Philippines lags behind in terms of green transition

MANILA, Philippines — The Philippines still lags behind Southeast Asian peers in terms of green transition and climate ambition, based on the latest report of Massachusetts-based global management consultancy Bain & Co.

The Southeast Asia’s Green Economy 2022 Report – by Bain & Co. and Temasek, with contributions from Microsoft – showed the 10-member region has charted positive progress, as countries with net zero targets increased by six to eight nations with Singapore and Indonesia piloting carbon taxes.

Unfortunately, the Philippines’ climate ambition still falls behind its peer countries due to few concrete plans or policies.

As the country has yet to define its net zero target, the report recommended the development of clear decarbonization targets and establish decarbonization roadmap.

Meanwhile, the Philippines has the slowest progress among Southeast Asian nations for carbon tax, with ongoing discussions over the last few years, but no concrete decision and/or implementation plan laid down, Bain & Co. said in the report.

While the country’s implementation of coal power moratorium is encouraging, the report cited the importance to enact moratorium on current pipeline, and phase out all coal by 2040.

The Philippines still has four gigawatts (GW) of coal power in the pipeline despite the moratorium announced in 2020.

The report also lauded the improved government policy support for electric vehicle (EV) manufacturers and infra providers, such as tax incentives and duty exemptions, but also noted that the country lacks of incentives to spur local consumer demand.

To further concretize plans, Bain & Co. recommended government actions, such as increasing renewable sourcing requirements from one percent of total energy today.

The Renewable Portfolio Standards (RPS), a mechanism under the Renewable Energy (RE) Act of 2008, directs distribution utilities, electric cooperatives and retail electricity suppliers to source a percentage of electricity requirements from RE sources—which is currently set at one percent.

While the Department of Energy (DOE) has yet to raise the RPS level, it is looking to raise the yearly minimum level of RE contracted by mandated on-grid participants to 2.52 percent beginning 2023 next year.

The adoption of the higher annual increment on RE percentage will help the country “meet the aspirational target of at least 35 percent in the total power generation mix by 2030 and more than 50 percent by 2040,” the agency said.

The Bain & Co. report also recommended to eliminate land restrictions for foreign firms to further facilitate foreign investment in renewables and remove contractual obligations to produce energy from coal.

While improvements were noted in the region, Bain & Co. said the recent progress has not overcome the existing emission reduction and investment gap.

“Despite bolder new ambitions, most SEA countries need more concrete roadmaps, as well as incentives and climate financing plans,” the report said.