ECCP and PE2 showcase innovative, broadened sustainable finance for EE

Date Published: 
October 8, 2021
  • Screenshot of the speakers during the ECCP-PE2 webinar on 8 October 2021 shows (clockwise from upper left) Asst. Gov. Lyn Javier of BSP, Comm. Ephyro Luis Amatong of SEC, Ruth Yu-Owen of ECCP and PE2 and Alexander Ablaza of Climargy and PE2. (Image: ECCP)
    Screenshot of the speakers during the ECCP-PE2 webinar on 8 October 2021 shows (clockwise from upper left) Asst. Gov. Lyn Javier of BSP, Comm. Ephyro Luis Amatong of SEC, Ruth Yu-Owen of ECCP and PE2 and Alexander Ablaza of Climargy and PE2. (Image: ECCP)

MAKATI CITY, 8 October 2021 – The European Chamber of Commerce of the Philippines (ECCP) and the Philippine Energy Efficiency Alliance (PE2) co-organized earlier today the second webinar under a renewed partnership for the 2021 Energy Smart Forum Series. The webinar Partnering with Sustainable Energy Finance Groups invited three experts on sustainable finance who showcased initiatives, policies and innovative business models that would enable scaled-up sustainable energy financing, especially for energy efficiency (EE) projects.

Ruth Yu-Owen, chairperson of the ECCP Renewable Energy and Energy Efficiency Committee and PE2 vice-president for internal affairs opened the event as master of ceremonies and moderator of the panel discussions.

Assistant Governor Lyn I. Javier, Policy and Specialized Supervision Sub-Sector, Financial Supervision Sector of the Bangko Sentral ng Pilipinas premised her presentation on the country’s climate response and COVID-19 impacts as a call for financial and non-financial corporations to revisit and reset strategies for business resiliency and sustainability.

While BSP provides a three-year transition period for the Sustainable Finance Framework (SFF) approved in April 2020, the SFF expects the board of directors of all institutions to promote a culture that fosters environmentally and socially responsible business decisions and ensure that sustainability implications are considered in the overall decision-making process. BSP needs banks to inspire their clients and other stakeholders in making the same environmentally- and socially responsible business decisions. The SFF likewise prompts banks' board and senior management to take a broader view on risk management by looking beyond the traditional sources of financial risks. The adoption of the environmental and social risk management (ESRM) system, which provides banks with confidence to support green or sustainable projects while effectively managing the related credit, compliance and reputational risks, includes disclosures on carbon dioxide emissions. Because of this, the SFF is now leading a growing number of banks to introduce or increase lending toward renewable energy (RE) and EE projects.

Asst. Gov. Javier also presented the shared responsibility in meeting the climate goals where the Green Force or national agencies and the two key initiatives – the development of the Sustainable Finance Roadmap and the development of the Sustainable Finance Guiding Principles – meet and where there is scope to address challenges and provide opportunities.

Commissioner Ephyro Luis B. Amatong of the Securities and Exchange Commission (SEC) described the regional and local sustainable finance ecosystem involving the corporates, banks, governments, debt capital markets, equity capital markets, investors and international organizations. As a member of the ASEAN Capital Markets Forum (ACMF) and co-chair of the ACMF Sustainable Finance Working Group (SFWG), the SEC has the authority and issued corresponding guidelines to certify green, social and sustainability (GSS) bonds to carry the ASEAN labels for the ASEAN Green Bonds, ASEAN Social Bonds, and the ASEAN Sustainability Bonds. As of 3 October 2021, ASEAN GSS bond issuances summed up to USD 16.4 billion for GSS activities largely for RE, EE, sustainable water and mass transit projects. Twenty-nine percent (29%) of this volume, or USD 4.8 billion, were issued by Philippine companies. Private sector companies, such as AP Renewables, BDO, Chinabank, Sindicatum, BPI, AC Energy, RCBC, Arthaland, Manila Water, EDC and UnionBank, have been driving the PHP 276 billion GSS bond issuances in the Philippines since 2016. An estimated 37% of these local GSS bond issuances are targeted at projects which have an EE component (that is, non-pure RE projects).

Climargy CEO and PE2 president Alexander Ablaza presented how Climargy comes forward as Asia’s pioneer equity vehicle for EE upgrades in commercial and industrial (C&I) facilities. He said that while PE2 estimates that USD 243 billion in investments will be required to reduce final energy demand by 182 Mtoe through 2040 in the Philippine market, over two-thirds of that EE capital mobilization will have to be through innovative, off-balance sheet modalities such as energy service company (ESCO) performance contracting.

Ablaza explained that Climargy was designed and established to address the persistent market failure for EE portfolio finance specifically caused by major financing gaps: (1) Up to 98% of ESCOs across developing Asia do not have suitable access to bank lending to pursue their long-term pipeline of ESCO-financed performance contracts; (2) No EE aggregators exist nor "fund-like" or "super-ESCO" equity providers of project capital exist as corporate structures across developing or emerging economies; (3) No entity is removing the barriers or de-risking the upfront project development costs (especially for investment-grade energy audits) for EE projects in the Philippines; and, (4) In the Philippines, private capital is moving at a steadily growing velocity toward 20,000 MW in RE projects, but sadly not toward the 45,900 MW potential EE improvements through 2040.

With Climargy’s unique market position as the pioneer and lone equity vehicle for off-balance sheet capital to ESCO-guaranteed EE upgrades in the C&I sector, it allows ESCOs to focus on delivering energy performance instead of financing projects on their balance sheets, and enables C&I host entities to preserve their capital budgets and credit lines for core business priorities. Ablaza said that with a targeted initial USD 108 million investment tranche for the Philippine market, Climargy can deliver up to 3 terawatt-hours of avoided generation and up to 2 gigatons of CO2e in greenhouse gas emission reduction by 2040.

The 2021 Energy Smart Forum Series provides an avenue for the collaborative efforts of energy stakeholders to support business continuity and productivity, and to access emerging business opportunities in the energy sector in line with the theme “Building a Competitive, Sustainable and Resilient Energy Future.”

Through the remainder of 2021, ECCP and PE2 are co-organizing three more EE webinars under the 2021 Energy Smart Forum Series, with topics that cover EE fiscal incentives (19 October), EE in the energy supply chain (TBC, 4 November) and EE innovations (TBC, 16 November).

About PE2

Philippine Energy Efficiency Alliance Inc. (PE2), is a non-stock, non-profit organization of energy efficiency market stakeholders.

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Republic Act 11285

R.A. 11285 - An Act Institutionalizing Energy Efficiency and Conservation, Enhancing the Efficient Use of Energy, and Granting Incentives to Energy Efficiency and Conservation Projects

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Beyond COVID-19: How governments, ESCOs and innovative financial modalities can mobilize energy efficiency capital through 2040

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