As per the Rockefeller Foundation report, the Philippines is heavily reliant on coal for more than half of its electricity requirements and the immediate funding of $9 billion is needed to facilitate the expansion of renewable energy over the coming decades. By 2050, the total investment could soar to $165 billion.
As the country aims to achieve a 50% share of renewable energy in power generation by 2040, the foundation recommends the establishment of a Just Energy Transition Partnership (JETP), which is a funding mechanism designed to assist developing nations in transitioning to clean energy sources. This partnership, funded by affluent donor countries and private investors, aims to facilitate the transition process. While JETPs have been initiated for various countries, including Vietnam, Indonesia, South Africa, and Senegal, their effectiveness has been marred by challenges.
Further, the report emphasizes the importance of commencing energy transition deals with technical negotiations overseen by the government to develop a “nationally appropriate” investment plan. The report highlights the need for a pragmatic assessment of the factors necessary for the success of such initiatives. It said that since the inception of JETPs, setbacks have been encountered, such as power outages in South Africa and criticism regarding the lack of government consultation in Vietnam’s plan.
The Rockefeller Foundation suggests leveraging philanthropic funds to establish a “country platform” in the Philippines. “This platform would engage policymakers and multilateral development banks in drafting and stress-testing investment plans before matching them with potential investors. If successful, this model could serve as a blueprint for future JETP deals,” said the report.
The report also highlights challenges related to low concessional funding and inconsistent involvement of multilateral lenders in the JETP model. It stresses upon the need of more countries to join the International Partners Group (IPG) to provide concessional finance and recommends that multilateral development banks optimize existing resources while seeking additional capital from member governments.
“Despite interest from countries like Thailand, Mongolia, and Kazakhstan to receive JETP funding, there is currently no clear pathway to process this interest,” said the report, further suggesting that these countries should collectively announce their interest to demonstrate substantial demand for such initiatives.
Dwelling on global scenario, it said, that in the global context, achieving net-zero emissions by 2050 requires significant investments in the energy sector, estimated at over $5 trillion annually. However, existing investments predominantly flow to developed nations due to lower credit ratings and higher project interest rates in developing countries. Foreign project developers in Southeast Asia also encounter challenges due to protectionist policies aimed at maintaining low electricity prices and safeguarding local employment.
It may be noted that an international coalition recently proposed using carbon credits to finance the early closure of two coal plants in the Philippines, highlighting ongoing efforts to transition to clean energy sources. However, retiring all coal plants in the country is projected to cost over $10 billion, excluding the expenses associated with replacing them with clean energy alternatives.
