THE Department of Finance (DOF) is looking to fast-track the shutdown and repurposing of coal-fired power plants in the country by getting foreign governments to buy out shareholdings of their citizens with a significant stake in the continued operations of these facilities.
Finance Secretary Carlos G. Dominguez III, who broached this possibility in a recent forum, noted that the proceeds from the would-be buyout can then be donated to help mobilize funds for the finance vehicle created for the Philippines under the Asian Development Bank (ADB)’s Energy Transition Mechanism (ETM) initiative. The latter is meant to accelerate the transition from coal to clean energy of Southeast Asian countries like the Philippines.
“If we can get the foreign governments to buy out those shareholders and donate the shares of that company to a government—to our government—or to a group, including ADB and other agencies, we can actually shut down that plant. And that foreign government would actually be making a contribution to reducing a coal-fired power plant,” said Dominguez at the recent Green Finance Session jointly hosted by TIME Magazine Singapore and the Philippine Department of Finance (DOF) in Glasgow, Scotland.
Those employees operating coal-fired plants lined up for decommissioning will also be retrained to work in other energy projects, Dominguez said.
“First of all, there are not a lot of people actually working in that particular coal-fired power plant, or in any coal-fired power plant. So it’s very easy to retrain them to do other projects,” he said.
For instance, Dominguez said, a coal plant in Mindanao is among those up for decommissioning under the partnership forged by the Philippines and ADB through the new ETM facility.
Dominguez has described the ETM-supported project in Mindanao as “one of the practical projects we are ready to implement to fully realize our ambitious goal of reducing greenhouse gas emissions by 75 percent in 2030.”
As it is in the process of improving the generating capacity of the Agus-Pulangi power plant complex composed of seven hydropower plants, the government can proceed with its plan to gradually acquire coal-fired power plants in Mindanao and repurpose them through the ETM facility, Dominguez said.
The ETM is a public-private finance vehicle seen to both reduce coal-fired power generation through accelerated plant retirement and boost the growth of renewable energy (RE) using an equitable, scalable, and market-based approach.
Under this innovative financing strategy, the partners in the ETM will jointly conduct a thorough feasibility study on the optimal business model for pilot countries —so far including the Philippines and Indonesia. The ETM will bring together concessional resources from donor governments and philanthropies, in close coordination with global climate change-focused funds, to leverage large amounts of commercial capital to trigger a decisive shift towards decarbonization.
As its Nationally Determined Contribution (NDC) to the Paris Agreement, the Philippines has committed to a projected GHG emission reduction and avoidance of 75 percent from 2020 to 2030 for the sectors of agriculture, wastes, industry, transport, and energy despite being among the countries with the smallest carbon footprints.