THE World Bank has approved a US$750-million loan that aims to boost the country’s environmental protection and climate resilience, which includes supporting the ongoing government reforms to attract private investment in renewable energy.
The Washington-based multilateral lender said the US$750-million Philippines First Sustainable Recovery Development Policy Loan (DPL) supports ongoing government reforms to attract private investment in renewable energy; enhance plastic waste management through reduction, recovery, and recycling; promote green transport, including the use of electric vehicles; and reduce climate-related fiscal risks from the agriculture sector.
Ndiamé Diop, World Bank Country Director for Brunei, Malaysia, Philippines, and Thailand emphasized that the Philippine government’s actions to promote foreign direct investments and streamlining permitting processes could “unlock” the country’s potential for renewable energy generation, especially in solar and wind.
“Renewable energy can help the Philippines mitigate climate change and bring numerous benefits, including enhanced energy security, the creation of green jobs, and improved access to electricity. It is a crucial step towards a more sustainable and resilient future for the country,” Diop also noted.
The World Bank also noted that the Philippine government has set an “ambitious” target of 50 percent of renewable energy (RE) in total power generation by 2040 and has started to pursue reforms to implement it, supported by this financing operation.
This increased focus on RE is pursued in parallel to slowing the expansion of coal-fired power generation capacity from 2026 onwards, it also noted.
However, WB emphasized that achieving these targets will require a “significant” increase in investments in solar and wind technologies and a “strong” policy environment conducive for investment in RE.
Last week, Trade Secretary Alfredo E. Pascual said RE projects are seen to account for a third of the Board of Investments (BOI) P1.5-trillion investments approval target for 2023.
From January to May 2023, investments approved by the BOI reached P532.27 billion, a 158.72-percent increase from the P205.73-billion investment approvals recorded in the same period in 2022. The investment promotion agency said the surge was mainly driven by foreign investments in the renewable energy sector.
Meanwhile, in the first quarter, Pascual said the BOI approved three offshore wind projects with a total capacity of 1,300 megawatts and an estimated investment cost of more than P390 billion.
In April 2023, Pascual, also the BOI chairman, said, “we aim to attract more RE players globally as full foreign ownership is now allowed under the amended implementing rules and regulations of the Renewable Energy Act.”
Meanwhile, the financing program also supports the introduction of new insurance products suitable for vulnerable smallholder farmers and strengthens the coverage and operations of the Philippine Crop Insurance Commission.
“The aim is to help mitigate climate-related disaster risks to the country’s budget and the farming sector. If properly designed and targeted, crop insurance can help stabilize farm income, reduce poverty, and provide a climate safety net for food producers,” WB said in a statement on Wednesday.
The multilateral lender noted that the Philippines, along with China, Indonesia, Thailand, and Vietnam, accounts for 55 to 60 percent of the plastic waste that enters the ocean.
“Approximately 1.7 million tons of post-consumer plastic waste is generated in the Philippines annually, with an estimated recycling rate of only 28 percent for recyclable plastic waste. The remaining balance either leaks into the environment or is disposed of as part of the mixed waste stream,” the World Bank said.
To help address this challenge, WB said this financing supports the implementation of the Extended Producer Responsibility Act mandating large enterprises to recover up to 80 percent of plastic packaging waste by 2028.
Under the EPR Law, the financial burden of waste management is shifted to business enterprises, which will reduce the need for public money to pay for the collection, segregation, disposal, and cleanup of packaging product waste created by these enterprises, the World Bank said.