by Former Senator Heherson T. Alvarez
Commissioner, Climate Change Commission

August 27-29, 2013, Power Week Asia 2013 Novotel Kuala Lumpur City Centre
Kuala Lumpur, Malaysia


Assalamu alaikum I want to thanks Power Week asia 2013 organized by JFPS Group
Malaysia for inviting me to share my thoughts with you on the changing climate of our planet.

The urgency for creating a low-carbon economy

Predictably, the Asian region will encounter more intensifying and life-threatening cyclones - along with super storms, floods, and heat waves. these extreme weather anomalies are evidence of the radical changes occurring in our natural environment.

Since 1800, carbon dioxide emission have grown by 150 times. during the same time frame, the global population reached seven billion. And the human population continues to grow at the rate of 80 million a year - more than the combined population of Australia, Taiwan and Malaysia. This tells us that there is a strong correlation between carbon emission, economic growth and population.

Today, it is the accepted fact that the use of fossil fuels to meet growth targets is the main contributor to an increase in greenhouse gases (GHGs) in our atmosphere. Our expanding global infrastructure produces 80% of the carbon that is the root cause of global warming. The containment of global warming and climate change, however, must necessarily depend on reforming the global economy and setting it on a path to low-carbon levels.

The Philippine's Low Carbon Path

Is the Philippines moving on a path to low-carbon? Yes, we are indeed. While feed-in-tariffs were approved last year, some mechanisms and administrative bottlenecks have delayed the implementation of over 350 renewable energy service contracts.

Philippine President Benigno S. Aquino III is pursuing a two-track energy program a short-term approach still reliant on coal and other fossil fuels to maintain an economic growth rate and a long-term strategy to greater use of clean of renewable energy sources.

Economic realities dictate the continued use of fossil fuels for power generation. Clearly, our developing economies could be jeopardized by a swift shift to clean energy. Green technologies are improving but are not yet competitive with fossil fuels.

At the same time, however, the Philippine government is pursuing a long-term strategy that will increasingly broaden the use of renewable energy. The Philippines is now reliant on renewable energy up to almost 40 percent for electricity generation - the highest in Asia. This year, we initiated a program of low to zero carbon, which is admittedly a very ambitious program. let me cite four examples:

  • Development of major river basins as a priority program of the Aquino administration. This is a long-term adaptation program to arrest the destructive impact of climate change, promote sustainable development, and create new hydro energy sources.
  • A program for a sustainable power system - using wind, solar, and biomass - in some of our islands and provinces. This is a low-emission development strategy that further lessens our dependence on fossil fuels.
  • A mitigation program on black carbon, which is generated by diesel-driven vehicles. Black carbon or black soot is a short-term Greenhouse Gas with disastrous health consequence with its unburned particulate micro-toxins.
  • A public-private program to develop green building standards.

In 2008, we passed a Renewable Energy Act to encourage RE investors, technology suppliers, and entrepreneurs to come to the Philippines. Through this act, we offer:

(1) A seven-year income tax holiday which becomes a low 10% income tax afterwards, (2) Zero import duties on equipment; (3) Zero value added tax for both electricity sales and purchase of inputs for generation; (4) A low 1%  royalty for solar, wind, biomass and micro-hydro; (5) and a Feed-in-Tariff (FIT) for a limited number of companies, with a quota for each technology such as solar, wind, micro hydro and biomass.

One of the challenges we need to address in the future as we adopt more renewable energy system into our electrical grid is the grid itself. We need to improve it so that it becomes more accepting of intermittent power system like solar and wind. We also need to bring in more electrical appliances that can be monitored by the power utility so it can better control the demand vis a vis the supply from electricity generators. I believe you engineers call this "Smart Grid."

The Philippine's two-track policy may not be unique. Across the globe, nations are exerting efforts to reduce carbon emissions by encouraging development of renewable energy sources. Ironically, at the same time coal plants are being constructed in several countries; oil and gas exploration goes on to keep one step ahead of mass consumption demands.

Magnifying the Problem

The central problem with our carbon dioxide dilemma is that the existing industrial infrastructure - the fossil-fulled power stations, the emission-spewing factories, the inefficient transport and buildings - is already contributing to the high level of emissions and will do so for decades. Carbon dioxide stays in the atmosphere and continues to have a warming effect for about a century, and industrial infrastructure is build to have a useful life of several decades.

Climate scientists estimate that global warming of 2C above per-industrial levels marks the limit of safety, beyond which climate change becomes catastrophic and irreversible. Now, if the world is to stay below 2C of warming, then emissions must be held to no more than 450 parts per million (ppm) of carbon dioxide in the atmosphere. The current level is around 390ppm. But, as I already noted, the world's existing infrastructure is already producing 80% of the carbon bedeviling our atmosphere.

The International Energy Agency (IEA) notes that the world's carbon dioxide emissions from fossil fuel usage have risen to a record level. Both the United States and China - the world's two largest polluters - must take on a much greater role if this trend of high-carbon energy generation is to be effectively controlled.

In the case of China, its industrial capacity relies heavily on coal by more than 60 percent. As one who always seeks to protect and conserve our environment,  I am not definitely a fan of coal. But we need to recognize the fact that they are there, operating Full-throttle as we are in conference. Could something be done? The world is littered with old-technology coal plants that burn coal inefficiently. At he moment, I am told that basic coal plant technology is only around 30% efficient, meaning that most of the heat generated from burning coal, which result in significant amounts of greenhouse CO2 and other gases, actually result in mostly waste heat.

There are better technologies today for reducing waste heat, such as combined heat and power strategies. There is also the combination of a steam turbine with a gas turbine or what you engineers call combined cycle technology to get more energy for the same amount of coal burned.

Then there are other simple, doable techniques that some of you may already be using. By mixing in roughly 20% biomass with your normal coal load, you lessen your coal usage by that amount. In the process, you help nearby agricultural farms with their waste biomass and also lessen greenhouse gas emissions.

IEA has found that emissions had risen by a record amount in 2010, despite the worst recession for 80 years. In 2012, a record 30.6 gigatonnes (Gt) of carbon dioxide poured into the atmosphere from the use of fossil fuels, a rise of 1.6Gt on the previous year. Let us note that the IEA's data is regarded as the gold standard in emissions and energy.

The Limping Kyoto

One enormous stumbling block to reduce carbon emission is the impasse over international negotiations on climate change. There is no successor yet to replace the 1997 Kyoto Protocol, the only binding international agreement on emissions that expired last year. This is why urgent significant government change in global energy development are not taking place.

Nonetheless, the inaction far outweigh the cost of mitigation. In the final analysis, the solution is to reduce fossil fuel use one way to do way is to shift away form fossil fuel towards reduce energy demands through increase efficiency.

Both mechanisms have economic implications. In order to stimulate the private sector's investment investment  in renewable, governments can put a levy on fuels, which may be used to fund or subsidize new initiatives. of course, such carbon levies or taxes should be thoroughly examined so that they will not damage economic prospects, particularly in developing countries.

Reinforcing a Climate Policy in Business

Trucost, the British consulting firm, reported to the United Nations that just 3,000 corporations cause $2.15 trillion in environmental damage every year. Remember, this $2.15 trillion is largely in the nature of subsidies which encourages wasteful consumption of hydrocarbons.

Given the dire impacts of climate change, there is no choice but for governments and the business sector to work hand in hand, to forge ever stronger partnerships for sustainable development. Such partnerships should increasingly focus on renewable energies and renewable energy technologies.

I appreciate the efforts of Dato' Sri Che Kalib Mohamad Noh, president and chief executive officer, of Tenaga Nasional Berhad for his thoughtful and realistic appraisal of Malaysia's energy resources. Not all countries are equally blessed with sufficient natural resources to make renewable energy a dominant force in their economies. With electricity demand on the  rise, Malaysia remains 94% dependent on fossil fuel in its total energy mix.

While renewable energy is a viable but limited option for this country, it is encouraging that Malaysia intends to exploit its hydro resources. You have a huge potential of over 5,400 MW in Sarawak.

I understand you have an on-going debate on nuclear energy which does not emit greenhouse gases. However, the recent accident in Fukushima, Japan has made it harder for nuclear advocates to convince countries in the region to go nuclear. But each nation must find its own path to cutting carbon emissions.

At any rate, although renewable energies are more expensive at current fuel price the difference is narrowing as government and industry cooperate to cut emissions
 in a variety of carbon offset programs. A very positive sign is that growing numbers in private industry is aligning corporate actions with the environmental interests of owners, employees, suppliers and customers.

For instance, the largest Philippine electric company, Meralco, has embarked on a program to build electric vehicles. Like many countries in Asia, the Philippine transport network is built on a system of public utility vehicles that use old surplus engines that pollute the air with black carbon and seriously impair the health of people.

Another example is that Walmart. As the largest retailer in the U.S. Walmart is pursuing specific environmental goals to reduce energy use in its stores. At the same time, it is pressuring its 60,000 suppliers in its worldwide supply chain to follow its lead.

On energy efficiency, Walmart is working to build a store that is at least 25% more energy efficient in the next four years. It is also working to increase the fuel efficient of its truck fleet by 25% over the next three years and double it within ten years. These efficiencies are expected to save the company, by 2020, an estimated $494 million a year.

Not all oil and gas companies are insensitive to climate change. Some companies, such as Shell and Statoil, are investing heavily to reduce environmental impacts, while at the same time meeting growing energy needs. Statoil has five environmental benchmarks that are worthy of mention her:

  • Climate policy measures should be predictable, transparent and internationally applied in order to avoid carbon leakage, ensure cost effectiveness and create a level playing field in global markets.
  • A price on greenhouse gas emissions, based on the "emitter pays" principle, should be the preferred climate policy framework.
  • Multiple regulations for each greenhouse gas emission should be avoided.
  • Climate policy measures should be technology and fuel neutral to maximize innovation through market competition.
  • A system with trad-able emission quotas is preferred to emission taxes, as it allow for linking national and regional quota markets towards an international carbon market.

 Public - Private Cooperation as a Key Strategy

The collective challenge is to create solution that protect the environment without undermining growth whenever feasible.

On the international stage, there should be a stronger mindset of governments and industry more into a low-carbon economy. This will require that subsidies now devoted to fossil fuels be phased out. Subsidies distort the market, creating the main and massive barrier that discourage the measured shift to renewable.

With earth warming accelerating, the world's biggest fund managers - who control $14 trillion of investments in everything from wind turbines and agriculture to property and manufacturing - are deeply concerned that green policy failures are choking off billion in investments to the private sectors.

This is because policy makers are failing to act with the level of urgency and clarity the problem requires. Without clear targets on renewable energy and global warming, these fund managers cannot shift investment from high-carbon to low-carbon projects.

Waging the War Against Carbon

The first step in solving the problem of climate change is to acknowledge it completely, unhesitatingly. I trust that with this conference, we will look for ways that go beyond short-term benefits and address how we can cut carbon for the long haul gains. We need power for economic growth, but that growth cannot be attained the expense of our environment and ultimately our planetary ruin.

Finally, let me say that the stresses of development and the drive for energy resources have already brought increasing tensions in our region. The conflicting claims of the Philippines, Vietnam, Malaysia, Indonesia, Brunei, japan and China over atolls and reefs in the seas of Asia create a volatile situation. We must all work together for a peaceful, bold, creative solution and share in the resources of our common natural riches.

if we do not change direction in the use of energy over the next decade, the scientific community believes that the consequences for planetary life are likely to be terrifying. It is time, therefore, for the world to face the hard, bitter truth: We must face the threat of climate change as if it were World War III - and we are actually defending our survival.

Peace Could Finance Climate Change War

Where to get the money for this war? The major powers can shift growing investment in weapons of mass destruction to global climate change actions.

According to Atomic Audit, the U.S. alone has spent $5.5 trillion on the research and development, testing, construction, and maintenance of nuclear weapons since the dawn of the atomic age. The amount poured into weapons of mass destruction will exceed $14 trillion if we include the investments of the nine other member of the exclusive nuclear club - Russia, Britain, France, Japan, India, Pakistan, Israel, Iraq and North Korea.

In annual expenditures, global military expenditure stands at over $1.7 trillion. World military expenditure in 2012 reached $1.75 trillion, corresponding to 2.5 percent of global gross domestic product (GDP), or approximately $249 for each person in the world. Yet the UN and first-world countries are only targeting $100 billion a year to address climate change - and this amount still remains merely a commitment.

To spare the world from the catastrophe of climate change, let us declare a full scale war on carbon. Let us organize, at the very least, one percent of the global economy to combat climate change. For unless the present world leaders can act coherently and morally, succeeding generations - our children, grandchildren, and great grandchildren - will inherit the devastation's of climate change

Thank you