RP eyes multilateral financing for $2.78-billion Clean Technology Fund

MANILA, Philippines - The Philippine government is eyeing to tap various multilateral financial institutions to fund a proposed $2.78-billion Clean Technology Fund (CTF).

The CTF will back up the Country Investment Plan (CIP), a proposal for the use of clean technology resources in the Philippines, including a potential pipeline of projects and national resource envelope. The CIP was developed by the government of the Philippines in agreement with the Asian Development Bank (ADB), the International Bank for Reconstruction and Development (IBRD), and the International Finance Corp. (IFC).

 “This CTF investment plan is a dynamic document and this version is based on the economic development plans and the government investment programs and mature project proposals considered at this time,” official documents showed.

The CTF took into consideration the key development objectives of the Philippine government as designed in the Medium-Term Philippine Development Plan 2004-2010 which includes targets for high levels of pro-poor sustainable growth and achieving the Millennium Development Goals (MDGs). 

The drafting of the CTF also took into account the potential resources that could be harnessed in the Philippines.

It took note that the Philippines is the world’s second largest archipelago with a diverse population of 89 million.

“It is reasonably well-endowed with natural resources including copper, gold, nickel, timber, and marine biodiversity. There are limited commercial reserves of fossil fuel, mainly natural gas and coal, but commercial scale geothermal energy and hydropower resources are currently being harnessed to meet power needs,” it said.

It was also noted that about 56 percent of the Philippines energy demand is met by indigenous resources including coal, natural gas, hydropower and traditional biomass energy.

The Philippines is one of few countries in the world where renewable energy accounts for the largest share (43 percent) of total primary energy supply.

However, starting in 2002, there has been increasing use of natural gas for power generation with the commercial operation of the Malampaya gas field. Likewise, the share of coal to total primary energy supply has risen from five percent in 1990 to 16 percent in 2007. In terms of overall greenhouse gas (GHGs) emissions, the Philippines is ranked 39th in the world in 2005 with about 142 million tons of carbon dioxide equivalent, excluding emissions due to land use change.

But the CTF enumerated a number of implementation potential and risks which are centered around a few key issues: readiness of proposed CTF supported projects in an election year; the policy framework for energy efficiency is somewhat immature, and new legislation is not expected until after mid-2010 and key provisions of the Renewable Act of 2008 will not be in place until 2010.

 “New business models are being utilized, and prevailing energy prices, especially electricity tariffs, clearly favor scale-up and replication of renewable and energy efficiency activities. The Philippines is an early adopter of RE technologies and systems such as geothermal power; biomass, small hydropower, and wind power technologies are now being deployed,” the report said.