Philippines Secures $500 Million Investment Plan from Climate Investment Funds for Coal Transition

In a significant development towards combating climate change, the governing board of the Climate Investment Funds (CIF) has approved a groundbreaking investment plan presented by the Government of the Philippines. This plan, named the Accelerating Coal Transition (ACT) investment plan, will receive a substantial allocation of $500 million from CIF. The primary objective of the plan is to facilitate a just transition from coal to renewable power in the country, impacting over 70 developing nations.

Under the ACT investment plan, the Philippines aims to expedite the retirement or repurposing of coal-fired plants, including the Mindanao plant, by leveraging CIF’s concessional resources. This initiative targets the acceleration of the retirement of up to 900 MW of existing coal generation capacity by 2027. Moreover, it emphasizes ensuring that 80% of affected employees gain access to sustainable income, ensuring a fair and equitable transition.

The allocated funding will also support the addition of 1500 MW of renewable energy capacity by 2030, incorporating various sources such as battery systems, offshore wind, floating solar, and pumped hydro projects. The overall objective of the ACT investment plan is to achieve a reduction of 33 million tons of CO2 in greenhouse gas emissions by 2030 while simultaneously enhancing the health and livelihoods of communities affected by the transition.

Coal currently constitutes 44% of the total installed capacity and 60% of total generation in the Philippines, emitting over 55% of the country’s greenhouse gas emissions. Recognizing the urgency to address this issue, the Government of the Philippines has committed to a 75% reduction in GHG emissions by 2030, aligning with its Nationally Determined Contribution (NDC).

Given that 90% of the national energy capacity is produced by the private sector, the ACT investment plan will play a crucial role in incentivizing private sector decarbonization and repowering efforts. The plan aims to facilitate the implementation of a comprehensive private sector program to transition away from coal and accelerate the creation of renewable energy capacity.

CIF’s financial support includes $475 million in loans and $25 million in grants, with the total co-financing expected to surpass $2.3 billion. This collaborative effort involves investments from institutions such as the Asian Development Bank, the World Bank Group, and both public and private sectors.

Tariye Gbadegesin, CEO of Climate Investment Funds, hailed this endorsement as a significant milestone in the Philippines’ journey towards a clean energy future. He commended the partnership between various stakeholders, including the Government of the Philippines, Asian Development Bank, and the World Bank Group, emphasizing the role of CIF’s concessional resources in driving private sector engagement and renewable energy development.

Scott Morris, Vice President for East Asia, Southeast Asia, and the Pacific at the Asian Development Bank, emphasized the necessity for innovative approaches and increased investment to accelerate the energy transition in the region. He highlighted ADB’s commitment to supporting the Philippines in achieving a just and inclusive energy transition, alongside other partners.

Jean-Marc Arbogast, Country Manager for the Philippines at the International Finance Corporation (IFC), underscored the importance of the CIF ACT Investment Plan in unlocking private sector financing for the country’s energy transition. He reiterated IFC’s dedication to collaborating with partners towards achieving green and inclusive growth in the Philippines.

Ndiame Diop, Country Director for Brunei, Malaysia, Philippines, and Thailand at the World Bank, lauded the Philippines government’s commitment to energy transition through the CIF ACT Investment plan. He expressed the World Bank’s readiness to support the government’s efforts in establishing the necessary policy and regulatory framework for a sustainable energy transition.