Energy Secretary Raphael P.M. Lotilla welcomes the action taken by the Bangko Sentral ng Pilipinas (BSP) allowing banks to expand financing for sustainable energy projects, including transition financing for decarbonization.
The BSP increased the Single Borrower’s Limit (SBL) for green loans by 15 percent and reduced gradually the applicable reserve requirement for green bonds from the current 3 percent to 0 percent over a two-year period.
They complement the strategies implemented by the Department of Energy (DOE) to accelerate the Philippine Energy Transition Program pursuant to the instructions of President Ferdinand R. Marcos Jr. Among these are the deployment of renewable energy (RE) projects to meet the target of at least 35 percent share of RE in electricity generation by 2030 and 50 percent by 2040; develop a green and smart grid to accommodate and manage the additional RE capacity expected to come online from 2024 to 2040; build or expand the necessary port infrastructure to support offshore wind and other marine-based energy resource development projects; and provide an avenue for voluntary early decommissioning or repurposing of existing coal-fired power plants.
“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, Secretary Lotilla said.
Universal and commercial banks have financed or approved loans supporting green or sustainable projects. Secretary Lotilla welcomed the BSP’s observations that the top five green projects supported by these banks include renewable energy, energy efficiency and green buildings --- which are among the concerns of the DOE.
The BSP’s initiatives fall under its 11-point Sustainable Central banking Strategy to mainstream sustainable finance as well as support the achievement of the country’s climate commitments and sustainable development goals. Meanwhile, the Secretary also lauds the earlier action of the Board of Investments (BOI) for providing income tax holiday (ITH) incentives for 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, the Secretary said.
The Secretary emphasized that all these actions only show that the government is working harmoniously in order to move forward the country’s energy transition program. ###