President Arroyo signs renewable energy bill into law. Will they come?

If you build it, they will come.

This is probably the hope of this government and our energy policy makers when President Gloria Macapagal-Arroyo signed on Tuesday the Renewable Energy Bill into law nearly two decades after the first semblance of a bill was filed.

As usual, the President herself and her energy minions are quick to take credits and wax eloquent that a flood of new renewable energy investments is just around the corner.

The President claimed the new law is the “first and most comprehensive renewable energy in Southeast Asia” that she hopes could corner a chunk of billions of dollars of energy investment money floating around the world. Her energy secretary, Angelo Reyes, thinks that “it will foster sustainable growth, energy independence and economic security for the country.”

Republic Act 9513, as the new law is officially known, provides for various fiscal and non-fiscal incentives for renewable energy—which includes solar, wind, geothermal, biomass, hydro and ocean energy—developers. Some of the fiscal incentives include the usual tax credits on domestic capital equipment and services, special realty tax rates, duty-free importation of essential equipment and income tax holidays, among others.

The non-fiscal incentives essentially consist of developing the necessary policy infrastructure that supports the growth of renewable energy. Parts of this infrastructure which has been credited with explosive growth in wind and solar energies in more developed countries include: (1) establishment of a renewable portfolio standards (RPS) which would require electricity distributors to include a certain percentage of their supply from renewable energy sources; (2) a feed-in tariff system—which was still absent in the bill’s version passed by the Lower House—which could help renewable energy projects become viable; (3) a green energy option, wherein users can in theory choose energy from green sources to avail of some incentives; (4) net metering, wherein (mainly) large users and independent producers will only be billed on the net usage of power from the grid and can sell their excess power to the grid; and (5) establishment of a renewable energy market wherein green energy credits are validated and certified and wherein these credits can be traded.

For a change, critics of government energy policies are one in heaping praises for the signing of the law. Catherine Maceda of the Renewable Energy Coalition which has been campaigning for the law’s passage, says “it will usher in an era of cleaner energy use in the country” while environmental campaigner Greenpeace Southeast Asia Executive Director Von Hernandez welcomed the development saying it helps addressing climate change.

“The passage of the bill is expected to attract more investors to the industry, and help cement plans of investors who had been waiting for the bill’s approval,” Reyes added.

Not quite.

While the law is grandiose in words and the intentions seem highly noble, nothing in the law aside from the promise of monetary incentives could precipitate energy investors to immediately jump into the renewable energy pool. For one, no firm numbers have been attached to, say to the renewable portfolio standard as to the percentages required, or the feed-in tariff amount that could be used for feasibility studies for green projects. The other major provisions—renewable energy market, green energy option and net metering—are nothing more than plans with no concrete guideposts as to how and when these would established.

Worse, the National Renewable Energy Board, which is specifically created under this law and will put in the numbers, is still to be constituted and convened.

The law can only be really operational when the adjunct implementing rules and regulations (IRR) are in place, and judging by the pace our policy makers create such important documents, it would take time before wee see its light. By this time—or even long before the signing of the bill—draft IRR, or at least well-researched white papers discussing the possible contents of the IRR, should have been floated in public for discussion and debate.

Without demeaning the lofty ideals of the law, we believe the hard work to make the law viable has only just begun.