IFC to local firms: ‘Assess the prospects in energy efficiency’

CEBU, Philippines - The International Finance Corporation has encouraged companies in the Philippines to discover the existing opportunities that energy efficiency and renewable energy projects can give to their businesses.

According to the IFC, the private investment arm of the World Bank Group, firms particularly industrial enterprises should assess the current market for energy efficiency financing.

Noel Verdote, operations officer of IFC’s Sustainability and Climate Finance, said there is a need to stimulate clean and resource-efficient projects in emerging markets through bank guarantees for loan.

In a data he presented during a recent energy forum in Cebu last month, about 132 loans have been granted to Philippine corporations since IFC’s Sustainable Energy Finance program started in 2008. Ninety one of these loans were able to finance EE projects.

US$ 463.5 million worth of projects were already loaned to about 130 companies for the adoption of sustainable and low-carbon practices in their business operations, Verdote said.

He also cited EE investments made up some 69 percent of the total energy saving transactions while renewable projects accounted 30 percent.

Of the total loan value granted, renewable energy investments accounted 56 percent while EE projects made up 44 percent.

About 44 percent of the loan portfolio was financed by IFC’s partner banks -- Bank of the Philippine Islands, Banco de Oro, China Bank and BPI Globe BanKO.

The total loans released last year by IFC and lead partner bank BPI grew 33 percent.

Verdote mentioned that about 131,918 megawatt-hours of energy were saved annually from EE projects while 1,075,101 metric tons of carbon dioxide emissions were avoided.

According to Verdote, demand-side investments should further be encouraged.

Underutilized resource

While EE is widely considered as the lowest risk, high return investment a corporation can venture into, Mariana Pacua of IFC said it is usually an underestimated resource because of some misconceptions.

Pacua, who is SCF’s operations analyst, cited some barriers that continue to hinder investments in energy efficiency. These include the lack of sufficient information and understanding, the supposed "no budget," lack of technology and incentives.

Aside from the lack of financing being the highest barrier, Pacua noted businesses also have poor understanding on the benefits of using energy-efficient technologies and mostly only think of appropriate incentives.

“We don’t really need an external award to promote investment in energy efficiency, because just implementing the EE already brings incentives to your operations,” she told companies.

She also added banks have started to explore EE financing, giving companies funding to invest in technologies that make power generation, distribution and energy use more efficient.

She noted enterprises can loan money from select Philippine banks through the SEF to invest in technologies that can reduce operating and energy expenses by 30 percent and cut CO2 emissions by at least 25,000 tons each year.

“But more than the dollars and the technologies involved, what we realize now since we started in 2008 is that SEF is actually a people’s program. If you implement any of these projects, there is a need to change the mindset. You know this is something that benefit the people in the long-run,” she explained.

In addition, the IFC assured that it would further scale up lending for these sustainable and reliable energy projects. It said it would guarantee its partner banks to support their loans.

Capital should be mobilized in underfinanced sectors such as EE, renewable energy, agriculture and water to spur private investments in the country.

'Starting small can make difference'

Jo Ann Eala, BPI’s vice president for specialized lending, said the companies that they financed for clean-energy investments have done to reduce their adverse environmental impacts on climate.

At the same time, these organizations have enjoyed the benefits of being able to save huge energy and cut greenhouse emissions.

Eala said businesses should believe on the ease of implementing EE, noting the venture only entails a short payback period, the technology is tried and tested, cost of conversion has become more affordable and financing is definitely available.

“Just starting with small and simple energy efficiency projects and initiatives can already make a difference,” the official said, stressing that energy security is a big deal now in the business sector.

According to the European Chamber of Commerce of the Philippines, the country has been experiencing rising power costs, growing energy demand and concern for environmental sustainability and impending power crisis.

Thus these events, it said, call for action to improve energy security and boost economic development.

On a larger scale, stakeholders including governments, the business sector, civil society groups and the people in general should likewise be informed and empowered to increase their level of action in combating climate change.  (FREEMAN)