A recent move by the Bangko Sentral ng Pilipinas (BSP) allowing banks to expand financing for sustainable energy projects, including transition financing for decarbonization, will further encourage investors in the sector.
Secretary Raphael Lotilla of the Bangko Sentral ng Pilipinas said the BSP’s action also complements the strategies implemented by the DOE to accelerate the Philippine Energy Transition Program.
The BSP increased the single borrower’s limit for green loans to from 25 percent to 30 percent and reduced gradually the applicable reserve requirement for green bonds from the current 3 percent to 0 percent over a two-year period.
The said adjustments were made effective after the BSP amended sections of its Manual of Regulations for Banks.
The Philippine Energy Transition Program involves the deployment of renewable energy (RE) projects and other initiatives to meet the target of at least 35 percent share of RE in electricity generation by 2030 and 50 percent by 2040.
“These would entail big investments where private sector funds, including equity investments, green bonds or loans would be needed. We are therefore pleased with this development noting that clean energy investments over the next decade will be carried out by the private developers,” Lotilla said.
The program also requires the following: development of a green and smart grid to accommodate and manage the additional RE capacity; building or expanding necessary port infrastructure to support offshore wind and other marine-based energy resource development projects; and provision of an avenue for voluntary early decommissioning or repurposing of existing coal-fired power plants.
Meanwhile, the DOE also lauded the earlier action of the Board of Investments providing income tax holiday incentives to own- use RE and energy efficiency projects, as well as duty exemption on importation of capital equipment, raw materials, spare parts or accessories.
“This would certainly aid energy efficient projects which will ultimately redound to the benefit of consumers. The tax incentives will result in increased economic activity and the potential to generate more jobs,” Lotilla added.
