High costs of investing in the Philippines is the top reason why businesses and investors are finding it hard to commit to the country’s pledge to fight climate change by reducing its greenhouse gases by 70 percent by 2030, an official of a UN-backed climate program said.
Francis Benito, chief technical adviser of the UN Development Program-supported Low Emission Capacity Building (LECB) Philippine Project, said that the country needs the cooperation of the private sector—not only the public sector—to achieve the long-term target in reducing greenhouse gases.
In order to achieve the 2030 goal, Benito said there should be a high-level, long-term national plan to decouple economic growth and social development from greenhouse gas emissions growth.
The plan that should be crafted by the government, he said, should also focus on incentives and policy reforms that would encourage the business sector to join in Philippine climate change mitigation efforts.
This low carbon development (LCD) project would also promote low-carbon power sources and low-carbon industry operations to minimize GHG emissions.
“High cost holds back climate change action. Given the scale of change and resources required to move onto LCD paths, successfully catalyzing and harnessing private sector potential will be crucial,” Benito said.
He said businesses have lukewarm responses to the country’s initiative in fighting climate change because industries and sectors are “unable to achieve the returns necessary to attract them to enter new high-risk, low-carbon sectors” or put up the higher-risk investment required.
Aside from high costs, several barriers to private sector participation in climate change reduction programs are unfavorable business conditions marked by an unstable political climate; capital controls; and inability to enforce contracts and agreements.
Other barriers include a poor regulatory environment; network constraints such as limited grid capacity that prevent the setup of new technologies; and steep startup costs and low cost recovery chances, since low-carbon technologies are more expensive to install and maintain than high-carbon versions.
Benito urged the incoming administration to address these concerns with appropriate measures such as establishing a strong investment climate and regulatory framework, exhibiting clear decision-making regarding advanced technologies and investment in associated infrastructure, and removing any distortionary government policies such as fossil fuel subsidies.
He is also pushing for more support for research and development (R&D), increased multi-stakeholder R&D collaboration, the conduct of demonstration projects and feasibility studies, and creation of local information and technical expertise centers.
Private sector participation
Apart from the public sector, Benito also called the attention of private sector stakeholders, saying that there should be increased participation in formulating a “low-emission development roadmap,” and in providing a comprehensive list of opportunities in climate change mitigation for the business sector.
It will also be beneficial for the private sector stakeholders to help draw up a national recognition and rating system for good practices in mitigation, he said.
A rating system can enable and inspire participating stakeholders, businesses and industries to strive for excellence by highlighting exemplary practices and resources that can be adopted and employed by others. It can also reward the most improved outcomes or outputs of the companies pushing for greener practices.
Benito said a rating program will set the standard of quality and level of excellence for projects and activities and can be a basis for incentives.
In October last year, a number of business organizations signed the Manila Declaration 2015 pledging cooperation with efforts to reduce greenhouse gas emissions and limiting global temperature rise to within 2 degrees Celsius.
Industries, at the same time, are asking why the Philippines pledged to reduce as much as 70 percent in greenhouse gases, citing the target as “unrealistic.”
Various industries are petitioning that the government should “exercise caution in making proposals for mitigation measures” that will “unnecessarily prejudice economic development and poverty alleviation.”
The Philippines pledged to reduce its greenhouse gas emissions by 70 percent by 2030 during the Paris Summit last December 2015.