Financing the Philippines’ Low Carbon Transition: Status and Prospects

We set out to understand the resource requirements of the Philippines’ low carbon transition, the sources of low carbon finance, and the chances that supply of low carbon finance will be responsive to demand at scale. We find that the country will require an initial USD 94.2 billion for measures that are expected to contribute an emissions reduction of 990mmtCO2e out of a pledged 2505 mmtCO2e, or 39.5 percent of the country’s Nationally Determined Contribution, and that private and public capital are expected to cover this amount in a 63 - 37% split. We determine that prospects are relatively high for an overwhelming 95.4% of the required amount, an assessment that rests on the positive market response to energy sector initiatives and management, and hinges critically on the government’s ability to extract pre-requisite transmission investments from its privately-owned transmission service provider in a timely manner. For 1.8%, prospects are fair and involve technologies dependent on nascent markets or behavioral change, such as accepting Energy Efficiency as the “first fuel†in the energy mix and all that this implies. For the remaining 2.8%, prospects are low, hindered by governance dysfunctions that have long-undermined efficiency in the agriculture, waste and road-based public transport sectors. While representing just 2.8% of the required amount, these programs and measures account for 30% of the 990 mmtCO2e emissions reduction targeted and, more importantly, feed into or coincide with food and water security strategies prioritized under the country’s climate change adaptation plan. Securing the 2.8% is not optional in other words. Thus, fixing institutions is the first and most important finance strategy moving forward.