Summary:

"The power industry of the Philippines, a government monopoly until the passage of the Electric Power Industry Reform Act in 2001, has had a particularly troubled history. Power sector reform has been extensively studied but less attention has been given to its environmental impact. This study assessed the air quality impact and the incremental benefits of increased use of indigenous energy resources for power generation in the Philippines during the period 2002-2011 – in other words, a "high indigenous" scenario, relative to the base case or "business as usual" scenario. In particular, the study quantified the likely changes in the level and spatial pattern of emissions from power generation and valued the incremental benefit of operating four coal-fired power plants under a high indigenous scenario. Based on the power supply projections, a high indigenous scenario envisioned in the 2002-2011 Philippine Energy Plan is projected to generate significant incremental impact in air quality, particularly in Luzon, relative to the base case.
Changes in the level and spatial pattern of emissions from power generation were estimated using a rapid assessment approach. The incremental benefit was valued using a damage function approach focusing on four coal-fired power plants in Luzon, which together account for a significant share of the country's coal-based and total generating capacity. The approach involved modeling the changes in ambient concentrations of PM10, SO2 and NO2, determining the incremental health effects and valuing these in economic terms. The study focused on adverse health effects using dose-response functions established in other studies and economic values based on the benefit transfer technique.
Our results show significant reductions in incremental emissions in the high indigenous scenario, compared to the base case (business as usual) scenario. Reduction is largest for SO2 and in Luzon. Luzon will remain the major source of PM10, SO2 and NO2 emissions despite the declining share in annual emissions. Reductions in Luzon are matched by emission increases, particularly SO2, in Visayas and Mindanao. However, both scenarios involve increases of nearly 10% a year in power generation and thus significant increases in emissions and health damages. In both scenarios, emissions will be markedly higher in 2011 than in 2000. Increased use of indigenous fuels, except local coal, generated incremental emission reduction.
The total incremental benefit of operating four coal-fired power plants under a high indigenous scenario is negligible. Incremental benefit, measured in terms of reductions in adverse health effects, is associated mainly with reductions in SO2 and varied widely among the four power plants. Although negligible, the incremental benefit far outweighs the cost of shifting to cleaner fuel.
The study finds that substituting indigenous fuels, as envisioned in the Philippine Energy Plan, would on the whole result in fewer emissions compared to a business as usual scenario. Since even the most favorable scenario assessed here will result in significant increase in emissions, we recommend that: a) incremental emission monitoring and control efforts by government and generating firms be geared at PM10 and SO2 emissions in Luzon; b) existing policies on the use of local coal for power generation be reviewed; c) a review of the Clean Air Act and its implementing rules and regulations be done to make it more responsive to the needs of a more competitive power sector; and d) policies to encourage energy conservation should also be pursued. "

URL: http://www.idrc.ca/uploads/user-S/10578021150ElviraRRlayoutfinal.doc