Bridging the Green Finance Gap: The Philippines’ Urgent Need for Climate Action Funding

Green finance in the Philippines is evolving as the country seeks to address its significant climate vulnerabilities and transition to a more sustainable economy. This shift involves various initiatives, partnerships, and investments aimed at reducing carbon emissions and fostering renewable energy projects.

National Efforts and Financial Initiatives

One of the major steps taken by the Philippines is the implementation of the Philippine Action Plan for Sustainable Consumption and Production. This plan promotes green recovery and sustainable economic practices, aiming to create decent jobs and build resilient societies, aligning with global climate goals such as the Paris Agreement and the Sustainable Development Goals​.

Key financial institutions are also playing a crucial role in this transition. For instance, the Bangko Sentral ng Pilipinas (BSP) has invested heavily in green bonds, positioning the Philippines as a leading green bond issuer in ASEAN. This investment supports sustainable and renewable projects​​. Additionally, the Asian Development Bank (ADB) has supported green corporate loans, such as those secured by Alternergy, to boost renewable energy initiatives​.

Despite these efforts, challenges remain. Philippine banks, although pledging to reduce coal exposure, continue to finance fossil fuel projects. Reports indicate significant investments in coal and fossil fuel projects, highlighting the tension between existing financial commitments and the country’s sustainability goals​​. Furthermore, effective utilization and management of disaster funds are critical, as the country frequently experiences extreme weather events due to its geographic location​.

International Support and Partnerships

International support and partnerships are crucial for the Philippines to meet its climate finance needs. The country has received substantial funding from various international bodies to support its climate action plans. For instance, the Climate Investment Funds (CIF) have backed the Philippines’ energy transition plans, emphasizing the need for substantial financial resources to move away from fossil fuels​ ​.

The government has also been proactive in advocating for climate finance on the global stage. At international conferences like COP27, the Philippines has called for more robust definitions and mechanisms for loss and damage funding, which are essential for countries severely affected by climate change​​. This includes pushing for an insurance scheme to provide predictable financial support to countries impacted by climate disasters.

Makakalikasan Party’s Green Agenda

To address this funding shortfall, the Makakalikasan Party proposes a Sustainable National Financing Green Agenda. This agenda includes several key policy proposals aimed at bridging the financial gap:

1. Debt Relief and Condonations: Renegotiating domestic and foreign debts to secure relief and condonations, alongside a commitment to avoid new national debts for a decade.
2. Re-channeling Funds: Redirecting funds from various sources such as carbon taxes, sin taxes, recovery of ill-gotten wealth, and a wealth tax. Additionally, re-nationalizing and re-cooperativizing public utilities and natural resources.
3. Public-Private Partnerships: Strengthening collaborations between the government and the private sector to boost investments in green technologies and sustainable infrastructure.
4. Public Procurement Reforms: Implementing a green procurement system across government agencies to optimize resource utilization and prevent financial leaks.
5. Integrating Overseas Workers: Encouraging overseas Filipino workers and business process outsourcing employees to invest in green initiatives, including financing Green Communes.

Transition to NCCAP and LCCAP Financial Requirements

Moving from the overall green financing requirements of the country, it is essential to focus on sound and effective climate actions by examining the specifics of the National Climate Change Action Plan (NCCAP). Furthermore, local initiatives through the Local Climate Change Action Plans (LCCAPs) play a crucial role in addressing climate change at the grassroots level.

Financial Requirements for NCCAP

The Philippines needs approximately Php 6.57 trillion to finance its green and climate action programs under the NCCAP. However, the current national budget allocates only about 20% of this requirement, highlighting a significant funding gap. This financial shortfall underscores the urgent need for innovative and sustainable financing solutions to meet the country’s climate goals​​.

Local Climate Change Action Plans (LCCAP)

At the local level, the development and implementation of Local Climate Change Action Plans (LCCAPs) are crucial. The Climate Change Act mandates all Local Government Units (LGUs) to submit their LCCAPs. As of the latest data, 85.95% of LGUs have completed their plans, showing significant progress but also leaving room for improvement to achieve full compliance​​.

The financial requirements for implementing all current LCCAPs nationwide are substantial. Specific figures for these needs are still emerging, but funding for LCCAPs primarily comes from a mix of local government budgets, national government support, and international funding sources. Despite these efforts, a considerable funding gap remains, which hampers the effective implementation of local climate initiatives.

Issues Surrounding the Funding Gap

Several issues contribute to the persistent funding gap for both NCCAP and LCCAP initiatives. These include:

1. Insufficient National Budget Allocation: The national budget only covers a fraction of the required funds, necessitating alternative financing mechanisms.
2. Dependence on Fossil Fuels: Despite pledges to reduce coal exposure, significant investments in fossil fuel projects continue, conflicting with sustainability goals.
3. Disaster Fund Management: Effective utilization and management of disaster funds are critical, especially as the country frequently faces extreme weather events.
4. Public Procurement Issues: Optimizing and cleaning up government procurement systems are necessary to prevent leaks and ensure efficient use of public funds.

Conclusion

Green finance in the Philippines is evolving with significant efforts from various stakeholders to address climate vulnerabilities and transition to a sustainable economy. The NCCAP and LCCAPs are key components of this strategy, requiring robust financial support and innovative funding solutions. The Makakalikasan Party’s Sustainable National Financing Green Agenda provides a comprehensive approach to addressing these challenges through debt relief, re-channeling funds, and strengthening public-private partnerships. Continued support from both domestic and international stakeholders is crucial to bridge the funding gap and ensure the successful implementation of these climate action plans.

By focusing on both national and local climate strategies, the Philippines can work towards achieving its climate resilience and sustainability goals, aligning with global commitments such as the Paris Agreement and the Sustainable Development Goals.