The Asian Development Bank (ADB)-supported initiative to speed up the Philippines’ transition from coal to clean energy sources is seen to generate investments, create jobs, and accelerate the retirement of coal-fired power plants in the country, Finance Secretary Carlos Dominguez III said Friday.
The Energy Transition Mechanism (ETM) facility was jointly launched in Glasgow, United Kingdom by the Philippines and Indonesia on November 2 during the 26th United Nations Climate Change Conference of the Parties (COP26).
Dominguez, who heads the Philippine delegation to the two-week COP26, said the country’s goals to retire coal-fired power plants and transition to clean energy sources would be achieved through the ETM.
As a public-private finance vehicle, the ETM aims to both reduce coal-fired power generation through accelerated plant retirement and boost the growth of renewable energy using an equitable, scalable, and market-based approach.
The Finance chief said the Philippines has a unique opportunity in Mindanao to pilot the ETM project as the government is in the process of rehabilitating the Agus-Pulangi hydropower plants to improve their generating capacity.
The ADB has said the ETM is a transformative, blended-finance approach that seeks to retire existing coal-fired power plants on an accelerated schedule and replace them with clean power capacity.
The mechanism will comprise two multibillion-dollar funds: one devoted to early retirement or repurposing of coal-fired power plants on an accelerated timeline, and the other focused on new clean energy investments in generation, storage, and grid upgrades.
It is envisioned that multilateral banks, private institutional investors, philanthropic contributions, and long-term investors will provide capital for ETM, according to the ADB.
Citing data from the Power Sector Assets and Liabilities Management Corp. (PSALM), Dominguez said the Agus-Pulangi rehabilitation project would enable the seven power plants in the hydropower complex to maximize their generation capacity to a combined 1,001 megawatts (MW), which is more than enough to cover the 232 MW capacity of the Mindanao coal-fired power plant that can be retired earlier in the area.
The oversupply of power in Mindanao resulting in stranded coal assets makes it timely to repurpose mature or more than 15 years old coal power plants to renewable energy source option, the Finance department said.
Dominguez said the shift from coal-dependence to renewable energy (RE) sources “requires an effective financing framework to be even imaginable,” thus the Philippine government has partnered with the ADB and some private sector partners in developing the ETM-supported project for the country.
ADB has proceeded to the feasibility study stage of the ETM-backed project for the Philippines to look more closely into the financial aspect of the project and estimate the value of the significant share of the coal fleet that could be retired early.
Dominguez said he expects the ETM-supported initiative to generate new jobs as investors—which include multilateral banks, international private-sector institutional investors, and long-term investors—bring in the funds needed to implement the project.
“A clean energy transition in the Philippines will attract investments in renewable energy, create jobs locally, and promote national growth,” he said.
He said the project “will help us accelerate the retirement of coal plants in the country by at least 10 to 15 years on average through innovative financing mechanisms.”
“It is intended to boost the growth of renewable energy using an equitable, scalable and market-based approach.”
Coal accounts for 54% of the Philippines’ energy mix, which makes it the largest source of greenhouse gas (GHG) emissions in the country.
In 2019, coal accounted for 48% of the carbon dioxide emissions in the country.
As its Nationally Determined Contribution (NDC) to the Paris Agreement, the Philippines has committed to a projected GHG emissions reduction and avoidance of 75%, referenced against a projected business-as-usual cumulative economy-wide emission of 3,340.3 million tons of tCO2 equivalent for the 2020–2030 period. — VBL, GMA News