Balancing the country’s energy and economic needs to achieve sustainable growth

Urbanization continues to accelerate across the globe and is widely seen as an irreversible trend.

The World Bank estimates that more than half of the global population, or around 4.4 billion people, resides in urban areas. Cities have emerged as key engines of economic growth and development, characterized by high concentrations of businesses, industries and consumer activity.

Collectively, these urban centers play a major role in driving the gross domestic product (GDP) and enhancing national productivity. In fact, the Philippine Statistics Authority recently reported that the country’s GDP expanded by 5.4% in the first quarter of this year.

Then again, everything comes with a cost. The increase in economic activity also brings the challenge of balancing environmental sustainability with development, as the demand for natural resources rises to support industrial growth.

These resources are consumed not only by businesses but also by a growing consumer base. Energy demand is expected to continuously increase considering that the country’s industrial, commercial and other critical sectors continue to grow as well. 

Energy security has indeed become a national priority. Ensuring access to reliable, affordable and sustainable energy sources is crucial in supporting industries, sustaining economic growth and improving the quality of life for Filipinos.

Major disruptions in energy supply can significantly hinder productivity, reduce competitiveness, and threaten overall economic stability.

To ensure energy stability, the Philippine Energy Plan 2023-2050, released by the Department of Energy (DOE), targets to increase the share of renewable energy in the power generation mix to 35% by 2030, 50% by 2040, and more than 50% by 2050.

Meeting the growing energy demand becomes even more challenging as the country’s reserves of indigenous natural gas field in Malampaya is declining at an alarming rate. According to the DOE, 16.0% of the country’s power generation relies on the indigenous Malampaya gas resource. This underscores the urgency of accelerating the development of other gas fields.

Indeed, securing the Philippines' energy future is critical. It should be a priority. With the Malampaya gas field anticipated to be depleted by 2027, the country has a timely opportunity to further develop its natural gas industry.

Considered as the cleanest among fossil fuels, natural gas can play a significant role in supporting the Philippines' long-term objective of achieving a low-carbon future.

The key characteristics of natural gas make it well-suited as an energy transition fuel, capable of meeting the country’s growing energy demands while reducing emissions.

In particular, liquefied natural gas (LNG) offers a cleaner alternative to coal as the global energy landscape moves away from high-carbon sources. As a transition fuel, LNG helps bridge the gap between conventional fossil fuels and renewable energy while technologies like solar and wind continue to advance and develop.

The Philippine government has been taking steps to achieve this. In January 2025, President Ferdinand Marcos Jr. signed Republic Act No. 12120, also known as the Philippine Natural Gas Industry Development Act, which establishes a framework for developing the country’s natural gas industry.

The law aims to increase the share of natural gas in the energy mix by promoting it as a safe, efficient, and cost-effective energy source, as well as a key contributor to energy security.

It also provides incentives to encourage investment in the Philippine natural gas sector. While the government is still in the early stages of developing this industry, this legislation marks a significant step by institutionalizing its growth.

The Philippines needs more investment in natural gas infrastructure, such as LNG terminals, floating storage and regasification units, and pipelines to expand natural gas use beyond power generation into industrial, commercial and transport sectors. This will open opportunities for private sector investment across the value chain, as well as public-private partnerships. 

A notable example is the US$ 3.3 billion deal between Meralco PowerGen Corp., Aboitiz Power Corp., and San Miguel Global Power Holdings Corp. to build an integrated LNG facility in Batangas, which will supply electricity to Luzon. This project aims to provide affordable, stable power and support the country’s transition to renewable energy.

Indeed, the private sector can provide technical expertise and financing to develop infrastructure for the clean energy transition. To support this, the government must maintain an attractive and enabling policy environment for investors.

However, to achieve the government’s ambitious renewable energy transition targets, implementation must be timely and efficient. Strong coordination among stakeholders and continuous monitoring will be essential to ensure these goals are met.

Ensuring energy security is crucial to the Philippines' sustainable economic development, specifically in the pursuit of an investment-led and job-generating growth.

A stable, reliable, and affordable energy supply is essential to supporting industrial activity and sustaining business operations, from large-scale industries all the way down to small enterprises. Energy-intensive industries such as manufacturing require higher electricity consumption. 

Energy security also plays a critical role in attracting both local and foreign investment as investors seek regions with dependable and resilient energy infrastructure to ensure long-term growth and profitability. It helps address the recurring problems of high cost of doing business which, for many years, hindered the entry of more foreign direct investments in various areas in the country.

By prioritizing energy security and strengthening the country’s energy infrastructure, the Philippines can create a solid foundation for sustained economic growth and ensure prosperity for current and future generations.

The Philippines is blessed with abundant natural sources of clean energy. All it needs is to harness it responsibly and well.

Venice Isabelle Rañosa, research director of think tank Stratbase Group.