Credit Your Carbon (Part 2 of 2)

The Philippines’ renewable energy (RE) capacity presents two development opportunities: foreign investments enabled by the Kyoto Protocol’s Clean Development Mechanism (CDM) and revenues from selling earned carbon credits, aka Certified Emission Reduction (CER) credits.

“Green-vestments”

Some projects exploit natural resources, like jatropha – a major biofuel ingredient. Seeing its potentials, the Administration in 2006 ordered the conversion of 2 million HA of idle land into jatropha plantations. A Korean Joint Venture is bringing $210 million for jatropha exploitation, including a $60-million biorefinery (online by 2009). Spanish firm Bionor announced in 2007 intent to invest $200 million in developing 247,000 acres for jatropha production.

A worthy side-note: reaching these idle lands requires infrastructure – roads, bridges, ports and airports – providing local populace vital livelihood, spurring sustained development.

CER credit sales are another revenue source. PNOC-Alternative Fuels Corporation’s Jatropha Plantations already have international entities like Mitsubishi Securities of Japan, and the World Bank ready to purchase credits, spending up to $70 million annually.

Other Philippine CDM projects include methane recovery via hog farms (approximately $2000-$4000 for earned credits), two Davao hydroelectric power plants (displacing 95,174 tons of Carbon Dioxide equivalent (tCO2e)), a Payatas Dumpsite biogas project (reducing 116,339 tCO2e yearly for 10 years), and two British-supported 18-MW Panay biomass facilities, estimated at P9.3 billion in 25-years.

Changing Climates

The benefits from hosting CDM projects are incontrovertible. But attracting foreign investors requires what I espoused long ago: we need to be kind, and true to our word. Stated by PGMA in her 2008 State of the Nation Address: “Government...[should] be more helpful, more courteous, more quick.”

Being kind, the Government could consider new corporate tax schemes for investors developing our RE sectors, especially those located deep inside rural Philippines.

For example, in exchange for a Wind Farm powering Siquijor, taxes could be 0% for the first three years, followed by a seven-year 50% tax break, thereafter, a fixed 15% for the program’s life, providing investors a lasting incentive for long-term national development. As postulated in the Laffer Curve, low taxes would not necessarily result in lower revenues, as it would be offset by increased business, investments, CER credits, and income taxes from viable livelihoods.

Using this, Vietnam earned $11 billion in 2008 Foreign Direct Investments (FDIs), amidst the Global Economic Storm. We earned $2.6 billion.

Being true to our Word proves harder, especially since many cling to a Constitution dated by quick-shifting economic times.

For instance, eliminating the 30% foreign ownership limit on our natural resources would foster investment-friendly climates. Isn’t it absurd making renewable energy sources inalienable? Wind, sun, and running water occur everywhere, but the 1987 provision encompasses those “natural resources.”

Also, research revealed that nuclear power emits 66 grams of carbon dioxide equivalent (gCO2e) per Kilowatt hour (KWh) – considerably lower than coal-fired plants (960 gCO2e/KWh), and natural gas facilities (443 gCO2e/KWh). And my October 6 article mentioned safer technology like the Pebble Bed Reactor limiting Chernobyl-like disasters.

Safer and with lower emissions, nuclear is a major energy source. But lingering fears of past accidents morph our anti-nuclear weapons provisions into anti-nuclear power; they are not the same.

Green RE for All

RE would reduce our foreign oil dependence (about 101.4 million barrels, worth $7.5 billion, imported in 2007). Raising RE share from the current 0.16% to 41% could save $2.9 billion. And despite oil prices’ downward trend (from July's $147.02 to $43.58 at this writing), a fourth Oil shock can and will happen. OPEC already announced a 2.2 million-barrel daily output cut in December, hinting at further cuts in March amidst continued sagging demand.

International telecommunications manufacturers, like Ericsson and Nokia Siemens Networks have switched to solar, wind or biofuel-powered base-stations, something our telco companies can do. We could export our natural resources like copper for oxygen-free wind turbine wiring, and silica for fiber-optic communications, for these companies.

Capitalizing on the demand boom for solar energy photovoltaic (PV) cells in previous years and the resulting soaring prices of silicon, polysilicon (the PVs' primary substrate) manufacturers drastically expanded plant capacities. The resulting supply glut is dwarfing demand, and peak watt (a solar electricity unit) prices have dropped below $3, from a $5 high. Further declines are predicted.

RE is entering the consumer level: the electric-powered jeepney – e-jeepney – with a 40-kph maximum speed and electric tricycles – “trikebayans” – running 12 hours on 36-watt batteries. It costs Php48 to operate daily, compared to Php200 for gas-powered tricycles.

E-jeepneys cost P500,000, and “trikebayans”, P68,000. Government can extend operators concessional loans, using Oil Evat revenues, financed by their increased earnings, plus augmented income by converting their tricycles into rolling sari-sari stores, selling items like cellphone cards, bottled beverages, candies, and packaged snacks – as practiced in India.

Harnessing our RE capabilities can deliver sustainable national development, while simultaneously moving the environmental revolution forward.

Reactions? Email entreprenomics@gmail.com