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Environment

WED 2023: To protect our environment, phase out fossil fuel finance, shift to renewables – think-tank

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On World Environment Day (WED), the Center for Energy, Ecology, and Development (CEED) rang the alarm against continued dependence on fossil fuels in the Philippines, which exacerbate ecological woes and are unnecessary in long-term sustainable development.

At a generation share of over 50%, the Philippines relies primarily on coal for its power needs. According to CEED, the detrimental rise of coal must serve as a wake-up call to revisit policies and industries that shape the country’s power development, including the finance sector.

“In the last three years, several Philippine banks pledged to restrict the support they extend to coal as testament to increasing environmental consciousness in the finance sector. All these are welcome, but intensifying climate and ecological crises require that they hold themselves to the highest standard of environmental protection and 1.5°C climate alignment,” said Gerry Arances, Executive Director of CEED.

A convenor of sustainable finance advocacy group Withdraw from Coal (WFC), CEED actively promotes the restriction and phase-out of fossil fuel financing among domestic banks and financiers, including through the annual Fossil Fuel Divestment Scorecard.

“A bank like BPI, for example, cannot wash its hands off its historical contributions in driving coal expansion, having helped build notoriously polluting projects like the Toledo and Limay coal plants, and even coal facilities culprit to perennial outages. BPI and all other coal banks can begin atoning for the damage they did by abandoning both direct and indirect support for coal and all fossil fuels, and by engaging clients to end their fossil fuel activities,” Arances added.

The Fossil Fuel Divestment scorecard underscored the continued funding enabled by domestic banks to coal in the country, and warned against shifting financing toward another fossil fuel – natural gas and LNG (liquefied natural gas). LNG is a fossil fuel that leaks high amounts of methane, a greenhouse gas that is 86 times more potent than carbon dioxide in inducing global warming over a 20-year period.

“We are aware that BPI denies it had been involved in a previously proposed coal project, which by now has been converted to a 2,400 MW LNG proposal. It is curious that BPI decided to proactively deny its involvement in the Atimonan One Energy (A1E) coal facility just when the coal project no longer exists, but whether or not it is involved in A1E, BPI retains its rank as the top contributor to coal among all domestic banks. It is only right for BPI and all other financiers that helped give rise to coal to prove that they are capable of sustainability leadership by also rejecting LNG financing, and instead focusing on how they can help rapidly advance the transition to sustainable energy from renewables,” Arances said.

While a moratorium on new coal projects has been in place since 2020, the Philippines still looks to expand its reliance on fossil fuels. At 39 GW, a total of 35 LNG power projects have been announced or are in development across the country.

Citing the Department of Energy-led Green Energy Auction Program (GEAP) which would see about 2 GW of new renewable energy projects sell electricity at Php 3-5/kWh rates in the near future and bids for over 11 GW more happening this month of June, CEED urged Philippine banks to take their cue from the increasingly favorable landscape for renewables to step-up and end their fossil fuel endeavors in favor of renewables – leaving no room for financing LNG.

“These LNG projects will be a bane for the climate survival of Filipinos, and will open the floodgate to ecological disruption and pollution in biodiversity hotspots like the Verde Island Passage where they are set to be built. National policies and genuinely sustainable finance must block the LNG build out in the Philippines, not clear the way for it. This is especially true as we prepare to welcome new renewable energy capacities at an unparalleled scale in the next two to three years, raising questions of whether we need all this LNG at all,” explained Arances.

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