Clean energy program at risk from TRAIN 2

Group warns vs scrapping perks

MANILA, Philippines — Scrapping the incentives under the Renewable Energy Law of 2008 will further slow down the development of clean and indigenous resources and only promote coal-based projects, advocacy group Center for Energy, Ecology and Development (CEED) said.

According to CEED, the renewable energy sector has yet to feel the incentives under the RE Law.

“Although it has been 10 years since the RE Law was passed, the first subsidy under the law has only been implemented less than four years ago. Its intended effect, which is to kickstart RE investments, has not yet been felt,” CEED legal officer Avril de Torres said.

Under the RE Law, only the feed-in tariff (FIT) system, the net-metering for RE end-users and renewable portfolio standards (RPS) have only been enforced.

In end-July, the Department of Energy finally issued the green energy option program (GEOP) rules that allows end-users to choose renewable energy  resources for their electricity requirements.

The agency has yet to implement the Renewable Energy Market (REM), which functions much like the Wholesale Electricity Spot Market (WESM) but for trading energy from renewable sources.

REM is a market for the trading of renewable energy certificates (RECs) under the RPS.

The law also calls for the creation of the RE trust fund, which will be used mostly for research, development, demonstration, and promotion of RE.

“If we are serious in pushing for RE instead of dirty energy, subsidies must be expanded, not removed. Currently, only RE developers are granted subsidies. These in fact must extend to and reach factories, small to medium enterprises, and residential consumers,” de Torres said.

Under the second package of the Tax Reform for Acceleration and Inclusion (TRAIN) Act, incentives promoting RE development will be removed or reduced.

Among the incentives proposed under TRAIN 2 include income tax holiday applicable only for the first five years of commercial operations and for a period not exceeding three years,  corporate income tax  rate of 15 percent based on net taxable income, duty-free importation on raw materials and capital equipment in the first five years, removal of the VAT incentives and special realty tax rates, and repeal of the net operating loss carry-over, accelerated depreciation, tax exemption on carbon credits, tax credit on domestic capital equipment and cash incentives for missionary electrification.

“Removing these subsidies will only make the playing field further in favor of coal, which already enjoys incentives from the Coal Development Act, the Investment Code, Oil Exploration and Development Act, and EPIRA. The willingness of the House to remove these subsidies is disconcerting considering their reluctance to increase taxes on coal in the first TRAIN package,” de Torres said.