RP gets $10.9-million grant for replacement of old chillers

MANILA, Philippines - The Philippines has received a combined $10.9 million in grant from multilateral lenders for the replacement of chillers in a bid to reduce the application of chlorofluorocarbons (CFCs) and hydrofluorocarbons (HCFCs) as refrigerants. These chemical substances are known to cause ozone depletion and global warming.

Spearheading the project is the World Bank, which approved financing to replace around 375 chillers used in industrial, commercial, service and institutional establishments nationwide with technology that is more energy efficient and friendly to the environment.

The project will be financed by a $2.6-million grant from the Global Environment Facility (GEF) Trust Fund, a $1-million grant from the Multilateral Fund (MLF) for the implementation of the Montreal Protocol, and a $7.3-million Clean Development Mechanism financing with KfW (German Reconstruction Bank) as the carbon buyer.

The Chillers Energy Efficiency project will provide financial incentive to chiller owners to encourage them to replace old chillers which consume around 50 percent more energy than new ones and emit harmful greenhouse gases into the atmosphere. Old chillers use up 50-70 percent of the total energy requirements in buildings.

A chiller is a primary component in refrigeration and air-conditioning systems. Old chillers commonly use CFCs and HCFCs as refrigerants.

Established in 1991, GEF assists its member countries in the protection of the global environment and promote environmentally sound economic development. The MLF for the implementation of the Montreal Protocol, created in 1987, provides funds to support developing countries in complying with the Kyoto Protocol requirement to phase out the use of ozone depleting substances. The importation of CFCs worldwide was banned starting January 2010.

Despite the benefits of using non-CFC, energy-efficient chillers, business owners have put chiller replacement low in their priority list because new chillers are expensive and many are not aware of the benefits and urgency of replacing their old equipment.

Under the Chiller Energy Efficiency Project, chiller owners can get an upfront grant subsidy of 15 percent of the cost of new non-CFC-based energy efficient chillers, or opt for future carbon finance revenues to be generated by energy savings from the replacement of their chillers. In addition, these new energy efficient chillers substantially reduce operating cost.

To cover the remaining 85 percent of chiller cost, chiller owners may secure financing from commercial banks, government financial institutions, energy service companies, leasing companies, and chiller manufacturers and suppliers which offer financing on attractive terms. Financing options available to chiller owners include corporate loans, leasing, financing from energy service companies and supplier credits.