The International Monetary Fund (IMF) said the Philippines will need massive investment in renewable energy and climate-resilient power systems to protect the economy from escalating climate risks.

In its latest Philippines: Selected Issues report, the IMF estimated that meeting the country’s clean energy goals between 2029 and 2050 would require about PHP 10.7 trillion in total investment, equivalent to roughly 2% of 2024 gross domestic product (GDP) per year over the period.

The IMF framed the renewable energy transition as both a climate response and an economic strategy, noting that clean power development can reduce exposure to extreme weather, fuel price volatility, and energy supply disruptions that weigh on growth and inflation.

The report highlighted that repeated typhoons disrupt sectors that support the energy system, these include utilities, mining, construction, and transportation. These disruptions weaken productivity and raise costs that ripple across the broader economy.

Because mining and utilities are upstream sectors with relatively flexible pricing, shocks in these areas can quickly translate into higher prices elsewhere. The IMF said this reinforces the need for a diversified and more resilient power system.

Climate adaptation spending in the Philippines has been rising, with climate-related expenditures averaging 1.7% of GDP from 2022 to 2024, increasing to 3.9% of GDP in 2025, and proposed at 2.7% of GDP for 2026. Sustainable energy is among the priority areas under this spending.

The IMF also cited estimates showing that building new climate-resilient infrastructure, including energy assets, could cost about 0.6% of GDP, excluding the expense of retrofitting existing facilities. Such investments, it said, help offset long-term output losses caused by repeated climate shocks.

While these investments involve fiscal trade-offs, the IMF said renewable energy expansion can reduce the Philippines’ reliance on imported fossil fuels and lower vulnerability to global price swings. However, it stressed that public funding alone will not be sufficient and that mobilizing private investment will be critical.

With climate risks intensifying, the IMF’s assessment positions clean and resilient energy systems as a core pillar of the country’s economic strategy rather than a secondary policy objective.

How should the Philippines balance the scale of clean energy investment needed with power affordability and fiscal sustainability?

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