Access to Sustainable Energy in the Philippines: Market Failure and Political Economy Considerations

Abstract

The Philippines has fallen behind its Asian neighbors in terms of energy access as measured by electricity consumption and electrification rate. Renewable energy, however, has a relatively high share in the generation mix but this has remained stagnant in the past two decades. Meanwhile, the Philippines fares relatively well in terms of energy efficiency but this may be distorted by the direction of causality between energy consumption and level of development. Market failure — defined as the inability of the market to allocate goods and services efficiently or allocate them at all — is a principal reason for problems in energy access, energy efficiency, and progress in the use of renewable energy. Appropriate government interventions can remedy these market failures. The Department of Energy (DoE) has many programs and policies in place that are aligned to such government interventions. However, political economy considerations have prevented some of these programs and policies to be implemented effectively. This paper adopts a theoretical framework to analyze the existing constraints and identifies relevant areas for carrying out the analysis. The latter forms the core of the ASEP-CELLs project agenda in knowledge management.