The reality of coal in our energy transition
- February 25, 2025
Progress requires power. To sustain rapid economic growth in the Philippines, we must balance energy security with decarbonization. For many developing economies, this means acknowledging the crucial role of legacy fuels, such as coal, in the transition to clean energy.
The Department of Energy (DOE) recently announced a record-breaking 794.34 megawatts (MW) of new renewable energy (RE) capacity in 2024, exceeding the total RE capacity installed over the past three years combined. We’ve also seen a significant ramp-up of RE projects in the Philippines.
(Also read: Renewables make up lion’s share of new energy projects in 2025)
However, coal remains the dominant energy source in the country. According to recent data from the International Energy Agency (IEA), coal accounted for 62 percent of the country’s power generation mix in 2024, while renewable energy’s share was 22 percent.
“In most advanced economies, coal demand has already peaked and is expected to keep decreasing through 2027,” the IEA reported last year. “Meanwhile, demand for coal is still increasing in some emerging economies where electricity demand is rising sharply along with economic and population growth.”
Viewing carbon emissions through a historical lens, a case could be made for the greater responsibility falling on the shoulders of post-industrial nations in the Global North and not developing countries like the Philippines.
“At our current stage of economic development and limited land areas for food production, the nation cannot yet dispense with baseload technologies such as coal, oil, and gas, without incurring significant energy costs detrimental to the public,” Terry L. Ridon of public policy think-tank InfraWatch PH, shared with Businessworld.
With the IEA expecting the Philippines’ electricity demand to grow at an average of over five percent between 2025 and 2027, relying solely on intermittent RE sources such as solar and wind could hinder economic progress.
“Coal power plants have a role to play in the Philippine energy transition, as we still have a growing economy to support and our RE power plants still need to be built,” DOE Undersecretary Rowena Guevara shared during the 6th Paderanga-Varela Memorial Lecture (PVML) of the Foundation for Economic Freedom (FEF).
The state of play for coal
“There are two types of coal plants in the Philippines and a potential third,” Guevara explained during her talk at the PVML event.
First, the existing 58 coal plants which generate a total of 12.4 gigawatts (GW). The second type is the 51 potential coal plants not covered by the 2019 coal moratorium which generate 20.3 GW.
Finally, the third type is potential plants for self-generation in high-intensity economic activities such as mining. Possible criteria for these self-use coal plants include “a requirement that the end user is a single mining company and must supply to essential industries in the renewable energy supply chain; and complete stop of the coal plant by 2050. Again, it can be part of our energy transition,” Guevara shared.
One of the DOE’s energy transition strategies is the voluntary early decommissioning and/or repurposing of existing coal plants. According to Guevara, the DOE will create a long-term program to facilitate the voluntary early decommissioning or repurposing of existing coal plants, over 3.8 GW of which are at least 20 years old.
A just transition
To better understand the Philippines’ impact on global greenhouse gas (GHG) emissions, let’s look at the global share of several countries using data from the non-profit organization Our World in Data.
In 2023, China’s share was 31.50 percent, while the United States was 13 percent. For the Philippines, it was only 0.41 percent. When we account for historical emissions of GHG—the running sum that countries have produced since 1751—the total amount of GHG responsibility for the Philippines becomes even less compared to advanced economies.
While every metric ton counts in the climate crisis, these percentages show that our global share is quite small. This small percentage fuels more than half of the country’s energy supply, safeguarding energy security and affordability. We must acknowledge that an abrupt shutdown of coal plants would jeopardize our economy.
This reality makes the smooth transition to clean energy even more important, especially since it’s a huge investment.
“If a coal-fired power plant retires, its replacement needs to be able to function as base load or mid-merit. If the replacement is a variable RE plant, it needs to be supported by an energy storage system. The added ESS means additional cost,” Guevara said.
To partially fund the construction of the replacement plant, Guevara proposed using transition credits. A new kind of carbon credit, they monetize the mitigated carbon emissions from a coal plant’s early retirement and can be sold to governments and companies to reduce their carbon footprint. The DOE is also looking into creating an energy trading system and participating in global carbon markets to bridge the financial gap in the energy transition.
(Also read: How transition credits can derisk the nation’s switch to green energy)
“These [energy transition] strategies take into account that there is a price to pay for improving the security, sustainability, resiliency, and reliability of our system and transitioning to a low-carbon economy. However, energy transition will only be possible if transition financing is sufficient,” said Guevara.
As we face rapid economic growth on the road to a cleaner and greener future, we must find a way to balance the realities of today with the hopes of tomorrow. Transitioning to cleaner energy sources, we must ensure continued economic prosperity.
Sources:
https://doe.gov.ph/press-releases/ph-push-renewable-energy-yields-record-breaking-installations
https://iea.blob.core.windows.net/assets/0f028d5f-26b1-47ca-ad2a-5ca3103d070a/Electricity2025.pdf
https://www.iea.org/news/global-coal-demand-is-set-to-plateau-through-2027
https://www.facebook.com/FEFPhilippines/videos/1676235962922048
https://drive.google.com/file/d/1fXxkZPumCjh7dYlZYk817EOukPO_08_n/view
https://ourworldindata.org/co2/country/philippines?country=PHL~CHN~USA
https://ourworldindata.org/grapher/annual-share-of-co2-emissions?country=PHL~CHN~USA
