Powering growth in an uncertain world: The high cost of energy vulnerability

For decades, energy debates have revolved around a familiar question: How do we produce enough electricity to sustain growth?

That remains important. But for countries such as the Philippines, it is no longer sufficient.

A more urgent question confronts us: What is the cost of remaining vulnerable?

According to the International Energy Agency (IEA), the Philippines imports more than half of its total primary energy supply, largely in the form of coal and crude oil. This dependence exposes our economy to global fuel price volatility, geopolitical tensions and supply disruptions over which we exercise little control. These vulnerabilities have consequences. They influence inflation, shape investment decisions, affect industrial competitiveness, and ultimately determine how resilient our economy can be in times of uncertainty.

The recent escalation of hostilities in the Middle East has reminded us how quickly external events can reverberate through domestic economies. For an energy-importing country such as the Philippines, geopolitical instability affects fuel prices, electricity costs, inflation, and ultimately the lives of ordinary Filipinos.

This is the cost of vulnerability.

The debate over renewable energy is often framed around the costs of transition. Solar farms require investment. Wind projects require infrastructure. Geothermal and hydropower require long-term planning. These are legitimate considerations. But perhaps we are asking the wrong question.

Can we afford the growing costs of remaining vulnerable?

Vulnerability is expensive. Every surge in imported fuel prices affects consumers and businesses alike. Every supply disruption reverberates through the economy. Every period of uncertainty raises the cost of investment and planning. These are not isolated events. They are structural risks that accompany dependence on systems beyond our control.

Renewable energy should therefore not be viewed simply as an environmental choice or a climate commitment. It is increasingly becoming an economic necessity.

Not because renewable energy eliminates risk entirely. Rather, it reduces exposure to some of the most expensive vulnerabilities confronting our economy today.

The Philippines is fortunate to possess a diverse portfolio of renewable energy resources. We are among the world’s leading producers of geothermal energy. We have more than 70 hydropower plants that contribute to grid stability and energy security. Solar and wind continue to expand across Luzon, Visayas, and Mindanao. Together, these resources provide something increasingly valuable in a volatile world: options.

And diversification itself is a form of resilience.

An energy portfolio can also be seen as an investment portfolio. No prudent investor places all assets in a single instrument. Neither should a nation place its energy future in a narrow set of imported fuels whose prices it does not control. Diversification is not merely a financial principle. It is a resilience principle.

This understanding increasingly underpins our national development agenda.

Under President Ferdinand R. Marcos Jr., the Philippine Development Plan (PDP) 2023-2028 recognizes climate change, disasters, and energy insecurity as among the most significant risks to sustained and inclusive growth. The Philippine Energy Plan (PEP) seeks affordable, reliable, and secure energy while increasing the share of renewable energy in the power generation mix to 35 percent by 2030 and 50 percent by 2040. Meanwhile, the Philippines’ Nationally Determined Contribution (NDC) under the Paris Agreement provides the long-term framework for pursuing development while reducing climate and energy vulnerabilities.

These are not competing agendas.

The PDP provides the vision for sustained and inclusive growth. The PEP provides the pathway toward a secure, affordable, and diversified energy future. The NDC provides the long-term framework for managing climate and transition risks.

Together, they are not separate plans. They are a common strategy for reducing the country’s cost of vulnerability.

The NDC, in particular, should not be viewed solely as an emissions pledge. It is also an investment signal. It tells markets where the country intends to go. It provides policy predictability. It identifies sectors where investment will be needed. And it signals that the Philippines intends to build an economy that is more resilient, more competitive, and better prepared for the demands of a rapidly changing world.

This matters because markets do not invest in aspirations. They invest in predictability. They invest where policies are stable, regulations are transparent, and governments articulate a credible long-term direction.

The stakes are high. The Climate Change Commission’s National Adaptation Plan projects that climate change could reduce Philippine GDP by 7.6 percent by 2030, 13.6 percent by 2040, and as much as 25 percent by the end of the century if risks are left unaddressed. These are not merely environmental losses. They are losses in productivity, livelihoods, investments, and economic opportunity.

Renewable energy is not simply about changing how we produce electricity. It is about changing the terms of our vulnerability.

The true cost of renewable energy is often debated. The cost of vulnerability is discussed far less.

Yet vulnerability has a price. It is paid through higher energy costs, lost opportunities, delayed investments, disrupted livelihoods, and diminished resilience to future shocks.

The Philippines cannot afford expensive vulnerability. And in an age of uncertainty, renewable energy is one of the wisest investments any nation can make.