Why Developing Countries Go through an Unsustainable Energy Transition Pathway? The Case of the Philippines from a Political Economic Perspective

A shift toward a sustainable energy system takes place when renewable energy technologies become much more appealing energy options. However, political factors deter many developing countries from deploying renewable energy. This paper aimed to elucidate how exogenous actors and regime incumbents exercise power to block renewable energy technologies from emerging in developing countries, using the Philippines as a case study. This work uses a combination of a multi-level perspective in socio-technical transitions with power exercises as the analytical framework. The results show that in the Philippines three types of power exercises have moved the country toward a coal-based energy system. First, multilateral banks and foreign investors exercised a transformative power to pressure the government to liberalize the energy system, and currently exercise this power to support the development of both coal and renewable energy, albeit more indirectly. Second, “energy oligarchs” exercise reinforcive power to create and reproduce a new private oligopolistic energy structure by acquiring energy assets, building coal power plants, and dominating the energy supply chains. Lastly, the government exercises the constitutive and transformative power to induce these foreign investors and energy oligarchs to continue investing in coal power unless renewables can sufficiently contribute to energy security and affordability of electricity prices. These findings imply that in developing countries the liberalization of the electricity market can result in a change to the dominant power structure from a government monopoly to a private oligopoly and accelerate the transition to a coalbased energy system.

J Sustain Res. 2020;2(2):e200012. https://doi.org/10.20900/jsr20200012 The MLP has a strong capacity to explain the transition process from a fossil fuel-based energy system to a renewables-based one. It has been used to consider specific types of transition pathways that fit with green or technological innovations by drawing from the experience of developed countries [7,9]. However, it cannot capture the conflicts and coalitionbuilding between and among actors that could affect the transition at the system level because these actors are deemed to be self-interested and to act strategically [14,15].
In addition, applying the MLP to energy transitions in developing countries requires in-depth understanding of the role of a few powerful elites because these countries often have a market system that is not well developed and is controlled by actors that affect transition at the systems level [8]. For example, in Nigeria, powerful political and economic elites who have business stakes in fossil fuels dominate the political and rentier systems [8]. These elites use their market and political power to influence agenda-setting or institutional strategies to favor their interests, even when this means adhering to the status quo [16].
Incorporating the concept of power into an MLP approach enables analysis of the political economic process during a transition. Two basic definitions of power are given in the Oxford English Dictionary: (a) "the ability or capacity to do something or act in a particular way"; and (b) "the capacity or ability to direct or influence the behavior of others or the course of events" [17]. Drawing from this definition, we take the actors and the power they exercise to direct the course of outcomes to their will, as the focal point of our analysis. This research complements the study of Geels [18] on the dynamic interactions between rule-regimes and actors, which shows that different actors have different strengths, power, resources, and opportunities to change the prevailing rules-regime [19].
A typology of power exercise provides tools to analyze how actors play the game to achieve their goals. Power can be defined as innovative, destructive, constitutive, transformative, systemic, or reinforcive [14].
Innovative power is the capacity of actors to create or discover new resources, especially when they cannot gain existing ones. In the process, actors are enabled to become visible to other actors in the system.
Conversely, destructive power-the opposite of innovative power-is the ability to destroy or annihilate existing resources. Meanwhile, constitutive power is the ability of actors to formalize the distribution of resources using existing established structures and institutions, thereby enforcing their legitimacy. This is contrary to transformative power, which is defined as the ability of actors to transform the mechanism of resource distribution through the development of new structures and new institutions. Systemic power is the combined ability of actors to mobilize resources towards a collective goal, regardless of whether or not these actors have the consciousness to do so. Lastly, reinforcive power is the capacity of actors to reinforce and reproduce existing structures and J Sustain Res. 2020;2(2):e200012. https://doi.org/10.20900/jsr20200012 institutions according to how these actors value and distribute the resources.
With these definitions of power exercise, it is possible to analyze how actors act in a way that could lead them to win or lose the game [19,20]. In this sense, power can be said to always be relational in that an actor exercising power against another could either empower or disempower themselves to gain or lose access, strategies, skills, or willingness to exercise power [19,20].
In line with the above arguments, this paper fills the scholarly gap in studies on the transition from a fossil-based energy system to a renewables-based one by incorporating the concept of power into an MLP to investigate why a developing country goes through an unsustainable energy pathway, taking the Philippines as a case study. We employ an MLP in combination with the concept of power to study the effect of the roles and power exercises of actors in shaping and directing the country's energy transition pathways.

Challenges in the Philippines' Energy System
The Philippines has among the highest electricity prices in Asia, at roughly 20 USD per kWh or 10 PHP per kWh [21]. This is higher than some developed countries, such as Japan and Singapore. The Philippines' high electricity price is partly due to the fact that the Philippine government does not provide subsidies to its citizens and that it is expensive to build and maintain the transmission and distribution networks that cover the country's over 7100 islands [22].
As the country's economy and population continue to grow, so too does the demand for energy. The population is already more than 100 million and is growing at an annual rate of 1.72% [23], and during the Aquino administration from 2010 to 2016 the economy grew at an average annual rate of 6.3% [24]. Furthermore, the Duterte administration began in 2016 and by its end in 2022, it is projected that the economy will have grown at an average of 6-8% annually [24].
The country's electricity is primarily obtained from fossil energy sources (coal, oil, and natural gas), which accounted for about 75% of its

History of Major Landscape Developments and Policy Responses
There are many regulatory barriers and much opposition to renewables becoming the Philippines' primary source of energy. One such barrier is that the energy policy of the present government focuses on increasing the country's generation capacity at an affordable cost in line with the country's growing economy and population.  [30,31]. A rapid growth in the demand for electricity combined with a lack of sufficient generating capacity led to brownouts averaging 7 hours per day in many regions of the country in 1992 and 1993 [32]. This crippled the economy and led to massive unemployment, causing an estimated annual loss of 600-800 million USD, or 1.5% of GDP [32].
The second landscape development was the Asian financial crisis of 1997. This crisis caused the NPC's contracted independent power producer (IPP) payments to balloon due to the depreciation of the Philippine peso [31,32]. According to Woodhouse [33], this was due to the following Thailand at that time, which were both pressured to implement structural adjustment agreements such as reforming their power sectors in exchange for external assistance [35]. In 2001, the Arroyo administration signed the Republic Act 9136, also known as the Electric Power Industry Reform Act (EPIRA). This law had two stated primary objectives, namely (i) to secure the country's energy supply, and (ii) to lower its high electricity prices [36].
In line with this, specific provisions were set to (i) disaggregate the J Sustain Res. 2020;2(2):e200012. https://doi.org/10.20900/jsr20200012 country's energy industry into generation, transmission, and distribution; (ii) introduce competition in generation and supply; (iii) introduce a wholesale electricity spot market (WESM); (iv) privatize generation and the operation of transmission by a concessionaire; (v) allow open access to distribution networks; and (vi) set up an independent agency to regulate the energy industry [37]. Since the signing of the EPIRA, the Philippines' energy system has been increasingly liberalized. Between 2003 and 2004, the government completed the unbundling of electricity prices; in 2006, the WESM started its operations for the largest electricity consumers in Luzon [37]; and in 2010, the Visayas grid was integrated into the WESM [36]. This latter event was immediately followed by the start of Retail Competition and Open Access, which aims to provide more power to consumers to choose their electricity provider [37]. At present, the Mindanao grid is developing plans to construct a separate WESM [37].
The fourth landscape development was the start of the ongoing global action to combat climate change. Climate change has been implicated in several recent extreme natural disasters in the Philippines. For example, between 1998 and 2013, the country was struck by the most devastating typhoons in its history, which claimed billions of pesos in damaged properties and claimed thousands of lives [38,39]. Most notable among these was Typhoon Haiyan in 2013, which was the strongest typhoon ever recorded in terms of sustained maximum wind speeds [40]. The Philippines ranks 5th out of the 10 countries in the world which were most affected by climate change in terms of annual average between 1998 and 2015 [41]. In part due to the country's vulnerability to natural disasters, J Sustain Res. 2020;2(2):e200012. https://doi.org/10.20900/jsr20200012 power and economic crisis before liberalization. At this time, multilateral organizations such as the ADB, IMF, and World Bank began to take a more aggressive role in the Philippine energy sector by providing loans, grants, advice, and technical expertise to the Philippine government to restructure its power sector [35]. In 1998, the ADB approved the Power Sector Restructuring Program for 300 million USD, and the Japan Bank for International Cooperation provided a loan of 300 million USD to support the program [45]. The ADB also provided technical assistance to support the restructuring and privatization of the NPC [45]. To attract investment in the coal sector, the current government is exercising a transformative power by implementing policies such as the "automatic pass-through", which creates secure profit and protects businesses against volatility risks in fuel prices and foreign exchange rates [46,58]; this policy essentially allows energy companies to pass the financial burden and investment risks caused by such volatility to consumers [58], thereby making coal the most secure and preferred energy choice for energy companies and investors [46,58].
However, the government also exercises its constitutive power for the deployment of renewable energy on two grounds: the variability of its supply, and its high investment costs [59,60]. Although the previous regime legislated a renewable energy law that aimed to implement the Feed-in Tariff (FiT) program in 2008, it took 4 years to implement its guidelines and rates. The "first come first to commercialize" policy requires project developers to construct the renewable facility and pass specific criteria before they can qualify for the FiT incentive [61], thereby imposing high upfront costs on the developers; consequently, despite the government defending the "first come first to commercialize" policy as a strategy to deter speculators, it has had the effect of inhibiting the development of renewables. Additionally, the planned introduction of the "FiT Allowance" (FiT-All), a uniform monthly deduction from the electricity bills of consumers to fund the FiT program, has suffered from many delays. In determining the FiT-All, Transco, as the collector for this fund, is required to submit its FiT-All application to the Energy Regulatory Commission, who then decides and approves its rates. The FiT-All for the following year must be determined and approved by the ERC each year no later than 31 October . However, for the 2018 FiT-All application, Transco was a month behind schedule to submit its application, and the Energy Regulatory Commission had still not approved the its rates as of August 2018, almost a year passed the deadline [62].
At the local institutional level, the local government exercises its constitutive power by a complex permitting process that slows down (potentially by months) and increases the costs of renewable energy development. For example, building a 3 kW retrofit solar power facility in the Philippines is estimated to cost 56,840 PHP, equivalent to 11% of total project costs, and takes 28 man-days to complete [63,64]. The delays caused by the permitting process can be especially large when renewable energy developers have to obtain permission from Local Government Units (LGUs) and/or indigenous peoples (IPs). For example, the developers may be required to secure a permit from the National Commission for Indigenous Peoples when the land that they wish to build on is within the ancestral domain of an IP [63,64]. To obtain the land permit, the developers must consult and receive the signatures of the chieftains of the IP. Furthermore, LGUs may also have powers that allow them to overrule national directives, particularly those pertaining to the issuing of permits and J Sustain Res. 2020;2(2):e200012. https://doi.org/10.20900/jsr20200012 licenses, and this can sometimes perpetuate bribery and corruption at the local level [6,63,64].

Emergence of Energy Oligarchs and Their Power Exercise
The Philippine energy system is moderately concentrated yet within Although SMC entered the power industry only in 2008, SMC is now the largest single supplier of energy in the Philippines [68,69]. SMC supplies about 20% of the total fossil energy (i.e., coal, oil, and natural gas) used in the country, of which 60% comes from coal ( Table 2) [71,72]. Therefore, of the three aforementioned companies, the Lopez Holdings Corporation has the "greenest" energy portfolio.
Our findings suggest that energy oligarchs in the Philippines can be classified into incumbents and newcomers. The incumbents-namely Aboitiz and the Energy Development Corporation (EDC)-have a significant proportion of large geothermal and hydropower in their generation capacity, whereas the newcomers-namely SMC and First Gen, Inc.-contain mostly coal power in their energy portfolios (Table 2).
However, regardless of the differences in their energy portfolios, these oligarchs have capitalized on the capital of both external actors and technology provision, and on governmental liberalization and coalfavoring policies to expand their coal power generation capacity. As these companies have become dominant in the Philippines' energy market, so has coal become dominant in its energy mix. by the energy oligarchs) [31].  The dark-shaded arrow shows a direct link while the light-shaded arrow shows a weaker link between these actors. The broken arrow between the national and the local government shows that in theory the LGU is under and must follow the national government policies and directives on renewable energy but in practice, due to the disconnect and weak coordination between them, the LGUs can rule these policies and directives out and implement their own.

IMPLICATIONS FOR THE DEPLOYMENT OF RENEWABLE ENERGY
The landscape developments during the severe economic and power crises in the 1990s forced the government to place energy security and affordability as top priorities without envisioning the longer-term sustainability of the energy mix; due to the cheapness and stability of supply of coal, the government exercised its constructive power to formalize its position in the country's energy mix while promoting renewables only as an "add-on" to existing energy sources.
J Sustain Res. 2020;2(2):e200012. https://doi.org/10.20900/jsr20200012 Power producers and foreign investors took advantage of the government's prioritization of energy security and affordability by positioning themselves to supply the Philippines' energy demand with coal power. The "energy oligarchs" who grew to dominate the country's energy system-partly due to the certain flaws in the provisions of the EPIRAare now the biggest coal producers in the country. In brief, we find that the liberalized energy system provided these large producers with a reinforcive power given that they had the resources to (1) buy energy assets from the government during its privatization, (2)

CONCLUSIONS
A shift toward a sustainable energy system is greatly facilitated when renewable energy technologies become much more appealing energy options. However, political factors deter many developing countries from deploying renewable energy. This paper aimed to elucidate how exogenous actors and regime incumbents exercise power to block the emergence of renewables in developing countries, using the Philippines as a case study. By combining the MLP with an analysis of power exercises, we found that three types of power exercises have moved the Philippines toward a coal-based energy system. The Philippine case study suggests that in developing countries the liberalization of the electricity market may merely result in a shift in the dominant power structure from a government monopoly to a private oligopoly and thereby lead to the transition toward a coal-based energy system. This trajectory is unlikely to change unless the government perceives renewable energy as a proven, competitive technology that meets its energy goal of a stable and affordable energy supply.