The World Bank has approved a financial operation to assist the Philippines in advancing its energy transition and climate resilience efforts. This initiative aims to support the government in enhancing clean energy technology adoption, boosting electricity market security, enhancing water management, and fostering effective resource utilization.
"Focusing on renewable energy sources and using energy more efficiently can help the country reduce electricity costs, improve energy security, and cut down on pollution," stated Zafer Mustafaoğlu, World Bank Division Director for the Philippines, Malaysia, and Brunei. "Using more affordable renewable energy in the energy and transport sectors is crucial for the Philippines to build a strong economy."
As a leading economy in the East Asia and Pacific region, the Philippines faces significant challenges including dependency on imported energy and high electricity costs. Transitioning to local renewable energy and improving energy efficiency could address these issues, making electricity more affordable by enhancing market competition.
Feng Liu, World Bank Senior Energy Specialist, and Task Team Leader emphasized, "To accelerate energy transition and keep electricity affordable for all Filipinos, the Philippines needs reforms to ensure achieving the government’s renewable energy and energy efficiency targets, improving grid capacity and flexibility, and enhancing competition in electricity markets. These reforms can help lower power supply cost and improve the reliability and resilience of the power system, thereby making electricity more affordable and reliable for Filipino households and businesses."
The approved policy loan aims to increase the share of renewable energy capacity from 30 percent in 2023 to 42 percent by 2027, support 1,000 megawatts of new offshore wind capacity, and implement energy efficiency savings. Electrification of public vehicles and improved market reforms will also progress the energy sector's decarbonization.
Additionally, the initiative will introduce reforms to improve water resource management, enhance coordination between national and local governments, and increase finance for water projects. Maria Fiorella Fabella, World Bank Senior Water Supply and Sanitation Specialist, noted that such reforms are geared towards securing sustainable water services and enhancing governance across sectors.
This $800 million Development Policy Loan serves as a quickly disbursing financial support aiming to meet development financing needs, enabling sustainable growth aligned with the Philippines’ development objectives.