Next admin warned vs another 6 years of dirty energy expansion
Days ahead the national elections, energy advocacy and bank watchdog group Withdraw from Coal (WFC) raised alarm over Philippine banks that have yet to quit dirty energy from coal, and posed a challenge to the upcoming administration to put mechanisms in place to accelerate just energy transition and commit to ambitious climate goals.
Since 2020, WFC has been releasing its annual Coal Divestment Scorecard to assess the financing activities of domestic banks, gauge their current divestment efforts in the coal industry, and evaluate their climate action policies. The 2022 Scorecard reveals that despite the welcome development of at least 5 banks now having public stances against coal and even as no new coal loans were detected for the period covered by the report, banks still in effect enable financing to flow into coal projects by underwriting or selling bonds issued by coal developers.
“We need to fix this disconnect between domestic banks’ no-coal stance with the reality of their financing activities. The findings of the report show us that banks managed to dodge being direct coal financiers by underwriting or selling bonds issued by coal developers. Banks cannot trick us into believing that they are truly divesting from coal unless they close this loophole of funneling funds through bonds,” Gerry Arances, Executive Director of Center for Energy, Ecology, and Development and co-convenor of WFC said.
BDO, China Bank, Metrobank, Security Bank, RCBC, and Unionbank are involved in the bond issuance of AboitizPower, the country’s second-largest coal developer, which were used in part for coal. This is despite RCBC, BDO, and Security Bank having already announced plans to restrict and phase down their coal exposures.
"We will sustain our action to demand drastic ecological economic transformation of financial institutions. Investing more in sustainability where no one is left behind is the right way forward. We enjoin everyone to continuously pressure our banks to divest from dirty products and services. It is not only a duty as citizens of this planet but a moral responsibility," added Rodne Galicha, Executive Director of Living Laudato Si’ Philippines.
Another cause of alarm is the upsurge of domestic banks investing in another fossil fuel in the form of fossil gas - dubbed as the Philippines new preferred fuel and peddled as a cleaner alternative to coal. A total of 27 power plant projects and 9 liquefied natural gas (LNG) terminal projects are in the pipeline, including an LNG Import Facility in Ilijan, Batangas through Linseed
Field Power Corporation financed by China Bank and Development Bank of the Philippines. This proposed facility is seen to have grave socio-economic and environmental impacts in Batangas, including the Verde Island Passage, considered to be the world’s center of the center of marine shorefish biodiversity. Security Bank also disclosed that it has “some exposure to natural gas and LNG” in its response letter to WFC.
“We call for banks to totally divest from coal and cease to invest in the equally climate-destructive energy source that is fossil gas. Opening up the country to gas projects is at odds with our climate targets. Allowing gas terminals into the country, including in biodiversity hotspots like our very own Tanon Strait or Verde Island Passage in Batangas, exposes us to decades of methane emissions and can cost us all remaining hope in the fight to meet Paris goals,” San Carlos Bishop Gerry Alminaza said, convenor of WFC.
Philippine banks have increasingly been the recipient of calls from their respective stakeholders to end their contribution to the continued dependence on coal, gas, and other fossil fuels - including through a Pastoral Statement on Ecology released by the CBCP earlier this year.
“In it, we commit to engage our banks and use our position as shareholders, clients, or stakeholders of financial institutions in and beyond the Philippines, but especially towards domestic banks, to demand for policies and plans to phase out their exposure to coal, fossil gas, and destructive energy in line with the 1.5°C ambition. [Dioceses and religious institutions also have a deadline to withdraw all our resources that are with these banks not later than 2025, and hold them accountable to their fiduciary duties and moral obligations as climate actors] should such engagement efforts fail to bear fruit,” explained Bishop Colin Bagaforo, National Director of Caritas Philippines.
WFC hopes the bank scorecard will be among the many civil society-led efforts that will wake the next administration in taking the right path for climate and energy transition action.
“With the window to take action closing fast, all actors – including banks –must take drastic actions to align their policies to the Paris Agreement, divest from funding coal and fossil fuel projects of all kinds, and cease all types of financing activities that pump cash into the coal industry. Policy directions from the incoming government will dictate how easily this can happen,” added Arances.