Keynote Speech: Development with Conscience in the Energy Sector

Keynote Speech of Senator Loren Legarda

Opening Session of the 12th APEC Energy Ministerial Meeting

“Development with Conscience in the Energy Sector”

13 October 2015 | Shangrila Mactan, Cebu

Secretary Zenaida Monsada,

Ministers,

Excellencies,

Distinguished guests and delegates,

Ladies and gentlemen,

Good morning.

I am deeply honored for this opportunity to address the 12th Energy Ministerial Meeting.

APEC’s 21 member economies is home to about 2.8 billion people and account for approximately 57 percent of the world GDP and close to 50 percent of world trade.  It is said that because of APEC’s hard work, “growth has soared in the region, with real GDP doubling from just USD 16 trillion in 1989 to USD 31 trillion in 2013.”

The statistics of APEC builds a solid case — “Average tariffs fell from 17 per cent in 1989 to 5.2 per cent in 2012, and within that period the region’s total trade increased over seven times—outpacing the rest of the world with two-thirds of this trade occurring between member economies.”[1]

Consequently, per capita income rose by 45 percent, and as the adage goes, millions were lifted out of poverty.[2]

To what extent growth has been translated to equity and fair opportunities for all is a different discussion altogether.  I will touch on that later.

The connection between free and open trade and investment and poverty reduction, many would say, is indisputable — with reduced trade barriers comes increased trade and therefore, growth and prosperity comes not too far behind.

Let me hasten to add, however, that the sum of 1 + 1 is not always 2.  Development is good; but development without conscience destroys the world.  We end up with zero.

Development and the choices we make should not be a zero sum game.

It is for this reason that I welcome the work of APEC in the energy sphere.

The theme of your meeting, “Towards an Energy Resilient APEC Community,” resonates deeply in my own advocacy as the United Nations Champion for Disaster Risk Reduction and Climate Change Adaptation for Asia-Pacific.

As an Asian, my resolve on the subject is deep and personal.  Asia Pacific bears much of the brunt of climate change, accounting for more than 80 percent of the global loss of life due to disasters.[3]

Why do I speak of climate change in an energy meeting?

Energy security and climate security are two stories under the same plot.

There is strong scientific consensus that climate change is largely the consequence of greenhouse gas emissions.   These emissions largely come from human activities, including burning fossil fuels for electricity, heat, transportation, and agriculture.

The Asian Development Bank projects that energy demand in Asia Pacific will almost double by 2030.  With development comes greater demand for energy.  The Asia-Pacific region is poised to have a 3.2 percent growth both in 2015 and 2016 from the 2.9 percent expansion in 2014^[4].

Clearly, the sustainable development-energy nexus requires an urgent examination of how the region can tap on the power of innovation and new technologies to provide for the energy it needs in a sustainable and inclusive manner.

There are three issues that I wish to underscore:

• First, across Asia, 610 million are still without access to electricity;
• Second, energy decisions have mainly been rooted on affordability and expediency as primary considerations. ADB, in its 2013 Outlook Report cites that by 2035, the majority of the region’s primary energy demand will still come from fossil fuels such as coal, oil and natural gas;
• Third, more than half of the global population live in cities. The ADB report poignantly pictures the problem – “Cities consume 78% of the world’s energy and contribute more than 60% of all carbon dioxide and other GHG emissions, while covering less than 2% of the earth’s surface.”^[5]

We know the issues, but solutions are hard to come by.

A great man once said, “Sometimes it falls upon a generation to be great. You can be that great generation.”^[6]

Those were the words of the late Nelson Mandela in 2005 before a Trafalgar Square assembly, calling attention to the great opportunity for change in 2005.

Ten years hence, we are still seeking solutions, not just to the daunting problems of poverty, but to the looming threats of global catastrophe brought about by climate change.

The First Energy Ministers Meeting was held in August 1996 in Australia.  It was the year the Philippines first chaired APEC.  As early as then, Ministers already talked about the “adoption of a strategic approach to reducing environmental impacts of energy supply and use.”

For this Meeting, I understand that you have identified four key themes for discussion: 1) climate proofing energy infrastructure; 2) improving energy trade and investment in APEC; 3) advancing cutting-edge energy efficient technologies; and 4) promoting community-based clean energy use in energy poverty stricken areas.

This event is an opportunity for all of us to address issues that need immediate response, and propose strategies that will augment present initiatives of APEC.

The APEC Business Advisory Council (ABAC), the voice of business in APEC, has been very forthcoming in its views on the region’s sustainable energy agenda. Energy security, it said, will increasingly depend upon policies that support green growth.  I join ABAC in welcoming the APEC Leaders’ ambitious commitment to double the share of renewables in power generation by 2030. Technical innovation will contribute greatly in this endeavor.

It is time to achieve progress in these commitments.

Allow me now to give my humble views on the four themes of this meeting.

Climate Proofing Energy Infrastructure

The energy infrastructure system receives the brunt of disaster impacts. This results in disruptions in businesses and in the delivery of services.

Interconnecting systems is considered as one of the most critical features of the energy sector. Natural hazards put the highly interdependent energy system at risk.  Disturbances in the energy system, in turn, upset economic activities and cause distress to other critical infrastructure sectors, like transportation, water supply and communications.

We, therefore, need to give focus on risks, as understanding our vulnerabilities supports decision-making in the context of climate change.

The approach being advanced by the Philippines is the incorporation of information parameters and benchmarking in carrying out vulnerability assessments and emergency response planning.   Our aim is to identify major energy networks that may be compromised by natural hazards.

I have authored two laws — the Climate Change Act of 2009 and the Philippine Disaster Risk Reduction and Management Act of 2010 which mainstream disaster risk reduction management and climate change adaptation in the development processes in policy formulation, socio-economic development planning, budgeting and governance in critical areas, including the energy sector^[7].

Our experiences with Typhoon Haiyan in 2013, whose intensity is unmatched in recent history, give us crucial lessons.  The total damage to the electricity sector then was estimated at US$ 155 million^[8]. The distribution utilities were the hardest hit, which accounted for 76 percent of the total damage to the energy sector, causing disruptions in electricity supply to residential consumers and public buildings^[9].

This underscores the importance of building adaptability in the energy sector.  Climate proofing the energy infrastructure has clearly become a necessity.

APEC and its member economies need to cooperate with the private sector, including ABAC, towards fostering public-private partnerships that will encourage the adoption of appropriate standards for critical energy infrastructure.

Improving Energy Trade and Investment in APEC

The Asia Pacific region, according to ADB, requires between $7 trillion and $9.7 trillion in the energy sector from 2005 to 2030.[10]

Creating a fiscal space for investments in climate resilient infrastructure, by providing easier access to markets, finance, and innovation, is crucial.

Energy trade and investment can be affected by barriers which create obstacles to fair competition.  These come in the form of quotas, export subsidies, procedural hurdles, local content requirements, just to name a few.

They can also come in the form of “behind-the-border barriers” such as poorly functioning financial markets, weak legal systems, restrictive regulatory approaches, among others.

Bottlenecks also come in the form of inadequate infrastructure, power grids, road and port facilities; but one of the biggest hurdles comes in the form of regulatory overreach.

These bottlenecks lay the predicate for a status quo — with economies continuing to embrace technologies that are easily accessible and cheap, but harmful to our environment.

Business environments need to adhere to the Rule of Law — considering that businesses will only be willing to invest in an economic space that provides predictability, transparency and fairness.

Investments in resilient energy infrastructure generate sustained economic and social benefits and deserve the highest priority for policy makers.

Advancing Cutting-Edge Energy Efficient Technologies

We are living in a world with finite resources and yet generations have lived over the centuries like there is no tomorrow.  Our natural environment has been compromised.  We all need to acknowledge and embrace this reality.

It does not mean, however, that we can just stand idly by to witness the continuing decline of our environment.

New, cutting-edge energy efficient technologies are within our reach.  I am therefore encouraged by APEC’s commitment to reduce aggregate energy intensity by 45% by 2030 from 2005 levels. Wider use of energy-saving equipment and technical innovation will contribute greatly in this endeavor.

We need to heed the private sector’s call for governments to take decisive action on environmental services, including further identification and elimination of non-tariff barriers to environmental goods and services and support for the development of low-carbon and renewable energy technologies.

Many APEC economies will continue to generate power, using fossil fuel, including coal. It is imperative that the best available technology be deployed.  Diversification of energy sources will promote disaster resilience.

Investments in sophisticated sustainable energy technologies augur well in reducing harmful emissions, protecting health and the environment, and sustaining economic growth.

APEC economies need to work with the private sector to develop clean and energy-efficient, climate-friendly technologies.  I, therefore, welcome ABAC’s initiatives that seek to build a culture of innovation in our economies.

Promoting Community-Based Clean Energy Use in Energy Poverty Stricken Areas

The final theme touches on the very core of the APEC 2015 theme – “Building Inclusive Economies, Building a Better World.”

Growth is difficult to imagine without energy; and energy that does not take into consideration the needs of future generations can only destroy and not build.

This brings me to the point I made at the onset.  Development, progress, and quality of life cannot be the exclusive domain of a few. Open trade brings immense opportunities, but unless fair opportunities are shared with all, the prosperity that APEC aims to deliver becomes an empty promise.

Energy drives economic growth and yet 1.1 billion, globally, have no access to electricity. Asia accounts for 615 million.

I therefore welcome APEC’s initiatives that will provide energy access to everyone, including those in remote communities.  Clean fuel and renewable energy need to be harnessed, and development of micro grids has to be pursued in addressing energy access challenges.

Inclusive growth begins with making basic services available to all.  Fostering the participation of micro-, small, and medium enterprises in the regional and global markets, much less in the domestic supply chain, will not happen unless energy access is guaranteed to everyone.  Off grid and last mile communities need to enjoy the benefits of APEC as much as everyone else in urban areas.

With the onset of technological innovations in energy, achieving universal access to clean energy technologies is within the reach of communities in APEC.

In the Philippines, for example, estimates indicate that we have some 246,000 megawatts of untapped renewable energy capacity. This is thirteen times more than our current installed capacity.  Failure to develop these capacities would be unforgivable.  It is for this very reason that I authored the Renewable Energy Act of 2008 to ensure the aggressive development of renewable energy resources in the Philippines.  It is my commitment to ensure its full implementation.  You can consider it as my own contribution to APEC’s aspirational goal of doubling renewable energy capacities in the region.

APEC needs to focus on promoting the growth of the low-carbon economy as a means to create jobs and curb carbon emissions.

APEC cannot afford to take half steps in its efforts to deliver clean energy to poverty stricken areas.

Conclusion

APEC economies account for 55 percent of global energy production, but account for 60 percent of total energy consumption.  Clearly, new and cleaner energy options need to be developed.

In closing, I wish to acknowledge the role of APEC as a platform that can bring together all 21 economies in finding sustainable and durable solutions to the region’s energy needs.  I urge closer public-private engagements and dialogues.

Ministers, Your Excellencies, we can no longer address the sustainable development-energy nexus on an ad-hoc basis.

Barely two months from now, the world will see one of the biggest gathering of representatives from governments, intergovernmental organizations, international agencies, NGOs and civil society in Paris toward achieving a universal climate agreement.

As a body that operates on consensus, it might be too much to ask for APEC to lend its voice that would call for positive actions from the Conference of Parties to the UN Framework Convention on Climate Change in Paris. It is worth making this appeal, however, considering the immeasurable cost of doing nothing and saying nothing.

Thank you and I wish everyone a productive meeting.