Philippines

We rate the Philippines’ current policies and action as “Insufficient” compared to its fair share contribution. The Philippines would need to implement additional policies, using its own resources, to close the gap between its fair share and current policies, but will also need international support to implement policies for 1.5°C compatibility.

Emissions are expected to continue to increase throughout the decade, after a short drop due to the impacts of the pandemic. We estimate that emissions will reach 340-357 MtCO₂e by 2030 (excl. LULUCF) under current policies. The Philippines is therefore on track to meet and exceed its unconditional target (384 MtCO₂e) without taking additional measures, but is far off track from its ambitious conditional target (96 MtCO₂e).

Historically, the energy sector has driven emissions growth in the Philippines. In October 2020, then Energy Secretary Alfonso Cusi announced a moratorium on new coal fired power plants, but allowed those already under development to proceed (Department of Energy, 2020b).

The Philippines Energy Plan (PEP) (2020-2040), published in 2021, sets out the government’s current plans for the sector. It includes an additional 2.6 GW of coal power to be added by 2025, but much of the former coal pipeline has now been replaced by fossil gas (see the Energy Supply section below for details).

The Department of Energy (DOE) is working on updating the PEP and will expand the time horizon from 2040 to 2050 (Power Philippines News, 2023c). The DOE also plans to integrate hydrogen and ammonia into the energy roadmap and explore harnessing its 178 GW of technical offshore wind potential (Power Philippines News, 2023a). The updated Plan is expected later this year.

The Philippines is also considering whether to revive its nuclear power program, which the CAT does not view as a viable solution to the climate crisis due to its many downsides.

In Glasgow, a number of sectoral initiatives were launched to accelerate climate action. At most, these initiatives may close the 2030 emissions gap by around 9% - or 2.2 GtCO₂e, though assessing what is new and what is already covered by existing NDC targets is challenging.

For methane, signatories agreed to cut emissions in all sectors by 30% globally over the next decade. The coal exit initiative seeks to transition away from unabated coal power by the 2030s or 2040s and to cease building new coal plants. Signatories of the 100% EVs declaration agreed that 100% of new car and van sales in 2040 should be electric vehicles, 2035 for leading markets. On forests, leaders agreed “to halt and reverse forest loss and land degradation by 2030”. The Beyond Oil & Gas Alliance (BOGA) seeks to facilitate a managed phase out of oil and gas production.

NDCs should be updated to include these sectoral initiatives, if they aren’t already covered by existing NDC targets. As with all targets, implementation of the necessary policies and measures is critical to ensuring that these sectoral objectives are actually achieved.

• Methane pledge: The Philippines signed the methane pledge at COP26. Methane accounted for 83.5 MtCO₂e or 33% of emissions excluding LULUCF in 2021 (Gütschow & Pflüger, 2023). Agriculture accounts for the largest share of methane (61%), followed by waste (24%) and energy (14%). Methane gas coverage is included in the Philippines NDC target, but no explicit methane reduction target is given (Philippines Government, 2021). With methane accounting for 82.5 MtCO₂e in 2020 (the pledge reference year), the Philippines would need reduce methane emissions to 58 MtCO₂e by 2030 to meet the target.
• Coal exit: The Philippines signed the coal exit at COP26, but did not agree to all aspects of the pledge, including stopping issuance of permits for new unabated coal fired power generation projects, despite already having a national coal power moratorium in place (UN Climate Change Conference (COP26), 2021). Coal is not mentioned in the Philippines’ updated NDC. It continues to play a significant role in the Philippines’ energy mix (see energy section for further details).
• 100% EVs: The Philippines did not sign the EV pledge at COP26, but it has started to put the regulatory framework in place to support EV uptake in the country. It is considering adopting a 2040 EV stock target of 50%.
• Forestry: The Philippines signed the forestry pledge at COP26. The forestry pledge is not mentioned in the NDC, however the NDC target does not include LULUCF, and therefore the Philippines will be relying on real emissions reductions from emissions intensive sectors of the economy.
• Beyond oil & gas: The Philippines has not signed up to the Alliance. The Philippines will be reliant on gas imports as three LNG terminals will open in early 2023 (Reuters, 2022a). In 2020, fossil gas represented 19% of power generation (Department of Energy, 2022).

Security of energy supply is a key issue for the Philippines. Approximately half of the country’s total primary energy supply relies on coal and oil imports (Department of Energy, 2022a). The Philippines has plans to open at least three LNG terminals in 2023 (Reuters, 2022b). Fossil gas import infrastructure creates more vulnerability to global market price fluctuations, and places the country at particular risk of price increases during the global energy crisis. Fossil gas investment seems misplaced considering the cheaper, cleaner, and domestically sourced alternative that renewable energy can provide.

There are ongoing climate and environmental challenges, such as earthquakes and typhoons that damage power infrastructure, and hydropower supply can be taxed in a longer dry season as the result of effects of El Niño (Rivas, 2019b, 2019a). These challenges are compounded when ensuring power supply over the three power grids across Luzon, Visayas and Mindanao, and another 132 isolated grids (Fuentes et al., 2020).

Transporting fossil fuels also poses risks. In February, an oil tanker sank off the country's southwest coast, causing significant harm to the lives and livelihoods of residents and the region’s biodiversity (Asia Pacific Foundation of Canada, 2023). There have been several significant oil spills in the country in the last few decades. Local groups are concerned that the country's fossil gas expansion plans – both in terms of new power plants and the LNG terminals needed to import the fuel to run them – will increase the risk of this type of disaster and further environmental destruction (Cabico, 2023).

Long-term plans to increase renewables can help address these challenges by increasing the indigenous share of energy, and decentralising and diversifying the Philippines’ power mix (Ahmed & Logarta, 2017; Bertheau et al., 2019; Domingo, 2019; Vemuri & Bohn, 2018). These measures can enhance the system’s reliability, and reduce emissions (Cervantes, 2019; Vemuri et al., 2018). If the Philippines couples low carbon development with its energy efficiency goals, it can ensure a more robust power supply for its population.

Gas
The Philippines plans to meet some of its growing energy demand by significantly increasing its reliance on fossil gas power and build out its LNG infrastructure. As its domestic supply of fossil gas will soon be depleted, it will be reliant on imports, making it vulnerable to global price fluctuations and undermining its energy security. Fossil gas is not a ‘bridging fuel’ for the transition. It will continue the Philippines’ energy dependence on fossil fuels and risks locking in large-scale fossil fuel infrastructure that can become a barrier to moving to zero emissions power (Ahmed, 2020). Analysis indicates that the Philippines needs to phase out fossil gas power by 2035 to be 1.5°C compliant.

About one fifth of the Philippines’ electricity comes from fossil gas. In absolute terms, it plans to almost double the amount generated by 2030, with an additional 150-300% increase by 2040. Fossil gas’ share of the electricity mix will essentially remain constant over the next decade, as demand grows, and will rise to between 27-40% by 2040 (Department of Energy, 2022a). The PEP 2020-2040 plans to add an additional 15-21 GW installed capacity of fossil gas by 2040 (Department of Energy, 2022a). Compared to the previous 2018-2040 Philippines Energy Plan, fossil gas power generation will increase by 50-100% in 2030. In essence, the Philippines has switched much of its anticipated future coal power with fossil gas.

The Philippines is running out of its domestic supply of fossil gas and thus has begun to build out its LNG import infrastructure to address this shortfall. The country’s sole gas field, Malampaya, will be depleted in the next few years (Power Philippines News, 2023b). The DOE has approved projects to construct seven LNG terminals, three of which are due to begin operations in 2023 (Power Philippines News, 2023b; Reuters, 2022b). The proposed capacity exceeds what is needed and is unlikely to lower electricity costs as expensive coal is replaced with expensive gas (Reynolds, 2022). This rapid scale up of LNG import infrastructure could create USD 14 bn in stranded asset risks (Reynolds, 2021). Many LNG projects have been delayed at an advanced stage of project development, remaining offline due to regulatory delays and face high market risks as renewable energy technology is dispatched (Reynolds, 2021).

Coal
Coal dominates the Philippines power mix at present and under current plans would continue to play a significant, though slowly diminishing, role until 2040 and beyond, notwithstanding the moratorium on new coal power plants. This continued reliance on coal power poses adverse economic and security risks for the country, in addition to its devasting environmental harm. Analysis suggests that the Philippines needs to phase out coal power by 2035 to be 1.5°C compatible.

Coal represented 57% of the electricity generation mix in 2020. Under current plans, its share will decrease to 45% in 2030 and fall to 23-25% by 2040 (Department of Energy, 2022a). Yet, as total power generation will grow during this period, the absolute level of coal power generation (and thus emissions) will rise to 2030 and then essentially remain flat or slowly start to fall until 2040.

The Philippines adopted a moratorium on new coal power plants in 2020, but allowed those already under development to proceed (Department of Energy, 2020). Its current plans include an additional 2.6 GW of installed capacity by 2025, but foresees no further additions (Department of Energy, 2022a).

The Philippines reliance on coal is a major energy security issue. Around 70% of Philippines coal supply is imported, mainly (97%) from Indonesia (PhilStar, 2022a). In January 2022, Indonesia banned coal exports for the month to secure its own energy supply. The Philippines Foreign Secretary appealed to Indonesia to lift the ban. The ban sent global coal prices higher during the global north’s winter when energy peaks (PhilStar, 2022a)

Power bills continue to increase due to the high reliance on imported coal for power generation and increasing global coal prices (PhilStar, 2022b). The operation of large, inflexible, coal power plants has not shown it can reliably deliver power supply: between March 2019 and September 2021, four major coal power plants registered 14 to 25 outages each, often leading to power outages and skyrocketing electricity prices (Dalusung III & Manansala, 2021). Analysis shows that variable renewable energy can be more reliable and cost effective than coal (Manansala & Lois Tan, 2021).

Renewables
In the last few years, the Philippines has reinvigorated its policy support for renewable energy, but much greater support is needed for the country to be able to decarbonise its power sector and reverse its slow historic growth trends.

The Philippines fell behind its peers in renewable energy generation in the last decade. Between 2014 and 2020, the Philippines increased its non-hydro renewable energy capacity by just 1.72 GW (Department of Energy, 2022a). This is in stark contrast with many other Asian countries (see chart below comparing Philippines, Indonesia, China, Japan across all renewable energy generation).

Under the National Renewable Energy Program (NREP) 2020-2040, the government aims to reach 35% renewable energy in power generation by 2030 and 50% by 2040. The 2030 target is consistent with both the reference (REF) scenario and clean energy scenario (CES) in the PEP 2020-2040 and equates to 66-68 TWh of renewable energy in 2030, but only the clean energy scenario is consistent with the 2040 target. In 2020, renewables represented 21% of power generation.

In 2021, the Philippines launched its Green Energy Auction Program (GEAP), largely as a successor to its Feed-In-Tariff system, to further support the expansion of renewable energy supply (Department of Energy, 2023a). It successfully auctioned 2 GW of renewable capacity in 2022 to be installed between 2023-2025 (Bellini, 2022). Its first auction of 2023 will run from March to June for 11.6 GW of various types of solar power, onshore wind, biomass and waste-to-energy to be installed between 2024-2026 (Crismundo, 2023c). Another auction is planned for the end of 2023 that will include geothermal and hydro power (Crismundo, 2023b). The 13.6 GW that has or is being auctioned to date is roughly in line with the amount of capacity the Philippines had planned to add under its PEP 2020-2040, though it contains significantly more onshore wind than envisaged under that plan.

In May 2022, the World Bank released an offshore wind roadmap for the Philippines (World Bank, 2022). It explored two scenarios – one largely consistent with the country’s current energy plan (PEP 2020-2040) and a high growth scenario. Under the latter scenario, the Philippines could supply 14% of its power needs in 2040 with offshore wind alone and reach 20 GW of installed capacity. For reference, the current clean energy scenario in the PEP envisages just under 12 GW of all types of wind power in 2040. The high growth scenario resulted in greater cost reductions and more jobs than the scenario consistent with the government’s current plans.

Significant upgrades are needed to the transmission network to support this level of offshore wind power. The World Bank also noted that limitations on foreign ownership of RE projects posed a barrier to securing international financing.

The government has started working on its regulatory framework to support offshore wind and is considering it, along with possible green hydrogen production, as part of the energy plan update due to be released later this year (Power Philippines News, 2022, 2023a). In December 2022, the Department of Energy rescinded the limitations on foreign ownership of renewable energy projects, paving the way to greater outside investment (Department of Energy, 2022b).

Nuclear
The Philippines is considering whether to revive its nuclear power programme. The Bataan Nuclear Power plant was built in the 1980s but was never brought online; instead it was shelved in the aftermath of Chernobyl (Crismundo, 2022; Wingfield-Hayes, 2023). President Marcos Jr., whose father commissioned the plant during his Presidency, is considering reviving the plant (ABS-CBN News, 2022). Costs to revive the plant range from one to several billion USD (Crismundo, 2022; Wingfield-Hayes, 2023). The Department of Energy is also considering new reactors, especially small modular reactors with capacities of 50 MW to 300 MW (Cruz, 2023; IAEA, 2022; Mercurio, 2022).

Although nuclear electricity generation does not emit CO₂, the CAT does not see nuclear as a solution to the climate crisis due to its inherent risks (accidents, proliferation, etc), high and increasing costs compared to renewable energy alternatives, long construction times, incompatibility with intermittent RE generation, and its vulnerability to environmental and climate extreme events. The Philippines is highly vulnerable to climate-related disasters, such as typhoons that hit the country every year, and located in the Ring of Fire, exposing it to seismic activity.

The Philippines’ transport sector is the country’s third biggest source of greenhouse gas emissions. Road transport accounts for 90% of the transport sector’s final energy consumption, followed by 8% water transport, 2% domestic air travel, <1% railways (Department of Energy, 2022a).

The Philippines has started to take important steps to boost its EV market. In 2022, it passed the Electric Vehicle Industry Development Act (EVIDA) which seeks to create an enabling environment for the development of the national EV industry (Electric Vehicle Industry Development Act (EVIDA), 2022). In January 2023, it issued Executive Order (EO) No. 12 which removes import duties on several types of EVs and suspended taxes on charging and distribution components for the next five years aiming to make EVs more accessible to Filipinos (Philstar, 2023; Executive Order No. 12, s. 2023, 2023; Tresvalles, 2023).

The EV Act includes a stock target for corporate and government fleets of at least 5% initially, gradually increasing to 10%, but does not include a timeline for achieving these goals. The government is expected to flesh out the details of this target and introduce others for all EVs in the Comprehensive Roadmap for the Electric Vehicle Industry (CREVI) currently under development (Crismundo, 2023a). The government is considering a 50% EV stock target by 2040, meaning half of all vehicles in circulation will be electric by that time (Velasco, 2023). The Philippines currently has only fractions of a percent of EV in either sales or total stock (Department of Energy, 2023b).

While these developments to support EV uptake in the Philippines are positive, they must be coupled with the rapid decarbonisation of the country’s power sector to achieve the full climate benefits.

Globally, all new passenger vehicles sold should be electric by 2035 and EVs share of the total light duty vehicle stock should be between 65-90% by 2040 to be 1.5°C compatible.

The ‘Build, Build, Build’ programme targets infrastructure development, especially roads and urban mobility. Some noteworthy projects are Bus Rapid Transit (BRT) in Cebu and improvements in the BRT system in Manilla (Republic of the Philippines, 2020). Investments in public transport are nonetheless lacking in many major urban centres (Chang et al., 2021). The country’s first subway - in Manila - is expected to partially open in 2025, and be fully operational by 2028 (International Railway Journal, 2022). Higher investments in public infrastructure would support a reduction in greenhouse gas emissions in the transport sector and lead to air pollution co-benefits.

The actual emissions and/or removal levels for the Philippine forestry sector are highly uncertain. National inventory data shows nearly zero emissions from the sector in 1994, but a net sink (removal of CO₂ from the atmosphere) of 105 MtCO₂/yr in 2000, shrinking to 37 MtCO₂e by 2010 (NICCDIES, 2021; UNFCCC, 2017). This difference is partly attributed to changes in the definition of forests and the correction of methodological errors. Government projections show that the net sink is expected to decrease further over this decade, eventually turning into a small source (CCC, 2022).

Commodity-driven deforestation is the dominant driver of tree cover loss in the Philippines (Global Forest Watch, 2022).

The Philippines Development Plan 2017-2022 includes strategies to rehabilitate and restore degraded natural resources and protect the fragile ecosystems while improving the welfare of resource-dependent communities (NEDA, 2017b). Some strategies include:

• Complete delineation of final forest limits including production and high value conservation areas as protection forest.
• Reverse the loss of forest cover through sustained rehabilitation of degraded forestlands including critical watersheds and strengthened protection of remaining natural forests.
• Enhance management of Protected Areas and strengthen sustainable management through the issuance of appropriate tenure and management arrangement.
• Strengthen research and development on forest, watershed and biodiversity.