Clean Energy Finance Framework
A four-cornerstone government framework to catalyze private investment in clean energy, with initial focus on offshore wind (OSW) and energy efficiency and conservation (EEC) in public buildings. Underpinned by a layered BSP -SEC regulatory architecture for sustainable finance [PEP 2023-2050 Vol. I, p.35, 2023; PEP 2023-2050 Vol. II, p.118, 2023].
Four Cornerstones
Defined in the CEFI Roadmap (see Clean Energy Finance and Investment (CEFI) Roadmap / CEFIM Programme ) and repeated in Vol. II [PEP 2023-2050 Vol. II, pp.118–119, 2023]:
- Achieving Energy Security — RE and EEC reduce dependence on imported fuels and improve energy utilization, addressing energy security as a global concern [PEP 2023-2050 Vol. II, p.119, 2023]
- Supporting Environmental Sustainability — mobilizes financial resources toward achieving clean energy targets and sustainable finance goals; reduces carbon footprints toward the targeted RE share in the generation mix [PEP 2023-2050 Vol. II, p.119, 2023]
- Promoting Technological Development — collaboration with local and foreign institutions; sustained research and development (R&D); drives innovation and improves use of efficient technologies [PEP 2023-2050 Vol. II, p.119, 2023]
- Encouraging Financing and Investment — expanding capital access; addressing barriers including absence of standards, staff capacity gaps, and LGU budget constraints; benchmarking foreign investor programs; circulars to incentivize local bank participation in domestic initiatives [PEP 2023-2050 Vol. II, p.119, 2023]
Philippine Sustainable Finance Roadmap
The Philippine Sustainable Finance Roadmap, formulated by the Inter-Agency Technical Working Group for Sustainable Finance (Green Force), was launched on 20 October 2021. It provides comprehensive strategies for sustainable finance across both the “greening of the financial system” and the “financing of sustainable activities” [PEP 2023-2050 Vol. II, p.114, 2023].
Three pillars:
- Creating a conducive environment — strengthen policies on climate-related finance transparency; develop sustainability risk management policies; capacity building; enhance reporting of green and climate finance flows
- Mainstreaming development finance — encourage sustainable financial products via penalties and incentives; leverage available financing; establish sustainable insurance mechanism
- Developing a sustainable pipeline — establish sustainable pipeline database for public and private sectors; monitor progress; link pipeline to SDGs, PDP, and NDC targets
Four objectives [PEP 2023-2050 Vol. II, pp.164–165, 2023]:
- Outline goals to support current initiatives and create a supportive environment for sustainable finance
- Determine priority areas and acknowledge basis for improvements
- Provide strategic direction and recommendations to accelerate sustainable finance
- Provide investment and policy signals to support the transition to a sustainable economy
Philippine Sustainable Finance Regulatory Architecture
BSP Sustainable Finance Framework
BSP Circular No. 1085 series of 2020 (29 April 2020): Requires financial institutions to integrate sustainability principles in their corporate governance framework, risk management systems, and strategic objectives. This is the foundational policy instrument underpinning all subsequent sustainable finance issuances [PEP 2023-2050 Vol. II, p.114, 2023].
BSP Circular 1185 series of 2023 (13 December 2023): Amended credit exposure limits and reserve requirements to scale up sustainable finance:
- (a) Grant of additional Single Borrower’s Limit (SBL) of 15 percent of net worth for loans, credit accommodations, and guarantees for eligible green or sustainable projects, including transitional activities to decarbonization
- (b) Gradual reduction of the reserve requirement (RR) rate to zero percent against new and outstanding sustainable bonds issued by banks
Objective: assist financing of eligible projects contributing to the government’s climate commitments and SDGs as articulated in the PDP and NDC [PEP 2023-2050 Vol. II, p.200, 2023].
Philippine Sustainable Finance Taxonomy Guidelines (SFTG)
BSP Circular No. 1187 series of 2024 (21 February 2024), issued through the Financial Sector Forum (FSF) — a voluntary interagency body comprised of the Bangko Sentral ng Pilipinas (BSP), Securities and Exchange Commission (SEC), Insurance Commission (IC), and Philippine Deposit Insurance Corporation (PDIC) — aimed at coordinating regulatory and supervisory policies [PEP 2023-2050 Vol. II, p.116, 2023].
The SFTG is a tool for determining whether an economic activity is environmentally and socially sustainable. Key characteristics:
- Dynamic — responsive to changes; subject to periodic review
- Phased approach — iterative, cooperative, user-focused development
- Inclusive — direction to financial sector and other users on categorizing sustainable finance activities
- Directs capital toward GHG emission reduction and climate resilience; minimizes greenwashing risk; supports a just transition
“Traffic Light” Classification System (Figure 30): Activities are classified as Green, Amber, or Red based on Essential Criteria and qualitative evaluation against Environmental Objectives (EOs), Do No Significant Harm (DNSH) tests, and Minimum Social Safeguards (MSS) standards. A “Red” classification does not necessarily mean an activity is unsustainable — it failed to meet SFTG sustainability ambition [PEP 2023-2050 Vol. II, p.116, 2023].
Seven Guiding Principles (Table 59):
| Guiding Principle | Subject |
|---|---|
| 1 | Climate Change Mitigation and Adaptation |
| 2 | Promoting Transition to a Low-Carbon Economy |
| 3 | Resilient Food Systems |
| 4 | Sustainable Cities |
| 5 | Sustainable and Resilient Infrastructure for Inclusive Growth and Poverty Reduction |
| 6 | Environmental Management and Conservation |
| 7 | Prohibited Activities |
[PEP 2023-2050 Vol. II, Table 59, 2023]
SEC Sustainable Investment Regulations
| Instrument | Date | Description |
|---|---|---|
| SEC MC No. 4 s.2019 | 2019 | Sustainability Reporting Guidelines for Publicly Listed Companies (PLCs) — aids PLCs in assessing non-financial performance and monitoring contributions toward UN SDG targets |
| SEC MC No. 11 s.2022 | 2022 | Rules on Sustainable and Responsible Investment (SRI) Funds — governs newly formed and existing investment companies qualifying as SRI Funds |
| SEC MC No. 3 s.2023 | 2023 | Guidelines on Issuance of Sustainability-Linked Bonds under ASEAN Sustainability-Linked Bond Standards (SLBS) — proceeds used for general purposes; financial/structural characteristics vary based on ESG objective achievement |
[PEP 2023-2050 Vol. II, pp.134–152, 2023]
SEC is also involved in the ASEAN Capital Markets Forum (ACMF) and ASEAN Taxonomy Board [PEP 2023-2050 Vol. II, p.157, 2023].
Philippine GSS Bond Issuances
| Year | Volume | Share of ASEAN Total |
|---|---|---|
| December 2022 | USD 6.58 billion | 21.0% of USD 30.64 billion ASEAN-Labelled GSS |
| December 2023 | USD 10.11 billion | 22.0% of ASEAN total |
[PEP 2023-2050 Vol. II, footnote 139, 2023]
PHILGUARANTEE — Sustainable Energy Credit Guarantee Facility (SEGF)
The Philippine Guarantee Corporation (PHILGUARANTEE) provides credit guarantees for sustainable energy projects under the Sustainable Energy Credit Guarantee Facility (SEGF), specifically for projects under the National Renewable Energy Program (NREP) [PEP 2023-2050 Vol. II, p.161, 2023].
Global Investment Context
- IEA NZE Scenario: approximately 70 percent of clean energy investment must come from private developers, consumers, and financiers. World must invest ~USD 2.8 trillion in energy in 2023, with USD 1.7 trillion to clean energy — RE for power (USD 501B, 29%), electricity grids (USD 472–600B, 28%), efficiency (USD 232B, 14%), low-emission fuels (USD 194B, 10%), energy storage (USD 117B, 7%), nuclear (USD 103–125B, 6%), end-use renewables/electrification (USD 107B, 6%) [PEP 2023-2050 Vol. II, p.114, 2023]
- IRENA World Energy Transitions Outlook: world needs USD 131 trillion in RE by 2050 for net-zero [PEP 2023-2050 Vol. II, p.113, 2023]
- Bloomberg NEF 2023 Climatescope Report: Philippines ranked 4th most attractive emerging market for RE [PEP 2023-2050 Vol. II, p.114, 2023]
International Climate Finance Access
DOE is partnering with international climate finance institutions to strengthen energy infrastructure resilience [PEP 2023-2050 Vol. II, p.127, 2023]:
- Green Climate Fund (GCF)
- Global Environment Facility (GEF)
- Adaptation Fund (AF)
- Climate Technology Center and Network (CTCN)
- Loss and Damage Fund (LDF)
Disaster Risk Financing and Insurance (DRFI): An innovative mechanism identified to mitigate the financial impacts of hazards on energy infrastructure while shielding consumers from cost pass-throughs. DOE committed to establishing mechanisms and guidelines to strengthen DRFI practices within the energy sector [PEP 2023-2050 Vol. II, p.127, 2023].