The Institute for Climate and Sustainable Cities (ICSC) warned that the effect of escalating tensions in the Middle East highlights the Philippine’s large vulnerability to global price shocks and urges the government to speed up the renewable energy shift.

In a position paper released on Tuesday (March 10), the think tank said the country’s heavy reliance on fossil fuels, particularly crude oil from the Middle East, makes it extremely susceptible to external market disruptions.

“When global price shocks or supply disruptions occur, we are reminded time and time again of the expensive costs that this heavy dependence on importation entails- and this story has been retold again now in the escalation of conflict in the Middle East,” ICSC said.

The group pointed out how quickly prices surged following the escalating conflict within the region. As of March 5, crude oil prices increased by 19%, liquefied natural gas by 47%, and coal by 15%. 

The ICSC said that the figures showcased how quickly volatility in international markets can ripple to domestic economies for countries that rely so heavily on imported fuel, like that of the Philippines.

This was also backed by the Department of Energy (DOE), who similarly warned how rising fuel costs can translate into price increases all around the country. 

According to the agency, diesel prices could increase by as much as PHP 24.25 per liter and gasoline prices by PHP 13 per liter. The DOE also warned that these factors could spill over into the electricity bills, estimating a 16% increase by April if the conflict persists.

ICSC noted that this sudden increase is more severe towards off-grid and remote areas, which typically rely on diesel generators for their electricity. While government subsidies help cushion the impact, the brunt of the effect is ultimately placed on end-consumers nationwide.

To address these vulnerabilities, ICSC concluded that the Philippines must cut its reliance on imported fuel and accelerate its indigenous renewable energy resources. Because these resources are located within the country, they are more protected from external factors- thus helping both stabilize the grid and increase energy security.

“Translating policy priorities into action requires accelerating renewable energy deployment- a no-regrets strategy for strengthening energy security,” the organization said.

ICSC also emphasized the need to modernize the country’s power infrastructure to support a more resilient energy system. The group recommended investments in battery energy storage systems, upgraded transmission networks, and smart grid technologies to improve grid flexibility and support higher shares of renewable energy.

It also highlighted the role of distributed energy resources, including rooftop solar installations in homes, businesses, and government facilities- which can add up in vast quantities and help reduce reliance on fossil fuels.

According to the think tank, hybrid renewable systems could also provide more stable and affordable electricity for off-grid and island communities.

ICSC said reducing dependence on fossil fuels would also strengthen the country’s economic resilience by improving the trade balance and protecting the economy from commodity and currency volatility.

How quickly should the Philippines accelerate renewable energy deployment to reduce its exposure to global fuel price shocks?

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