Philippines has yet to establish net zero emission goal

MANILA, Philippines — The Philippines has set strong emission reduction targets, but it has yet to establish its net zero goal as the energy sector grapples with clearer policies and as the net zero initiative is still something new to local companies, according to Massachusetts-based global management consultancy Bain & Co.

Bain & Co.’s latest report, Southeast Asia’s Carbon Markets: A Critical Piece of the Climate Puzzle, said the move to achieving net zero carbon dioxide emissions or carbon neutrality, has become a race as governments, corporations, and societies create ambitious targets to decarbonize and act against climate change.

Between 2019 and 2020, it found that the number of global corporations with net zero goals soared by 200 percent to over 1,500 companies, of which nearly a quarter are from Asia Pacific, according to Science Based Targets initiative or SBTi.

SBTi is a partnership between CDP, World Resources Institute (WRI), the World Wide Fund for Nature (WWF), and the United Nations Global Compact (UN Global Compact) which sets net-zero science-based targets in line with a 1.5°C future.

While this is the case, Bain & Co. found that few CEOs and leaders have set clear plans to deliver on these goals.

The same is observed in the Philippines, which “has set strong emissions targets, but there is a need to put words into action,” Bain & Co.’s Global Sustainability Innovation Center partner and co-director Dale Hardcastle said in an e-mail response to The STAR.

“While no net zero target is set yet, the Philippines has committed in Nationally Determined Contributions to reduce emissions by 75 percent below business as usual by 2030 (compatible with two degrees), which is the highest of Southeast Asian  countries, but only 2.7 percent of this is unconditional, one of the lowest in the region,” he said.

And while the country has commendable support for renewable uptake and energy efficiency with 38 percent target capacity by 2035, Hardcastle said “this is still less ambitious than for example Indonesia’s 48 percent target by 2030.”

To chart a firm path towards decarbonization, the country needs to lay down clearer policies and roadmaps to reach its targets.

“The coal moratorium is a good start, but recent plans to expand natural gas sector may lock in fossil fuel infrastructure and become a barrier to moving to net zero,” Hardcastle said.

The government, through the Department of Energy, is pushing for the development of the liquefied natural gas (LNG) sector for energy security, with six proposed LNG terminal projects underway, especially since the contract for the Malampaya gas field – the country’s largest and only gas source – is about to expire in 2024.

Hardcastle also cited some efforts to align budgets with decarbonization ambitions, “but these steps are not yet comprehensive.”

“Recent stimulus packages only cover agriculture and food security/disaster risk mitigation, while latest state budgets cover cleaner transport and water treatment facilities,” he said.

Based on its assessment, Bain & Co. said the Philippines only has two major organizations that have committed to SBTi – the Ayala Group and Nestle Philippines.

Globe Telecom, the telco arm of the Ayala Group, is the first Philippine company committed to SBTI and targets net zero by 2050. AC Energy Corp., the group’s energy arm, is boosting investments in renewable energy, while property arm Ayala Land Inc. is pursuing sustainable developments.

Nestle Philippines is targeting net zero by 2050 in line with its global push, and this will be done by switching to renewable energy and implementing significant circularity practices.

Meanwhile, green office developer NEO has achieved five-star certifications for net zero carbon energy in three of its buildings – namely One/NEO, Four/NEO and Six/NEO – under the Philippine Green Building Council’s Advancing Net Zero Rating Scheme (ANZ/PH) pilot program, which verifies a development’s net zero carbon energy emissions.

Hardcastle said Philippine companies can further their net zero efforts by raising their overall net zero ambition and developing a holistic plan with operational, strategic, and compensatory measures to drive value from decarbonization efforts.

They can also explore investing in digital innovations to scale emissions measurement/reductions cost effectively across the organization and building/transforming business models to thrive in the low-carbon economy, such as developing green products and services, he said.

Philippine companies can also look at supporting suppliers and other companies in value chain on their journey, through providing incentives, knowledge transfer, etc., and partnering across and beyond the ecosystem to scale impact, Hardcastle said.

The Bain & Company report also said the Southeast Asian region has significant untapped potential to meet the global net zero challenge as it offers $10 billion in carbon markets opportunity for regional economies along with environmental and social benefits.

Achieving Net Zero goals requires deep organizational transformation and a holistic approach that pulls multiple levers at once, the consultancy firm said.

Although eliminating emissions as much as possible is a critical part of the net zero journey, carbon offsets will play an important role in compensating for hard-to-abate emissions.

“Inaction has consequences and significant reputational, regulatory, strategic, and financial impacts lie ahead for businesses that ignore climate change and continue to rely on finite resources.  Regardless of industry, company size, or ambition, the time to act is now as the cost of complacency is far greater than the risk of not getting it perfect,” Hardcastle said.

Although offsets are not a silver bullet for decarbonization, they serve as an important lever on the pathway to net eero, the firm said.