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The Philippines is increasingly turning to coal to stabilize electricity prices amid a global oil and gas crunch triggered by geopolitical tensions in the Middle East. Elevated fuel costs have disrupted the country’s push toward cleaner energy, prompting authorities to maximize output from existing coal-fired power plants as a short-term buffer.
The Department of Energy (DOE) estimates that ramping up coal generation could temper electricity price increases by around ₱2 per kilowatt-hour. But analysts warn this approach may offer only temporary relief while reinforcing long-term vulnerabilities.
According to Zero Carbon Analytics (ZCA), the pivot to coal reflects a broader regional trend across Southeast Asia, where countries are reverting to fossil fuels traditionally labeled as “dirty energy” to cushion price shocks. However, this shift is also driving up coal prices, undermining the very stability governments seek.
Coal futures have already surged, with Newcastle benchmarks hitting $146.25 per metric ton in late March. Meanwhile, Dubai crude prices remain elevated above $100 per barrel, underscoring persistent volatility in global energy markets.
“Fuel switching may offer short-term relief, but it ultimately locks countries into higher costs and greater exposure to global price shocks,” said ZCA analyst Amy Kong.
Expanding Coal Exploration
Even as the government pursues renewable energy targets, it is simultaneously advancing new coal development through its Philippine Conventional Energy Contracting Program.
Five companies recently visited Semirara Island in Antique as part of a DOE-led bidding process covering 10 coal blocks within a 10,000-hectare area. The broader bid round includes 18 coal blocks across three regions, reflecting continued state support for coal resource development.
Energy Undersecretary Alessandro Sales emphasized that these activities are being conducted under strict guidelines, requiring technical competence, environmental safeguards and transparent processes.
The Semirara blocks, which are currently under a contract set to expire in 2027, are among the most strategically significant, given their role in domestic supply. Other coal areas in Cagayan and Isabela are also being reopened following the expiration of previous contracts.
This renewed exploration push comes as the country remains heavily dependent on imported coal, with Indonesia supplying about 98% of requirements. Expanding local production is seen as a way to mitigate supply risks, even as it raises questions about long-term energy direction.
Semirara’s Critical Role
At the center of the country’s coal strategy is Semirara Mining and Power Corp. (SMPC), which accounts for roughly 97% of domestic coal production and supplies about 35% of the Philippines’ baseload power.
SMPC has signaled its intent to maintain output levels despite operational challenges and an approaching contract expiry. Company president Maria Cristina Gotianun described the current environment as “very critical,” citing both supply pressures and technical risks, including water intrusion in its below-sea-level mining operations.
Failure to manage these risks could halt production within days, highlighting the fragility of the country’s reliance on a single dominant supplier.
Despite posting record coal production in 2025, SMPC saw profits decline by 33 percent to ₱13.06 billion due to softer coal and electricity prices, reflecting ongoing market fluctuations.
Transition Goals Under Strain
Coal currently accounts for more than 60% of the Philippines’ energy mix, contributing to some of the highest electricity rates in Southeast Asia. While the government aims to increase the share of renewables to 35% by 2030 from 25% today, recent developments suggest a more complicated path forward.
Analysts argue that the continued dependence on coal, both imported and domestically produced, exposes the country to the same price shocks affecting oil and gas markets, weakening energy security rather than strengthening it.
ZCA maintains that renewable energy, particularly solar, offers a more stable and cost-effective alternative over the long term. “Energy security in Southeast Asia will not come from switching between fossil fuels; it will come from reducing dependence on them altogether,” Kong said.
For now, however, immediate economic pressures and supply concerns are anchoring the Philippines to coal, even as it strives to accelerate its transition to cleaner energy sources.
Source:
https://manilastandard.net/business/314725955/5-firms-join-semirara-coal-site-visit.html