Green infrastructure investment seen potentially supercharging PHL recovery
INVESTMENT in “green” infrastructure can help the Philippines bounce back faster and become more resilient after the pandemic, according to a report published by the Climate Bonds Initiative (CBI) and prepared with the Securities and Exchange Commision (SEC) and the Asian Development Bank (ADB).
“The significant scaling-up of investment in green infrastructure is critical for the Philippines to meet its climate commitments — including meeting global emission reduction pathways under the Paris Climate Change Agreement — and build resilience to the impacts of climate change as well as to achieve rapid economic development,” according to the “Philippines: Green Infrastructure Investment Opportunities” report released Thursday.
The report was prepared in order to identify infrastructure investment opportunities in four key sectors: renewable energy, low-carbon transport, sustainable water management, and sustainable waste management.
It said green infrastructure promises to significantly benefit the economy and environment by promoting competitiveness, productivity, and employment opportunities; extending the reach, reliability and efficiency of the power grid while mitigating air pollution; expanding the economic base; creating new markets; and boosting inclusion and connectivity.
“The lack of understanding of what are green investments makes it difficult for governments to develop pipelines of commercially viable green infrastructure investment opportunities that are able to support the nation’s transition to a low-carbon economy,” it said.
The government’s flagship “Build, Build, Build” infrastructure program hopes to invest roughly P8 trillion between 2016 and 2022 to close the Philippines’ infrastructure shortfalls.
The pandemic has hampered such investment due to the repurposing of some funding towards coronavirus containment efforts. The government plans to ramp up spending again next year with the infrastructure budget rising to P1.12 trillion from the reduced P785.5 billion this year.
“Infrastructure is necessary for a return to economic growth. Ensuring this infrastructure in green would aid in increasing the nation’s resilience to future shocks and help to build a more sustainable society,” according to the report.
“However, attracting finance to green infrastructure projects has been challenging because of a lack of bankability and low revenue streams. Thus, there is an urgent need to leverage public funds better… (and attract investment from) private institutions and commercial sources to bridge the financing gap,” according to Joven Z. Balbosa, the ADB’s Principal Country Specialist for the Philippines, during the report’s launch Thursday.
The report said the Philippines can adopt key policy and institutional reforms to increase the profile of its green infrastructure, support financing channels for infrastructure developers, diversify risk, and expand the menu of options for investors.
These include the study of climate risk exposure in the preparation of new infrastructure plans; boosting the visibility of green investment; adjusting regulatory requirements; issuing sovereign green or recovery bonds; promoting green bonds among local government units by offering incentives; and offering perks such as grants to subsidize bond issue costs and interest payments, as well as tax exemptions. — Beatrice M. Laforga