Banks not funding RE enough–group
THE Philippine government’s decision to impose a moratorium on greenfield coal plants may have cut financing for coal projects but it was not enough to raise funding for renewables, according to the Center for Energy, Ecology, and Development (CEED).
Based on the 2024 Fossil Fuel Divestment Scorecard report, total coal financing between 2021 and 2023 only reached $1.4 billion in the Philippines.
This is a 89.86-percent contraction from the average of $13.8 billion before the Department of Energy (DOE) imposed the moratorium on financing for these projects.
“In 2020, the Department of Energy (DOE) took its first step in exiting coal by implementing a moratorium on greenfield coal plants,” the report stated. “Based on the banks’ financing data and shifting trends, the coal moratorium became a noticeable turning point for the banks.”
However, financing for gas projects surged 75.29 percent to $1.2 billion between 2021 and 2023 from only $296.6 million before the DOE imposed the moratorium.
The report also noted that after the moratorium, the financing for renewables declined 13.95 percent to $3.7 billion after the moratorium from $4.3 billion between 2009 to 2020.
“Despite the loopholes that allow firm expansion plans, domestic banks increased their financing for sources of energy other than coal after the moratorium, implying the importance of national policies as market signals,” the report stated.
The report stated that after the DOE moratorium, Chinabank and BDO Unibank led banks in terms of financing fossil fuels with scores of 3.78 and 3.56, respectively.
Other banks included in the top five are Metrobank and the Philippine National Bank (PNB) which both scored 2.78 followed by the Bank of the Philippines Islands (BPI) with a score of 2.56.
The study also stated that the Land Bank of the Philippines, with a score of 2.56, led banks in terms of fossil fuel financing before the DOE’S moratorium.
This was followed by Asia United Bank Corp. with a score of 2.30; BDO Unibank Inc., 2.13; China Banking Corp., 2.09; and, Bank of the Philippine Islands (BPI), 1.99 in the index.
Nonetheless, the report stated that no new coal and gas transactions were recorded from April to December 2023.
Further, for the first time since 2009, total financing for renewable energy exceeded that of fossil fuels in 2022 and 2023.
BPI and BDO Unibank are considered the leading financiers of renewable energy despite being among the biggest funders of coal and fossil gas in the country.
The report stated that considering the investments of these banks after the moratorium showed that BDO contributed $1.2 billion to renewables—the biggest during the period—and financed $642.98 million to fossil fuels.
During the same period, BPI funneled $716.28 million to renewable energy while contributing $302.87 million to fossil fuels.
“To truly show their commitment to contributing to the country’s energy transition, these banks must stop funding dirty energy, and instead redirect financing to renewables,” the CEED study stated.