17 May 2022
Philippines

The Philippine Department of Energy (“DOE”) released a new policy program that seeks to enhance the development of biomass waste-to-energy (“WTE”) facilities in the country. The goal of the new policy is to tackle several issues, including energy supply, generation of green jobs in local areas, solid waste management, reduction of methane emission by way of converting biodegradable organic fractions of municipal and industrial wastes to heat, steam, mechanical power or electricity through various processes and technologies.

In the same DOE Department Circular No. DC2022-02-0002, the DOE also proposes the repurposing of coal power plants by turning them into biomass WTE facilities.

The policy provides for the following salient points:

  • Eligibility of biomass WTE facilities. For a biomass WTE facility to be eligible to receive the benefits under the policy, the facility shall be duly registered with the DOE and must be, at all times, compliant with the Philippine Clean Air Act, Philippine Clean Water Act, Ecological Solid Waste Management Act, Toxic Substance and Hazardous and Nuclear Wastes Act and the Electric Power Industry Reform Act, among others.
  • Compliance with the Renewable Portfolio Standards (“RPS”). Under the Renewable Energy Act, mandated participants, such as power distribution utilities, are required to source a portion of their energy supply from eligible renewable energy facilities. The DOE policy specifically provides that participants may meet their requirements under the RPS if they procure their energy supply from eligible biomass WTE facilities. For this purpose, a renewable energy certificate (“REC”) will be issued to such participant, which it can use to meet its RPS requirements or trade the REC in the Renewable Energy Market.
  • Exemption from the conduct of competitive selection process (“CSP”). Under the current CSP policy, power supply agreements should be generally procured through the conduct of a competitive bidding. A biomass WTE facility embedded in a distribution utility that utilizes indigenous energy resources shall be exempt from the conduct of CSP, provided that the resources are gathered from the franchise area of the distribution utility and such biomass WTE facility does not sell its generated power outside such franchise area.
  • Term of power supply agreements. The DOE recommends that the power supply agreements between a distribution utility and an eligible biomass WTE facility have a minimum term of 20 years.
  • Rules implementing the policy. The Energy Regulatory Commission (“ERC”) is tasked with issuing the necessary implementing rules and regulations to effectuate DOE’s policy.

Conclusion

The world is grappling with the repercussions of climate change and the trashing of the planet. Many know that, to abate, if not eliminate, such effects, several facets of these issues should be addressed at the same time and quickly. WTE facilities are proposed to be a solution that challenges these issues simultaneously.

However, the solution itself is facing its own problems. Many critics of WTE posit that WTE is actually more dangerous to the environment and human health.* Proponents of WTE counter that WTE will allow communities to switch from coal and other traditional sources of energy to renewable energy supply while managing their waste and plastic pollution. Painting the WTE as an attractive solution, WTE proponents argue that the creation of more WTE facilities in communities will open up green jobs to their population.

Only time will tell if DOE’s policy will trigger the establishment of more WTE facilities in the country. The effects of such objective, however, should be tempered to ensure that they would not result in damage to the people and the planet. The DOE and the ERC should work together with the Department of Environment and Natural Resources and various stakeholders to make this a possibility.

If you have any questions or require any additional information, please contact Felix Sy and Reeneth B. Santos of Insights Philippines Legal Advisors (a member of ZICO Law).


This alert is for general information only and is not a substitute for legal advice.

* Angelica Yang, “DOE to enhance development of biomass waste-to-power facilities, at https://www.philstar.com/headlines/2022/03/22/2169144/doe-enhance-development-biomass-waste-power-facilities (last accessed 6 May 2022).