PH to spend P318B for 'green' projects

May 27, 2021

THE government will spend an estimated P318.6 billion this year and in 2022 on projects that will count toward its commitment under the 2015 Paris Agreement to reduce greenhouse gas (GHG) emissions by 75 percent by 2030, according to data provided to The Manila Times by the Department of Finance (DoF).

The Aquino 3rd administration pledged a 70-percent reduction in GHG emissions as the Philippines' National Determined Contribution (NDC) to global efforts to limit the increase in atmospheric temperatures to 1.5 to 2 degrees Celsius over pre-industrial levels by the end of the century.

Last month, Finance Secretary and Climate Change Commission (CCC) Chairman Carlos Dominguez 3rd announced that the Philippines had revised its NDC upward to 75 percent in a letter to the United Nations Framework Convention on Climate Change (UNFCCC) secretariat.

Under the Paris Agreement, NDCs are updated every five years. The baseline for GHG reduction is the estimated total GHG emissions for a "business as usual" scenario - that is, if no action were taken - for the 2020 to 2030 period. For the Philippines, that figure is 3.3403 billion metric tons of CO2 equivalent (3,340.3 MtCO2e). So, if the NDC is to be met, the country will have to reduce GHG emissions to less than 830.1 MtCO2e by 2030.

There is, however, a significant caveat to the Philippines' NDC: since the country contributes very little to overall global GHG emissions - only about 0.3 percent - and is considered among the countries most at risk from climatic changes, most of the NDC is "conditional," or only achievable with financial and other material support from developed economies. Under the current version of the Philippines' NDC, that amounts to 72.29 percent of the 75 percent emissions reduction target; the remaining 2.71 percent is "unconditional," or the amount the country must achieve on its own.

– The Public Utility Vehicle Modernization program, which has a budget of P591.8 million for 2021 and an estimated budget of P824.4 million for 2022.

– Bus Rapid Transit projects in Cebu and along Quezon Avenue in Manila. The Cebu project figured into the 2021 budget for a total of P511 million; the Quezon Avenue project, which will begin in earnest next year, will raise the budget encompassing both initiatives to an estimated P7.4 billion.

– Various rail projects under the Build, Build, Build umbrella, which accounted for P40.7 billion this year, and an estimated P266.98 billion next year.

– Ongoing work by the Department of Energy to assess and develop baseline indicators for energy efficiency, which is vital to being able to properly measure the environmental impact of other development projects. This has a budget of P45 million this year.

Funding 'gap'

With the Philippines putting forth a substantial effort to meet its "unconditional" NDC commitment, how well are the world's wealthier nations meeting funding needs for the "conditional" commitment to reduce GHG emissions?

Perhaps not surprisingly, that aspect of the broader effort is proving to be a bit problematic, although not for lack of commitment or unwillingness to make funds available on the part of developed nations. Numerous financing vehicles that developing and emerging economies can tap for climate mitigation and adaptation needs have been created. Two of the more familiar ones are the Green Climate Fund (GCF), which is part of the UNFCCC framework and is the main financial mechanism of the 2015 Paris Agreement; and the Global Environment Facility (GEF), an administratively independent fund created in 1991 prior to the 1992 Rio climate summit.

However, getting the funds to beneficiary countries is a slow process. In a sense, the issue is one of two sides speaking different languages, DoF Assistant Secretary Paola Alvarez explained in an interview with The Manila Times, and it is reflected in two issues that as of now make it more difficult to accurately assess the cost (in financial terms) and value (in terms of GHG emissions reduction) of climate mitigation and adaptation projects.

"The Paris Agreement, which provides for the commitment to greenhouse gas emissions, doesn't really talk about losses and damages, [or] quantifying losses and damages in relation to climate change," Alvarez said. "So that's the first issue. Second, the concept of finance within the framework of the Paris Agreement is not the same as the usual finance tools."

Finance from the government's perspective is fairly straightforward; the cost or close estimate of the cost of particular projects and initiatives is calculated and included in the country's GAA. From the perspective of the global funds, however, costs are necessarily more generalized since local conditions in individual countries lead to significant variations.

"If you go to a banker or a financier, they'll tell you the exact cost of an infrastructure project," Alvarez said. "But this is not how the UNFCCC computes. So that's where the gap lies. You have the funding facilities like the GCF, the GEF - you can apply for a project, for them to fund you, but it takes a lot of time" to work out the differences in financing definitions and approaches, she added.

To help resolve some of these difficulties, Alvarez explained, the Green Task Force of the CCC, with support from the UK Prosperity Fund, is developing what they call a Sustainable Finance Roadmap, which, among other things, will present a uniform taxonomy of climate-related initiatives and impacts. Work on this project is ongoing, with the final version intended to be presented at the 26th UN Climate Change Conference of the Parties or COP26 in Glasgow, Scotland in early November. https://www.manilatimes.net/2021/05/27/news/national/ph-to-spend-p318b-for-green-projects/1800763