the distribution utilities shall enter into net-metering
renewable energy resource, in the form of: (i) all products of agreements with qualified end-users who will be installing RE system.
geothermal processes, embracing indigenous steam, hot water, and
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o Special Realty Tax Rates on Equipment and Machinery. - Any law to

Section 12. Off-Grid Areas. - Within one (1) year from the effectivity of this Act, the contrary notwithstanding, realty and other taxes on civil works,
NPC-SPUG or its successors-in-interest and/or qualified third parties in off-grid equipment, machinery, and other improvements of a Registered RE
areas shall, in the performance of its mandate to provide missionary Developer actually and exclusively used for RE facilities shall not exceed
electrification, source a minimum percentage of its total annual generation upon one and a half percent (1.5%) of their original cost less accumulated
recommendation of the NREB from available RE resources in the area concerned, normal depreciation or net book value: Provided, That in case of an
as may be determined by the DOE. integrated resource development and generation facility as provided
under Republic Act No. 9136, the real property tax shall only be imposed
Section 13. Government Share. - The government share on existing and new RE on the power plant.
development projects shall be equal to one percent (1%) of the gross income of o Net Operating Loss Carry-Over (NOLCO). - The NOLCO of the RE
RE resource developers resulting from the sale of renewable energy produced Developer during the first three (3) years from the start of commercial
and such other income incidental to and arising from the renewable energy operation which had not been previously offset as deduction from gross
generation, transmission, and sale of electric power except for indigenous income shall be carried over as a deduction from gross income for the
geothermal energy, which shall be at one and a half percent (1.5%) of gross next seven (7) consecutive taxable years immediately following the year
income. of such loss: Provided, however, That operating loss resulting from the
availment of incentives provided for in this Act shall not be entitled to
Section 14. Compliance with Environmental Regulations. - All RE explorations, NOLCO.
development, utilization, and RE systems operations shall be conducted in o Corporate Tax Rate. - After seven (7) years of income tax holiday, all
accordance with existing environmental regulations as prescribed by the DENR RE Developers shall pay a corporate tax of ten percent (10%) on its net
and/or any other concerned government agency. taxable income as defined in the National Internal Revenue Act of 1997,
as amended by Republic Act No. 9337. Provided, That the RE Developer
Section 15. Incentives for Renewable Energy Projects and Activities. - RE shall pass on the savings to the end-users in the form of lower power
developers of renewable energy facilities, including hybrid systems, in proportion rates.
to and to the extent of the RE component, for both power and non-power o Accelerated Depreciation. - If, and only if, an RE project fails to receive
applications, as duly certified by the DOE, in consultation with the BOI, shall be an ITH before full operation, it may apply for Accelerated Depreciation in
entitled to the following incentives: its tax books and be taxed based on such: Provided, That if it applies for
o Income Tax Holiday (ITH) - For the first seven (7) years of its Accelerated Depreciation, the project or its expansions shall no longer be
commercial operations, the duly registered RE developer shall be eligible for an ITH. Accelerated depreciation of plant, machinery, and
exempt from income taxes levied by the national government. equipment that are reasonably needed and actually used for the
o Duty-free Importation of RE Machinery, Equipment and Materials - exploration, development and utilization of RE resources may be
Within the first ten (10) years upon the issuance of a certification of an depreciated using a rate not exceeding twice the rate which would have
RE developer, the importation of machinery and equipment, and been used had the annual allowance been computed in accordance with
materials and parts thereof, including control and communication the rules and regulations prescribed by the Secretary of the Department
equipment, shall not be subject to tariff duties: Provided, however, That of Finance and the provisions of the National Internal Revenue Code
the said machinery, equipment, materials and parts are directly and (NIRC) of 1997, as amended. Any of the following methods of
actually needed and used exclusively in the RE facilities for accelerated depreciation may be adopted:
transformation into energy and delivery of energy to the point of use and o Declining balance method; and
covered by shipping documents in the name of the duly registered o Sum-of-the years digit method
operator to whom the shipment will be directly delivered by customs o Zero Percent Value-Added Tax Rate. - The sale of fuel or power
authorities: Provided, further, That endorsement of the DOE is obtained generated from renewable sources of energy such as, but not limited to,
before the importation of such machinery, equipment, materials and biomass, solar, wind, hydropower, geothermal, ocean energy and other
parts are made. emerging energy sources using technologies such as fuel cells and
hydrogen fuels, shall be subject to zero percent (0%) value-added tax
(VAT).
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o All RE Developers shall be entitled to zero-rated value added the components, parts and materials had these items been imported
tax on its purchases of local supply of goods, properties and shall be given to an RE equipment manufacturer, fabricator, and supplier
services needed for the development, construction and duly recognized and accredited by the DOE who purchases RE
installation of its plant facilities. components, parts and materials from a domestic manufacturer:
o Cash Incentive of Renewable Energy Developers for Missionary Provided, That such components, and parts are directly needed and shall
Electrification. - A renewable energy developer, established after the be used exclusively by the RE manufacturer, fabricator and supplier for
effectivity of this Act, shall be entitled to a cash generation-based the manufacture, fabrication and sale of the RE equipment: Provided,
incentive per kilowatt hour rate generated, equivalent to fifty percent further, That prior approval by the DOE was obtained by the local
(50%) of the universal charge for power needed to service missionary manufacturer.
areas where it operates the same, to be chargeable against the universal o Income Tax Holiday and Exemption. - For seven (7) years starting
charge for missionary electrification. from the date of recognition/accreditation, an RE manufacturer, fabricator
o Tax Exemption of Carbon Credits. - All proceeds from the sale of and supplier of RE equipment shall be fully exempt from income taxes
carbon emission credits shall be exempt from any and all taxes. levied by the National Government on net income derived only from the
o Tax Credit on Domestic Capital Equipment and Services. - A tax sale of RE equipment, machinery, parts and services.
credit equivalent to one hundred percent (100%) of the value of the o Zero-rated value added tax transactions - All manufacturers,
value-added tax and custom duties that would have been paid on the RE fabricators and suppliers of locally produced renewable energy
machinery, equipment, materials and parts had these items been equipment shall be subject to zero-rated value added tax on its
imported shall be given to an RE operating contract holder who transactions with local suppliers of goods, properties and services.
purchases machinery, equipment, materials, and parts from a domestic
manufacturer for purposes set forth in this Act: Provided, That prior Section 22. Incentives for Farmers Engaged in the Plantation of Biomass
approval by the DOE was obtained by the local manufacturer: Provided, Resources. - For a period of ten (10) years after the effectivity of this Act, all
further, That the acquisition of such machinery, equipment, materials, individuals and entities engaged in the plantation of crops and trees used as
and parts shall be made within the validity of the RE operating contract. biomass resources such as but not limited to jatropha, coconut, and
sugarcane, as certified by the Department of Energy, shall be entitled to duty-
Section 21. Incentives for RE Commercialization. - All manufacturers, free importation and be exempted from Value-Added Tax (VAT) on all types of
fabricators and suppliers of locally-produced RE equipment and components agricultural inputs, equipment and machinery such as, but not limited to,
duly recognized and accredited by the DOE, in consultation with DOST, DOF fertilizer, insecticide, pesticide, tractor, trailers, trucks, farm implements and
and DTI, shall, upon registration with the BOI, be entitled to the privileges set machinery, harvesters, threshers, hybrid seeds, genetic materials, sprayers,
forth under this section. packaging machinery and materials, bulk handling facilities, such as
o Tax and Duty-free Importation of Components, Parts and Materials. - conveyors and mini-loaders, weighing scales, harvesting equipment, and
All shipments necessary for the manufacture and/or fabrication of RE spare parts of all agricultural equipment.
equipment and components shall be exempted from importation tariff and
duties and value added tax: Provided, however, That the said
components, parts and materials are: (i) not manufactured domestically
Section 23. Tax Rebate for Purchase of RE Components. - To encourage the
in reasonable quantity and quality at competitive prices; (ii) directly and
adoption of RE technologies, the DOF, in consultation with DOST, DOE, and
actually needed and shall be used exclusively in the
DTI, shall provide rebates for all or part of the tax paid for the purchase of RE
manufacture/fabrication of RE equipment; and (iii) covered by shipping
equipment for residential, industrial, or community use. The DOF shall also
documents in the name of the duly registered manufacturer/fabricator to
prescribe the appropriate period for granting the tax rebates.
whom the shipment will be directly delivered by customs authorities:
Section 27. Creation of the National Renewable Energy Board (NREB). - The
Provided, further, That prior approval of the DOE was obtained before
NREB is hereby created. It shall be composed of a Chairman and one (1)
the importation of such components, parts and materials.
representative each from the following agencies: DOE, DTI, DOF, DENR,
o Tax Credit on Domestic Capital Components, Parts and Materials. -
NPC, TRANSCO or its successors-in-interest, PNOC and PEMC who shall be
A tax credit equivalent to one hundred percent (100%) of the amount of
designated by their respective secretaries on a permanent basis; and one (1)
the value-added tax and customs duties that would have been paid on
Atty. Joyce Tan
representative each from the following sectors: RE Developers, Government promotion and dissemination of RE benefits to the national and local
Financial Institutions (GFIs), private distribution utilities, electric cooperatives, levels.
electricity suppliers and non-governmental organizations, duly endorsed by o Fund such other activities necessary or incidental to the attainment of the
their respective industry associations and all to be appointed by the President objectives of this Act
of the Republic of the Philippines.
Use of the fund may be through grants, loans, equity investments, loan
The NREB shall have the following powers and functions: guarantees, insurance, counterpart fund or such other financial arrangements
o Evaluate and recommend to the DOE the mandated RPS and necessary for the attainment of the objectives of this Act: Provided, That the
minimum RE generation capacities in off-grid areas, as it deems use or allocation thereof shall, as far as practicable, be done through a
appropriate. competitive and transparent manner.
o Recommend specific actions to facilitate the implementation of the
The RETF shall be funded from:
National Renewable Energy Program (NREP) to be executed by the
DOE and other appropriate agencies of government and to ensure o Proceeds from the emission fees collected from all generating facilities
that there shall be no overlapping and redundant functions within the consistent with Republic Act No. 8749 or the Philippine Clean Air Act.
national government departments and agencies concerned. o One and 1/2 percent (1.5%) of the net annual income of the Philippine
o Monitor and review the implementation of the NREP, including Charity Sweepstakes Office.
compliance with the RPS and minimum RE generation capacities in o One and 1/2 percent (1.5%) of the net annual income of the Philippine
off-grid areas. Amusement and Gaming Corporation.
o Oversee and monitor the utilization of the Renewable Energy Trust o One and 1/2 percent (1.5%) of the net annual dividends remitted to the
Fund created pursuant to Section 28 of this Act and administered by National Treasury of the Philippine National Oil Company and its
the DOE. subsidiaries.
o Perform such other functions, as may be necessary, to attain the o Contributions, grants and donations: Provided, That all contributions,
objectives of this Act. grants and donations made to the RETF shall be tax deductible subject
to the provisions of the National Internal Revenue Code. Towards this
end, the BIR shall assist the DOE in formulating the Rules and
Section 28. Renewable Energy Trust Fund (RETF). - A Renewable Energy Trust Regulations to implement this provision.
Fund is hereby established to enhance the development and greater utilization of o One and 1/2 percent (1.5%) of the proceeds of the Government share
renewable energy. It shall be administered by the DOE as a special account in collected from the development and use of indigenous non-renewable
any of the GFIs. The RETF shall be exclusively used to: energy resources.
o Any revenue generated from the utilization of the RETF.
o Finance the research, development, demonstration, and promotion of the o Proceeds from the fines and penalties imposed under this Act.
widespread and productive use of RE systems for power and non-power
applications, as well as to provide funding for R & D institutions engaged Section 29. Financial Assistance Program. - Government financial institutions
in renewable energy studies undertaken jointly through public-private such as the Development Bank of the Philippines (DBP), Land Bank of the
sector partnership, including provision for scholarship and fellowship for Philippines (LBP), Phil-Exim Bank and other government financial institutions
energy studies. shall, in accordance with and to the extent allowed by the enabling provisions
o Support the development and operation of new RE resources to improve of their respective charters or applicable laws, provide preferential financial
their competitiveness in the market: Provided, That the grant thereof packages for the development, utilization and commercialization of RE
shall be done through a competitive and transparent manner. projects as duly recommended and endorsed by the DOE.
o Conduct nationwide resource and market assessment studies for the
power and non-power applications of renewable energy systems. Section 30. Adoption of Waste-To-Energy Technologies. - The DOE shall,
o Propagate RE knowledge by accrediting, tapping, training, and providing where practicable, encourage the adoption of waste-to-energy facilities such
benefits to institutions, entities and organizations which can extend the
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as, but not limited to, biogas systems. The DOE shall, in coordination with the o Supervise and monitor activities of government and private companies
DENR, ensure compliance with this provision. and entities on renewable energy resources development and utilization
o Waste-to-energy technologies shall refer to systems which convert to to ensure compliance with existing rules, regulations, guidelines and
biodegradable materials such as, but not limited to, animal manure or standards.
agricultural waste, into useful energy through processes such as o Provide information, consultation and technical training and advisory
anaerobic digestion, fermentation and gasification. services to developers, practitioners and entities involved in renewable
energy technology and develop renewable energy technology
Section 31. Incentives for RE Host Communities/LGUs. - Eighty percent (80%) development strategies.
of the share from royalty and/or government share of RE host o Perform other functions that may be necessary for the effective
communities/LGUs from RE projects and activities shall be used directly to implementation of this Act and the accelerated development and
subsidize the electricity consumption of end users in the RE host utilization of the renewable energy resources in the country.
communities/LGUs whose monthly consumption do not exceed one hundred
(100) kwh. The subsidy may be in the form of rebates, refunds and/or any Section 35. Prohibited Acts. - The following acts shall be prohibited:
other forms as may be determined by DOE, DOF and ERC, in coordination o Non-compliance or violation of the RPS rules
with NREB. o Willful refusal to undertake net metering arrangements with qualified
distribution grid users
Section 32. Creation of the Renewable Energy Management Bureau. - For the o Falsification or tampering of public documents or official records to avail
purpose of implementing the provisions of this Act, a Renewable Energy of the fiscal and non-fiscal incentives provided under this Act;
Management Bureau (REMB) under the DOE is hereby established, and the o Failure and willful refusal to issue the single certificate referred to in
existing Renewable Energy Management Division of the Energy Utilization Section 26 of this Act; and
Management Bureau of the DOE, whose plantilla shall form the nucleus of o Non-compliance with the established guidelines that DOE will adopt for
REMB, is hereby dissolved. The organizational structure and staffing the implementation of this Act.
complement of the REMB shall be determined by the Secretary of the DOE, in
consultation with the Department of Budget and Management, in accordance Section 36. Penalty Clause. - Any person who willfully commits any of the
with existing civil service rules and regulations. The budgetary requirements prohibited acts enumerated under this Act, shall be imposed with the penalties
necessary for the creation of the REMB shall be taken from the current provided herein. Any person, who willfully aids or abets the commission of a
appropriations of the DOE. Thereafter, the funding for the REMB shall be crime prohibited herein or who causes the commission of any such act by
included in the annual General Appropriations Act. The REMB shall have the another shall be liable in the same manner as the principal.
following powers and functions: In the case of association, partnership or corporations, the penalty shall be
o Implement policies, plans and programs related to the accelerated imposed on the partner, president, chief operating officer, chief executive
development, transformation, utilization and commercialization of officer, directors or officers responsible for the violation.
renewable energy resources and technologies. The commission of any prohibited acts provided for under Section 35, upon
o Develop and maintain a centralized, comprehensive and unified data and conviction thereof, shall suffer the penalty of imprisonment of from one (1)
information base on renewable energy resources to ensure the efficient year to five (5) years, or a fine ranging from a minimum of One Hundred
evaluation, analysis, and dissemination of data and information on Thousand Pesos (P100,000.00) to One Hundred Million Pesos
renewable energy resources, development, utilization, demand and (P100,000,000.00), or twice the amount of damages caused or costs avoided
technology application. for non-compliance, whichever is higher, or both upon the discretion of the
o Promote the commercialization/application of renewable energy court.
resources including new and emerging technologies for efficient and
economical transformation, conversion, processing, marketing and BIOFUELS ACT (R.A. 9367)
distribution to end users.
o Conduct technical research, socio-economic and environmental impact AN ACT TO DIRECT THE USE OF BIOFUELS, ESTABLISHING FOR THIS
studies of renewable energy projects for the development of sustainable PURPOSE THE BIOFUEL PROGRAM, APPROPRIATING FUNDS THEREFOR,
renewable energy systems. AND FOR OTHER PURPOSES.
Atty. Joyce Tan
January 12, 2007

SECTION 1. Short Title - This act shall be known as the "Biofuels Act of 2006".
Summary: SEC. 2. Declaration Policy - It is hereby declared the policy of the State to
The law mandates the use of biofuels and phases out the use of harmful reduce dependence on imported fuels with due regard to the protection of public
gasoline additives in all liquid fuels for motor and engines sold in the health, the environment, and the natural ecosystems consistent with the country's
Philippines. The biofuel component shall be locally-sourced in line with the sustainable economic growth that would expand opportunities for livelihood by
policy to reduce dependence on imported fuels. (Sec.4) MANDATING THE USE OF BIOFUELS as a measure to:
The law provides for an incentive scheme such a zero specific tax, VAT a) Develop and utilize indigenous renewable and sustainable-
exemption, wastewater charge exemption, and financial assistance. (Sec.6) sources clean energy sources to reduce dependence on imported
The law creates the NBB/ National Biofuel Board to execute the law and at oil.
the same time calls on other government agencies such as DA, DENR, DOE, b) Mitigate toxic and greenhouse gas (GSG) emissions;
DOLE, DOF, DOST, DITC, AFTA, and PNS Ito ensure that the effective c) increase rural employment and income; and
implementation of the law. Moreover, it provides for specific powers of DOE d) Ensure the availability of alternative and renewable clean energy
in the implementation of this Act. (Secs. 7, 8 and 11) without any detriment to the natural ecosystem, biodiversity and
The law also provides for penal sanctions: (Sec.12) food reserves of the country.
a) Diversion of biofuels, whether locally produced or imported, to
purposes other than those envisioned in this Act; SEC. 3. Definition of terms - As used in this act, the following term shall be
b) Sale of biofuelblended gasoline or diesel that fails to comply with the taken to means as follows:
minimum biofuelblend by volume in violation of the requirement under
Section 5 of this Act; a) AFTA - shall refer to the ASIAN free trade agreement initiated by the
c) Distribution, sale and use of automotive fuel containing harmful Association of South East Asian Nation;
additives such as, but not limited to, MTBE at such concentration
exceeding the limits to be determined by the NBB. b) Alternative Fuel Vehicle/Engine - shall refer to
d) Noncompliance with the established guidelines of the PNS and DOE vehicle/engines that use alternative fuels
adopted for the implementation of this Act; and such as
e) False labeling of gasoline, diesel, biofuels and biofuel-blended o biodiesel,
gasoline and diesel. o bioethanel,
The law also ensure domestic sugar supply (Sec.10) o natural gas,
o electricity,
o hydrogen and
o automotive LPG
instead of gasoline and diesel;
c) Bioethanol fuel - shall refer to ethanol (C2H30H) produce from

feedback and other biomass.
d) Biodiesel - shall refer to

Fatty Acid Methyl Ester (FAME) or mono-alkyl ester
delivered from
o vegetable oil, or
o animal fats and
o other biomass-derived oils
that shall be technically proven and approved by the DOE for use in
diesel engines,
with quality specifications in accordance with the Philippine National
Standards (PNS)
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organic sources
e) Bioethanol fuelS (emphasis supplied)- shall refer to the o such as molasses, sugarcane, cassava, coconut, jatropha,
hydrous and anhydrous bioethanol sweet sorghum or other biomass
suitably denatured for use as motor fuel used in the production of biofuels;
with quality specifications in accordance with the PNS;
r) Gasoline shall refer to
f) Biofuel - shall volatile mixture of liquid hydrocarbon,
refer to the generally containing small amounts of additives suitable for use as fuel in
o bioethanol and spark-ignition internal combustion engines with quality specifications in
o biodiesel and accordance with the PNS;
o other fuels
made from biomass and s) Motor fuel - shall refer to all volatile and inflammable liquids and gas produced,
primary used for motive, thermal power generation, blended or compounded
with quality specifications in accordance with PNS; for the purpose of, or which are suitable or practicable for, operating
motor vehicle;
g) Biomass - shall refer to
any organic matter, t) MTBE - shall refer to Methyl Tertiary Butyl Ether;
o particularly cellulosic or ligno-cellulosic matter,
which is available on a renewable or recurring basis, u) NBB or Board - shall refer to the National Biofuel Board created under Section
including trees, crops and associated residues, plant fiber, poultry litter 8 of this Act ;
and other animal wastes, industrial wastes and biodegradable
component of solid waste; v) Oil Company - shall refer to any entity that distributes and sells petroleum fuel
products;
h) DA - shall refer to the Department of Agriculture created under Executive Order
No. 116, as amended; w) Oxygenate - shall refer to substances, which, when added to gasoline,
increase the amount of oxygen in that gasoline blend;
i) Diesel - shall refer to the refined petroleum distillate, which may contain small
amount of hydrocarbon or nonhydrocarbon additives to improve ignition quality or x) PNS shall refer to the Philippine National Standard; consistent with section 26
other characteristic, suitable for compression ignition engine and other suitable of R.A. No. 8749 otherwise known as the 'Philippine Clean Air Act of 1999;
types of engines with quality specifications in accordance with PNS;
y) Renewable Energy Sources - shall refer to
j) DENR - shall refer to the Department of Environment and Natural Resources energy sources
created under Executive No. 192, as amended; that do not have an upper limit on the total quantity to be used.
k) DOE - shall refer to the Department of Energy created under Republic Act No. Such resources are renewable on a regular basis; and
7638, as amended;
l) DOLE - shall refer to the Department of Labor and Employment created under z) WTO - shall refer to the World Trade Organization.
Executive Order No. 126, as amended;
m) DOF - shall refer to the Department of Finance created under Administrative SEC. 4. Phasing Out of the Use of Harmful Gasoline Additives and/or
Orders No. 127 and 127-A; Oxygenates.
n) DOST - shall refer to the Department of Science and Technology created under Within six months from affectivity of this Act,
Republic Act no. 2067 the DOE, according to duly accepted international standards,
o) DOTC - shall refer to the Department of Transportation and Communication shall gradually phase out
created under Executive Order No. 125-A, as amended; o the use of harmful gasoline additives
p) DTI - shall refer to the Department of Trade and Industry created under such as, but not limited to MTBE
Executive Order No. 133;
q) Feedstock - shall refer to the

Atty. Joyce Tan
SEC. 5. Mandatory Use of Biofuels. Pursuant to the above policy, it is hereby without prejudice to enjoying applicable incentives and benefits under existing
mandated that laws, rules and regulations,
all liquid fuels for motors and engines sold in the Philippines the following additional incentives are hereby provided under this Act.
shall contain locally-sourced biofuels components as follows:
a) Specific tax
5.1 o The specific tax on local or imported biofuels component,
Within two years from the effectivity of this Act, per liter of volume shall be zero (0).
o at least five percent (5%) bioethanol o The gasoline and diesel fuel component,
shall comprise the annual total volume of gasoline fuel shall remain subject to the prevailing specific tax rate.
actually sold and distributed b) Value Added Tax
by each and every oil company in the country; o The sale of raw material used in the production of biofuels such as,
o subject to requirement that all bioethanol blended gasoline but not limited to, coconut, jatropha, sugarcane, cassava, corn, and
shall contain a minimum of five percent (5%) bioethanol sweet sorghum
fuel by volume shall be exempt from the value added tax.
Provided, that ethanol blend conforms to PNS. c) Water Effluents
All water effluents,
5.2 o such as but not limited to distillery slops from the production of
Within four years from the effectivity of this Act, biofuels used as liquid fertilizer and for other agricultural purposes
o the NBB created under this Act are considered "reuse", and are therefore, exempt from wastewater
is empowered to determine the feasibility charges
thereafter recommend to DOE to mandate a minimum of o under the system provided under section 13 of R.A No. 9275, also
ten percent(10%) blend of bioethanol by volume into all known as the Philippine Clean Water Act:
gasoline fuel distributed and sold by each and every oil Provided, however, That such application shall be in accordance with the
company in the country. guidelines issued pursuant to R.A. No. 9275,
In the event of supply shortage of locally-produced bioethanol during the subject to the monitoring and evaluation by DENR and approved by DA.
fouryear period, d) Financial Assistance
o oil companies shall be allowed to import bioethanol Government financial institutions,
o but only to the extent of the shortage as may be determined by NBB. o such as the Development Bank of the Philippines, Land Bank of the
Philippines, Quedancor and other government institutions providing
5.3 financial services
Within three months from the effectivity of this Act, shall, in accordance with and to the extent by the enabling provisions of their
o a minimum of one percent (1%) biodiesel by volume shall be respective charters or applicable laws, accord high priority to extend financing
blended into all diesel engine fuels sold in the country: to Filipino citizens or entities, at least sixty percent (60%) of the capital stock
o Provided That the biodiesel blend conforms to PNS for biodiesel. of which belongs to citizens of the Philippines
Within two years from the effectivity of this Act, o that shall engage in activities involving production storage,
o the NBB created under this Act is empowered to determine the handling and transport of biofuel feedstock, including the
feasibility and thereafter recommend to DOE to mandate a minimum blending of biofuels with petroleum,
of two percent (2%) blend of biodiesel by volume which may be o as certified by the DOE.
increased taking into account considerations
o including but not limited to domestic supply and availability of locally- SEC. 7. Powers and Functions of the DOE. In addition to its existing powers
sourced biodiesel component. and functions, the DOE is hereby mandated to take appropriate and necessary
actions to implement the provisions of this Act.
SEC. 6. Incentive Scheme
To encourage investments In pursuance thereof, it shall within three months from effectivity of this Act:
o in the production, distribution and use of locally-produced biofuels at a) Formulate the implementing rules and regulations under Section 15 of
and above the minimum mandated blends, and this Act;
Atty. Joyce Tan
b) Prepare the Philippines Biofuel program consistent with the Philippine biofuels: Provided, That the minimum blend may be decreased only within the first
Energy Plan and taking into consideration the DOE's existing biofuels program; four years from the effectivity of this Act. Thereafter, the minimum blends of the
c) Establish technical fuel quality standards for biofuels and biofuel- five percent (5%) and two percent (2%) for bioethanol and biodiesel respectively,
blended gasoline and diesel which comply with the PNS. shall not be decreased;
d) Establish guidelines for the transport, storage and handling of biofuels; d) Recommend to DOE a program that will ensure the availability of
e) Impose fines and penalties against persons or entities found to have alternative fuel technology for vehicles, engine and parts in consonance with the
committed any of the prohibited acts under Section 12 (b) to (e) of this Act; mandated minimum biofuel-blends, and to maximize the utilization of biofuels
f) Stop the sale of biofuels and biofuel-blended gasoline and diesel that including other biofuels;
are not in conformity with the specifications provided for under Section 5 of this e) Recommend to DOE the use of biofuelblends in air transport taking
Act, the PNS and corresponding issuances of the Department; and into account safety and technical viability; and
g) Conduct an information campaign to promote the use of biofuels f) Recommend specific actions to be executed by the DOE and other
appropriate government agencies concerning the implementation of the NBP,
SEC. 8. Creation of the National Biofuel Board (NBB) including its economic, technical, environment, and social impact.
The National Biofuel Board is hereby created.
It shall be composed of SEC. 10. Security of Domestic Sugar Supply. - Any provision of this Act to the
o the Secretary of the DOE as chairman and contrary notwithstanding, the SRA, pursuant to its mandate, shall, at all times,
o the Secretaries of the DTI, DOST, DA, DOF, DOLE, and the ensures that the supply of sugar is sufficient to meet the domestic
Administrators of the PCA, and the SRA, as members. demand and that the price of sugar is stable.
The DOE Secretary, in his capacity as Chairperson,
o shall, within one month from the effectivity of this Act, convene the To this end,
NBB. the SRA shall recommend and the
The Board shall by assisted by a Technical Secretariat proper agencies shall undertake the importation of sugar whenever
o attached to the Office of the Secretary of the DOE. necessary and shall make appropriate adjustments to the minimum
It shall be headed by a Director to be appointed by the Board. access volume parameters for sugar in the Tariff and Custom Code.
The number of staff of the Technical Secretariat and the corresponding
positions shall be determined by the Board, SEC. 11. Role of Government Agencies. To ensure the effective
o subject to approval by the Department of Budget and Management implementation of the NBP, concerned agencies shall perform the following
(DBM) and existing civil services rules and regulations. functions:
a) The DOF shall monitor the production and importation of biofuels
SEC. 9. Powers and Functions of the NBB. The NBB shall have the following through the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC);
powers and functions: b) The DOST and the DA shall coordinate in identifying and developing
a) Monitor the implementation of, and evaluate for further expansion, the viable feedstock for the production of biofuels;
National Biofuel Program (NBP) prepares by the DOE pursuant to Section 7 (b) of c) The DOST, through the Philippine Council for Industry and Energy
this Act; Research and Development (PCIERD), shall develop and implement a research
b) Monitor the supply and utilization of biofuels and biofuel-blends and and development program supporting a sustainable improvement in biofuel
recommend appropriate measures in cases of shortage of feedstock supply for production and utilization technology. It shall also publish and promote related
approval of the Secretary of DOE. For this purpose: technologies developed locally and abroad.
1. The NBB is empowered to require all entities engaged in the d) The DA through its relevant agencies shall:
production, blending and distribution of biofuels to submit reports of their (1) Within three months from effectivity of this Act, develop a
actual and projected sales and inventory of biofuels, in a format to be national program for the production of crops for use as feedstock supply.
prescribed for this purpose; and For this purpose, the Administrators of the SRA and the PCA, and other
2. The NBB shall determine availability of locally-sourced DA-attached agencies shall, within their authority develop and implement
biofuels and recommend to DOE the appropriate level or percentage of policies supporting the Philippine Biofuel Program and submit the same
locallysourced biofuels to the total annual volume of gasoline and diesel to the Secretary of the DA for consideration;
sold and distributed in the country. (2) Ensure increased productivity and sustainable supply of
c) Review and recommend to DOE the adjustment in the minimum biofuel feedstocks. It shall institutes program that would guarantee that a
mandated biofuel blends subject to the availability of locallysourced
Atty. Joyce Tan
sufficient and reliable supply of feedstocks is allocated for biofuel o a fine ranging from a minimum of One million pesos
production; and (P 1,000,000.00) to Five million pesos (P 5,000,000.00).
(3) Publish information on available and suitable areas for In addition, the DOE
cultivation and production of such crops. o shall confiscate any amount of such products that fail to comply
e) The DOLE shall: with the requirements of Sections 4 & 5 of this Act, and
(1) Promote gainful livelihood opportunities and facilitate implementing issuance of the DOE.
productive employment through effective employment services and o The DOE shall determine the appropriate process and the
regulation; manner of disposal and utilization of the confiscated products.
(2) Ensure the access of workers to productive resources and o The DOE is also empowered to stop and suspend the operation
social coverage; and of businesses for refusal to comply with any order or instruction
(3) Recommend plans, policies and programs that will enhance of the DOE Secretary in the exercise of his functions under this
the social impact of the NBP. Act.
f) The Tariff Commission, in coordination with the appropriate Further, the DOE is empowered to impose administrative fines and penalties
government agencies, shall create and classify a tariff line for biofuels and biofuel- for any violation of the provisions of this Act, implementing rules and
blends in consideration of WTO and AFTA agreements; and regulations and other issuance relative to this Act.
g) The local government units (LGU) shall assist the DOE in monitoring
the distribution sale in use of biofuels and biofuel-blends SEC. 14. Appropriations. - Such sums as may be necessary for the initial
implementation of this Act shall be taken from the current appropriations of the
SEC. 12. Prohibited Acts. The following acts shall be prohibited: DOE. Thereafter, the fund necessary to carry out provisions of this Act shall be
a) Diversion of biofuels, whether locally produced or imported, to included in the annual General Appropriation Act.
purposes other than those envisioned in this Act;
b) Sale of biofuelblended gasoline or diesel that fails to comply with the SEC. 15. Implementing Rules and Regulations (IRR). - The DOE, in
minimum biofuelblend by volume in violation of the requirement under Section 5 consultation with the NBB, the stakeholders and the other agencies concerned,
of this Act; shall within three months from affectivity of this Act, promulgated the IRR of this
c) Distribution, sale and use of automotive fuel containing harmful Act: Provided, That prior to its effectively, the draft of the IRR shall be posted at
additives such as, but not limited to, MTBE at such concentration exceeding the the DOE web site for at least one month, and shall be published in at least two
limits to be determined by the NBB. newspapers of general circulation.
d) Noncompliance with the established guidelines of the PNS and DOE
adopted for the implementation of this Act; and SEC. 16. Congressional Oversight Committee. - Upon affectivity of this act, a
e) False labeling of gasoline, diesel, biofuels and biofuel-blended Congressional Committee, hereinafter referred to as the Biofuels Oversight
gasoline and diesel. Committee, is hereby constituted. The biofuels oversight committee shall be
compose of (14) members, with the Chairmen of the Committees on Energy of
SEC. 13. Penal Provisions. both House of Congress as co-chairmen. The Chairmen of the Committee on
Any person, Agriculture and Trade and Industry shall be ex officio members. An additional four
who willfully aids or abets in the commission of a crime members from each House, to be designated by the Senate President and
prohibited herein or Speaker of the House of Representatives, respectively. The minority shall be
who causes the commission of any such act by entitled to pro-rata representation but shall have at least one representative in the
another Biofuel Oversight Committee.
o shall be liable in the same manner as the principal.
In the case of association, partnerships or corporations, SEC. 17. Benefits of Biofuel Workers. - This Act shall not in any way result in
o the penalty shall be imposed on the partner, president, chief the forfeiture or diminution of existing benefits enjoyed by the sugar workers as
operating officer, chief executive officer, directors or officers, prescribed under the R.A. No. 6982, or the Sugar Amelioration Act of 1991. In
responsible for the violation. case sugarcane shall be used as feedstock.
The commission of an act enumerated in Section 12, upon conviction thereof, The NBB shall establish a mechanism similar to that provided under the Sugar
shall suffer the penalty of Amelioration Act of 1991 for the benefit of other biofuel workers.
o one year to five years imprisonment AND
Atty. Joyce Tan
SEC. 18. Special Clause. - This act shall not be interpreted as prejudicial to clean CCC Resolution 2016-001: RESOLUTION ON THE DEVELOPMENT OF A
development mechanism (CDM) projects that cause carbon dioxide (CO2) and CLEAR POLICY ON COAL-FIRED POWER PLANTS IN PURSUIT OF A LOW
greenhouse gasses (GHG) emission reductions by means of biofuel use. CARBON DEVELOPMENT PATHWAY FOR THE PHILIPPINES
SEC. 19. Repealing Clause. - The provision of Section 148 (d) of R.A. No. 8424, 18 May 2016
otherwise known as Tax Reform Act. of 1997, and all other laws, presidential
decrees or issuance, executive orders, presidential proclamations. rules and Summary
regulations or part thereof inconsistent with the provisions of this Act, are hereby
repealed, modified or amended accordingly. RESOLVED
SEC. 20. Separability Clause. - If any provision of this Act is declared The CCC commit to a MAINSTREAM A LOW CARBON DEVELOPMENT
unconstitutional in the same shall not affect the validity and effectivity of the other PATHWAY for the Philippines in accordance with a countrys commitments
provision hereof. under the UNFCCC and in the light of its submitted INDC;
The CCC shall facilitate within 6 mos. of adoption of this Resolution, a
SEC. 21. Effectivity. - This act shall effect fifteen (15) day after publication in at national policy review and framework development on energy, through
least two newspapers of general circulation. a WHOLE-OF-NATION APPROACH, in accordance with
o a low carbon development pathway and national goals and targets
for climate change adaptation and mitigation,
o disaster risk reduction and sustainable development, and
o considering the prioritization and acceleration of renewable energy
development,
o enhancement of energy efficiency and conservation, and
o ensurance of clean, affordable, and reliable energy for the entire
country;
The CCC urges
o the DENR and DOE to initiate and coordinate discussion and
harmonize policies and regulations on new and existing coal-fired
power plants in accordance with a low carbon development pathway
to be reflected in the PHILIPPINE ENERGY PLAN
o the DENR to ensure the incorporation of the measurement and
mitigation of GHG emissions in the development and review process
for the ENVIRONMENTAL IMPACT STATEMENTS OF COAL-
FIRED POWER PLANTS
o NEDA to PRIORITIZE the mainstreaming of low carbon
development and climate change adaptation and mitigation
strategies in the FORMULATION OF ALL NATIONAL AND LOCAL
DEVELOPMENT PLANS;
WHEREAS CLAUSES
RA 9729, as amended by RA 10174/ Climate Change Act: CCC is the lead

policy-making body of the government
o Task to coordinate, monitor and evaluate the program and action
plans of the government relating to climate change
Atty. Joyce Tan
The CCC, in coordination with the DFA, represents the Philippines in the EXECUTIVE ORDER NO. 206: Adopting the Policy on Ensuring Sustainable
Climate Change negotiations, constitute the UNFCCC panel of negotiators Renewable Energy Resource Management And Mandating The Department
o Leads the formulation of the official Philippine position on the of Energy (Doe) to Lead In Its Implementation
Climate Change negotiation issues
State Policy to adopt the ultimate objective of UNFCCC: stabilization of GHG Whereas Clauses
concentrations in the atmosphere at a level that world prevent dangerous o President may transfer to the appropriate agency of the government
anthropogenic interference the jurisdiction over certain watersheds and reservations which may
INDC/ Intended Nationally Determined Contribution, art.2: 70% GHG in the future support water-based energy projects
emissions reduction by 2030 relative to its business-as-usual scenario of
o DOE deputized the Philippine National Oil Company (PNOC) to
2000-2030 which will come from the energy, transport, waste, forestry, and
undertake the management, protection, development and
industry sectors
rehabilitation of the watershed areas surrounding geothermal
The Philippines, as a member of the UNFCCC, supported the adoption of the
reservations
Paris Agreement
o PNOC has the jurisdiction, control, management, protection,
Cabinet Cluster Committee on Climate Change Adaptation and
Mitigation Resolution recommending that the President or his representative development and rehabilitation of the watershed areas surrounding
sign the Paris Agreement in behalf of the Philippines geothermal reservations and other geothermal reservations as may
Philippine supported the adoption of the Sendai Framework on Disaster discovered, identified, determined and developed by the PNOC, and
Risk Reduction 2015-2030 and the 2030 Agenda for Sustainable proclaimed by the President of the Philippines
Development o (NPC) jurisdiction, control and regulation over watershed areas and
o both advocate for a balance between economic growth and reservations surrounding its power generating plants
environmental protection towards building a resilient future o NPC is tasked with the management of the environmental fund to be
EPIRA/ Electric Power Industry Reform Act of 2001 and the Renewable used solely for watershed rehabilitation and management
Energy Law of 2008 o DOE is lead agency to implement the policy and programs of
o support sustainable and environmentally-friendly sources of energy accelerated development and advancement of RE resources
with the EPIRA indicating a preferential bias for environment- o There is a need for an established watershed management body for
friendly, indigenous, and low-cost sources of energy the effective protection, rehabilitation and development of the
Clean Air Act of 1999 and the Clean Water Act of 2004 watershed areas
o Regulate water and air emission to ensure economic growth is o The jurisdiction, control, administration and management of the
consistent with the protection, preservation, and revival of the watershed areas of geothermal reservations are transferred from
environment;
PNOC to the Department of Environment and Natural Resources
o Coal-fired power plants are the biggest source of man-made
o The signing of the Paris Agreement under the United Nations
carbon dioxide emissions
Framework Convention on Climate Change (UNFCCC), the
Primary emitted through human activities
development of renewable energy in the Philippines, such as
35% of global GHG emission
geothermal and hydropower projects, is crucial in the attainment of
the policy on the reduction of greenhouse gas emission.
o Geothermal and hydropower projects are dependent on watersheds
and must be exclusively used for such purposes as other
commercial exploitations threaten its sustainability and proposes a
policy of ensuring sustainable RE resource management
Salient Provisions
Adopting a policy of ensuring sustainable RE resource management in
the country.
Atty. Joyce Tan
The DOE and/or other departments, bureaus, offices, agencies and DAO 2015-07-0014: Mandating Mining Contactors to Secure ISO 14001
instrumentalities of the government, may enter into such agreements as Certification
may be necessary for the effective implementation of this Order and Whereas Clauses
consistent with existing laws and the commitments of the Philippines o Advance the right of the people to a balanced and healthful ecology
under UNFCCC Paris Agreement. o The exploration, development and utilization of mineral resources
shall be under the full control and supervision of the State
o Our biodiversity and mineral resources should be utilized for the
benefit of the Filipino people
o It is the responsibility of the State to promote the rational
exploration, development, utilization and conservation of the
country's mineral resources
through the combined efforts of Government and the
private sector in order to enhance national growth
in a way that effectively safeguards the
environment and protect the rights of affected
communities.
o DENR is the primary government agency responsible for the
conservation, management, development and proper use of the
countrys environment and natural resources,
specifically forest and grazing lands, mineral resources,
including those in reservation and watershed areas, and
lands of the public domain,
as well as the licensing and regulation of all natural
resources as may be provided for by law in order to ensure
equitable sharing of the benefits derived therefrom for the
welfare of the present and future generations of Filipinos.
o DENR is required to ensure that environmental standards in mining.
o A multi-stakeholder team led by the DENR shall conduct a review of
the performance of existing operations.
o The extractive nature of mining necessitates a greater degree of
standards to ensure that any adverse impact on the environment.
o There is a necessity to develop strategies and policies to reduce
mining fugitive and greenhouse gas emissions as a climate change
mitigation action
o ISO provides for a standard environmental system that draws out an
effective framework to achieve improvement in environmental
performance and compliance with the international acceptable
standards
o ISO Certification will help achieve sustainable growth by the
development of an effective environmental management system
Salient Points
Atty. Joyce Tan
o It covers all holders of valid and existing Mineral Agreement (MA) GLOBAL ENERGY DILEMMAS: A GEOGRAPHICAL PERSPECTIVE
and Financial or Technical Assistance Agreement (FTAA) that are in
Introduction
the operating period
o MA or FTAA holders engaged in metallic mining operations should Global energy dilemma: Can we have the necessary energy for economic
secure the ISO 14001 Certification within one year from the date of development and, at the same time, manage the transition to a low-carbon
said DAO energy system necessary to avoid catastrophic climate change?
o In the case of an MA or FTAA holder filing for a Declaration of The aim of the paper is to demonstrate how a geographical perspective adds
Mining Project Feasibility (DMPF) for metallic mineral, the ISO insight to the analysis of energy security and climate change. The analysis
14001 Certification should be secured within one year from receipt combines three relatively disparate sets of literature on:
of the order approving the said DMPF o Global energy security,
o ISO 14001 Certification for MA or FTAA holders engaged in non- o Economic geography of globalization, and
metallic mining operations is at their option within the same one year o Politics and economics of climate change.
period. Mandatory compliance shall be imposed thereafter under a The central message is that while there may be a single global energy
deadline to be set at the appropriate time dilemma, it is played out in very different ways across the states that make up
o Failure to secure or maintain the ISO 14001 Certification shall cause the global political economy and that understanding this is essential to
the suspension of the pertinent Environmental Compliance reaching international agreement on climate change policy.
Certificate (ECC) and non-issuance of Ore Transport and/or Mineral The conclusions suggest that while human geography has much to offer, a
new focus and division of labor is required to consider the key issues of
Export Permit until such time that the said Certification is secured.
energy security and climate change.
The DENR shall undertake a periodic review of the mining
operations of all MA or FTAA holders in the operating Challenges to global energy security
period to ensure compliance with environmental standards,
laws and regulations, including conditionalities of their International Energy Agency (IEA): Energy security means adequate,
ECCs and Environmental Protection and Enhancement affordable and reliable supplies of energy.
Program. o The state sees itself as the guarantor of energy security because an
adequate, affordable and reliable supply of energy is the lifeblood of
An assessment team composed of technical
modern society.
experts from the DENR and other government
agencies will be created to undertake said review Fossil fuel economy
and give pertinent recommendations to the DENR.
The fabric of our economy and some would argue our political system
(carbon democracy) is dependent upon plentiful and relatively inexpensive
supply of the fossil fuels.
However, when viewed in the span of human history, fossil fuel capitalism is
a relatively short and very particular period of development modeled around
the industrialization of what are now the developed market economies of the
Organization of Economic Cooperation and Development (OECD).
The energy services provided by the consumption of hydrocarbons come with
externalities, in the form of pollution and environmental degradation, the cost
of which is seldom borne by the producer or the consumer.
o The market failure (i.e., the cost of energy remaining relatively low
despite its significant contribution to economic growth) has been
essential to keeping energy services affordable, but it now threatens
the planetary ecosystem.
Atty. Joyce Tan
As industrialization spread in the form of colonialism and, more recently, Confidence in sustained high prices can open up reserves
globalization so did its fossil fuel addiction. However, a number of factors now in high cost locations. They made the exploitation of non-
challenge the sustainability of fossil capitalism. This challenges can be conventional oil reserves, such as the Canadian oil sands,
divided into two namely, (1) above-ground and (2) below-ground factors. economically viable. Equally, a fall in price can bring about
o Above-ground factors relate primarily to the consequences of the reduction in investment in high-cost and/or high-risk fields.
changing ownership and control of oil and gas resources. Technological usage can also increase resource
The widespread nationalization of the oil industry and the availability.
creation of OPEC broke the hegemony of the OECD and its The macroeconomic situation also affects energy demand
associated international oil companies (IOC). and price and can delay investments in new production.
The increasing financialization of oil complicates the Consequently, there are now growing concerns that once
situation as both speculative activity and growing physical economic growth returns demand may quickly outstrip
demand for oil played a part in the recent record high oil supply resulting in a price spike that could even trigger a
prices. second recession.
During 1970s IOCs dominated global oil production and o Advocates of Peak Oil maintain that current tightness of supply
held the majority of reserves. However, by 2007, state- reflects the fact that the global oil industry is about or will soon reach
controlled national oil companies (NOCs) accounted for peak production and that thereafter there will be a substantial
52% of global oil production and held 88% of total reserves. decline in achievable levels of production.
The challenge for IOCs today is gaining access to reserves Peak Oil in its purest form is a below-the-ground problem
to develop and they are increasingly forced into extreme about how much of the reserve base has already been
environments such as the deep water offshore and this is consumed and how much is available now and in the
fraught with risks (e.g., recent oil spill in the Gulf of Mexico). future.
For the energy-rich states, control over the rents generated o While there is no physical shortage of oil reserves, the problem is
by their energy exports is a central concern and some that new production is increasingly more difficult to access, more
states, such as Russia, have sought to use their energy costly to extract and will take more time to reach market. As a result,
wealth to promote foreign policy goals. Some energy- it will be increasingly challenging to match supply with demand.
importing states have decried this as resource o In sum, while there is no consensus, there are real doubts about the
nationalism (i.e., a criticism that rings hollow when the US ability of oil production to match demand in the future but there are
and its allies continue to use their military strength to also other pressing reasons why the world should reduce its reliance
protect supplies of oil). on hydrocarbons.
There is now a view that the rising tensions between
energy-exporting and energy-consuming states in an A new energy paradigm
increasingly tight supply situation is resulting in an age of
Energy is central to climate change policy for the simple reason that the
resource wars where energy-importing powers compete
consumption of hydrocarbons to supply energy services is the single most
for control and influence over energy-exporting states.
significant source of carbon dioxide emissions.
o Below-the-ground factors relate to the finite nature of hydrocarbon
o IPCC estimates that fossil fuel energy has released 1100 GtCO2 into
energy resources.
the atmosphere since the mid-nineteenth century.
The total amount of hydrocarbons on the planet today is
o 61% of GHGs (and 75% of all CO2) stem from energy related
the resource base, but this is not the amount available for
activities, with the large majority coming from fossil fuel combustion.
human exploitation, that is the proven reserve (i.e.,
Many believe that there is now a new energy paradigm where the central
generally taken to be those quantities that geological and
question is how to design a new energy policy with security of supply and
engineering information indicates with reasonable certainty
climate change at the core.
can be recovered in the future from known reserves under
existing economic and operating conditions). A low carbon energy revolution
Atty. Joyce Tan
o
IEA maintains that limiting temperature rise to 2 C requires a low-carbon o Associated processes of urbanization and industrialization driving
energy revolution. demand for commercial fuels, particularly for transportation.
o End-use energy efficiency is seen as the largest contributor to CO2 IEAs International energy outlook 2009 forecasts that between 2006 and
abatement in 2030 with bigger reductions in the role of coal-based 2030, non-OECD energy consumption will increase by 73% compared with a
electricity generation and bigger contributions from nuclear power 15% increase in energy use among the OECD countries with Brazil, Russia,
and renewable energy. India and China accounting for more than two-thirds of total non-OECD
o They also see carbon capture and storage, which has yet to be growth.
proven on a commercial scale, contributing a 10% reduction in
emissions in 2030 compared to today. The consequences for climate change
o In the transportation sector, the use of biofuels and hybrid and
According to the World Resources Institute, the top 25 emitters account for
electric vehicles, will lead to a big reduction in demand.
an estimated 80% of emissions. The top 15 emitters accounted for 85.55% of
This low(er)-carbon energy revolution comes at considerable cost; the 450-
emissions between 1990 and 2006 while five countries alone were
scenario requires $10.5 trillion more investment in energy infrastructure and
responsible for 60% of emissions. Looking at these top 15, it is possible to
energy-related capital stock globally than in the reference scenario.
identify old emitters (e.g., OECD/EU, core remnants of USSR-Russia and
Clearly, the new energy paradigm and associated low-carbon revolution Ukraine) and new emitters (e.g., China, India, Brazil).
require a major political commitment from the international community and
The IEA projections show that non-OECD world accounting for 67% of total
individual states. It also requires a pace of technological change umatched in
energy-related CO2 emissions in 2030, compared with 54% in 2007. If the
human history.
level of GHG concentrations predicted by the reference scenario were to
The science suggests that even if we could secure the fossil fuels needed to become a reality, it could result in a level of atmospheric concentration of
meet future demands for energy services, the earths ecosystem cannot 1,000 ppm of CO2 equivalent over the longer term and an eventual
sustain the associated increases in the level of CO2 concentrations without o
temperature rise of 6 C.
triggering catastrophic climate change.
While the legacies of the past oblige OECD countries to take the lead in
The globalization of energy demand reducing emissions, the dynamics of the recent past and the likely future
require climate change policies to address the needs of the developing world,
BP 2009: in 2008, non-OECD primary energy demand surpassed OECD particularly in terms of finance and technology transfer, as it is they who will
demand for the first time mainly driven by the fact that the non-OECD be demanding an increasing share of global energy services and generating
contribution to global economic growth has almost doubled since the 1990s the largest share of future emissions.
to over 40% today, with the most of this increase happening since the turn of
the century. The global energy dilemma nexus
o The impact of this shift in the locus of economic dynamism had a
The global shift in energy demand is center stage in the current impasse as
disproportionate impact on energy demand as economic growth in
the global South sees the Norths demand that they must also constrain
the developing world is far more energy intensive than in the OECD
emissions as a threat to their future economic prosperity. The missing link in
economies (i.e., developing world contributed approximately 90% of
the current stalemate is the impact of economic globalization.
the growth in total energy demand).
Economic globalization is a set of processes whereby production and
o Thus, in a relatively short period of time there has been a dramatic
consumption activities shift from the local or national scale to the global scale.
shift in global energy demand and all of the indications are that this
o The creation of global production networks and the related increase
pattern is set to continue.
in international trade is driving new economic activity that, in turn, is
IEAs World energy outlook 2009 reference case forecasts a 40% increase in
promoting economic development in the emerging economies of the
global energy demand between 2007 and 2030 and identifies China and India
world.
as the main locus of growth, followed by the Middle East. Key drivers are
Historically, there has been a close relationship between economic
o Population increase
development and energy consumption.
o Economic growth
Atty. Joyce Tan
th
o During the 20 century, there was a 16-fold increase in the level of All this requires substantial capital investment, which few states, businesses
economic output and the level of energy consumption. However, or consumers can afford, especially since the region has been particularly
closer examination of this correlation reveals that it is increasingly hard hit by the current global financial crisis.
complex and dynamic. However, without such expenditure the windfall energy demand and emission
o IPCC reports that an analysis of 125 countries indicated that well- reductions that were a consequence of the collapse of the Soviet system are
being and level of development correlate with the degree of modern fast disappearing and the energy importing post-socialist states now face
energy services consumed per capita in each country. both energy security and climate change challenges that could force them
o Kaya Identity provides a formal link between economic growth, back onto a high-carbon path that could see them join the ranks of fast-
energy demand and carbon emissions and plays a key role in the growing carbon emitters.
models used by the IPCC to forecast future CO2 emissions. It shows
that total GHG emissions in a country result from population size, The curse of plenty: energy dilemmas in the energy-rich emerging world
per capita income, economic structure, energy intensity, fuel mix
and GHG per unit of fuel. The challenges relate to maximizing the potential benefits of the income
generated by oil and natural gas exports.
The global energy dilemma nexus brings together the processes,
Resource curse: resource-rich, and particularly energy-rich, economies have
consequences and issues behind global energy security, economic
globalization and climate change policy. tended to develop at a slower rate than comparable resource-poor
economies.
Global energy dilemmas If climate change policy does result in substantial reductions in demand for
hydrocarbons, it will present a major challenge to those states that currently
The central proposition is that the nature of the energy dilemma facing a benefit from energy exports.
particular region, state or world region is shaped by the interplay of energy There is tension between the energy-exporting states that want security of
security concerns, the processes of economic globalization, climate change demand and high prices for their oil and gas, and the energy-importing states
policy and its position in the global political economy. that want security of supply, lower prices and reduced import independence.
It is understood that there is considerable variation amongst the states and
regions within which each grouping and that some states might occupy Fuelling growth: energy dilemmas in the energy poor emerging world
multiple positions in the typology.
It is the rapid growth of their energy consumption and CO2 emissions that
Sustaining affluence: energy dilemmas in high-energy society pose the greatest challenge.
The critical issue is securing sufficient energy to fuel their rapidly growing
Dilemma: securing affordable and reliable energy services at the same time economies and the increased demand for energy services associated with
as reducing the levels of CO2 generated by the high-energy lifestyles improving living standards.
In addition to addressing the need to reduce domestic carbon emissions, The challenge us to convince energy-poor emerging economies that
these energy-exporting economies are increasingly concerned about the cooperating on climate change mitigation will not compromise their future
carbon intensity of their exports. economic growth.
For these wealthy economies, the solution to their energy dilemma is being
sought through increased energy efficiency, carbon trading, CCS to Degradation and development: energy dilemmas in low energy societies
decarbonize fossil fuel use and electricity generation and the promotion of
renewable energy and nuclear power. Nearly 2.4 billion people use traditional biomass fuels for cooking and nearly
1.6 billion people do not have access to electricity. Reliance on biomass fuels
Legacies and liberalization: energy dilemmas in the post-socialist world is itself a cause of environmental degradation (deforestation) and also places
the burden of collection on women and children and causes ill health.
With economic recovery and higher incomes, consumer-led demand for Energy ladder: as income rises, demand for energy service increases.
energy services has replaced the demand previously generated by the The increased provision of energy services is central to the development
smokestack industries of the socialist era. process. However, increasing levels of commercial energy demand in the
developing world raises concerns about energy security and climate change.
Atty. Joyce Tan
o Energy security: When energy-poor developing economies are WORLD ENERGY OUTLOOK
drawn into the commercial energy system, they are exposed to the
price volatility of global energy markets. Summary
o Climate change: Increasing demands for energy services in the
The Paris Agreement on climate change, which entered into force in
global South will generate increased GHG emissions.
November 2016, is at its heart an agreement about energy.
The limited success of Clean Development Mechanism and the empty o Transformative change in the energy sector, the source of at least
promises of financial assistance by G-8 have done little to convince the two-thirds of GHG emissions, is essential to reach the objectives of
developing world that the technology and finance needed to promote a low- the Agreement.
carbon path to development will be forthcoming. o Growth in energy-related CO2 emissions stalled completely in 2015.
This was mainly due to a 1.8% improvement in the energy intensity
Conclusion of the global economy as well as the expanded use of cleaner
energy sources worldwide, mostly renewables.
The world currently faces a global energy dilemma: how to satisfy ever- The renewables-led transformation of the power sector has given focus to a
growing demand for energy without doing irreparable damage to the planets new debate over power market design and electricity security, while
ecosystem. traditional energy security concerns have not gone away.
It is increasingly difficult and costly to match the demand for energy with 30% rise in global energy demand to 2040 means an increase in
reliable and affordable supplies (i.e., hydrocarbon-based energy system) and consumption for all modern fuels, but the global aggregates mask a multitude
even if it were possible, this would result in catastrophic climate change. of diverse trends and significant switching between fuels. Moreover,
At present, the global energy system is experiencing a dramatic shift in its hundreds of millions of people are still left in 2040 without basic energy
center of gravity, as the emerging economies of the global South are services.
increasingly becoming the locus of both future energy production and new o Renewable energy is fast-growing in several countries while coal
energy demand. use it hit by environmental criticism.
o Energy consumption is shifting to industrializing countries.
Bringing about the energy revolution envisioned by the IEAs 450 ppm
A cumulative $44 trillion in investment is needed in global energy supply in
scenario will require huge transfers of capital and technology between the
our main scenario, 60% of which goes to oil, gas and coal extraction and
North and the South and it will fundamentally change the meaning of supply, including power plants using these fuels, and nearly 20% to
business as usual. renewable energies. An extra $23 trillion is required for improvements in
energy efficiency.
o Compares to 70% in 2000-2015 which went into fossil fuels.
o Depleting production and unrest in oil-rich countries and shift to RE
are some of the factors.
Countries are generally on track to achieve, and even exceed in some
instances, many of the targets set in their Paris Agreement pledges; this is
sufficient to slow the projected rise in global energy-related CO2 emissions,
but not nearly enough to limit warming to less than 2 C.
o China is past the point of heavy use of energy-intensive materials
since it reached its peak of infrastructure construction.
o India also showed reduction in coal-use in the power mix from 75 to
55%
o Developed countries also look to be on track in meeting their
pledges.
A step-change in the pace of decarbonization and efficiency improvement is
required in the 450 Scenario, underlining the importance of the five-year
review mechanism, built into the Paris Agreement, for countries to increase
the ambition of their climate pledges.
Atty. Joyce Tan
o The frontlines for additional emissions reductions are in the power the risks would increase sharply in the event of sudden policy shifts,
sector, via accelerated deployment of renewables, nuclear power stop-and-go policy cycles or other circumstances that lead
and carbon capture and storage; a strong push for greater companies to invest for demand that does not materialise.
electrification and efficiency across all end-uses; and a robust and A near-term risk to oil markets could arise from the opposite direction a
concerted clean energy research and development effort by shortfall of new projects if the cuts in upstream spending in 2015-2016 are
governments and companies. prolonged for another year.
Electricity takes an ever-larger share of the growth in final energy Over the longer term, oil demand in our main scenario concentrates in freight,
consumption: from just over one-quarter over the last 25 years, electricity aviation and petrochemicals, areas where alternatives are scarce, while oil
accounts for almost 40% of additional consumption to 2040 in our main supply despite a strong outlook for US tight oil increasingly concentrates
scenario and for two-thirds in the 450 Scenario. in the Middle East.
o Policy shoft necessary to support the choice of electric vehicles, to o Decrease in one area is offset by an increase of fossil fuel use in
overtake fossil fuel-powered vehicles. another area.
The electricity sector is the focus of many Paris pledges: nearly 60% of all A 1.5% annual rate of growth in natural gas demand to 2040 is healthy
new power generation capacity to 2040 in our main scenario comes from compared with
renewables and, by 2040, the majority of renewables-based generation is the other fossil fuels, but markets, business models and pricing arrangements
competitive without any subsidies. are all in
In the 450 Scenario, nearly 60% of the power generated in 2040 is projected flux. A more flexible global market, linked by a doubling of trade in liquefied
to come from renewables, almost half of this from wind and solar PV. natural gas
o A 40% increase in generation from renewables, compared with our (LNG), supports an expanded role for gas in the global mix.
main scenario, comes with only a 15% increase in cumulative With no global upturn in demand in sight for coal, the search for market
subsidies and at little extra cost to consumers: household electricity equilibrium depends on cuts to supply capacity, mainly in China and the
bills in the 450 Scenario are virtually unchanged from those in our United States.
main scenario, thanks also to more efficient energy use. The inter-dependencies between energy and water are set to intensify in the
o coming years, as the water needs of the energy sector and the energy
Cost reductions for renewables, on their own, will not be enough to secure an needs of the water sector both rise.
efficient decarbonisation of electricity supply. Structural changes to the o A rise in biofuels demand pushes up water use and greater
design and operation of the power system are needed to ensure adequate deployment of nuclear power increases both withdrawal and
incentives for investment and to integrate high shares of variable wind and consumption levels.
solar power. Managing energy-water linkages is pivotal to the prospects for successful
o careful review of market rules and structures is required to ensure realisation of a range of development and climate goals.
that generators have ways to recover their costs, and that the power
system is able to operate with the necessary degree of flexibility.
The challenges to achieve the 450 Scenario are immense, requiring a major
reallocation of investment capital going to the energy sector.
o It would require net-zero emissions at some point between 2040 and
2060 (even if negative emissions technologies can be deployed at
scale), thus requiring radical near-term reductions in energy sector
CO2 emissions, employing every known technological, societal and
regulatory decarbonization option.
For the moment, the collective signal sent by governments in their climate
pledges (and therefore reflected in our main scenario) is that fossil fuels, in
particular natural gas and oil, will continue to be a bedrock of the global
energy system for many decades to come, but the fossil-fuel industry cannot
afford to ignore the risks that might arise from a sharper transition.
o Investment in developing new upstream projects is an important
component of a least-cost transition, as the decline in output from
existing fields is much larger than the anticipated fall in demand. But

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REVIEWER,

International Telecommunications Union: It is easier to start

It is recognized that many multilateral funding agencies are

Performance trade-offs: system-wide performance must be

Firm and consumer decision making

responses of other firms and supporting industries. sectors.

lock-in forces can also involve formal government institutions

o Special Realty Tax Rates on Equipment and Machinery. - Any law to

January 12, 2007

c) Bioethanol fuel - shall refer to ethanol (C2H30H) produce from

d) Biodiesel - shall refer to

q) Feedstock - shall refer to the

RA 9729, as amended by RA 10174/ Climate Change Act: CCC is the lead

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