GLASGOW—An Asian Development Bank (ADB)-supported initiative to speed up the transition of the Philippines’ dependence from coal to clean energy sources will generate investments, create jobs, and accelerate the retirement of coal-fired power plants in the country by an average of 10 to 15 years, according to Finance Secretary Carlos Dominguez III.

The Energy Transition Mechanism (ETM) facility jointly launched here on Nov. 3 by the ADB, the Philippines, and Indonesia will achieve these goals, according to Secretary Dominguez, who heads the Philippine delegation to the two-week 26th United Nations Climate Change Conference of the Parties (COP26) that started here last Sunday.

As a public-private finance vehicle, the ETM aims to both reduce coal-fired power generation through accelerated plant retirement and boost the growth of renewable energy using an equitable, scalable, and market-based approach.

Secretary Dominguez said the Philippines has a unique opportunity in Mindanao to pilot the ETM project as the government is in the process of rehabilitating the Agus-Pulangi hydropower plants to improve their generating capacity.

As the Agus-Pulangi power plant complex composed of seven hydropower plants maximizes its generating capacity, the government can proceed with its plan to gradually acquire coal-fired power plants in Mindanao and repurpose them through the ETM facility.

Based on data from the Philippines’ Power Sector Assets and Liabilities Management Corp. (PSALM), the Agus-Pulangi rehabilitation project would enable the seven power plants in the hydropower complex to maximize their generation capacity to a combined 1001 megawatts (MW), which is more than enough to cover the 232 MW capacity of the Mindanao Coal-Fired Power Plant that can be retired earlier in the area.

The oversupply of power in Mindanao resulting in stranded coal assets makes it timely to repurpose mature (more than 15 years old) coal power plants to renewable energy source option.

Secretary Dominguez said during the launch of the ETM facility that the shift from coal-dependent to renewable energy (RE) sources “requires an effective financing framework to be even imaginable,” which is why the Philippine government has partnered with the ADB and some private sector partners in developing the ETM-supported project for the country.

ADB has proceeded to the feasibility study stage of the ETM-backed project for the Philippines to look more closely into the financial aspect of the project and estimate the value of the significant share of the coal fleet that could be retired early.

PSALM said in a report to Secretary Dominguez that “while the Feasibility Study will take about 2 years to complete, the aim is to have first a closing on the pilot fund by the end of 2022.”

The Finance Secretary is Chairman-designate of the Philippines’ Climate Change Commission (CCC) and Chairman of the PSALM Board.

Secretary Dominguez said he expects the ETM-supported initiative to generate new jobs as investors—which include multilateral banks, international private-sector institutional investors, and long-term investors–bring in the funds needed to implement the project.

“A clean energy transition in the Philippines will attract investments in renewable energy, create jobs locally, and promote national growth,” Secretary Dominguez said.

He said the project “will help us accelerate the retirement of coal plants in the country by at least 10 to 15 years on average through innovative financing mechanisms. It is intended to boost the growth of renewable energy using an equitable, scalable and market-based approach.”

Coal accounts for 54 percent of the Philippines’ energy mix, which makes it the largest source of greenhouse gas (GHG) emissions in the Philippines.

In 2019, coal accounted for 48 percent of the carbon dioxide emissions in the country.

According to PSALM’s report to Secretary Dominguez, despite the large share of coal in the current power generation mix in the Philippines, it would be increasingly uncompetitive to rely on this energy source in the coming years.

PSALM projects that by 2029, new solar photovoltaic systems would be cheaper than running coal plants in the country.

It said the Departments of Finance (DOF) and of Energy (DOE) and the Energy Regulatory Commission (ERC) will be working together to ensure that the ETM is properly mapped out and incorporated in the Philippine Energy Plan, and then implemented in the country “in a manner that will constantly ensure energy security and at the same time managing the power rates so that the electricity consumers are constantly protected.”

“Part of the process of preparing the ETM is closely interacting with power customers in the Philippines (electric cooperatives) that are currently being supplied by the existing coal power plants. This is to be able to determine the replacement capacity needed in a long-term scenario,” it said in its report.

As its Nationally Determined Contribution (NDC) to the Paris Agreement, the Philippines has committed to a projected GHG emissions reduction and avoidance of 75 percent, referenced against a projected business-as-usual cumulative economy-wide emission of 3,340.3 million tons of tCO2 equivalent for the 2020–2030 period.

Secretary Dominguez said the Philippines’ participation in the ETM underscores its firm commitment to “combat climate change through practical projects on the ground.”

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