PMCJ: Coal plant insurance hikes signal urgency of coal phaseout

Media Communications
May 22
3 min read

Quezon City, Philippines — PMCJ slams the persistent support of the Department of Energy (DOE) for coal plants following Secretary Raphael Lotilla’s statement in a forum that coal-fired power plants are facing problems, as insurance premiums for coal plants rose due to growing disinterest in fossil fuels.

Without providing the numbers, Lotilla explained that this has affected the expansion of coal plants ‘exempted’ from the 2020 coal moratorium. Rather than a recognition of the dying coal industry that signals a much-needed coal phaseout, DOE leads in convincing insurers to reduce rates, saying risks are relatively lower compared to the premiums.

Insurers have seen this coming. Coal is already considered investment risks as early as 2019. Banks are moving away from coal due to climate commitments and rendering these unbankable. There are 46% of reinsurance market and 37% of industry’s global assets that are covered by coal exit policies.

Ian Rivera, PMCJ national coordinator, said it does not make sense for the DOE to prop up the image of coal. It is literally a dying industry. What it should have done is to manage coal’s demise for a stable transition to happen.

In 2023, coal's share in our energy mix was 63%, and renewables were 22%. The government plans to increase this to 35% by 2030 and 40% by 2040. With the 2020 coal moratorium, the country is expected to move further away from coal as a major energy source. However, it’s now the other way around. Several coal plants will still proceed as questionable exemptions have been made to the moratorium.

Rivera said that before the coal moratorium was implemented in 2020, the Philippines had the highest share of renewable energy among Southeast Asian countries, amounting to around 30%. “This has dwindled to today’s 22% because the country prioritized baseload plants, which encourages coal plant operators and financiers to expand and construct more,” he added.

Last year, Sanlakas and the Power for People Coalition filed a report with the Office of the Ombudsman against Lotilla for violating the coal moratorium by approving the Aboitiz coal expansion in Toledo, Cebu.

More recently, the DOE revoked an exemption of MGen’s coal plant in Atimonan from the coal moratorium after MGen announced its non-coverage of the moratorium, which it confirmed from DOE. And on May 15, a brownout allegedly caused by a broken fuse darkened a DOE press briefing on power supply—an ironic symbol of the department’s mismanagement of the power situation in the country.

Brownouts are also frequently associated with coal plants. With baseload coal plants operating at efficiencies unable to meet the surging electricity demand at peak hours, energy policy experts at the Institute for Climate and Sustainable Cities have long pointed out that there is no longer a need for coal plants. Instead, the country needs flexible power generation to handle the intermittent rise and fall of energy demand.

Renewable energy sources readily answer this question because they fit the need for constant adjustment of power output due to their efficiency. With the advancement of technology accelerating by the year because of global demand, the price of renewables has plummeted, making them a more ideal, viable, and financially attractive venture than coal energy.

“All the means and reasons to transition are readily available. We just need a government and an energy sector with the backbone to implement a planned and managed phaseout of coal, and a just transition to cleaner energy sources. With the clock ticking before the climate catastrophe becomes inevitable, it’s time to let the dying coal industry die,” Rivera concludes. ###

#EndCoal #FossilFuelPhaseOut #JustTransitionNow #ClimateJusticeNow