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The governing board of the Climate Investment Funds (CIF), the pioneering multilateral climate fund delivering low-cost finance to over 70 developing countries, endorsed a new investment plan presented by the Government of the Philippines, allocating $500 million for a just transition from coal to renewable power in the country.
The Philippines’ Accelerating Coal Transition (ACT) investment plan will harness CIF’s concessional resources to facilitate the early retirement or repurposing of the Mindanao plant and other privately owned coal fired plants. In total, the country plans to accelerate the retirement of up to 900 MW of existing coal generation capacity by 2027. To ensure a just transition, 80% of affected employees are projected to gain access to sustainable income.
CIF funding will also support efforts to add 1500 MW of renewable energy capacity by 2030 – which could include battery systems, offshore wind, floating solar and pumped hydro projects. Overall, the ACT investment plan is expected to deliver 33 million tons of CO2 in GHG emissions reduction by 2030 and improve the health and livelihoods of affected communities.
In 2022, coal accounted for 44% of total installed capacity and 60% of total generation in the Philippines. It emits over 55% of the country’s GHG emissions, generates air pollution, and is costly, with the sector relying on imports.
Through the ACT investment plan, the Government of the Philippines will progress their Nationally Determined Contribution (NDC), having committed to a 75% reduction in GHG emissions by 2030. Renewable energy currently stands at 22% of total energy generation and must grow to 35% by 2030.
In the Philippines, 90% of national energy capacity is produced by the private sector. The ACT investment plan will facilitate the implementation of a private sector decarbonization and repowering program designed to incentivize the transition away from coal and expedite the creation of renewable energy capacity.
CIF will provide $475 million in loans and $25 million in grants to support the country’s coal transition. The total co-financing is expected to exceed $2.3 billion, with investments from the Asian Development Bank, the World Bank Group, and the public and private sectors.
The CIF funding is part of the $2.2 billion Accelerating Coal Transition investment program, a first-of-its-kind multilateral investment platform pioneering a transition away from coal toward clean energy utilizing concessional finance in key middle-income countries.
Tariye Gbadegesin – CEO, Climate Investment Funds
“This endorsement represents a major achievement in the Philippines’ journey away from coal and towards a clean energy future. I congratulate all our partners, notably the Government of the Philippines, Asian Development Bank, and the World Bank Group. The Climate Investment Funds’ concessional resources will help ensure private sector buy-in, increased renewable energy development, and a just transition, for the benefit of the Filipino people and our planet.”
Scott Morris – Vice President for East Asia, Southeast Asia, and the Pacific, Asian Development Bank
“Innovative approaches and greater public and private investment are required to accelerate the energy transition in Asia and the Pacific. As the region’s climate bank, ADB welcomes the Climate Investment Funds’ support for the Philippines to move away from coal and towards clean, renewable energy. This financing is instrumental in enabling ADB’s Energy Transition Mechanism (ETM) to help incentivize the early retirement and repurposing of coal plants and deployment of clean energy in the country in a just manner. Together with the International Finance Corporation and the World Bank, we are committed to supporting the Philippines in achieving a just and inclusive energy transition that is a win for communities, the environment, and the economy.”
Jean-Marc Arbogast – Country Manager for the Philippines, IFC
“The CIF ACT Investment Plan offers a blueprint for a clean energy future which can help unlock private sector financing to support the country’s energy transition. IFC remains committed in working with partners towards a green and inclusive growth for the Philippines.”
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Ndiame Diop – Country Director for Brunei, Malaysia, Philippines and Thailand, World Bank
“The Philippines government’s commitment to energy transition through the CIF ACT Investment plan is commendable. The World Bank looks forward to supporting the government’s efforts to establish the enabling policy and regulatory environment and scale up investments for a just, sustainable energy transition.”