Green Infrastructure Finance
Green Investment Climate Country Profile – Philippines
East Asia and Pacific Region
Copyright Š2013 International Bank for Reconstruction and Development/The World Bank East Asia and Pacific Region/Water and Energy Management Unit (EASWE) 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org
All rights reserved This volume is a joint publication of the staff of the International Bank for Reconstruction and Development/ The World Bank and the Australian Agency for International Development (AusAID). The findings, interpretations, and conclusions expressed in this volume do not necessarily reflect the views of The World Bank, its Board of Executive Directors, the governments they represent, or AusAID. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Moreover, the statistical database and other country-related information is time sensitive and subject to updates and/or changes. Rights and Permissions The material in this work is subject to copyright. Because The World Bank encourages dissemination of its knowledge, this work may be reproduced, in whole or in part, for noncommercial purposes as long as full attribution to the work is given. For permission to reproduce any part of this work for commercial purposes, please send a request with complete information to the Copyright Clearance Center Inc., 222 Rosewood Drive, Danvers, MA 01923, USA; Telephone: 978-750-8400; Fax: 978-750-4470; Internet: www.copyright.com. All other queries on rights and licenses, including subsidiary rights, should be addressed to the Task Team Leader, Aldo Baietti: The World Bank, 1818 H Street NW, Washington, DC 20433, USA; e-mail: abaietti@worldbank.org.
Design: Miki FernĂĄndez, ULTRA Designs, Inc., miki@ultradesigns.com
Table of Contents Acknowledgements................................................................................................................................................. ii List of Abbreviations and Acronyms...................................................................................................................... iii 1. Statistical Overview........................................................................................................................................... 2 2. Energy................................................................................................................................................................ 4 3. Green Policies and Incentives............................................................................................................................ 5 4. Green Programs and Institutions...................................................................................................................... 9 5. Green Regulatory Framework........................................................................................................................ 10 6. Investment Trends and Challenges................................................................................................................. 11 7. Concluding Remarks........................................................................................................................................ 17 8. Summary of Policy Instruments...................................................................................................................... 18 9. Annex............................................................................................................................................................... 19 10. References........................................................................................................................................................ 43 List of Tables and Figures: Table 1: Electricity Generation by Source (% of total)....................................................................................... 4 Table 2: Exploration and Development of Geothermal Resources Act............................................................. 5 Table 3: Biofuels Act Incentives........................................................................................................................... 5 Table 4: Renewable Energy Law 2008 Incentives............................................................................................... 6 Table 5: Approved FiTs Rates (PHP/kWh), 2012.................................................................................................. 7 Table 6: National Renewable Energy Program Targets (MW)........................................................................... 7 Table 7: EAP Domestic Utilities Tariff Rates (US$).............................................................................................. 8 Table 8: Standard and Poor’s Foreign Currency Rating................................................................................... 11 Table 9: Investments in PPI - 2002 to 2010 (current US$ millions)................................................................... 12 Table 10: FDI (net BoP, current US$).................................................................................................................... 12 Table 11: Number of International Investment Agreements (as of July 2012)................................................. 13 Table 12: CDM Program Participation................................................................................................................. 15 Figure 1: Figure 2: Figure 3: Figure 4: Figure 5:
Total Primary Energy Supply.................................................................................................................. 4 Global Competitiveness Index............................................................................................................. 11 Corruption Perceptions Index 2011..................................................................................................... 12 Inadequate Infrastructure Supply and Policy Instability Comparison............................................... 14 Private Investment in New or Additional RE Capacity (US$ million)................................................ 14
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Green Infrastructure Finance
Acknowledgements
T
his country profile has been prepared by the East Asia and Pacific Region of the World Bank. The work was led by Aldo Baietti, Lead Infrastructure Specialist (EASWE) under the overall guidance of John Roome, Sector Director (EASSD) and Charles Feinstein, Sector Manager (EASWE). The team and co-authors included Andrey Shlyakhtenko and Roberto La Rocca (EASWE) from the World Bank. The team wishes to acknowledge the peer reviewers and other contributors inside and outside the World Bank Group including, Jesse O. Ang, Resident Representative (CEAR1), Alan Townsend, Senior Energy Specialist (EASWE), Josefo Tuyor, Senior Environmental Specialist (EASDE), Victor Dato, Infrastructure Specialist (EASPS), Alexander Jett, Research Analyst (TWISI), John Probyn (PPIAF), Bastiaan Verink (TWISI), Banuchandar Nagarajan, Amar Causevic (EASWE), Paz Benavidez (Local Consultant) and 10EQS, Ltd. Edward Charles Warwick edited the report. Finally, the team wishes to acknowledge the generous support from the Australian Agency for International Development (AusAID) provided through the World Bank East Asia and Pacific Infrastructure for Growth Trust Fund (EAAIG).
ii
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Green Investment Climate Country Profile - Philippines
List of Abbreviations and Acronyms ADB
Asian Development Bank
ADFIAP
Association of Development Financing Institutions in Asia and the Pacific
AFVs
Alternative Fuel Vehicles
AML/CFT
Anti-money Laundering and Combating the Financing of Terrorism
AMORE
Alliance for Mindanao Off-grid Renewable Energy Program
ASEAN
Association of Southeast Asian Nations
BITs
Bilateral Investment Agreements
BOI
Bureau of Investment
BoP
Balance of Payments
BOT
Build-Operate-Transfer
BPI
Bank of the Philippine Islands
BRT
Bus Rapid Transit
CCC
Climate Change Commission
CDM
Clean Development Mechanism
CER
Certified Emission Reduction
CFG
Climate Finance Group
CNG
Compressed Natural Gas
COC
Certificates of Compliance
CO2
Carbon Dioxide
CPI
Corruption Perceptions Index
DBP
Development Bank of the Philippines
DENR
Department of Environment and Natural Resources
DMAF
Disaster Management Assistance Fund
DOE
Department of Energy
DOF
Department of Finance
DOTC
Department of Transportation and Communications
DTI
Department of Trade and Industry
EAS
East Asia Summit
ECC
Environmental Compliance Certificates
ECCP
European Chamber of Commerce of the Philippines
EE
Energy Efficiency
EMB
Environmental Management Bureau
ERC
Energy Regulatory Commission
FATF
Financial Action Task Force
FDI
Foreign Direct Investment
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Green Infrastructure Finance
FiTs
Feed-in Tariffs
GDP
Gross Domestic Product
GFI
Government Financial Institutions
GHG
Greenhouse Gas
GOP
Government of the Philippines
GPP
Green Public Procurement Program
ICC
Investment Coordination Committee
IFC
International Finance Corporation
IIA
International Investment Agreement
IPP
Investment Priorities Plan
Kgoe
Kilogram(s) of Oil Equivalent
kWh
Kilowatt Hour
LDRRMF
Local Disaster Risk Reduction and Management Fund
LGUs
Local Government Units
LPG
Liquefied Petroleum Gas
LTFRB
Land Transportation Franchising and Regulatory Board
LTO
Land Transportation Office
Mt
Metric Ton
Mtoe
Million Tons of Oil Equivalent
MW
Megawatt
NA
Not Available
NBB
National Biofuel Board
NCCAP
National Climate Change Action Plan
NDRRMF
National Disaster Risk Reduction and Management Fund
NEDA
National Economic and Development Authority
NEECP
National Energy Efficiency and Conservation Program
NELP-GCP
National Ecolabelling Programme – Green Choice Philippines
NESTS
National Environmentally Sustainable Transport Strategy
NFSCC
National Framework Strategy on Climate Change
NGV
Natural Gas Vehicle
NGVPPT
Natural Gas Vehicle Program for Public Transport
NREB
National Renewable Energy Board
NREP
National Renewable Energy Program
PCAPI
Pollution Control Association of the Philippines
PDP
Philippine Development Plan
PEENRA
Philippine Economic Environmental and Natural Resources Accounting
PEP
Philippines Energy Plan
iv
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Green Investment Climate Country Profile - Philippines
PES
Payment for Environmental Services
PHP
Philippine Peso
PINAI
Philippine Investment Alliance for Infrastructure
PNOC
Philippine National Oil Company
PPI
Private Participation in Infrastructure
PPP
Public-Private Partnership
PSSD
Philippine Strategy for Sustainable Development
PUV
Personal Utility Vehicle
QRF
Quick Response Fund
RE
Renewable Energy
REDD
Reducing Emissions from Deforestation and Forest Degradation
REMB
Renewable Energy Management Bureau
RETF
Renewable Energy Trust Fund
RPS
Renewable Portfolio Standard
R&D
Research and Development
SEF
Sustainable Energy Finance Program
SMEs
Small and Medium Enterprises
SWITCH
Policy Support Program for the National Renewable Energy Program
USAID
United States Agency for International Development
US$
United States Dollar
VAT
Value Added Tax
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Green Investment Climate Country Profile - Philippines
Philippines
is located in the Philippines archi-
pelago, which consists of 7,107 islands with vast arable lands, mountainous regions and a coastline exceeding 18,000 kilometers with about 60 natural harbors. Although its fossil fuel reserves are relatively low, the Philippines abounds in geothermal and biomass energy sources and has great potential to develop ocean and wind-based renewable energy (RE). As a tropical country with average temperature varying from 24ºC to 31ºC (75ºF to 87ºF), the Philippines has also significant untapped solar energy potential.
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Green Infrastructure Finance
Indonesia
Philippines
Vietnam
China
Rep. of Korea
Singapore
Malaysia
1. Statistical Overview
847
225
124
7,318
1,116
240
278
Macro Indicators GDP (current US$ billion)1 Population (million)
242
95
88
1,344
50
5
29
Urban population (% of total)3
49.9
48.7
30.4
49.2
82.9
100
72
2
Economic Indicators Constant GDP 10 Year CAGR (%)4
5.1
4.5
6.4
9.6
3.4
5.8
4.5
24.7
50.9
48.8
16.5
34.7
108.3
51.8
5.4
4.7
18.7
5.4
4.0
5.2
3.2
Agriculture
15
12
21
10
3
0
11
Industry
47
33
41
47
39
28
44
Services
38
55
38
43
58
72
45
Energy production (Mtoe)8
352
24
77
2,085
44
0.03
90
Energy use (Mtoe)8
202
39
64
2,257
229
19
67
147
(19)
11
(185)
NA
(51)
18
Public debt (% of GDP)5 Inflation, consumer prices (annual %)6 Sector mix (% of GDP)7
Energy Indicators
Net energy exports/imports (Mtoe)
9
Electricity access (% of population)
71
90
98
99
100
100
99
Electric transmission and distribution losses (%)11
9.4
12.1
9.6
4.9
3.7
5.2
3.8
Energy intensity (kgoe/US$1,000 2005 PPP)12
230
126
274
273
184
80
191
CO2 emissions (Mt of CO2)13,i
376
71
114
6,832
515
45
208
Electricity tariffs (US$/kWh)
0.07
0.14
0.05
NA
0.13
0.22
NA
6,095
348
165
126,215
139
NA
4.4
10
14
Fossil fuel endowment15 Coal (2008, million short tons)
3.9
0.1
4.4
20.4
0
0
4
141.1
3.5
24.7
107
0.3
0
83
Coal and peat
15.1
15.2
19.7
67.2
28.3
0
15.8
Crude oil
26.5
19.3
4.2
16.8
39.5
61.4
35.5
Oil products
6.7
14.3
21.2
0
0
0
0
Natural gas
17.4
8.3
11.1
3.3
13.8
38.4
43.4
0
0
0
0.8
16.8
0
0
0.5
2.2
4.0
2.4
0.1
0
0.9
Oil (2012, billion barrels) Natural Gas (2012, trillion cubic feet) Total Primary Energy Supply (%)16
Nuclear Hydro Geothermal, solar, wind Combustible renewable and waste Electricity and heat
i CO2 emissions from fuel combustion only.
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7.9
22.9
0
0.5
0.1
0
0
26.0
17.9
39.3
9
1.3
0.2
4.5
0
0
0.5
0
0
0
0
Rep. of Korea
Singapore
Malaysia
0.1
6.3
0.4
4.4
18.8
2.0
1.9
32.7
0
0
43.4
1.4
15.6
81.0
60.7
26.6
18
78.8
46.2
0
30.9
BB+
BB+
BB-
AA-
A+
AAA
A-
129
136
98
91
8
1
18
100
129
112
75
43
5
60
Vietnam
1
Philippines
17.5
Indonesia
China
Green Investment Climate Country Profile - Philippines
Renewables
13.3
32.6
36
Oil
22.8
8.7
2.5
0
0
0
Natural gas
22.1
32.1
Coal
41.8
S&P’s Credit Rating (Foreign Currency)18 Doing Business Ranking19 CPI Transparency Ranking20
Energy Indicators (cont.) Electricity Sources (%)17
Nuclear
Investment Climate
FDI, net (% of GDP)
1.6
0.3
6.8
2.2
(1.9)
8.5
1.6
PPI (million US $)22,ii
37,113
45,114
8,328
78,438
NA
NA
46,401
3,876
3,844
1,839
8,380
NA
NA
198
13.2
7.7
13.1
5.9
5.4
5.6
5
6
4
2
3
2
5
3
30
29
35
20
8
37
27
21
PPI renewable energy (US$ million)22 Lending interest rate (%)
23
Lending-deposit spread (%)24 Liquid assets to deposits and short term funding (%)
25
ii
Investments amounts include greenfield projects, concessions and management, and lease contracts.
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2. Energy
H
istorically, oil imports and biofuel-based energy have been the two mainstays of the Philippines’ total primary energy supply. The geothermal development program started by the Government in the 1970s has substantially changed the country’s energy mix. In 2009, geothermal energy alone met about one quarter of the country’s energy needs and together with traditional biofuels and hydro power made up almost half of the country’s total energy consumption.iii
Figure 1: Total Primary Energy Supply
For over a decade, the indigenous natural gas resources have also been a significant contributor to the country’s energy supply. The Government started pursuing gas in an effort to cut oil imports, to achieve foreign-exchange savings, to diversify the country’s own electricity generation, and ultimately, to strengthen its energy independence, which, largely due to the country’s local RE sources, is estimated at 61 percent.
Table 1: Electricity Generation by Source (% of total)
Natural gas 8% Oil products 15% Crude oil 19%
Coal & Peat 15%
Combustible renewables and waste 18%
Renewables 43%
Hydro 2% Geothermal 23%
Source: International Energy Agency, 2009.26
2002
2009
Renewables
35.6
32.6
Oil
13.0
8.7
Natural gas
18.1
32.1
Coal
33.3
26.6
Source: International Energy Agency, 2009.27
Despite its indigenous resource endowment, the Philippines is still a net energy importer. The exploitation of the Philippines’ modest fossil fuel reserves is not sufficient to complement the local production of RE to meet the country’s energy demand. The Philippines currently imports sizeable quantities of crude oil — about 20 percent of the country’s consumption — along with oil products, coal and peat.28 Compared to other lower middle-income countries in the region such as Indonesia and Vietnam, the Philippines has low levels of CO2 emissions and energy intensity. This is attributed to a number of factors including: (i) the expansion of the service sector — at 55 percent of GDP one of the most developed in the region; and (ii) the key role played by geothermal and other renewables within the country’s energy mix. iii Consumption equals indigenous production plus imports minus exports, stock changes, and energy delivered to international marine and aviation bunkers.
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Green Investment Climate Country Profile - Philippines
3. Green Policies and Incentives
T
he Philippines has created a number of policies and incentives for the development of the country’s RE industry. Prompted by the oil crisis in the 1970s, the Government introduced incentives for the exploration of the nation’s indigenous geothermal sources through the Presidential Decree No. 1442. Similarly, the Government established the Oil Exploration and Development Act 1972 — which also covers gas — and the Coal Development Act 1976 for the exploration of the country’s fossil fuel reserves. The incentives provided under these three pieces of legislation have supported the development of the country’s power sector. However, despite these incentives, there has been little development of coal, gas and oil-based power due to the country’s relatively low fossil fuel endowment.v By contrast, the abundance of national geothermal resources has constantly played a key role in determining the national power generation landscape. In 1992, the Philippines introduced the Republic Act No. 7718, which allowed foreign operators to participate in domestic power generation.30,vi In response to the promulgation of the legislation, the country’s geothermal sector expanded significantly by adding 752 MW in capacity, representing an increase of nearly 80 percent. The country has since grown to become the world’s second geothermal producer after the United States. In 2006, the Philippines promulgated the Biofuel Act, which provides incentives for and mandates the use of biofuel-blended gasoline and diesel fuels to encourage investments in
Table 2: Exploration and Development of Geothermal Resources Act ■■
Recovery of operating expenses not exceeding 90% of the gross value in any year with carry-forward of unrecovered cost
■■
Service fee of up to 40% of the net proceeds
■■
Exemption from all taxes except income tax
■■
Exemption from payment of tariff duties and compensating tax on the importation of machinery, equipment, spare parts and all materials
■■
Depreciation of capital equipment over a 10 year period
■■
Easy repatriation of capital investments and remittance of earnings
■■
Entry of alien technical and specialized personnel
Source: Department of Energy, 2008.29
Table 3: Biofuels Act Incentives ■■
Tax exemption for the biofuel component of blended gasoline and diesel
■■
VAT exemption for the sale of raw material used in the production of biofuels
■■
Exemptions from wastewater charges
■■
High priority financing to Filipino citizens/ entities engaged in production, storage, handling and transport of biofuel feedstock and the blending of biofuels
Source: Congress of the Philippines, 2006.iv
iv For more details see Annex 9.1. v A new mining law is under preparation and is expected, among other things, to clarify whether or not open pit mining can go ahead. If it cannot, the law would prevent most of the mining projects that are being explored, including some ideas for integrated coal-to-power projects in Zamboanga City, Mindanao. vi The Republic Act No. 7718 is a BOT law. The World Bank – AusAID
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Green Infrastructure Finance
the biofuel industry. Although the Act requires the biofuel components to be locally sourced, the country’s ethanol production falls short of the required levels. While the Philippines is forced to import ethanol to satisfy the Act’s mandate, recent developments in the country’s RE sector could help ramp up local production of ethanol and further expand the biofuel industry. Recently, the country adopted a series of landmark policies including the Renewable Energy Law 2008 and the National Climate Change Action Plan (NCCAP) of 2011. While the latter outlines objectives for adaptation and mitigation for the medium and long-term, the former provides, among other things, for a mix of production, consumption and commercialization-related incentives for RE. Table 4: Renewable Energy Law 2008 Incentives ■■
RE Production Incentives Seven year income tax holiday
■■
Incentives for RE Commercialization Tax and duty-free importation of components, parts and materials for the manufacture and/or fabrication of RE equipment and components
■■
Duty free importation of RE machinery, equipment and materials within the first 10 years
■■
1.5% realty tax cap on original cost of equipment and facilities to produce RE
■■
Tax credit on domestic capital components, parts and materials
■■
Net operating loss carryover (to be carried for the next seven consecutive years)
■■
Income tax holiday for seven years from the date of recognition/accreditation
■■
10% corporate tax rate (regular tax rate is 35%)
■■
50% tax rebate for purchase of RE equipment
■■
Zero-rated VAT for all RE equipment transactions
■■
Tax exemption on carbon credits
■■
Tax credit on domestic capital equipment and services
■■
RE Consumption Incentives Net-metering for RE to allow end-users generating own power to sell it to the grid
■■
Green energy option to allow end-users the option to use RE as their source of energy
■■
Zero percent VAT on sale of fuel generated from RE
■■
Incentives for Biomass Feedstock Producers Duty free importation and VAT exemption on all types of agricultural inputs, equipment, and machinery
Source: Congress of the Philippines, 2006.vii
Although the Renewable Energy Law 2008 provides a new financing framework for RE generation, such a framework is not fully in place. For example, the Renewable Energy Law 2008 mandates that a minimum percentage of the total off-grid generation, which currently relies on government-subsidized diesel, be sourced from RE and that such generation be eligible for RE certificates in order to comply with the country’s Renewable Portfolio Standard (RPS).viii However, the country’s RPS has vii For more details see Annex 9.1 and 9.2. viii The RPS applies to both on- and off-grid generation, while the FiTs is only for on-grid generation. 6
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Green Investment Climate Country Profile - Philippines
yet to be finalized. Moreover, while the Government has instituted cash incentives for RE generation equivalent to 50 percent of the universal charge for power needed to service in remote areas, it is not clear whether such incentives will effectively offset the current diesel subsidies. Although a feed-in tariff (FiT) regime was Table 5: Approved FiTs Rates (PHP/kWh), 2012 agreed with the Renewable Energy Law 2008, Small Hydro 5.90 it has taken more than four years to be impleBiomass 6.63 mented.xi The 2012 FiTs rates for solar, wind, Wind 8.53 hydro and biomass, cleared by the Energy Solar 9.68 Regulatory Commission (ERC), had capacity caps Sources: Energy Regulatory Commission of the Philippines of 50 MW for solar, 200 MW for wind and 250 and Congress of the Philippines, 2012.ix, x MW each for biomass and hydro. These approximately represent 0.3 percent, 1.25 percent and 1.56 percent of the country’s current power generating installed capacity, respectively.31 The intent is to periodically review the appropriateness of capacity caps and FiTs rates. While only two projects are expected to be completed within a two-year period — the 54 MW San Lorenzo and the 86 MW Burgos, Ilocos Norte wind farms — many more are currently under development.xii Preliminary analyses of existing project proposals indicate high sensitivity of financial viability to changes in discount rates, which emphasizes the importance of the general investment climate for the development of RE projects. The incentives established through the Renewable Energy Law 2008 are intended to support the achievement of the targets established under the National Renewable Energy Program (NREP) by five different methods. These are: (i) increasing geothermal capacity by 50 percent; (ii) doubling hydro capacity; (iii) becoming the number one wind energy producer in South-East Asia; (iv) further developing biomass and solar industries; and (v) starting the exploration of ocean energy sources. The Department of Energy (DOE) aims to nearly triple the current RE installed capacity with almost US$27 billion in new RE investments by 2030.32
Table 6: National Renewable Energy Program Targets (MW) 2009 Capacity
2030 Targets
Geothermal
2,027
3,467
Hydro
3,367
8,729
Wind
33
2,378
Solar
5
285
58
306
0
70
5,490
15,235
Biomass Ocean Total
Source: Department of Energy, 2012.xiii
ix x xi xii
For more details see Annex 9.3. Philippine peso (PHP) exchange rate is approximately PHP40.979 = US$1. The FiTs will be collected and settled with the RE developers through a FiTs allowance. The World Bank’s PPI Renewable Energy pipeline include projects that are expected to be completed within a twoyear period and for which at least one significant contract has been signed. xiii For more details see Annex 9.4 and 9.5.
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In support of the country’s overall sustainable Table 7: EAP Domestic Utilities Tariff Rates strategy, the Government of the Philippines (US$) (GOP) established the National Energy Efficiency Nov 2009 to Apr 2010 and Conservation Program (NEECP), which is Indonesia 0.071xiv expected to achieve energy savings equal to 10 Vietnam 0.054xv percent of the annual final 2009-2030 energy Philippines 0.143 demand outlook. Among other things, the proKorea, Rep.of 0.126 gram provides for: (i) energy efficiency (EE) standards and labeling requirements; (ii) energy audit Sources: Energy Market Authority of Singapore, 2012; World Bank, 2011; Perusahaan Listrik Negara, 2012; services; and (iii) the Philippine Energy Efficiency Asia-Pacific Economic Cooperation, 2011; and Economic Project. However, national standards on EE and Research Institute for ASEAN and Eastern Asia, 2012.13 labeling requirements have yet to be fully implemented and while mandatory energy audits are the core of the GOP’s approach, little is known about their results.33 Moreover, financial incentives have not been introduced for EE measures. EE is not only important given the country’s average retail energy price of 15.5 cents/kWh — high by regional standards — but also plays a key role in postponing new, expensive capital investments.34
xiv Indonesia provides a US$10 billion annual operating subsidy to PLN. xv Vietnam’s prices are increasing as they adjust local coal and gas prices in the direction of global ones.
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Green Investment Climate Country Profile - Philippines
4. Green Programs and Institutions
L
aunched in 2011, the Philippines’ NREP was created to support the achievement of the policy objectives of the Renewable Energy Act 2008. Supervised by the National Renewable Energy Board (NREB), the NREP is currently in the first stage of its development. Among other objectives, the program aims at: (i) tripling the current RE-based capacity; (ii) institutionalizing a comprehensive approach to address challenges and gaps that prevent wider application of RE technologies in a sustainable manner; and (iii) facilitating and encouraging greater private sector investments in the RE sector.35 The program benefits from the capacity building support and technical assistance of the United States Agency for International Development (USAID). In the Philippines, USAID is also engaged with the Alliance for Mindanao Off-grid Renewable Energy Program (AMORE). Through this program RE technologies like solar and micro-hydro contribute to the electrification and development of remote communities in the Mindanao region. Currently in its third stage of development, AMORE has already energized more than 470 rural villages and provided more than 270 schools with RE-powered electricity. In addition to NREB and AMORE, the Philippines also benefits from the implementation of a number of climate-friendly programs. These include, among others: (i) the Sustainable Energy Finance (SEF) Program, which is a partnership between local private financial institutions such as the Bank of the Philippine Islands (BPI) and International Finance Corporation (IFC) to finance projects that can help reduce greenhouse gas (GHG) emissions; (ii) the Clean Transport Program, which aims to introduce alternative clean transport fuels, particularly, biofuels, compressed natural gas (CNG) and liquefied petroleum gas (LPG) to reduce the transport sector’s dependence on oil as well as local pollution and GHG emissions; and (iii) a Green Public Procurement (GPP) program to promote environmentally informed procurement decisions in Government.xvi
xvi Despite the absence of formal CO2 emission reduction targets, the Philippines has since 2008 been able to reduce emissions by 716,700 tons of CO2 through the projects implemented under the SEF.
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5. Green Regulatory Framework
T
he ERC is the main power sector regulatory institution of the Philippines. Among other tasks, the ERC promotes competition, encourages market development, ensures customer choice and penalizes abuse of market power in the electricity industry. It does this by imposing fines or penalties for any non-compliance with or breach of the Electric Power Industry Restructuring Act. The ERC currently has the difficult task of creating regulatory policies to support the country’s RE strategy, while ensuring that electricity is universally accessible, reflective of true cost, and free from distortions like cross-subsidization. Another agency with regulatory functions is the Renewable Energy Management Bureau (REMB), which was established under the DOE. Among other things, the REMB is responsible to supervise and monitor activities of the Government and private companies and entities on RE resources development and utilization to ensure compliance with existing rules, regulations, guidelines and standards. Despite the existence of the REMB, the Philippines does not have a regulatory framework for monitoring CO2 emissions.
The Philippine legal framework for private-public partnership (PPP) projects is based on the buildoperate-transfer (BOT) law, which was the first in the East Asia region (1990), and includes a range of contractual structures (e.g., build-own-operate, build-transfer-operate, build-lease-transfer, etc.) in addition to BOT.36 At the national level, the GOP has established the Investment Coordination Committee (ICC), which is responsible to review investment proposals, and a PPP Center, which facilitates the development of PPPs.37 Among other tasks, the PPP Center: (i) facilitates, coordinates and monitors the implementation of PPPs; (ii) provides advisory services, technical assistance, training and capacity building; and (iii) manages a central database system of PPP programs and projects. At the local level, local government units (LGU) also have monitoring responsibilities.
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Green Investment Climate Country Profile - Philippines
6. Investment Trends and Challenges
T
he 2012 report by the Government’s Investor Relations Office, “The Republic of the Philippines: A Fortified Credit Story” underscored that the Aquino Administration is committed to “institutional reform, economic stability and inclusive growth” by supporting key industries where the country has competitive advantage.38 This report came just after Standard & Poor’s raised the Philippines’ credit rating from BB to BB+, one level below investment grade.39
Table 8: Standard and Poor’s Foreign Currency Rating
The Philippines’ investment climate continues to benefit from a highly sophisticated financial market, a largely service-oriented economy, and a substantial market size.40 Supported by an improved policy regime, strengthened public institutions (ranked 94th globally, up 23 places since 2009) and increased trust in politicians (up 33 to 95th), sound investment environment pushed the country’s 2012 global competitiveness ranking up 22 points since 2009 to 65th rank. This progress is reflected in rising investor confidence.41,42 Further, the Philippines PPP framework remains one of the most robust in the region, beating other developing economies in “readiness and capacity of a country to carry out sustainable, long term PPP projects”.43,44
Figure 2: Global Competitiveness Index
Country
Rating
China
AA-
Indonesia
BB+
Philippines
BB+
Singapore
AAA
Korea, Rep. of
A+
Vietnam
BB-
Source: Standard & Poor’s, 2012.
18
Stage of development Transition 1-2
1 Factor driven
2 Efficiency driven
Transition 2-3
3 Innovation driven
Institutions 7 Innovation Business sophistication
6 5 4
Infrastructure Macroeconomic environments
3 2 Market size
Technological readiness Financial market
1
Health and primary education
Higher education and training Goods market
efficiency development The Philippines has been utilizing PPPs in the Low market efficiency water sector since the late 1980s. While it has Philippines Economies in transition from 1 to 2 not always shown stable outcomes, the volume and governance quality appears to be improving and benefiting from attracting increased Source: World Economic Forum, 2012.41 international expertise (recently the IFC has won another three tendering mandates).45 As a result, over the last several years, the amount of investment in PPP projects in the Philippines substantially exceeded those of their regional neighbors, particularly in the water, sewerage, and energy sector.
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Table 9: Investments in PPI - 2002 to 2010 (current US$ millions) Indonesia US$ Mil
%
No
Philippines %
US$ Mil
%
Vietnam
No
%
US$ Mil
%
No
%
Energy
16,262
43
41
20
17,558
38
64
31
4,508
54
45
57
Telecom
16,288
44
115
56
15,886
35
115
55
2,280
27
19
24
Transport
3,669
10
30
14
3,931
9
19
9
1,235
15
11
14
Water and sewerage
1,020
3
21
10
8,098
18
10
5
305
4
4
5
Total
37,239
207
45,473
208
8,328
79
Source: World Bank, 2010.46
The overall legal PPP framework is sound and the bidding process is well structured. However, the Government’s support is limited and the bond market is underdeveloped, thereby reducing the possibility of finding adequate domestic funding. The perception is that “everything is available on paper but in reality, is lacking…[and] not transparent, not competitive”.20
Anti-Money Laundering and Combating The Financing of Terrorism systems (AML/CFT) are also weak.50 Despite the Philippines’ high-level political commitment to work with the Financial Action Task Force (FATF) to address its strategic AML/CFT deficiencies, the FATF is not yet satisfied that the Philippines has made sufficient progress in implementing its action plan. If satisfactory action is not taken in the near future, the country will be considered by the FATF as out of compliance with their agreed action plans. All these weaknesses are especially damaging for foreign participation in PPPs and foreign private investment in general.
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Figure 3: Corruption Perceptions Index 2011 129
112
100
75
43
pp
in
es
am Ph
ili
Vi e
ne do In
tn
sia
a in Ch
p. Re
Ko
re
a,
ng
ap
or
of
e
5
Si
This perception, along with the levels of corruption that are still the highest in the region (108th global ranking), adversely affects investors’ confidence.20 Thus, the absence of specific provisions for compensation (dealt on a caseby-case basis) and institutional weakness in dispute-resolution (loopholes in rules and ambiguity result in disputes often left to parties to solve between themselves), and courts’ lack of independence significantly increase the entry barriers for potential investors.
Source: Transparency International, 2011.20
Table 10: FDI (net BoP, current US$) 2002-2010
2010
As % of GDP
815.95
124.93
0.80
Indonesia
24.90
11.10
1.57
Malaysia
-31.06
-4.35
3.29
9.21
0.68
0.34
-74.50
-19.38
-1.46
Singapore
67.21
18.90
12.31
Vietnam
38.46
7.10
6.83
China
Philippines Korea, Rep. of
Source: World Bank, 2010.49
Green Investment Climate Country Profile - Philippines
To overcome some of these deficiencies, the Table 11: Number of International Investment Government began offering guarantees to cerAgreements (as of July 2012) tain PPP investors. However, these measures BITs Other IIAs Total have not generated much additional deal flow China 128 16 144 and, overall, the foreign direct investment (FDI) Indonesia 63 17 80 flows remain constrained. This has prompted Malaysia 67 23 90 many observers to argue that FDI potential is Philippines 35 16 51 unrealized (FDI attraction index is very low) Singapore 41 29 70 because of insufficient infrastructure, excessive bureaucracy and the perception of an unstaKorea, Rep. of 90 16 106 51 ble regulatory environment. FDI volume in the Vietnam 59 20 79 Philippines lags well behind other emerging Source: United Nations, 2012.50 Asian economies’ FDI inflows. Many multinational corporations, such as Fairchild, Texas Instruments, Intel, and National Semiconductor, came to the Philippines but then either left or remained confined to the Philippine Economic Zone Authority and never fully integrated with domestic firms. To accelerate the penetration of low-emission technologies, it is essential that the Philippines becomes more open to the transfer of international expertise backed up by knowledgeable international investors. Philippine FDI constraints are traceable to the restrictive economic provisions of Bureau of Investment (BOI) incentives and the extensive “Foreign Investment Negative List” of the 1991 Foreign Investment Act. This list provides a number of sectors where foreign equity participation or ownership is restricted or limited (generally to 40 percent) for reasons of national security, defense, public health and safety. The restrictions stem from a constitutional provision permitting Congress to reserve to Philippine citizens certain areas of investment and limit foreign participation in public utilities or their operations. Thus, a 60 percent ownership level applies to franchises in public utilities, such as railways or urban rail mass transit systems, electricity distribution, water distribution, and telephone systems. As a result, in most cases, foreign firms can only channel (and then control) the investments into power generation. Other impediments to FDI transactions include: ■■
The GOP procurement contracts mandate that 40 percent of supply of goods and commodities and 25 percent of construction of locally-funded public works, should be locally sourced. This restriction, if applied to low-emission technologies, might be especially constraining, as many of these projects involve 60-70 percent expenditure on purchasing of the equipment produced overseas.
■■
The ownership of private lands for projects is limited to 40 percent. This limitation might present a serious barrier for wind or ground-mounted solar developers, because arranging longterm possession of the land is a fundamental condition for raising commercial loans. Similar but less restrictive policies (such as bail emphytéotique in France) are known to substantially complicate such transactions.
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■■
The Philippines FDI policy is not accommodative to foreign investors in general and the Philippines has the smallest number of bilateral investment agreements (BITs). For example, upgrading the standards of treatment of foreign investment along with relaxing the requirements for transfer of funds across national borders might help reduce the perceived risk and, therefore, improve viability of certain projects.52
Policy instability and future uncertainty is often Figure 4: Inadequate Infrastructure Supply and cited as the biggest contributor to elevated risk Policy Instability Comparison perception and the expectation of high returns n Inadequate supply of infrastructure on investment, particularly in long-term investn Policy instability 15% ments including infrastructure. In some regions, instability is further exacerbated by local conflicts and political unrest. An example of this 10% is the Mindanao conflict that first flared in the 1960s when the Muslim minority — known as the Moros — launched an armed struggle for 5% their ancestral homeland in the south. After more than 50 years, a truce was recently signed 0% between the Moro Islamic Liberation Front 2008 2009 2010 2011 2012 and the Government followed by a framework Source: Authors, 2012.xvii accord. It is hoped that the accord will improve the investment attractiveness of the impoverished yet natural resource-rich Mindanao and begin correcting the disparity between the contribution of the “Autonomous Region for Muslim Mindanao” to total economic output and its labor capital.53 Already, investments in Northern Mindanao rose in the first half of 2012 reaching PHP10.87 billion, or more than twice the PHP4.88 billion posted during the same period last year.54 Nevertheless, it might take years for the negative investment perception of the region to wear off. Figure 5: Private Investment in New or Additional RE Capacity (US$ million) 150 US$ million
These continuing issues and instabilities have led to a substantial accumulated inadequacy of infrastructure supply. The current basic infrastructure in the Philippines is ranked last among Asia-Pacific countries.56 The GOP realizes the urgent need for at least US$120 billion of investment in infrastructure and hopes that at least 12 percent of this requirement will be contributed by the private sector.57 Recently the Asian Development Bank (ADB) approved an equity investment in a US$625 million private equity fund focused exclusively on Philippine
100 50 0
2003 2004 2005 2006 2007 2008 2009 2010 2011
Source: World Bank, 2011.55
xvii Authors compilation based upon the World Economic Forum’s “Global Competiveness Report 2012-2013”.
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infrastructure projects — the largest and first of its kind in the country. The Philippine Investment Alliance for Infrastructure (PINAI) fund will invest in Philippine core infrastructure assets with an initial focus on existing projects that need expansion or rehabilitation, but will also be in a position to support the development of critical infrastructure projects from the ground up. ADB hopes the success of the PINAI fund will also spur more private equity funds that will catalyze additional foreign capital into the country, and further the development of domestic capital markets. Increased interest in ramping up infrastructure investments presents an opportunity for “greening” the growth, provided policies are supported by investment incentives and mechanisms that help “bend” the emission curve. Currently, however, there is no clear trend of accelerating investments in RE. From 2001 to 2011, the country received the relatively modest amount of US$373 million in private renewable investments, the greatest portion of which — US$134 million — was in hydro projects of less than 50 MW.59 Wind investment (US$87 million) was concentrated in two projects: (i) the 58 MW Bangui Bay Wind Farm; and (ii) the 31 MW 3IPowergen wind/diesel project. Table 12: CDM Program Participation In 2011, US$74 million was invested in Maibarara Batangas Geothermal Number of Total CERs/ Plant. Similarly, there was one sigregistered reduction, Country projects MtCO2e CER/GDP Emission nificant biomass project, the 30 China 2,363 8,190 11.1 7,821 MW Talisay co-generation facilIndonesia 81 554 3.5 4,383 ity. Sourcing foreign capital for the Malaysia 110 193 4.7 5,350 low-emission projects through the Philippines 58 101 3.0 5,569 Clean Development Mechanism Singapore 2 39 0.9 5,051 (CDM) was also constrained in volume, ineffective, and slow. By Korea, Rep. of 70 543 2.1 3,792 October 2012, only 58 CDM projects Vietnam 149 136 21.6 16,233 had been registered (with 35 more Source: United Nations, 2013.60 pending) and approximately half a million Certified Emission Reduction (CERs) certificates had been issued. In addition, for many of the registered projects, the issuance of CERs certificates was delayed by an average of 38.5 months and in some case by as much as six years.61 Overall, the impact of the Philippines participation under the CDM mechanism has been limited and has only led to a total reduction of about 100 MtCO2 (more than five-times less than CDM projects in Indonesia). However, the country’s low energy and emission intensities make the CER allocation ratio (number of CERs per unit of total country’s CO2 emission) comparable to some of the Philippines’ peers.
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In summary, an improving policy environment, enacted FiTs, and increasingly supportive financial sector (ranked 58th globally) have great potential to further enhance the financial viability of many RE projects. Nevertheless, addressing the non-financial barriers for investments is another key area to unlock the growth and acceleration of RE investment. The full implementation of the Renewable Energy Law should be accompanied by improving the country’s regulatory and institutional climate, so that investors will not be deterred by unwieldy processes, heavy bureaucratic burden, numerous requirements for obtaining financial relief for RE projects, and weak support from the legal system.
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7. Concluding Remarks
T
he Philippines has demonstrated a long-standing commitment to greening its economy, with the Government championing substantial investments in the past, particularly in geothermal and hydropower. Despite these accomplishments, vast RE potential remains untapped and recent on-the-ground results raise concerns on whether the country will be able to achieve the goal of mobilizing US$27 billion in new RE investments by 2030.62 While good progress has been made, there are still abundant natural resources that can further reduce the country dependence on energy imports (currently about 40 percent). This brief review has identified three broad areas of opportunity for further improving the country’s energy mix and for stepping up the greening of the national economy. First, the development of the country’s geothermal and hydro resources, specifically large installations, has slowed down considerably since the privatization and liberalization of the power sector. There is a need to better understand why investments have not kept pace in recent years and, specifically for geothermal power, to review the current risk allocation framework surrounding resource exploration initiatives. Given that these projects are more capital intensive than traditional infrastructure projects, there is value in reviewing the existing incentive framework in order to render them more attractive as investment opportunities. Second, given its geographical characteristics, the Philippines offers tremendous opportunity for RE in remote, off-grid areas, which are significantly reliant on higher cost diesel. However, to tap this potential, it is necessary to develop a suitable incentive framework to attract private investment. Under typical circumstances, in the absence of direct subsidies that disadvantage RE, many RE technologies can be competitive against the diesel alternative. In addition, the increased use of biomass — which accounts for about 20 percent of the country’s total primary energy supply — could significantly benefit from the implementation of initiatives such as “Clean Cook Stoves” in rural areas. Third, despite the gains recorded in the last 15 years, distribution losses are still high by regional standards. Moreover, the Philippines has the highest electricity rates in East Asia. This situation immediately implies the need for a well-designed program promoting EE, yet the current incentives could be substantially strengthened for further RE use among industrial and service sectors as well as improving performance of electric utilities. In addition, the GOP needs to act decisively in order to address corruption and transparency, which contributes to making the country’s “Doing Business” rating among the lowest in the region. This continuing perception has inevitably affected FDI in the country as well as increased the yield thresholds for many potential investors.
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8. Summary of Policy Instruments Below is a summary table of renewable energy, energy efficiency and market-based instruments for seven selected East Asia and Pacific countries. China
Korea, Rep. of
Indonesia
Philippines
Tax Incentives
●
●
●
Carbon Tax
●
Capital Subsidy/Grants - RE
●
●
Policy Distortions
●
Feed-in Tariff
●
●
Domestic
●
●
Foreign
●
●
●
●
Renewable Energy
Concessional Financing
Partial Risk Guarantee Renewable Portfolio Standard
Energy Efficiency & Green Tech
Market Based
Malaysia
●
●
●
●
●
●
●
●
●
●
●
●
●
●
● ●
●
●
● ●
●
●
●
●
●
●
●
●
Capital subsidy/Grants - EE
●
●
●
●
●
●
Domestic
●
●
●
●
●
●
Foreign
●
●
●
●
●
●
Concessional Financing
Partial Risk Guarantee
●
Green Labeling
●
Awareness Campaigns
●
●
●
●
CDM
●
●
●
Carbon market
●
●
●
Cap-and-trade scheme
●
●
● Full implementation ● Limited scale and/or early stage implementation ● Existing barriers
18
Vietnam
Tax Incentives
Singapore
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●
●
●
Green Investment Climate Country Profile - Philippines
9. Annex Table of Contents 9.1 Policies, Objectives and Targets..............................................................................................................20 9.2 Financial and Economic Instruments......................................................................................................26 9.3 Programs and Institutions.......................................................................................................................31 9.4 Regulatory Environment.........................................................................................................................36 9.5 Supplementary Materials........................................................................................................................38
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9.1 Policies, Objectives and Targets Overarching Policies • Presidential Decree 1151 • Strategy for Sustainable Development (PSSD) • Philippine Development Plan (PDP) • Climate Change Act (Republic Act 9729) • National Framework Strategy on Climate Change (NFSCC) • National Climate Change Action Plan (NCCAP) 2011-2028 (CCC Resolution No. 2[2011]) • Manila Declaration on Green Industry in Asia and Framework of Action
Presidential Decree 1151 declares that it is a continuing policy of the State and the responsibility of the Government to: (i) recognize, discharge and fulfill the responsibilities of each generation as trustee and guardian of the environment for succeeding generations; (ii) assure the people of a safe, decent, healthful, productive and aesthetic environment; (iii) encourage the widest exploitation of the environment without degrading it, or endangering human life, health and safety or creating conditions adverse to agriculture, commerce and industry; (iv) preserve important historic and cultural aspects of the Philippine heritage; (v) attain a rational and orderly balance between population and resource use; and (vi) improve the utilization of renewable and non-renewable resources.63
Strategy for Sustainable Development (PSSD) was adopted in 1989. The strategy was followed in 1996 by the Philippine’s Agenda 21 which was adopted by virtue of Memorandum Order No. 399 — the nation’s blueprint for sustainable development. It provides for the creation of an enabling environment, which would assist various stakeholders to integrate sustainable development in their decision-making processes.xviii
Philippine Development Plan (PDP) 2011-2016 has a vision to achieve inclusive growth, create employment and reduce poverty. Its key strategies include: (i) massive investment in infrastructure; (ii) transparent and responsive governance; (iii) human development and improved social services; (iv) competitiveness to generate employment; and (v) access to financing. In the environment and natural resources sector, the PDP identifies the following key strategies: ■■
Implement the Philippine National Reducing Emissions from Deforestation and Forest Degradation (REDD) + Strategy;
■■
Institute and operationalize the concept of Payment for Environmental Services (PES) in protected areas;
xviii For more details see Supplementary Materials 9.5.
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■■
Develop environment-friendly enterprises and livelihood opportunities for local communities; and
■■
Strengthen the institutional capacities of national and local governments for climate change adaptation and disaster risk reduction management.xix,xx
In the energy sector, the PDP strategic plan and focus seek to: (i) accelerate the exploration and development through the Philippines Energy Contracting Round; (ii) intensify development and utilization of RE and environment-friendly alternative energy resource technologies; and (iii) increase utilization of alternative fuels. The GOP recognizes that the Philippines is highly vulnerable to the negative impact of climate change and has proactively responded by taking solid positions in global negotiations such as the United Nations Climate Change Conferences and by making climate change a national top priority since the early 1990s. In 2003, the GOP ratified the Kyoto Protocol to demonstrate the nation’s commitment to the global community to achieve sustainable development. In 2004, Executive Order No. 320 recognized that participation by the Philippines in the CDM will provide numerous benefits, including foreign investments in CDM projects, employment and income opportunities, establishment of ecologically-friendly projects that will contribute to a healthier environment, as well as technology transfer and income from carbon purchases by developed countries. The Department of Environment and Natural Resources (DENR) became the Designated National Authority for CDM in accordance with the Marrakesh Accord.
Climate Change Act (Republic Act 9729) was enacted in 2009. Through the Climate Change Commission (CCC), the Climate Change Act has been operationalized in a national strategy (2010), a national action plan (2011) and upcoming local action plans. The Republic Act 9729 creates the overall framework for mainstreaming climate change mitigation and adaptation into all governmental policies, designing strategic and operational frameworks, establishing the CCC, and clarifying the various roles of relevant government agencies in dealing with climate change. The Act identifies a number of potential sources of international and domestic financing for climate change mitigation. This includes the settlement of climate debts, Disaster Management Assistance Fund (DMAF), public finance mechanisms, and PES.xxi
National Framework Strategy on Climate Change (NFSCC) 2010-2022 serves as guidance fornational and sub-national development planning processes across all sectors, addresses mitigationand adaptation policies as two complementary pillars, and aims to increase the adaptive capacity of communities, the resilience of natural ecosystems to climate change and to optimize mitigation
xix For more details see also Annex 9.1 and Supplementary Materials 9.5. xx A range of multilateral and national actions orientated towards reducing emissions from deforestation and forest degradation, and preservation and enhancement of carbon stocks. xxi Market-based Mechanisms funds are described in that section.
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opportunities towards sustainable development. In the area of mitigation, priorities are focused on EE and conservation, RE, the national REDD+ Strategy, sustainable infrastructure, environmentally sustainable transport, as well as waste management. It also commits to capacity development, knowledge management and information, education and communication as well as research and development (R&D) and technology transfer.
National Climate Change Action Plan (NCCAP) 2011-2028 (CCC Resolution No. 2[2011]) outlines objectives and goals for adaptation and mitigation for the medium and long-term from 2011 to 2028. It prioritizes food security, water sufficiency, environmental and ecological stability, human security, climate-friendly industries and services, sustainable energy and knowledge, and capacity development. It focuses on the creation of green and eco-jobs and sustainable consumption and production, the development of sustainable cities and municipalities, the promotion and expansion of EE and conservation, the development of sustainable and RE, environmentally sustainable transport, and climate-proofing and rehabilitation of energy systems infrastructure. Specifically, “the NCCAP outlines clear adaptation priorities around food security through more resilience of the agriculture and fisheries sectors, as well as improved water governance and sustainable access to water. Mitigation will be fostered through climate-smart industries and services, as a tool for greening the economy. Importantly, the NCCAP introduces the concept of ‘adaptive mitigation’, where mitigation becomes part of the efforts to adapt to climate change. Sustainable energy and transport will be the second pillar of national mitigation policies.”64
Manila Declaration on Green Industry in Asia and Framework of Action was signed in 2009. The countries in the region acknowledge that “the lack of adequate finances and the necessary technologies and capacities is still the major obstacle preventing the developing countries from achieving sustainable development and internationally agreed development goals in the Asian and Pacific region. There is still an urgent need for the international community, especially donor countries, to honor their commitments and to provide financial support, technical assistance and capacity-building to developing countries, in particular the least developed countries, the small island developing States and economies in transition in this region.”65 They recognize the “need to increase efficiency of production in order to advance the economic and trade competitiveness of industries in the region by effective utilization of materials, energy and water through continuous application of cleaner production, fostering innovation and development and transfer of environmentally sound technologies”.64 The declaration and framework outline the initiatives needed to develop green industry in the region. The main goal of this effort is to promote low-carbon and resource efficient patterns of industrial development in the rapidly industrializing economies of Asia. The Philippines remains at an initial stage in its action plan.
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Renewable Energy Policies • Renewable Energy Act 2008 • Biofuels Act 2006 • Philippine Energy Plan (PEP) • Investment Priorities Plan (IPP) (Memorandum Order No. 20 [2011]) • Congress Pending Bills
Renewable Energy Act 2008 was intended to accelerate the development, utilization and commercialization of RE resources through funding, technical support and policy reform. A shift from fossil fuel sources to renewable forms of energy is key in driving the energy sector towards sustainable development. RE, especially hydropower, has contributed to the country’s primary energy supply mix for a long time. Current programs under this policy are creating a market-based environment that is conducive to private sector investment and participation while encouraging technology transfer and R&D. Biofuels Act 2006 mandates that all liquid fuels for motors and engines sold in the Philippines shall contain locally sourced biofuel components. To encourage investment in the production, distribution and use of locally sourced biofuels and the minimum mandated blends, the Implementing Rules and Regulations (DC 2007-05-0006), allows other fuels derived from biomass to be utilized upon technical validation.
Philippine Energy Plan (PEP) for 2009-2030 is designed to respond to the current challenges confronting the energy sector. The PEP is based on three broad policy platforms: (i) ensuring energy security; (ii) pursuing effective implementation of energy sector reforms; and (iii) implementing social mobilization and cross-sector monitoring mechanisms. It has laid out essential steps to support the policy directions of the energy sector. These are: (i) exploration/development of conventional fuels; (ii) pursuing clean and green energy; (iii) promoting responsible use of energy; (iv) ensuring developments in the power and electrification sectors; (v) pursuing reforms in the power and downstream oil and gas industries; (vi) using energy in an environmentally responsible manner (Climate Change Adaptation Measures); and (vii) social mobilization. Investment Priorities Plan (IPP) (Memorandum Order No. 20 [2011]) identifies a number of areas as priority investments: ■■
Energy covers the exploration, development, and/or utilization of indigenous energy sources, as well as other energy sources that have adopted environmentally friendly technologies.
■■
Green Projects cover the manufacture/assembly of goods that would significantly lead to the efficient use of energy, natural resources or raw materials, minimize/prevent pollution, or reduce GHG emissions.
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■■
Motor Vehicles covers the manufacture/assembly of motor vehicles, including alternative fuel vehicles (AFVs) and electric vehicles, but excluding two-stroke motorcycles, and manufacture of motor vehicles parts and components.
■■
Disaster Prevention, Mitigation and Recovery Projects cover projects that will prevent or mitigate adverse impacts of calamities and disasters (e.g., installation of flood control systems, installation of early warning systems for typhoons, earthquake occurrences, tsunami, volcanic eruptions, dikes, etc.). This also covers projects to rehabilitate areas affected by calamities and disasters (e.g., rebuilding of roads and bridges after earthquakes/floods, volcanic eruptions, and oil spill clean-up, as well as training for disaster preparedness, and mitigation or recovery, rehabilitation and reconstruction).
Congress Pending Billsxxii are: ■■
The AFVs Bill provides for: (i) tax and non-tax exemptions and incentives for the manufacture, importation, sale and distribution of hybrid or AFVs; (ii) motorists who trade or convert their old vehicles for/to hybrid or AFVs; and (iii) refueling/fueling stations for hybrid or AFVs. It also creates a trust fund to finance local research, development and promotion of hybrid and AFVs.
■■
Electric or Zero Emission Vehicles Bill mandates car manufacturers, assemblers and importers to allot 10 percent of their output into electric or zero emission vehicles.
■■
Green Energy for Homes and Buildings Bill establishes a program which provides financial assistance to convert buildings and homes into green buildings.
■■
Philippine Economic Environmental and Natural Resources Accounting (PEENRA) Bill seeks to institutionalize a PEENRA System to reflect environmental input and output in the determination of national income accounts. The PEENRA framework shall include accounting for environmental quality and waste disposal services, depreciation of natural capital and environmental damages.
■■
Downstream Natural Gas Industry Bill provides a framework for the development of a downstream natural gas industry and its transition to a mature industry.
■■
Wind Energy Development Act creates the Wind Energy Development Authority to facilitate research and promote the development and utilization of wind energy.
■■
Ocean Energy Development Act creates the Ocean Energy Development Authority to facilitate research and promote the development and utilization of ocean energy.
■■
The Hydrogen Research Promotion and Development Act supports and encourages the use and development of hydrogen as alternative source of fuel energy.
■■
Solar Energy Development Act creates the Solar Energy Development Authority, which is tasked to facilitate research and promote the development and utilization of solar energy.
■■
Waste-to-energy Technology Bill promotes and permits the use of waste-to-energy technology.
xxii Bills on the list might never be passed and are subject to significant potential modification.
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Environmental Laws Information Availability • Philippine Disaster Risk Reduction and Management Act 2010 • Clean Air Act • Clean Water Act • Ecological Solid Waste Management Act
Philippine Disaster Risk Reduction and Management Act 2010 “provides for the development of policies and plans and the implementation of actions and measures pertaining to all aspects of disaster risk reduction and management, including good governance, risk assessment and early warning, knowledge building and awareness raising, reducing underlying risk factors, and preparedness for effective response and early recovery”.66 Significantly, disaster risk-reduction management throughout the country is implemented by several management councils with multi-agency membership. In strengthening its commitment to the Kyoto Protocol, the Philippines passed the Clean Air Act in 1999, the Ecological Solid Waste Management Act 2000, the Clean Water Act 2004, as well as other laws that help protect the environment.
Clean Air Act presents measures to reduce air pollution and protect the environment. It is funded from the self-established Air Quality Fund, fed from fines for imposing damages to the environment and from proceeds for issuing licenses, permits, registrations and tax-exempt contributions and grants. It sets emission standards in global or by pollutant source for all motor vehicles and industries, charging fines to non-compliers and providing tax incentives of accelerated depreciation, deductibility of R&D expenditures, tax credits on the value added tax (VAT) of equipment and tax exemption on real property tax on the machinery and equipment used to comply. The Act bans incineration and smoking in public places and encourages the development of recycling programs.
Clean Water Act outlines measures to prevent water bodies from pollution from industries and commercial establishments, agriculture and community/household activities. The Act provides incentives to LGU, enterprises and private entities to undertake such measures as wastewater treatment, cleaner production and adoption of technologies that minimize waste, resulting in overall pollution abatement and more effective water quality management. Ten years are given towards provision of incentives including tax and duty exemption on imported capital equipment and tax credit on domestic capital equipment.
Ecological Solid Waste Management Act promotes the protection of public health and environment. It does so encouraging: (i) cooperation and self-regulation among waste generators; (ii) institutional programs with responsibility on local levels; (iii) solid waste avoidance and volume reduction through source reduction; and (iv) education and R&D on more effective arrangements.
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9.2 Financial and Economic Instruments Fiscal Incentives and Direct Subsidies • Renewable Energy Law 2008 incentives • Geothermal Exploration Incentives • Tax Deductions
Renewable Energy Law 2008 establishes a number of RE production, consumption, commercialization and development incentives. Renewable Energy Law 2008 (R.A. No. 9513) Incentives ■■
RE Production Incentives Seven year income tax holiday
■■
Incentives for RE Commercialization Tax and duty-free importation of components, parts and materials for the manufacture and/or fabrication of RE equipment and components
■■
Duty free importation of RE machinery, equipment and materials within the first 10 years
■■
1.5% realty tax cap on original cost of equipment and facilities to produce RE
■■
Tax credit on domestic capital components, parts and materials
■■
Net operating loss carryover (to be carried for the next seven consecutive years)
■■
Income tax holiday for seven years from the date of recognition/accreditation
■■
10% corporate tax rate (regular tax rate is 35%)
■■
50% tax rebate for purchase of RE equipment
■■
Zero-rated VAT for all RE equipment transactions
■■
Tax exemption on carbon credits
■■
Tax credit on domestic capital equipment and services
■■
RE Consumption Incentives Net-metering for RE to allow end-users generating own power to sell it to the grid
■■
Green energy option to allow end-users the option to use RE as their source of energy
■■
Zero percent VAT on sale of fuel generated from RE
Source: Congress of the Philippines, 2008.67
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Incentives for Biomass Feedstock Producers Duty free importation and VAT exemption on all types of agricultural inputs, equipment, and machinery
Green Investment Climate Country Profile - Philippines
Geothermal Exploration Incentives support the development of the country’s geothermal through a number of incentives under the 1978-signed Presidential Decree No. 1442. Renewable Energy Law 2008 (R.A. No. 9513) Incentives ■■
RE Production Incentives Recovery of operating expenses not exceeding 90% of the gross value in any year with carryforward of unrecovered cost
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Service fee of up to 40% of the net proceeds
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Exemption from all taxes except income tax
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Exemption from payment of tariff duties and compensating tax on the importation of machinery, equipment, spare parts and all materials
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Depreciation of capital equipment over a 10 year period
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Easy repatriation of capital investments and remittance of earnings
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Entry of alien technical and specialized personnel
Source: Department of Energy, 2008.28
Tax Deductions encompass the 2010 IPP stating that green projects are entitled to tax reductions and other incentives upon application with the BOI. Green projects cover the production of goods, the use of which would lead to either the efficient use of energy, natural resources, raw materials, or minimize or prevent pollution. This also includes systems or processes that would involve the application of cleaner and more efficient technologies on carbon and other GHG emission reduction. The Clean Water Act also provides tax and duty exemption on imported machinery, equipment and spare parts used for industrial wastewater treatment/collection and treatment facilities, provided certain conditions are met.68 A similar tax and duty exemption on imported machinery, equipment and spare parts used for collection of solid waste is granted in the Ecological Solid Waste Management Act. Under the Biofuels Act, a specific tax on local or imported biofuel component has been reduced to zero, while the sale of raw material used in the production of biofuels is exempt from payment of VAT. In addition, all water effluents used as liquid fertilizer and for other agricultural purposes are considered as “reuse” and therefore are exempt from wastewater charges. CNG motor vehicles and natural gas vehicle (NGV) industry as well as related equipment, parts and components under Section 104 of the Tariff and Customs Code of 1978, are subject to the most-favored nation import duty.
Oil, Gas and Coal Exploration Incentives Oil and Gas Incentives or Privileges are made available to all service contractors under Presidential Decree 87 otherwise known as the Oil Exploration and Development Act 1972. These include: ■■
Service fee of up to 40 percent of net production;
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Cost reimbursement of up to 70 percent gross production with carry-forward of unrecovered costs;
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Filipino Participation Incentive Allowance grants of up to 7.5 percent of the gross proceeds for service contract with minimum Filipino company participation of 15 percent;
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Exemption from all taxes except income tax;
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Income tax obligation paid out of GOP’s share;
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Exemption from all taxes and duties for importation of materials and equipment for petroleum operations;
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Easy repatriation of investments and profits;
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Free market determination of crude oil prices, i.e., prices realized in a transaction between independent persons dealing at arm’s-length;
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Special income tax of eight percent of gross Philippine income for subcontractors;
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Special income tax of 15 percent of Philippine income for foreign employees of service contractors and subcontractors;
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The Office of the Energy Affairs Circular No. 87-12-003, provides a sliding allowance from 1.5 percent to 7.5 percent of the gross proceeds to be granted to the contractor when the aggregate participation in the contract by one or more Filipino citizens and/or companies is at least 15 percent in respect to a deep water contract; and
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Moreover, DOE Circular No. 94-01-01 provides an allowance of 7.5 percent of the gross proceeds granted to the contractor when the aggregate participation in the contract by one or more Filipino citizens and/or companies is at least 15 percent in respect to the drilling of a well by the contractor in water depths beyond 200 meters, whether inside or outside a deep water area.
Coal Incentives or Privileges provides that all coal service contractors may be eligible for the incentives or privileges under Presidential Decree 1174, which amends Presidential Decree 972, otherwise known as the Coal Development Act 1976 as follows: ■■
Cost reimbursement of operating expenses up to 90 percent of gross proceeds from production with carry forward of unrecovered cost;
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Special allowance of up to 40 percent of the net proceeds;
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Exemption from all taxes, excluding income tax, but including exemption from payment of tariff duties and compensating tax on the importation of machinery, equipment, spare parts and all materials for coal operations;
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Entry of alien technical and specialized personnel; and
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Right of ingress to and egress from the Coal Operating Contract area.
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Financial Measures • Feed-in Tariffs (FiTs)
Feed-in Tariffs, under the Renewable Energy Act provide for FiTs consisting of a guaranteed fixed price for at least 12 years for electricity produced from emerging RE resources. In July 2012, the ERC approved the initial FiTs that shall apply to generation from RE sources, particularly, run-of-river hydro, biomass, wind, and solar, as follows: The Biofuels Act also mandates the Tariff Approved FiTs (PHP/kWh), 2012 Commission, in coordination with the appropriSmall Hydro 5.90 ate government agencies, to create and classify Biomass 6.63 a tariff line for biofuels and biofuel-blends in Wind 8.53 consideration of World Trade Organization and Solar 9.68 Association of Southeast Asian Nations (ASEAN) free trade area agreements. Priority in financing Sources: Energy Regulatory Commission of the Philippines, 2012; and Congress of the Philippines, 2012.69 under the Biofuels Act mandates Government Financial Institutions (GFIs) to accord high priority to extend financing to Filipino citizens or entities to a level of at least 60 percent of the capital that belongs to Philippine citizens engaged in activities involving production, storage, handling and transport of biofuel, biofuel feedstock, including the blending of biofuels with petroleum.
Market-based Mechanisms • Management Funds • Payments for Ecosystem Services
Management Funds consist of: ■■
Disaster Management Assistance Fund (DMAF) is a lending facility to LGUs offered at very low rates (three percent to five percent) with the objective of providing timely financial support to disaster risk and damage management initiatives. It includes disaster prevention and mitigation projects, response and relief related projects, and recovery and rehabilitation projects.
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The Local Disaster Risk Reduction and Management Fund (LDRRMF) shall consist of not less than five percent of the estimated revenue from regular sources to support disaster risk-management activities such as, pre-disaster preparedness programs including training, purchasing life-saving rescue equipment, supplies and medicines, for post-disaster activities, and for the payment of premiums on calamity insurance. Thirty percent of the LDRRMF is allocated as a Quick Response Fund (QRF) or stand-by fund for relief and recovery programs as aid to restore communities or areas stricken by disasters, calamities, epidemics, or complex emergencies, as quickly as possible.
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The National Disaster Risk Reduction and Management Fund (NDRRMF) is intended to be used for disaster risk reduction or mitigation, prevention and preparedness activities such as personnel training, equipment procurement, and capital expenditures. It can also be used for relief,
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recovery, reconstruction and other work or services in connection with natural or human-induced calamities that may occur during the budget year, or those that occurred in the past two years. Moreover, as with the LDRRMF, 30 percent of the NDRRMF is also allocated as a QRF or stand-by fund for relief and recovery. ■■
Renewable Energy Trust Fund (RETF) was established under the Renewable Energy Act to enhance the development and greater use of RE. It shall be administered by the DOE as a special account in any of the GFIs. The RETF shall be exclusively used to: (i) finance the research, development, demonstration, and promotion of the widespread and productive use of RE systems for power and non-power applications, as well as to provide funding for R&D institutions engaged in RE studies undertaken jointly through public-private sector partnership; (ii) support the development and operation of new RE resources to improve their competitiveness in the market; (iii) conduct nationwide resource and market assessment studies for the power and non-power applications of RE systems; and (iv) propagate RE knowledge by accrediting, tapping, training, and providing benefits to institutions, entities and organizations which can extend the promotion and dissemination of RE benefits to the national and local levels.
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Air Quality Management Fund was created by the Clean Air Act, is intended to: (i) finance containment, removal, and clean-up operations of the Government in air pollution cases; (ii) guarantee restoration of ecosystems and rehabilitate areas affected by the acts of violators of this Act; (iii) support research, enforcement and monitoring activities and capabilities of the relevant agencies; and (iv) provide technical assistance to the relevant agencies. It is sourced from the fines imposed and damages awarded by the Pollution Adjudication Board, the proceeds of licenses and permits issued by the department under this Act, emission fees, and from donations, endowments and grants in the forms of contributions. Contributions to the fund shall be exempted from donor taxes and all other taxes, charges or fees imposed by the Government.
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Clean Water Management Fund is similar to the Air Quality Management Fund and was created under the Clean Water Act for water pollution cases.
Payment for Ecosystem Services (PES) is a program intended to compensate those who provide ecosystem services. PES was developed to incentivize land users to properly manage and conserve their natural environment. Appropriate mitigation actions with carbon credit potential can also be applied in the protected area provided they are supported by international climate financing.
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9.3 Programs and Institutions Programs • National Renewable Energy Program (NREP) • Ecotowns • Green Public Procurement (Executive Order 301 [2004]) • Capacity Building • National Energy Efficiency and Conservation Program (NEECP) • Clean Transport Program • Natural Gas Vehicle Program for Public Transport (NGVPPT) • Association of Development Financing Institutions in Asia and the Pacific (ADFIAP)xxiii • Sustainable Energy Finance Program (SEF) • ADB-funded e-trikes Pilot Project • National Environmentally Sustainable Transport Strategy (NESTS) • Metro Manila and Cebu City Bus Rapid Transit (BRT)
National Renewable Energy Program (NREP) is formulated and facilitated under Section 27 (b) of the law and Section 31 (a) of the Implementing Rules and Regulations — mandate the DOE, in consultation with its stakeholders. To achieve the RE goals, the NREP “seeks to: (i) increase RE-based capacity to an estimated 15,304 MW by the year 2030, almost triple the 2010 level of 5,369 MW; (ii) institutionalize a comprehensive approach to address the challenges and gaps that prevent and/ or delay wider application of RE technologies in a sustainable manner; and (iii) outline the action plans necessary to facilitate and encourage greater private sector investments in RE development”.70
Ecotowns are implemented under the NCCAP. This is a planning unit consisting of municipalities or a group of municipalities located within the boundaries of critical key biodiversity areas (forest, coastal/marine and fishery, or watersheds) which are highly vulnerable to climate change risks due to its geography, geographic location, and poverty situation. The ecotown targets assistance to vulnerable people in communities, ensures that a package of assistance is provided for sustainable livelihood activities, and that ecosystems (such as forests, coastal areas, fisheries, and urban/built up systems) are protected. The package of assistance will require a poverty reduction scheme through the Climate Adaptation Support Service, which provides immediate income to the poor within target ecosystems.
Green Public Procurement (Executive Order 301 [2004]) mandates all government departments, offices and agencies to establish their prospective Green Procurement Program. The Executive Order
xxiii For more details see Supplementary Materials 9.5.
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seeks to accelerate the establishment of sustainable/green procurement systems in Government to catalyze the shift towards sustainable production and consumption. This system aims to promote the culture of making environmentally informed decisions in Government, especially in the purchases and use of different products. In particular, it will: ■■
Include environmental criteria in public tenders, whenever possible and practicable;
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Establish the specifications and requirements for products of services to be considered environmentally advantageous; and
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Develop incentive programs for suppliers.
However, this initiative is still in its infancy and is limited to national government agencies that have launched a few pilot initiatives. The ultimate goal is to establish the GPP for all departments, businesses, offices and agencies of the executive branch of the GOP.
Capacity Building is formulated, developed and implemented under the Climate Change Act. All relevant government agencies and LGUs are required to allocate from their annual appropriations adequate funds for the formulation, development and implementation, including training, capacity building and direct intervention, of their respective climate change programs and plans. The allocation also includes public awareness campaigns on the effects of climate change and energy-saving solutions to mitigate these effects, and initiatives, through educational and training programs and micro-credit schemes, especially for women in rural areas. In its pursuit to comprehensively address the issues surrounding climate change, the Philippines has enacted the Climate Change Act in 2009, which has been enhanced with the passage of the People’s Survival Fund (RA 10174).xxiv Through the CCC, the Climate Change Act has been operationalized in a national strategy (2010), a national action plan (2011) and upcoming local action plans. Under RA 10174, the CCC is tasked to formulate a NSFCC which shall serve as the basis for climate change planning, R&D, extension, monitoring of activities, and climate financing, to protect vulnerable and marginalized communities from the adverse effects of climate change.71
National Energy Efficiency and Conservation Program (NEECP) is launched by DOE as part of the SWITCH movement and was initiated by President Arroyo in July 2008. SWITCH aims to persuade people to change from a lifestyle of expenditure and waste to a lifestyle of conservation and efficiency. It also aims to promote a shift from petroleum-based fuels to alternative fuels such as biodiesel and bioethanol. The NEECP outlines the following goals to be achieved by 2014:
xxiv RA 10174 was signed in August 2012.
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■■
To cushion the impact of price increases in petroleum products and electricity through the implementation of EE and conservation measures;
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To promote cost avoidance/savings on fuel and electricity without affecting productivity;
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To protect the environment; and
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To generate cumulative energy savings for the planning period 2007-2014 of 9.1 million barrel of oil equivalent, which is equal to a deferred megawatt capacity of 210.56 MW and GHG emissions of 2.92 million tons of CO2 equivalent at the end of the planning period.
Clean Transport Program is part of the Government’s aggressive program to: (i) introduce alternative clean transport fuels, particularly, biofuels, CNG and auto gas LPG; and (ii) reduce the transport sector’s reduce the transport sector’s dependence on oil as well as local pollution and GHG emissions. Examples include: ■■
The Committee on Fuel Conservation and Efficiency in Road Transport has targeted a five percent reduction in fuel consumption by road transport users. The result is the Road Transport Patrol Campaign that has expanded to six chapters in key economic zones within the country; and
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In 2004, all departments, bureaus, offices, and instrumentalities of the Government, including government owned and controlled corporations were mandated to use one percent coconut methylester by volume as a blend in petroleum diesel fuel.
Natural Gas Vehicle Program for Public Transport (NGVPPT) provides incentives for transport operators to shift to CNG.xxv Incentives include a wide range of industry related concessions regarding taxes and duty as well as preferential treatment. The DOE is the lead implementing agency for NGVPPT. The DOE shall: (i) take the lead in implementing the NGVPPT, including establishing pilot projects to spur accelerated development, to encourage the use of CNG-powered personal utility vehicle (PUVs) and establish the necessary refueling infrastructure; (ii) develop an implementation plan to ensure the success, synergy and continuity of all activities related to the NGVPPT; (iii) develop a CNG Master Plan in coordination/cooperation with concerned government agencies/institutions and in consultation with all stakeholders; and (iv) facilitate program participants’ access to privileges and incentives.xxvi
ADFIAP-DBP-ECCP Green Financing and Advocacy Initiative includes the Association of Development Financing Institutions in Asia and the Pacific (ADFIAP), the Development Bank of the Philippines (DBP) and the European Chamber of Commerce of the Philippines (ECCP).26 The three reached an agreement for a green financing and advocacy initiative that will benefit small and medium enterprises (SMEs) and LGUs in the country. The partnership seeks “to support investments in environmentally-friendly processes and systems such as cleaner production, waste minimization, resource conservation, EE, and pollution prevention and control, with the goal of reducing xxv As of today, very little has happened on the ground due to limited re-fueling infrastructures and insufficient gas supply for a major push in the NGV program. xxvi For more details see Supplementary Materials 9.5.
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the environmental footprint from LGUs projects and SMEs operations”.xxvii Under the agreement, SMEs and the LGUs will be assisted by the DBP in the development and implementation of their green projects through its environmental credit facilities under its green financing program. DBP’s PHP20.6 billion facility is available for industries and LGUs embarking on projects for cleaner production, reducing waste, conserving resources, and promoting efficient use of energy and curbing pollution. Conversely, the ECCP will serve as the main contact for its member-companies and other stakeholders that seek a loan under DBP’s green financing program. ADFIAP’s main function is to conduct and advocate through its network of members and supporting organizations, green finance awareness briefings, SMEs access to finance forums as well as linkage building and capacity-building programs on green investments.
Sustainable Energy Finance Program (SEF) began in 2008 and was renewed through the BPI and the IFC. SEF is an IFC initiative designed to help reduce GHG emissions. It focuses on projects involving RE, EE and cleaner production technologies. Under the renewed partnership, BPI’s SEF will expand into green mortgages, energy performance contracting and CDM projects. The Philippines’ SEF program has financed projects responsible for saving 142,100 MW of energy; produced 208,200 MW of clean energy and reduced 716,700 tons of CO2 emissions.72 Recently, the IFC signed an agreement with mobile-based local bank, BPI Globe BanKO, to help smaller businesses afford clean energy and energy-saving systems under the SEF Program. Under the agreement, IFC and BanKO seek to determine the demand for smaller RE and EE systems that could be financed by the bank. Financing is to come through direct lending or through network of non-governmental organization partners. International organizations’ programs are actively presented in regional energy cooperation and initiatives through Association of Southeast Asian Nations (ASEAN), Asia-Pacific Economic Cooperation, the Asia Cooperation Dialogue, the Asia–Europe Meeting and the East Asia Summit (EAS). Following the signing of the Cebu Declaration on East Asian Energy Security by the heads of government of ASEAN member economies and of ASEAN’s dialogue partners during the second EAS held in 2007 in Cebu, the leaders endorsed the establishment of a working group to study possible areas of cooperation among EAS members to enhance energy security. Following this directive, the EAS Energy Cooperation Task Force was established with three identified areas of cooperation: (i) biofuels for transport and other uses; (ii) market integration; and (iii) EE. The Philippines was designated as the lead economy for the working group.
Asian Development Bank (ADB)-funded e-trikes Pilot Project was established as a joint project by the Philippines and ADB. The DOE held a consultation meeting in Taguig City attended by 16 LGUs to present the proposed e-trike Program wherein a minimum of 20,000 units to a maximum of 100,000 units of e-trikes will be deployed under a “rent-to-own” arrangement through the ADB loan facilities to LGUs.73 During the consultation meeting, the results of the Pilot e-trike Study held in Mandaluyong was discussed, including the city’s approach to maximize driver participation in the actual runs, while paying PHP150.00 or PHP300.00 boundary per day.
xxvii For more details see Supplementary Materials 9.5.
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National Environmentally Sustainable Transport Strategy (NESTS) was formulated by the Department of Transportation and Communications (DOTC) and other transport-related agencies in an effort to further reduce the country’s carbon footprint and improve local air quality.74 NESTS promotes, among others, the development of BRT systems, expansion of the urban rail network in Metro Manila, deployment of hybrid vehicles in the public transport fleet, and acceleration of fuel-switching in certain public transport modes.
Metro Manila and Cebu City Bus Rapid Transit (BRT) is pursued with the aim of addressing traffic problems in the National Capital Region and the Cebu province. According to the Transportation Secretary Joseph Emilio Abaya, the BRT project in Cebu is scheduled to be presented to the ICC under National Economic and Development Authority (NEDA). Both the Metro Manila and Cebu BRT projects will be bided out through the country’s PPP mechanism. In the field of clean transportation, the DOTC has also expressed interest in clean natural gas-fueled buses. Currently, however, this is merely a concept under study.
Institutions • Climate Change Adaptation and Mitigation Cluster • Climate Finance Group (CFG)
Climate Change Adaptation and Mitigation Cluster is created under the Executive Department. This group shall take the lead in pursuing measures to adapt to and mitigate the effects of climate change on the Philippine archipelago; and undertake all necessary preparations for both natural and man-made disasters.xxviii
Climate Finance Group (CFG) was formed in April 2011 under the Executive Department and headed by the Secretary of Finance with co-chairmanship of the CCC. The extensive membership of CFG includes the Department of Foreign Affairs, the Department of Budget and Management, NEDA, the DENR, and the Senate Committee on Climate Change. CFG provides strengthening of the country’s leadership in generating and prioritizing resources for climate change policies. There are also ongoing discussions in the CFG around the set-up of the National Implementation Entity which would allow for accessing directly, without multilateral intermediaries, the resources of the Adaptation Fund. Moreover, together with the Cabinet Cluster, the CFG is to ensure a clear interface and better coherence between the PDP, the NCCAP and the new the Medium Term PDP.
xxviii For more details see Supplementary Materials 9.5.
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9.4 Regulatory Environment Regulatory Agencies • Energy Regulatory Commission (ERC) • National Renewable Energy Board (NREB) • National Biofuel Board (NBB) • Renewable Energy Management Bureau (REMB) • Department of Energy (DOE) • Department of Environment and Natural Resources (DENR) • Land Transportation Office (LTO) • Pollution Control Association of the Philippines, Inc. (PCAPI)
Energy Regulatory Commission (ERC) is the main power sector regulatory institution of the Philippines. Among other tasks, the ERC promotes competition, encourages market development, ensures customer choice and penalizes abuse of market power in the electricity industry by, for example, imposing fines or penalties for any non-compliance with or breach of the Electric Power Industry Restructuring Act. The ERC is currently faced with the difficult task of creating regulatory policies that would support the country’s RE strategy, while ensuring that electricity is universally accessible, reflective of true cost, and free from distortions like cross-subsidization.
National Renewable Energy Board (NREB) was created under Section 27 of the Renewable Energy Act 2008 and is the designated body for the implementation of RE policies and action plans by the DOE. The NREB supervises the NREP, which was created to support the achievement of the policy objectives of the Renewable Energy Act 2008.
National Biofuel Board (NBB) was created under Biofuels Act, has the task to: (i) monitor the implementation of and evaluate for further expansion of the National Biofuel Program; (ii) monitor the supply and utilization of biofuels and biofuel blends and recommend appropriate measures in cases of shortage of feedstock supply; (iii) review and recommend to DOE the adjustment in the minimum mandated biofuel blends subject to the availability of locally sourced biofuel; (iv) recommend to DOE a program that will ensure the availability of alternative fuel technology for vehicles, engines and parts; and (v) recommend to DOE the use of biofuel-blends in air transport taking into account safety and technical viability.
Renewable Energy Management Bureau (REMB) was established under the DOE. The REBM is responsible to: (i) implement policies, plans and programs related to the accelerated development, transformation, utilization and commercialization of RE resources and technologies; (ii) develop and maintain a centralized, comprehensive and unified data and information based on RE resources to ensure the efficient evaluation, analysis, and dissemination of data and information on RE resources, development, utilization, demand and technology application; (iii) promote
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the commercialization/application of RE resources including new and emerging technologies for efficient and economical transformation, conversion, processing, marketing and distribution to end users; (iv) conduct technical research, socio-economic and environmental impact studies of RE projects for the development of sustainable RE systems; (v) supervise and monitor activities of Government and private companies and entities on RE resources development and utilization to ensure compliance with existing rules, regulations, guidelines and standards; (vi) provide information, consultation and technical training and advisory services to developers, practitioners and entities involved in RE technology and develop RE technology development strategies; and (vii) perform other functions that may be necessary for the effective implementation of the Act and the accelerated development and utilization of the RE resources in the country.
Department of Energy (DOE) as defined under the Electric Power Industry Reform Act, is mandated to: (i) formulate the planning and implementation of a comprehensive program for the efficient supply and economical use of energy consistent with the approved national economic plan and environmental protection and conservation and maintenance of ecological balance with a focus on the development of indigenous and RE sources; (ii) develop and update annually the existing PEP; (iii) prepare and update annually a Power Development Program and integrate the same into the PEP; (iv) encourage private sector investments in the electricity sector and promote development of indigenous and RE sources; (v) establish and administer programs for the exploration, transportation, marketing, distribution, utilization, conservation, stockpiling, and storage of energy resources of all forms, whether conventional or non-conventional; (vi) formulate and implement a program for the accelerated development of non-conventional energy systems and the promotion and commercialization of its applications; and (vii) establish technical fuel quality standards for biofuels and biofuel-blended gasoline and diesel which comply with the Philippine National Standards.
Department of Environment and Natural Resources (DENR) is the primary government agency responsible for the conservation, management, development, and proper use of the country’s environment and natural resources. It is the lead agency implementing the Clean Air Act, Clean Water Act, Ecological Solid Waste Management Act and the Philippine Environmental Impact System. Specifically, the DENR: (i) issues air pollution control techniques; reviews and or revises and publishes annually a list of hazardous air pollutants with corresponding ambient guideline values and/or standards necessary to protect health and safety, and general welfare; and (ii) reviews, revises and publishes emission standards to further improve the emission standards for stationary sources of air pollution.
Land Transportation Office (LTO) is an agency of the GOP under the DOTC that administers emission tests and roadworthiness checks for motor vehicles.
Pollution Control Association of the Philippines (PCAPI) was formed in 1980 to work closely with the Government in the protection of the environment, prevention, abatement and control of land, air, and water pollution. PCAPI is a non-stock, non-profit and non-governmental organization. PCAPI, which seeks to be the leading organization complementing the Government in conserving the Philippine Environment, is committed to be an active partner in institutionalizing environmental conservation, and compliance with environmental regulations.
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9.5 Supplementary Materials Philippine Strategy for Sustainable Development (PCAPI) is a non-stocks formulated and consists of a ten-pronged strategy: (i) integration of environmental consideration in decision-making; (ii) proper pricing of natural resources; (iii) property rights reform; (iv) conservation of biodiversity; (v) rehabilitation of degraded ecosystem; (vi) strengthening of residuals management; (vii) control of population growth & human resources development; (viii) inducing growth in rural areas; (ix) promotion of environmental education; and (x) strengthening citizens’ participation.
Memorandum Order No. 399 is the nation’s blueprint for sustainable development. It is based on the following principles: (i) primacy of developing full human potential; (ii) holistic science and appropriate technology; (iii) cultural, moral and spiritual sensitivity; (iv) self-determination; (v) national sovereignty; (vi) gender sensitivity; (vii) peace, order and national unity; (viii) social justice, inter-, intra-generational and spatial equity; (ix) participatory democracy; (x) institutional viability; (xi) viable, sound and broad-based economic development; (xii) sustainable population; (xiii) ecological soundness; (xiv) bio-geographical equity and community-based resource management; and (xv) global cooperation.
Philippine Development Plan (PDP) key strategies are: ■■
Implement the Philippine National REDD+ Strategy;
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Institute and operationalize the concept of PES in protected areas;
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Develop environment-friendly enterprises and livelihood opportunities for local communities;
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Strengthen the institutional capacities of national and local governments for climate change adaptation and disaster risk reduction management;
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Pursue the use of appropriate valuation methods in the computation of applicable fees and taxes for the use of natural resources and enhance its collection;
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Ensure rightful share of environment and natural resources activities and priorities in national and local government budgets;
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Enhance collection of taxes/revenues including pollution and exploitation fees from industries;
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Retain the LGU share of taxes and revenues especially those pertaining to environmental activities;
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Utilize disposable public and government land assets and resources, balancing economic, environment and social development objectives;
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Strengthen LGU revenue through local real property tax to achieve better local tax efficiency, a wider tax base and greater equity;
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Promote and roll out the adoption of the Philippine Valuation Standards and compatible valuation methodologies in the public and private sector;
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Develop local capacities to generate revenue to finance activities for the control of polluting vehicles;
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Increase the value of natural resources by adopting resource valuation techniques in determining rates of user’s fees for use of forest land;
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Increase government share in the use of mineral wealth through the establishment of mineral reservations and greater value adding;
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Formulate policies on accessing carbon credits; and
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Explore further innovative sources of finance, both for environment and natural resources activities and climate change adaptation.
The Natural Gas Vehicle Program for Public Transport (NGVPPT) features include: ■■
Income tax holiday for qualified NGV industry-related activities under the Bureau of Industry’s 2003 IPP;
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Zero percent rate of duty on imported NGVs, NGV engines and other NGV industry related equipment, facilities, parts and components as certified by the DOE;
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Issuance of COC with Emission Standards to NGVs by the LTO;
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Preferential franchises from the Land Transportation Franchising and Regulatory Board (LTFRB) for NGVs on newly opened routes;
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Accelerated issuance by the DENR of Environment Compliance Certificates (ECC) for NGV facilities and refueling stations;
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Affordable and commercially tenable financial packages from GFIs; and
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Manpower development and capability building by the DOST and DOE through training and technology transfer.
For the implementation of the NGVPP different government agencies were assigned with roles as follows: ■■
DENR shall fast track the issuance of ECC for NGV facilities and refueling stations and formulate emission standards for CNG.
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The Department of Finance (DOF) shall create a pricing environment conductive to the use of CNG compared to diesel and formulate tax policies relative to the NGVPPT, and DOF, through the Bureau of Internal Revenue, will develop revenue regulations for the implementation of time-bound tax incentives for CNG, NGVs and related facilities and infrastructure. In addition, DOF, through the Bureau of Customs, shall implement guidelines on reduced tariffs on NGVs, NGV engines and other NGV industry related equipment, facilities parts and components duly certified by the DOE.
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DOST shall develop and promote locally manufactured NGV conversion kits, parts and components; develop training modules on NGV conversion, operation and maintenance and refueling station operation and maintenance; and establish testing centers for NGV systems, components and related equipment and facilities together with the DOE.
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The Department of Trade and Industry (DTI) shall, through the Bureau of Product Standards, establish Philippine National Standards for Natural Gas Utilization in the Transport Sector and certify the safety of CNG fuel, NGVs, NGV systems and components and related equipment and facilities. The DTI shall, through the BOI, enhance existing incentive packages for land transportation using CNG, conversion shops, terminals with CNG refueling stations and the manufacture/assembly of NGVs and provide incentives to the other NGV industry related activities.
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The DOTC will work with the DOE to develop an implementation plan for a gradual shift to CNG fuel utilization in PUVs and promote NGVs in Metro Manila and Luzon through the issuance of directives/orders providing preferential franchises in present day major routes and exclusive franchises to NGVs in newly opened routes. This shall be done in compliance with emission standards and other preferential incentives through the LTO, which shall issue Certificates of Compliance (COC) with emission standards to NGVs and also through the LTFRB, which shall grant preferential and exclusive Certificates of Public Convenience or franchises to operators of NGVs based on the results of the DOTC surveys.
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The Metro Manila Development Authority shall provide regulatory and administrative support and introduce traffic schemes favoring NGVs to enhance the use of such NGVs in Metro Manila, and shall integrate the location of CNG refueling stations within the overall plan/rationalization of its intermodal terminal program.
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The Tariff Commission shall reduce tariffs on NGVs, NGV engines, conversion kits/systems, refueling equipment and other NGV industry related equipment, facilities, parts, and components.
■■
The Technical Education and Skills Development Authority shall develop training modules and conduct training for NGV conversion/retrofit/maintenance engineers, mechanics and technicians, and certify the same after training.
■■
GFIs such as the DBP, the Land Bank of the Philippines, Trade and Investment Development Corp. of the Philippines and the Small Business Guarantee Fund Corporation, shall develop separate financing windows for the NGV industry which provide affordable and commercially tenable financing to NGV, refueling station and related infrastructure operators.
■■
The Philippine National Oil Company (PNOC), together with its subsidiary, PNOC-Exploration Corporation, shall provide the necessary support for infrastructure development such as the gas supply for performance testing of demo NGVs.
Examples of other Program Partnerships ■■
DBP-ECCP Partnership is undertaking the environmental Accountability, Responsibility and Transparency (SMART) Cebu Project to increase the competitiveness of SMEs via cleaner produc-
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tion, and to develop eco-friendly products and enter green markets in Europe and Asia. They are also collaborating on the Green Philippines Islands of Sustainability promoting sustainable production for industries within Metro Manila and the Cavite-Laguna-Batangas-Rizal-Quezon area. ■■
DBP-ADFIAP Partnership incorporates ADFIAP that includes safe and clean environment in its business practice and organizes training programs on development banking, risk management, access to finance, corporate and environmental governance.
■■
DBP-ASSIST Partnership includes the Asia Society for Social Improvement and Sustainable Transformation, an international capability building organization, and DBP are collaborating on promotional activities and identifying potential projects for funding under the Green Financing program.
■■
DBP-DENR agreement for green financing involves the DENR. DENR, through the Environmental Management Bureau (EMB) and the DBP, agreed to boost green financing in the country by providing concerned stakeholders access to the best financing program available for their environmental improvement initiatives. Under their agreement, the EMB will work closely with the DBP and other financial institutions to assist its stakeholders gain access to financing programs that will support projects on improved environmental compliance, pollution control, waste management, and climate change mitigation and adaptation.
■■
The Green Building Campaign can have a significant impact on sustainability in the Philippines and the building sector has been recognized as one of the main areas providing such sustainability.
■■
Current demands for sustainability in building and construction in the Philippines, have led professionals in the field of building and construction to develop ways for Filipinos to live in an ecologically sound environment. The Metropolitan Chapter (a responsible contractors group) and the Philippine Green Building Council — an alliance of national leaders from both the public and private sectors), have taken positive collective action to combat the threat of climate change and to secure a sustainable future.
■■
Leadership support to the sustainable building sector is demonstrated by the decision to make the House of Representatives the first green government building. This is also strongly symbolic, as the House of Representatives Building, built more than 30 years ago, is the seat of power of the legislative branch of the Government and is from where all laws that help protect the environment emanate.
■■
National Ecolabelling Programme – Green Choice Philippines (NELP-GCP) is one of the country’s initiatives to implement the fundamentals of sustainable development. According to a national survey in 2005, people in the Philippines are concerned about Green Business, 79 percent of the respondents expressed serious concerns on the state of the environment, with 55 percent being willing to buy environmental-friendly products, and 37 percent willing to buy even if the products cost more. NELP-GCP aims to change the behavioral patterns in consumption and production that degrade the environment. This International Organization for Standards series
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awards environmental labels to products and services that are based on specific criteria or meet a set of predetermined requirements. The goals are:
■■
■■
To guide the consumers when purchasing products and services that have reduced impacts to the environment;
■■
To encourage manufacturers to adopt processes and supply environmentally sound products; and
■■
To use the label to empower the consumers and complement the government’s environmental policy.
NELP-GCP has granted the Seal of Approval to eleven products under the categories of laundry detergent, cement, natural infill material and engine oil. Twelve products are currently undergoing assessment to acquire the seal under the categories of cleaning agent, disinfectant, industrial lamp, and paint. Also, the program has developed and approved the environmental criteria for thirty-two wide ranging products and services, including tissue paper products, household batteries, engine oils, printing and writing paper products, crayons, fire extinguishers, cement, etc. However, the overall consumer awareness on eco-labeling in the Philippines remains at a very low level, and progress is slow.
Climate Change Adaptation and Mitigation Cluster shall pursue the following objectives: (i) adopting climate change adaptation and mitigation measures by LGUs and their respective communities, national government agencies, and the general public; and ensure that these are incorporated in their annual work plans and budgets, where applicable; (ii) ensuring the utilization of natural resources for the equal benefit of present and future generations; (iii) formulating alternative and inclusive urban development plans, which ensure that people of varying income levels are integrated in productive, healthy and safe communities; and (iv) undertaking all other measures necessary to prepare for and manage the risks and/or threats associated with natural and manmade phenomena such as, but not limited to, typhoons, earthquakes, tsunami, floods, landslides, civil disturbance and terrorism.
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10. References 1
World Bank Data Bank. “GDP (current US$).” Accessed July 21, 2013. http://data.worldbank. org/indicator/NY.GDP.MKTP.CD.
2
World Bank Data Bank. “Population, total.” Accessed July 21, 2013. http://data.worldbank.org/ indicator/SP.POP.TOTL.
3
World Bank Data Bank. “Urban population (% of total).” Accessed July 21, 2013. http://data. worldbank.org/indicator/SP.URB.TOTL.IN.ZS.
4
International Monetary Fund. “World Economic Outlook Database 2011.” Accessed July 21, 2013. https://www.imf.org/external/pubs/ft/weo/2011/01/weodata/weoselco.aspx?g=2001&sg=All+countries.
5
Economist Intelligence Unit. “EIU Country Data.” Accessed July 21, 2013. http://www.eiu.com/ site_info.asp?info_name=EIUcountryData&=entr.
6
World Bank Data Bank. “Inflation, consumer prices (annual %).” Accessed July 21, 2013. http:// data.worldbank.org/indicator/FP.CPI.TOTL.ZG.
7
Central Intelligence Agency. “GDP Composition by Sector.” Accessed July 21, 2013. https:// www.cia.gov/library/publications/the-world-factbook/fields/2012.html#rp.
8
International Energy Agency. “Statistics and Balances 2009.” Accessed July 21, 2013. https:// www.iea.org/stats/.
9
Adapted from:
International Energy Agency. “Statistics and Balances 2009.” Accessed July 21, 2013. https:// www.iea.org/stats/.
U.S. Energy Information Administration. “Countries Data.” Accessed July 21, 2013. http://www. eia.gov/countries/data.cfm.
World Bank. “Winds of Change: East Asia’s Sustainable Energy Future.” Accessed July 23, 2013. http://siteresources.worldbank.org/INTEASTASIAPACIFIC/Resources/226262-1271320774648/ windsofchange_fullreport.pdf.
World Bank Data Bank. “Energy imports, net (% of energy use).” Accessed July 23, 2013. http://data.worldbank.org/indicator/EG.IMP.CONS.ZS.
10
Adapted from:
Indriyanto, Asclepias R., Nasrullah Salim, Fabby Tumiwa, Tri Mumpuni et al. “Electricity Governance in Indonesia: Assessment Report.” World Resources Institute, 2007. Accessed July 23, 2013. http://pdf.wri.org/egi_report_indonesia.pdf.
International Energy Agency. “Access to Electricity 2011.” Accessed July 21, 2013. http://www. worldenergyoutlook.org/resources/energydevelopment/accesstoelectricity/.
World Bank Data Bank. “Access to electricity (% of population).” Accessed July 23, 2013. http://data.worldbank.org/indicator/EG.ELC.ACCS.ZS.
11
World Bank Data Bank. “Electric power transmission and distribution losses (% of output).” Accessed July 21, 2013. http://data.worldbank.org/indicator/EG.ELC.LOSS.ZS.
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Green Infrastructure Finance
12
Adapted from:
Asia-Pacific Economic Cooperation. “Energy Overview 2012.” Accessed July 23, 2013. http:// publications.apec.org/publication-detail.php?pub_id=1432.
Energdata. “Energy intensity of GDP at constant purchasing power parities.” Accessed July 21, 2013. http://yearbook.enerdata.net/energy-intensity-GDP-by-region.html. 13
Adapted from:
International Energy Agency. “Statistics and Balances 2009.” Accessed July 21, 2013. https:// www.iea.org/stats/.
Intergovernmental Panel on Climate Change. “Revised 1996 Intergovernmental Panel on Climate Change’s National Guidelines.” Accessed August 1, 2013. http://www.ipcc-nggip.iges. or.jp/public/gl/invs1.html.
14
Adapted from:
Energy Market Authority of Singapore. “Singapore Energy Statistics, 2012.” Accessed July 21, 2013. http://www.ema.gov.sg/media/files/publications/EMA_SES_2012_Final.pdf.
Maurer, Luiz T., and Luiz A. Barroso. Electricity Auctions: An Overview of Efficient Practices. Washington D.C.: International Bank for Reconstruction and Development/ World Bank, 2011. Accessed July 23, 2013. http://www.ifc.org/wps/wcm/connect/8a92fa004aabaa73977bd-79e0dc67fc6/Electricity+and+Demand+Side+Auctions.pdf?MOD=AJPERES.
Perusahaan Listrik Negara. “Indonesian Electricity Tariff.” Accessed July 23, 2013. http://www. pln.co.id/eng/?p=534.
Lee, Seung-Hoon. “Electricity in Korea.” Asia-Pacific Economic Cooperation, 2011. Accessed July 23, 2013. http://mddb.apec.org/Documents/2011/SOM/SYM/11_som_sym1_009.pdf.
Wu, Yanrui, Xunpeng Shi, Fukunari Kimura et al. Energy Market Integration in East Asia: Theories, Electricity Sector and Subsidies. Jakarta: Economic Research Institute for ASEAN and Eastern Asia, 2012. Accessed July 23, 2013. http://www.eria.org/RPR-2011-17.pdf.
15
Adapted from:
Organization for Economic Co-operation and Development. “Energy Statistics of Non-OECD Countries (2012).” Accessed July 23, 2013. http://www.oecd-ilibrary.org/energy/energy-statistics-of-non-oecd-countries_19962851-en.
U.S. Energy Information Administration. “Countries Data.” Accessed July 21, 2013. http://www. eia.gov/countries/data.cfm.
16
Adapted from:
International Energy Agency. “Statistics and Balances 2009.” Accessed July 21, 2013. https:// www.iea.org/stats/.
Organization for Economic Co-operation and Development. “Energy Statistics of Non-OECD Countries (2012).” Accessed July 23, 2013. http://www.oecd-ilibrary.org/energy/energy-statistics-of-non-oecd-countries_19962851-en.
17
Adapted from:
International Energy Agency. “Statistics and Balances 2009.” Accessed July 21, 2013. https:// www.iea.org/stats/.
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Organization for Economic Co-operation and Development. “Energy Statistics of Non-OECD Countries (2012).” Accessed July 23, 2013. http://www.oecd-ilibrary.org/energy/energy-statistics-of-non-oecd-countries_19962851-en.
18
Standard & Poor’s Rating Services. “Sovereigns Rating List.” Accessed July 21, 2013. http:// www.standardandpoors.com/ratings/sovereigns/ratings-list/en/us.
19
World Bank. “Doing Business Economy Rankings.” Accessed July 21, 2013. http://www.doingbusiness.org/rankings.
20
Transparency International. “Corruption Perceptions Index 2011.” Accessed July 21, 2013. http://www.transparency.org/cpi2011/results.
21
Adapted from:
World Bank Data Bank. “Foreign direct investment, net inflows (% of GDP).” Accessed July 23, 2013. http://data.worldbank.org/indicator/BX.KLT.DINV.WD.GD.ZS.
World Bank Data Bank. “Foreign direct investment, net outflows (% of GDP).” Accessed July 23, 2013. http://data.worldbank.org/indicator/BM.KLT.DINV.GD.ZS.
22
World Bank. “Private Participation in Infrastructure Database - Sector Data Snapshot.” Accessed July 21, 2013. http://ppi.worldbank.org/explore/ppi_exploreSector.aspx?sectorID=2.
23
World Bank Data Bank. “Lending interest rate (%).” Accessed July 23, 2013. http://data.worldbank.org/indicator/FR.INR.LEND.
24
World Bank Data Bank. “Interest rate spread (lending rate minus deposit rate, %).” Accessed July 23, 2013. http://data.worldbank.org/indicator/FR.INR.LNDP.
25
World Bank Data Bank. “Liquid assets to deposits and short term funding (%).” Accessed July 23, 2013. http://data.worldbank.org/indicator/GFDD.SI.06.
26
International Energy Agency. “Philippines - Share of total primary energy supply 2009.” Accessed July 23, 2013. http://www.iea.org/stats/pdf_graphs/PHTPESPI.pdf.
27
International Energy Agency. “Philippines: Electricity generation by fuel.” Accessed July 23, 2013. http://www.iea.org/stats/graphresults.asp?COUNTRY_CODE=PH.
28
International Energy Agency. “Energy Balance for Philippines 2009.” Accessed July 21, 2013. http://www.iea.org/stats/balancetable.asp?COUNTRY_CODE=PH.
29
Philippines Department of Energy. “Presidential Decree No. 1442.” Accessed July 25, 2013. http://www.doe.gov.ph/microsites/pecr/geothermal/pdf/PD1442.pdf.
30
Congress of the Philippines. “The Philippine BOT Law.” Accessed July 29, 2013. http://www. neda.gov.ph/references/RAs/RAs%207718%20or%20the%20BOT%20Law.pdf.
31
U.S. Department of Commerce. “U.S. Renewable Energy Trade Mission Philippines and Thailand.” Accessed July 23, 2013. http://www.gpo.gov/fdsys/pkg/FR-2012-07-09/html/2012-16595.htm.
32
Philippines Department of Energy. “Programs and Projects.” Accessed July 23, 2013. http:// www.doe.gov.ph/programs-projects-alternative-fuels.
33
International Finance Corporation. “Energy Efficiency Standards and Labeling in Asia.” Accessed July 21, 2013. http://www.clasponline.org/en/Resources/Resources/SLHeadlines/~/media/ Files/SLHeadlines/APP%20Workshop/ICF%20EE%20SL%20in%20Asia.pdf.
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34
Adapted from:
Maurer, Luiz T., and Luiz A. Barroso. Electricity Auctions: An Overview of Efficient Practices. Washington D.C.: International Bank for Reconstruction and Development/ World Bank, 2011. Accessed July 23, 2013. http://www.ifc.org/wps/wcm/connect/8a92fa004aabaa73977bd-79e0dc67fc6/Electricity+and+Demand+Side+Auctions.pdf?MOD=AJPERES.
Wu, Yanrui, Xunpeng Shi, Fukunari Kimura et al. Energy Market Integration in East Asia: Theories, Electricity Sector and Subsidies. Jakarta: Economic Research Institute for ASEAN and Eastern Asia, 2012. Accessed July 23, 2013. http://www.eria.org/RPR-2011-17.pdf.
35
Layug, Jose M. “The National Renewable Energy Program: The Road Starts Here.” Philippines Department of Energy, 2012. Accessed July 21, 2013. http://eeas.europa.eu/delegations/philippines/documents/press_corner/national_renewableenergy_prog_usec_layug_en.pdf.
36
Grimsey, Darrin M., and Mervyn K. Lewis. “Are Public Private Partnerships value for money? Evaluating alternative approaches and comparing academic and practitioner views.” Accounting Forum 29, no. 4 (December 2005): 345-78.
37
President of the Republic of Philippines. “Executive Order No. 8.” Accessed July 21, 2013. http://ppp.gov.ph/wp-content/uploads/2011/04/ExecutiveOrderNo8.pdf.
38
The Government of the Republic of the Philippines’ Investor Relations Office. “ A Fortified Credit Story.” Accessed July 21, 2013. http://www.iro.ph/main.php?page=downloads&id=4.
39
Bloomberg. “S&P Raises Philippines’ Credit Rating to Nine-Year High.” Accessed July 21, 2013. http://www.bloomberg.com/news/2012-07-04/s-p-raises-philippines-credit-rating-to-nine-yearhigh.html.
40
Remo, Michelle V. “Government: Look out world, here comes PH in 2016.” Business Inquirer, 2012. Accessed July 21, 2013. http://business.inquirer.net/71043/ph-aims-to-land-in-upper-30of-competitiveness-rankings-by-2016.
41
Schwab, Klaus. “Global Competitiveness Index.” World Economic Forum, 2012. Accessed July 23, 2013. http://www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2012-13.pdf.
42
Philippines Department of Trade and Industry. “PH is among Southeast Asia’s ‘New Tigers’.” Accessed July 23, 2013. http://investphilippines.org.uk/newsroom/1475-ph-is-among-southeastasias-new-tigers.
43
Asian Development Bank. “Public Private Partnerships Key to Meeting Asia’s $8 Trillion Infrastructure Needs – Study.” Accessed July 24, 2013. http://www.adb.org/news/public-private-partnerships-key-meeting-asias-8-trillion-infrastructure-needs-study.
44
Economist Intelligence Unit. “Evaluating the environment for PPP in Asia-Pacific: The Infrascope 2011.” Accessed July 23, 2013. http://www.adb.org/sites/default/files/pub/2012/ evaluating-environment-ppp-2011-infrascope.pdf.
45
International Finance Corporation. “After a False Start, Philippine Public-Private Partnership Projects Find Spark.” Accessed July 21, 2013. http://www.ifc.org/wps/wcm/connect/region__ext_ content/regions/east+asia+and+the+pacific/news/after+a+false+start,+philippine+public-privat e+partnership+projects+find+spark.
46
World Bank. “Private Participation in Infrastructure Project Database.” Accessed July 23, 2013. http://ppi.worldbank.org/explore/ppi_exploreRegion.aspx?regionID=2.
47
[Endnote 20].
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48
[Endnote 20].
49
Adapted from:
World Bank Data Bank. “Foreign direct investment, net inflows (BoP, current US$).” Accessed July 23, 2013. http://data.worldbank.org/indicator/BX.KLT.DINV.CD.WD.
World Bank Data Bank. “GDP (current US$).” Accessed July 21, 2013. http://data.worldbank. org/indicator/NY.GDP.MKTP.CD.
50
Financial Action Task Force. “Improving Global AML/CFT Compliance: On-going process - 22 February 2013.” Accessed July 22, 2013. http://www.fatf-gafi.org/documents/documents/impro vingglobalamlcftcomplianceon-goingprocess-22february2013.html.
51
United Nations Conference on Trade and Development. “World Investment Report 2012.” Accessed July 22, 2013. http://www.unctad-docs.org/files/UNCTAD-WIR2012-Full-en.pdf.
52
U.S. Department of State. “2012 Investment Climate Statement - The Philippines.” Accessed July 22, 2013. http://www.state.gov/e/eb/rls/othr/ics/2012/191218.htm.
53
Business Inquirer. “Peace dividends: Mindanao attracts investors.” Accessed July 25, 2013. http://business.inquirer.net/86364/peace-dividends-mindanao-attracts-investors.
54
Philippines Department of Trade and Industry. “Region 10, 2012 Annual Highlights on Accomplishment.” Accessed July 22, 2013. http://r10.dti.gov.ph/.
55
World Bank. “Private Participation in Renewable Energy Database.” Accessed July 30, 2013. http://ppi-re.worldbank.org/Data.
56
International Institute for Management Development. “World Competitiveness Yearbook 2009.” Accessed July 22, 2013. http://www.imd.org/about/pressroom/pressreleases/IMD-WorldCompetitiveness-Yearbook-2009.cfm.
57
Philippines National Economic and Development Agency. “Philippine Development Plan 20112016.” Accessed July 22, 2013. http://devplan.neda.gov.ph/.
58
Asian Development Bank. “First-Ever Private Equity Fund for Philippine Infrastructure Investments.” Accessed July 22, 2013. http://www.adb.org/news/first-ever-private-equity-fundphilippine-infrastructure-investments.
59
World Bank. “Philippines - Renewable Energy Database.” Accessed July 22, 2013. http://ppi-re. worldbank.org/Snapshots/Country/philippines.
60
United Nations Environment Programme Risoe Centre on Energy, Climate and Sustainable Development. “CDM project distribution within host countries by region and type.” Accessed July 22, 2013. http://cdmpipeline.org/cdm-projects-region.htm#3.
Baietti, Aldo, Andrey Shlyakhtenko, Roberto La Rocca, and Urvaksh D. Patel. Green Infrastructure Finance: Leading Initiatives and Research. Washington D.C.: International Bank for Reconstruction and Development/ World Bank, 2012. Accessed July 26, 2013. http:// wwwwds. worldbank.org/external/default/WDSContentServer/WDSP/IB/2012/04/05/000356161_ 20120405024626/Rendered/PDF/678630PUB0EPI0067902B09780821394885.pdf
61
62
Philippines Department of Energy. “2012-2030 Philippine Energy Plan.” Accessed July 22, 2013. www.doe.gov.ph/policy-and-planning/philippine-energy-plan.
63
President of the Philippines. “Presidential Decree No. 1151.” Accessed July 22, 2013. http:// www.lawphil.net/statutes/presdecs/pd1977/pd_1151_1977.html. The World Bank – AusAID
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64
Philippines Climate Change Commission. “The Philippines Climate Change Action Plan 20112028.” Accessed July 22, 2013, http://climate.gov.ph/.
65
“Manila Declaration on Green Industry in Asia and Framework of Action, 2009.” Accessed July 22, 2013. http://www.unido.org/fileadmin/user_media/Services/Green_Industry/Manila_declaration.pdf.
66
Congress of the Philippines. “Philippine Disaster Risk Reduction and Management Act of 2010.” Accessed July 22, 2013. http://www.ifrc.org/docs/idrl/878EN.pdf.
67
Congress of the Philippines. “Republic Act No. 9513.” Accessed July 30, 2013. http://www.doe. gov.ph/issuances/republic-act/627-ra-9513.
68
Asian Environmental Compliance and Enforcement Network. “The Clean Water Act Law of the Philippines: The Use of Incentives to Promote Investments.” Accessed July 22, 2013. http://www. aecen.org/good-practices/clean-water-act-law-philippines-use-incentives-promote-investments.
69
Adapted from:
Energy Regulatory Commission of the Philippines. “Feed-in Tariff Collection and Disbursement Guidelines.” Accessed July 31, 2013. http://www.erc.gov.ph/Home/Index.
Congress of the Philippines. “An Act Promoting the Development, Utilization and Commercialization of Renewable Energy Resources and for Other Purposes.” Accessed July 22, 2013. http://www.lawphil.net/statutes/repacts/ra2008/ra_9513_2008.html.
70
Philippines Department of Energy. “National Renewable Energy program.” Accessed July 29, 2013. http://www.doe.gov.ph/microsites/nrep/index.php?opt=home.
71
Congress of the Philippines. “Peoples’ Survival Fund (RA 10174).” Accessed July 22, 2013. http://pcw.gov.ph/sites/default/files/documents/laws/republic-act-10174.pdf.
72
International Finance Cooperation. “Philippine Bank Partners Step Up.” Accessed July 30, 2013. http://www.ifc.org/wps/wcm/connect/region__ext_content/regions/east+asia+and+the+pacific/ news/philippine+bank+partners+step+up.
73
Government of the Philippines and Asian Development Bank. “Investment Plan Report.” Accessed July 22, 2013. http://www.climateinvestmentfunds.org/cif/sites/climateinvestmentfunds. org/files/Approval_by_Mail_CTF_Philippines_updated_investment_plan_report_of_Philippines_ and_ADB_on_consultations_with_CSOs_and_other_stakeholders.pdf.
74
Philippines National Economic and Development Authority. “Clean Technology Fund: Investment Plan for the Philippines.” Accessed July 22, 2013. http://www.neda.gov.ph/econreports_ dbs/CTF/CTF%20Investment%20Plan%20Philippines.pdf.
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I
n July 2012, the Green Infrastructure Finance Framework Report was published to address the constraints in financing green infrastructure and to develop a new PPP-based approach to accelerate investments in lowemission technologies. The approach calls for assessing the “Green Investment Climate� of a given country in order to develop country-specific recommendations for policy and incentive programs as well as other measures which can be introduced in order to further promote green growth in an economy. This report includes one of the first Green Investment Country Profiles completed for the East Asia and Pacific Region as part of bringing the approach closer to operational status. The initial countries include China, Philippines, Vietnam, Malaysia, Indonesia, Singapore and South Korea. The assessment involves not only the green policy and incentives environment, but also the country’s overall natural resource endowment of fossil and renewable energy, its industrial development strategy in addition to general business indicators and other considerations, such as electricity prices, the capacity of the financial sector to mobilize long-term domestic financing, as well as their overall regulatory and legal capacity to implement PPPs. The country profiles provide a general understanding of the attractiveness, prevailing trends, strengths, and other aspects affecting the ability of the country to leverage its green growth potential.
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