Dominguez urges multilateral lenders to invest in Ph climate finance efforts

carlos dominguez

Finance Sec. Carlos Dominguez III has urged multilateral development banks (MDBs) to come up with guidelines for vetting climate adaptation projects in developing countries in order to attract private investors.

Dominguez outlined his proposal in a letter addressed to World Bank Group (WBG) President David Malpass, Asian Development Bank (ADB) President Masatsugu Asakawa, and Asian Infrastructure Investment Bank (AIIB) President Jin Liqun.

“With the public and private sectors resting their trust and confidence in MDBs, I propose that the WBG, ADB and AIIB collaborate in setting up a harmonized set of guidelines to determine the viability and sustainability of climate projects,” said Dominguez, who is also the chairman-designate of the Philippines’ Climate Change Commission.

Dominguez made the proposal when he noted that the discussions during the recently-concluded 26th United Nations Climate Change Conference of the Parties (COP26) revolved around “consensus regarding certain principles and parameters on climate change without a clear understanding of how global finance can play a significant part in moving the climate agenda along.”

The secretary has been advocating for more climate financing from wealthy economies whom he contends “bear the most responsibility for their historic emissions.”

Meanwhile, the Philippine Energy Efficiency Alliance (PE2) has requested to Dominguez the upgrading of the industry tier classification of energy efficiency projects within the income tax holiday (ITH) framework of domestic market activities of Republic Act 11534 or the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act.

“Since 2016, PE2 has been consistent in seeking a minimum six-year ITH and duty-free importation as the floor package of fiscal incentives that would start to elevate after-tax internal rates of return (IRR) of energy efficiency investments from single-digit to low-teens percentages,” PE2 President Alexander Ablaza said in his letter to Dominguez, who also sits as chairman of his department’s Fiscal Incentives Review Board.

“We need to stress that both local and foreign portfolio investors need energy efficiency project portfolios to hurdle 15% in after-tax IRR before pledging long-term capital, especially for an entirely new investment asset class (energy efficiency),” Ablaza continued.

Still in other related developments, think-tank Center for Energy, Ecology, and Development (CEED) called for the end of all fossil fuel usage, and not just coal.

“In what is a historic win for civic movements and climate-vulnerable communities across the globe, we finally have a climate conference coming up with bold action against coal, the dirtiest of all fossil fuels, for the first time: the latest COP26 draft decision is pushing for the phase-out of unabated coal. This would have been much more welcome if it was put forward years ago, but we take this as a key step forward, nonetheless, in keeping our hope for the 1.5°C goal alive,” the group said in a statement.

During COP26, the Department of Energy committed to increasing renewable energy capacity in the country, but did not commit to a coal phaseout.