PE2 airs hopes for DOE support toward Tier III incentives for all EE projects
TAGUIG CITY, 27 January 2022 – The Philippine Energy Efficiency Alliance (PE2) echoed before the Department of Energy (DOE) earlier today its position that all energy efficiency (EE) projects, strategic or otherwise, be made eligible for Tier III fiscal incentives under Republic Act (RA) No. 11534, otherwise known as the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act.
The PE2 position for Tier III re-classification of all EE projects was conveyed as a comment to the draft department circular (DC) on the guidelines for the endorsement of EE strategic investments to the Board of Investments (BOI) for fiscal incentives during DOE’s second public consultation (PubCon) on 6 draft DCs held virtually today.
The Pubcon solicited stakeholder comments on 5 other draft DCs: the guidelines on the recognition of testing laboratories for the examination, testing and verification of EE of energy-consuming products (ECPs and fuel efficiency of transport vehicles); the energy audit certification guidelines for firm, partnership, and corporation (FPCs); the adoption of training regulations and prescribing certification process of individual energy auditors; the adoption of training regulations and prescribing certification process of energy managers (EM); and, the adoption of training regulations and prescribing certification process of energy conservation officers (CECO).
DOE Senior Undersecretary Jesus Cristino P. Posadas’ welcome remarks gave an affirmation that the PubCon was a testament to the continued collaboration of the DOE with the commercial, industrial, and transport sectors and other stakeholders from government, non-government organizations and the academe on EE policies. Director Patrick T. Aquino of the DOE Energy Utilization Management Bureau (EUMB) led the presentation of the 6 draft DCs and in the DOE responses to stakeholder comments and questions on the draft issuances.
PE2 president Alexander Ablaza conveyed the Alliance’s comment: “PE2 hopes that DOE can still support our push before BOI and the FIRB [Fiscal Incentives Review Board] for a universal Tier III classification of all EE projects, whether strategic or not. Otherwise, if there is a short-term need to define strategic EE for Tier III classification, PE2 believes that the value addition should not be technology-based, for technologies are rapidly evolving and cannot be captured by a static eligibility list. Also, several innovative technologies do not necessarily deliver dependable energy savings. Instead, we hope DOE bases its endorsement of strategic EE on energy savings impacts, such as meeting the threshold of 25% energy savings measured at project boundary.”
Ablaza suggested that the draft DC clause excluding EE retrofitting and upgrading projects be removed as a qualification of strategic EE projects, but Dir. Aquino explained that retrofitting projects are already covered in the previously approved DC for endorsement guidelines for non-strategic EE projects.
DOE also said that PE2’s comment to reword Clause 3.3, specifically to ensure that the definition of “Project Proponent” be based on the legal entity that is raising the bulk of upfront project capital and exposed to investment risks, will remain open for discussion.
Dir. Aquino also explained, in response to Ablaza’s recommendation that the qualifications for strategic EE projects not be technology-based, that DOE does not intend to define or qualify strategic EE investments based on the type of innovative technology adopted. Ablaza said earlier that the supposedly repealed Article 17 of Executive Order (EO) No. 226, which grants “pioneer” status to projects with technological innovation was not effective in attracting new EE incentives under the pre-CREATE Act policy framework.
DOE likewise assured PE2 and other stakeholders that they will maintain open for discussion PE2’s suggestion for the draft DC to set guidelines for the endorsement of EE projects to other investment promotion agencies (IPAs), especially the Philippine Economic Zone Authority (PEZA). Ablaza cited that, while RA 11285 specifically mentions the role of BOI in the granting of fiscal incentives, and since BOI coverage does not cover jurisdictions of other IPAs, the DOE and BOI should make it clear through respective guidelines how EE projects situated in the other IPA jurisdictions (e.g. PEZA zones) should be granted fiscal incentives.
PE2 vice president for external affairs Theresa Acedillo-Lapuz also sought clarifications from DOE on the appointment of energy managers and the distinction between simple and complex EE projects.
During the second PubCon, DOE proposed the emerging definition for strategic EE projects, which should: (1) not be classified as retrofitting or system upgrades; (2) not be covered by other incentives; (3) hurdle a minimum project investment cost of PHP 10 million; (4) be designed to reduce energy consumption; (5) reduce greenhouse gas emissions; (6) contribute to country’s economic development; (7) possess high potential for job creation; (8) be beneficial to the environment; and, (9) be technologically feasible.
Dir. Aquino closed the second PubCon by thanking the participants and stakeholders for contributing their respective inputs into the draft policy issuances of the DOE.
