Private Sector Promotion (SMEDSEP) Program

Green Financing in the Philippines

Responsible
Vickie Antonio victoria.antonio@giz.de

Author
Wolfram Hiemann w.hiemann@gmx.de

Editor
Leah Divina Siton Steigerwald leah22@gmail.com
Consultant

Publisher
Private Sector Promotion Program PSP SMEDSEP
smedsep.ph

PSP Program Office

7F New Solid Building, 357 Sen Gil Puyat Avenue
Makati City 1226 PHILIPPINES

Volker Steigerwald PhD

Program Manager
volker.steigerwald@giz.de

May 2012
Private Sector Promotion (SMEDSEP) Program

Green Financing in the Philippines

Contents
EXECUTIVE SUMMARY .................................................................................................... 13
1 INTRODUCTION ..................................................................................................... 22
1.1 Background and Purpose of the Study .......................................................................22
1.2 Scope of the Study ........................................................................................................23
1.3 Methodology ...................................................................................................................23
1.4 Definition of Green Finance (GF) .................................................................................24
1.5 Profile of SMEs ...............................................................................................................24
1.6 SME Development Plan 2011 - 2016.............................................................................26
1.7 Legal and Regulatory Environment .............................................................................26
2 FINANCING GREEN INVESTMENTS ..................................................................... 30
2.1 SME Financing ...............................................................................................................30
2.1.1 Rationale for Green Financing for SMEs .............................................................................30
2.1.2 SMEs and access to finance (A2F) .....................................................................................30
2.1.3 Obstacles for Green Financing ............................................................................................31
2.2 Bank Financing ..............................................................................................................33
2.2.1 Motivation for banks to go green .........................................................................................33
2.2.2 Processing financing proposals ...........................................................................................34
2.2.3 Obstacles to Green Financing related to banks ..................................................................35
2.2.4 Perceptions and attitudes ....................................................................................................36
2.2.5 Environmentally conscious banking ....................................................................................38
2.3 GF incentives and Facilities .........................................................................................39
2.4 Characteristics of Green Loans ...................................................................................40
2.5 Other Financing Models ................................................................................................44
2.5.1 Microcredits..........................................................................................................................44
2.5.2 Leasing ................................................................................................................................45
2.5.3 Venture capital .....................................................................................................................45
2.6 Carbon Trade ..................................................................................................................46
3 FINANCING GREEN INVESTMENTS ..................................................................... 48
3.1 Multilateral and Bilateral Financial Assistance (ODA) ...............................................48
3.1.1 World Bank (WB) .................................................................................................................49
3.1.2 Asian Development Bank (ADB) .........................................................................................51
3.1.3 Japan International Cooperation Agency (JICA) and Japan Bank for International
Cooperation (JBIC) .............................................................................................................53
3.1.4 United States Agency for International Development (USAID) ...........................................54
3.1.5 Kreditanstalt für Wiederaufbau (KfW) ..................................................................................54
3.1.6 International Finance Corporation (IFC) ..............................................................................54
3.2 Environmental Loan Programs of Universal Banks ...................................................55
3.2.1 Bank of Philippines Islands (BPI) ........................................................................................56
3.2.2 Land Bank of the Philippines (LBP), Landbank ...................................................................57
3.2.3 Development Bank of Philippines (DBP) .............................................................................61
3.2.4 DBP environmental loans, no active marketing ...................................................................62
3.2.5 Dungganon Thrift Bank and Negros Women for Tomorrow Foundation Inc (NWTF) .........69
3.3 Banks with Green Agenda but No GF Product ...........................................................70
3.3.1 Citibank NA (CITIBANK) ......................................................................................................70
3.3.2 Planters Development Bank (Plantersbank, PDB) ..............................................................71
3.3.3 First Macro Bank (FMB), Rural Bank ...................................................................................71
3.3.4 First Agro-Industrial Rural Bank (FAIR Bank)......................................................................72
3.3.5 Green Bank ..........................................................................................................................73
3.4 Nonbank GF Providers ..................................................................................................73
3.4.1 Government Institutions .......................................................................................................73
3.4.2 Energy Service Companies (ESCOs) ..................................................................................74
3.4.3 Carbon Funds ......................................................................................................................75
3.4.4 ApproTech Asia ...................................................................................................................76
3.4.5 Envirofit Philippines Foundation, Inc ...................................................................................78
3.4.6 KIVA NGO international .......................................................................................................78

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3.5 Institutions Supporting Green Financing ....................................................................79
3.5.1 United Nations Environment Programme (UNEP)...............................................................79
3.5.2 German Development Cooperation (GTZ) / Deutsche Gesellschaft fuer Internationale
Zusammenarbeit (GIZ) ........................................................................................................80
3.5.3 European Chamber of Commerce of the Philippines (ECCP) .............................................80
3.5.4 Association of Development Financing Institutions (ADFIAP) .............................................81
3.5.5 Energy Efficiency Practitioners Association of the Philippines (ENPAP) ............................82
3.5.6 Philippine Business for the Environment (PBE) ..................................................................83
3.5.7 Industrial Environmental Management (IEM) Knowledge Network .....................................83
4 GREEN INVESTMENT OPPORTUNITIES FOR SMES .......................................... 84
4.1 PSP Related Programs ..................................................................................................84
4.1.1 Tourism ................................................................................................................................85
4.1.2 Bamboo for furniture and construction material...................................................................85
4.1.3 Creative sector .....................................................................................................................86
4.1.4 Financing green supply and value chains ...........................................................................87
4.2 Renewable Energy (RE) and Energy Efficiency (EE) Projects ..................................90
4.2.1 Relevance of RE / EE projects for industries and commercial sectors ...............................91
4.2.2 Viability of RE / EE investments ..........................................................................................92
4.3 Selected Investment Opportunities .............................................................................93
4.3.1 Solar Power .........................................................................................................................93
4.3.2 Water heaters ......................................................................................................................93
4.3.3 Solar photovoltaic (PV) electricity generation ......................................................................93
4.3.3.1 Philippines Solar Power Alliance .........................................................................................95
4.3.4 Air Conditioners, Chillers .....................................................................................................96
4.3.5 Lighting ................................................................................................................................96
4.3.6 Greening Transport ..............................................................................................................97
4.3.7 Green Building .....................................................................................................................97
4.3.8 Agriculture ............................................................................................................................98
4.3.9 Organic Farming (Agriculture) .............................................................................................99
4.3.10 Various Green Investment Opportunities ..........................................................................100
5 CONCLUSION ...................................................................................................... 101
5.1 Information Gaps .........................................................................................................101
5.2 Banks and Finance ......................................................................................................102
5.3 Private Sector ...............................................................................................................103
5.4 Government ..................................................................................................................104
5.5 Nongovernment Organizations (NGOs) .....................................................................105
6 RECOMMENDATIONS ......................................................................................... 106
6.1 Improved Information for SMEs .................................................................................106
6.2 Strengthening the Role of Financial Institutions ......................................................109
6.3 Enhanced Role of the Government ............................................................................110
ANNEXES ........................................................................................................................ 111
Annex 1 Frequently Asked Questions about SE, EE, RE (FAQ from BPI) ............................112
Annex 2 Private Sector Promotion - SME Development for Sustainable Employment (PSP –
SMEDSEP) Program ....................................................................................................113
Annex 3 Green Finance Association ........................................................................................114
Annex 4 Excerpts from Republic Act 9178 (BMBE’s Act) .......................................................115
Annex 5 Incentives for Renewable Energy Developers ..........................................................116
Annex 6 Cool Earth Partnership ................................................................................................117
Annex 7 ADB loan and climate justice .....................................................................................118
Annex 8 Loan application for SMEs ..........................................................................................119
Annex 9 LBP’s Carbon Finance Support Facility (CFSF) .......................................................120
Annex 10 Green Financing and the gender dimension.............................................................121
Annex 11 Citibank: Investing for a green future ........................................................................122
Annex 12 Macro Bank: Microentrepreneur of the Year Special Award ...................................123
Annex 13 Philippines Business for the Environment: PBE links ............................................123
Annex 14 Landbank Releases 1.97 billion PHP for Food Supply Program.............................124
Annex 15 Certification and Supply Chain: Cradle to Cradle (C2C) ..........................................125
Annex 16 Green Investment Opportunities ................................................................................126

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 Annex 16.1 Greening Transport .....................................................................................................126
Annex 16.2 Green Boracay......................................................................................................127
Annex 16.3 Government to implement national standards for engineered bamboo ...............128
Annex 16.4 Feed-in Tariffs for RE ...........................................................................................128
Annex 17 Case Studies and Model Calculations .......................................................................129
Annex 17.2 Steam System Improvement and Cogeneration ..................................................129
Annex 17.3 Steam Leak Repair ...............................................................................................129
Annex 17.3 Replacement of Lighting .......................................................................................130
Annex 17.4 Replacement of Air Conditioner for Office / Home ...............................................130
Annex 17.5 Replacement of Air Conditioner / Chiller ..............................................................131
Annex 17.6 Replacement Central Air Conditioner / Chiller for Large Buildings ......................132
Annex 17.7 Biogas from Piggeries...........................................................................................132
Annex 17.8 New Equipment for Pulp and Paper .....................................................................132
Annex 17.9 New Post Harvest Facility .....................................................................................133
Annex 18 Solar PV Systems and Projects ..................................................................................133
Annex 18.1 Production .............................................................................................................133
Annex 18.2 Market ...................................................................................................................133
Annex 18.3 SHS Projects ........................................................................................................134
Annex 18.4 Cagayan Electric Power and Light Company, Inc [CEPALCO] ............................135
Annex 18.5 Model calculation solar PV equipment .................................................................135
Annex 18.6 Solar PV Financing: Risk Analysis .......................................................................136
Annex 18.7 Experience from other countries: Indian Solar Loan Programme ........................137
Annex 18.8 SHS India - Financing Support (UNEP) ................................................................138
Annex 18.9 Small Scale Sustainable Infrastructure Development Fund (S³IDF), India ..........139
Annex 19 ECCP activities .............................................................................................................140
Annex 20 DBP: Environment Management System (EMS) .......................................................141
Annex 20.1 Environmental Assessment and Review Procedures for Subprojects .................142
Annex 21 Landbank, Credit Line for Energy Efficiency and Climate Protection (CLEECP) .144
Annex 22 RobinsonsBank Microfinance Program ....................................................................145
Annex 23 Sulong SME Loan programs or schemes ..................................................................146
Annex 24 Small Business Corporation (SB Corp) .....................................................................148
Annex 25 Foundation for a Sustainable Society, Inc (FSSI) .....................................................150
Annex 26 Department of Agriculture, Credit Policy Council ....................................................150
Annex 27 People’s Credit and Finance Corporation (PCFC) ....................................................150
Annex 28 Department of Science and Technology (DOST): Set-Up ........................................151
Annex 29 Can microfinance address environmental issues? ..................................................154
Annex 30 CDM in the Philippines ................................................................................................155
Annex 30.1 Introduction to CDM mechanism ..........................................................................155
Annex 30.2 Programs of Activities (PoA) .................................................................................155
Annex 31 Discussions on the Definition of GF ..........................................................................157
Annex 32 Banks in the Philippines and their green profile ......................................................159
Annex 33 BPI and its concern about the environment .............................................................161
Annex 34 Small Business (Guarantee and Finance) Corporation (SB Corp) .........................162
Annex 35 Leading microfinance institutions .............................................................................163
BIBLIOGRAPHY .............................................................................................................. 164

4
Figures
Figure 1 Exchange rate development from July 2007 to June 2011 ...................................... 12
Figure 2 Selected interest rates as of May 2011 ................................................................... 12
Figure 3 Sample Yellow Label............................................................................................... 28
Figure 4 Loan Demand and Supply (billion PHP) .................................................................. 32
Figure 5 Landbank Corporate Environmental Policy ............................................................. 58
Figure 6 Citibank Tree Planting inside La Mesa Watershed .................................................. 70
Figure 7 Sample Products ..................................................................................................... 78

Tables
Table 1 SME Profile in the Philippines .................................................................................. 25
Table 2 Salient Points of the 1980 Energy Conservation Law and 2006 Biofuels Law........... 27
Table 3 2009 update of the Renewable Energy Policy Framework Target 2020.................... 27
Table 4 Yellow Labeling in the Philippines ............................................................................ 28
Table 5 Interest Rate Schedule (% per year) ........................................................................ 42
Table 6 The Definition of Short, Medium or Long Term Business Loans ............................... 44
Table 7 Small Scale CDM Activities ...................................................................................... 47
Table 8 Potential RE / EE Projects ........................................................................................ 59
Table 9 Facts about Jatropha................................................................................................ 59
Table 10 Outline of EISCP Loan Agreement ......................................................................... 63
Table 11 DBP Environment Protection and Management Facility.......................................... 65
Table 12 Climate Change and Carbon Financing Facility ...................................................... 65
Table 13 New and Renewable Energy .................................................................................. 66
Table 14 SEED Cleaner Public Transport Program ............................................................... 67
Table 15 SEED High Value Crops Financing Programs ........................................................ 67
Table 16 SEED Organic Agriculture Financing Program ....................................................... 68
Table 17 DBP Lending for SME ............................................................................................ 68
Table 18 DBP’s 2008 Sustainable Development Report ....................................................... 69
Table 19 PBE Bank Membership and PBE Corporation Training Services ............................ 83
Table 20 Environmental Sensitive Sectors ............................................................................ 84
Table 21 New Bamboo Manufactured Products .................................................................... 86
Table 22 Supply Chain and Successful Supply Chains – necessary conditions .................... 88
Table 23 Differences between Alternative Energy and Renewable Energy ........................... 91
Table 24 RE / EE Opportunities 1: Industrial Sector .............................................................. 91
Table 25 RE / EE Opportunities 2: Commercial Sector ......................................................... 92
Table 26 Opportunities for RE / EE Microinvestments ........................................................... 92
Table 27 Investment Opportunities in RE Projects ................................................................ 93
Table 28 Solar PV Electricity Generation .............................................................................. 94
Table 29 Development of Book Values and Depreciation (capital) Costs of PV Panels ......... 94
Table 30 Biodigester ............................................................................................................. 99
Table 31 SEED Organic Agriculture .................................................................................... 100
Table 32 Green Investment Opportunities ........................................................................... 100

5
Boxes
Box 1 Overview of the report ................................................................................................. 15
Box 2 Challenges .................................................................................................................. 23
Box 3 BMBE Law (RA 9178) on Barangay Microenterprises ................................................. 32
Box 4 Bank Data as of September 2010 ............................................................................... 33
Box 5 Drivers for Sustainable Finance .................................................................................. 34
Box 6 RE / EE Investments ................................................................................................... 35
Box 7 Clean Production ........................................................................................................ 35
Box 8 Bank Procedures ........................................................................................................ 36
Box 9 Self Employment Assistance Program (SEAP)............................................................ 36
Box 10 Equator Principles ..................................................................................................... 38
Box 11 Financing Certification............................................................................................... 41
Box 12 Green Financing Terms ............................................................................................ 41
Box 13 Foreign Exchange Hedging ....................................................................................... 43
Box 14 IPVG Corporation, Venture Capital Firm ................................................................... 45
Box 15 Introduction to CDM Mechanism ............................................................................... 46
Box 16 CDM Experience: Quezon City (Payatas) Controlled Disposal Facilities ................... 47
Box 17 World Bank: Philippine Chiller Energy Efficiency Project 2010 ................................. 49
Box 18: Annual GHG Emissions in Cebu .............................................................................. 50
Box 19 ADB Safeguard Policy Statement.............................................................................. 51
Box 20 Workshop on GF: Tools and Opportunities for Banks................................................ 53
Box 21 IFC and Environmental Issues When Choosing Partner Banks ................................. 55
Box 22 Banco De Oro Unibank (BDO) Joins in SEF.............................................................. 57
Box 23 Jatropha Financing Program .................................................................................... 59
Box 24 DBP Environmental Policy Statement ....................................................................... 61
Box 25 Power Project: DBP Wins Two Regional Awards ...................................................... 64
Box 26 Empowering Rural Communities with Shell Solar Home Systems (SHS) .................. 64
Box 27 Examples of Green Projects...................................................................................... 64
Box 28 Loans for Energy Efficient Oven (for household use or microenterprise) ................... 69
Box 29 “Go paperless, save a tree!” ...................................................................................... 70
Box 30 Citibank: Green Tips ................................................................................................. 70
Box 31 Plantersbank: Institutional Partners ........................................................................... 71
Box 32 Financial Program: First Macro Bank ........................................................................ 72
Box 33 Profile of FAIR Bank.................................................................................................. 72
Box 34 Energy Service Companies (ESCO) ......................................................................... 74
Box 35 Approtech Asia’s Cook Stove and Lighting Program ................................................. 77
Box 36 Microentrepreneurs and Entrepreneurship ................................................................ 77
Box 37 Market Interest Rates ................................................................................................ 77
Box 38 Death from Open Fire Stoves .................................................................................... 78
Box 39 KIVA Facts ................................................................................................................ 79
Box 40 SMART Cebu Target 2013 ........................................................................................ 81
Box 41 ADFIAP’s Philippine Member Banks ......................................................................... 82
Box 42 Palawan’s Hotel Sheridan Markets itself as a Green Hotel ........................................ 85
Box 43 Supply Chain versus Value Chain ............................................................................. 87
Box 44 Sunpower Philippines................................................................................................ 95
Box 45 Solar Assisted Air Conditioning Units ........................................................................ 96
Box 46 Green Building .......................................................................................................... 98
Box 47 Conclusion by Others (IFC) ..................................................................................... 101
Box 48 Beneficiaries of Environmental Credit Lines ............................................................ 104
Box 49 Complete Information .............................................................................................. 107

6
Acronyms
5C Loan assessment tools based on character, capacity, capital, collateral, conditions
ADB Asian Development Bank
ADFIAP Association of Development Financing Institutions in Asia and the Pacific
AFI accredited financial institution
AFMP Agri – Fishery Microfinance Program
APEC Asia – Pacific Economic Cooperation
ApproTech Asia Asian Alliance of Appropriate Technology Practitioners Inc
ASHI Ahon sa Hirap Inc
ASKI Alalay sa Kaunlaran Inc
AusAID Australian Agency for International Development
BDO Banco de Oro
BMBE Barangay Micro Business Enterprises
BMS building management system
BOI Board of Investments
BPI Bank of the Philippines Islands
BRR borrower risk rating
BRT bus rapid transit
BSP Bangko Sentral ng Pilipinas (Central Bank)
C2C Cradle to Cradle
CALABARZON Calamba – Laguna – Batangas - Quezon
CAR Cordillera Administrative Region
CARD Center for Agriculture and Rural Development
CAS Country Assistance Strategy
CBA Compressed by air
CCA Climate Change Act
CCT Center for Community Transformation Credit Cooperative
CCVI Climate Change Vulnerability Index
CDA Cooperative Development Authority
CDM Clean Development Mechanism, a Kyoto Protocol mechanism to assist developing
countries in reducing their greenhouse gas emissions
CER certificate of emission reduction or certified emission reduction (units)
CFC chloroflourocarbon
CFI community finance institutions
CFL Compact fluorescent light bulbs. CFLs last ten times longer, use two thirds less
energy and give 70 percent less heat than tungsten bulbs
CFSF Carbon Finance Support Facility
CHM chattel mortgage
CIDA Canadian International Development Agency
CITC Cottage Industry Technology Center
CLEECP Credit Line for Energy Efficiency and Climate Protection
CLF Countryside Loan Fund
CLSWM Credit Line for Solid Waste Management
CMI Carbon Market Initiative
CNG compressed natural gas (CNG vehicles)
COBP Country Operations Business Plan
COCAP Citizens Organizations Concerned with Advocating Philippine Environmental
Sustainability
COO Chief Operation Officer
CP clean production
CPS Country Partnership Strategy
CREAM Credit Support for Environment, Agribusiness, Small and Medium Enterprises
Program

7
CSR Corporate Social Responsibility demonstrate their commitment to sustainability and
other social issues
DA Department of Agriculture
DAR Department of Agrarian Reform
DBP Development Bank of Philippines
DENR Department of Environment and Natural Resources
DepEd Department of Education
DFI development financial institutions
DILG Department of the Interior and Local Government
DNA Designated National Authority
DND Department of National Defense
DOE Department of Energy
DOE designated operational entity
DOF Department of Finance
DOH Department of Health
DOST Department of Science and Technology
DOST ITDI DOST Industrial Technology Development Institute
DOST SET-UP DOST Small Enterprise Technology Upgrading Program
DOST TAPI DOST Technology Application and Promotion Institute
DOST TLRC DOST Technology and Livelihood Research Center
DPWH Department of Public Works and Highways
DSWD Department of Social Welfare and Development
DTI BPS Department of Trade and Industry Bureau of Product Standards
EAGLE Efficiency, Asset Quality, Growth, Liability Structure and Earnings
ECC Environment Compliance Certificate
ECCP European Chamber of Commerce of the Philippines
EDP Environmental Development Program
EE energy efficiency
EE & C energy efficiency and consumption
EEF Energy Efficiency Forum
EI Enterprise Index
EIB European Investment Bank
EISCP Environmental Industrial Support Credit Program
EMCBP Environmental Management Capacity Building for the Philippines Project
EMPOWER Environmental Management with Public and Private Sector Ownership
ENPAP Energy Efficiency Practitioners Association of the Philippines formerly ENMAP
Energy Management Practitioners Association of the Philippines
ENR Environment and Natural Resources
EPIC Environmental Management Program for Industry Competitiveness
ERPA Emission Reduction Purchase Agreement
ERUs emission reduction units
ESG environment, social and governance issues
ESCOs energy service companies
EST environmentally sound technologies
FA Financial Assistance
Fair Bank First Agro-Industrial Rural Bank
FI financial institutions
FIRR financial internal rate of return
FIT Feed-in Tariffs
FMB First Macro Bank
FPIDR Forest Products Research and Development Institute
FSSI Foundation for a Sustainable Society Inc
GBAP General Banking Act of the Philippines
GCF Green Climate Fund

8
GDMPC Gata Daku Multipurpose Cooperative
GEF Global Environment Facility
GF Green Financing
GFI government financial institutions (DBP, LBP, SBC etc)
GHG greenhouse gas emissions
GIZ Deutsche Gesellschaft für Internationale Zusammenarbeit, German TA, since 2011
GOCC Government Owned and Controlled Corporation
GOP Government of the Philippines
GRI Global Reporting Initiative
GREEN Global Action for Reconciling Economic Growth and Environmental Protection
GRIAP Greenhouse Gas Emission Reduction from Industry in Asia and the Pacific
GSIS Government Service Insurance System
GTZ Deutsche Gesellschaft für Technische Zusammenarbeit, German TA, renamed 
Gesellschaft für Internationale Zusammenarbeit GIZ in 2011
HCFC hydrochloroflourocarbon
HEM high efficiency motor
HID high intensity discharge
HRD human resources development
HSPI Hagdan sa Pag-uswag Foundation Inc
HUDCC Housing and Urban Development Coordinating Council
HVAC heating / ventilation / air conditioning
ICBC Industrial and Commercial Bank of China
ICSC Institute for Climate and Sustainable Cities
ICSP Improved Cook Stove Program of the Philippines
IECLP Industrial Environmental Control Loan Program
IEE Initial Environmental Examination
IEM Industrial Environmental Management Knowledge Network
IFC International Finance Corporation, Washington
INR Indian Rupee
InWEnt Internationale Weiterbildung und Entwicklung gGmbh
Capacity Building International
IPCLP Industrial Pollution Control Loan Program
IPCT Integrated Program on Cleaner Production Technologies
IPP Investment Priorities Plan
IRR internal rate of return
ITH Income Tax Holidays
JBIC Japan Bank for International Cooperation
JI Joint Implementation
JICA Japan International Cooperation Agency
J-MRV JBIC measuring, recording and verification methodologies
JPY Japanese yen
JVOFI Jaime V Ongpin Foundation for a Sustainable Society
LC letter of credit
KADET Kenyan Agency for Development of Enterprises and Technology
KfW Kreditanstalt für Wiederaufbau, German Bank for Reconstruction
LaTop La Trinidad Organic Practitioners Multipurpose Cooperative
LBP Land Bank of Philippines (Landbank)
LGU Local Government Units (barangays, municipalities, cities)
LGU GC LGU Guarantee Corporation
LPG liquefied petroleum gas (autogas), green fuel: it reduces CO2 emissions
MABS Microenterprise Access to Banking Services
MBDC McDonough Braungart Design Chemistry
MCPI Microfinance Council of the Philippines Inc
MDFO Municipal Development Fund Office

9
ME medium size enterprise / entrepreneur
MERALCO Manila Electric Company
MF Microfinance
MFF multitranche finance facility
MFI Microfinance institution, financial institutions with focus on micro loans
MIPPS Microinsurance Innovations Program for Social Security
MRV Measurement, Reporting / Recording, Verification
MS(M)E Micro, small, (and medium) enterprises / entrepreneur
MSMEDC Micro Small and Medium Enterprise Development Council
MSW Municipal Solid Waste
NCCAP National Climate Change Action Plan
NCR National Capital Region
NEDA National Economic Development Authority
NERBAC National Economic Research and Business Action Center
NGO nongovernment organization
NLSF National Livelihood Support Fund
NPL nonperforming loan
NREB National Renewable Energy Board
NSO National Statistics Office
NWTF Negros Women for Tomorrow Foundation
ODA Official Development Assistance
ODS ozone depleting substances
OIC Officer in Charge
OPG Operating Procedures and Guidelines
P&E Productivity and Efficiency
PACAP Philippine – Australian Community Assistance Program
PBE Philippine Business for the Environment
PCA Partnership for Clean Air
PCCI Philippine Chamber of Commerce and Industry
PCFC Philippine Credit and Finance Corporation
PCW Philippine Commission on Women
PDB Planters Development Bank
PDR Project Description Report
PEEF Philippine Energy Efficiency Forum
PEP Philippine Energy Plan
PhilEXIM Philippine Export- Import Credit Agency
PhilGBC Philippine Green Building Council
PHP Philippine Peso
PIN Project Idea Note
PMPC Paglaum Multipurpose Cooperative
POs people’s organization
PO Purchase Order
PoA Programs of Activities, bundling SME projects to benefit from CERs
PRRCFI Philippine Reef and Rainforest Conservation Foundation Inc
PSF People’s Survival Fund
PSP SMEDSEP Private Sector Promotion (SMEDSEP) Program
PSPA Philippine Solar Power Alliance
PV photovoltaic
QUEDANCOR Quedan and Rural Credit Guarantee Corporation
RA Republic Act
RBAP Rural Bankers Association of the Philippines
RCF Retail Countryside Fund
RE Renewable energy
REM real estate mortgage

10
REWARD Renewable Energy for Wiser and Accelerated Resources
REPF Renewable Energy Policy Framework
RPP Rural Power Project
S3IDF Small Scale Sustainable Development Fund, India
SB Corp Small Business Corporation
SBC Small Business Corporation
SCAF Seed Capital Assets Facility
SCP Sustainable Consumption and Production
SEA – K Self Employment Assistance Program sa Kaunlaran (for progress)
SEAP Self Employment Assistance Program
SEED Sustainable Entrepreneurship Enhancement Development Program
SEF Sustainable Energy Finance
SEMS Social and Environmental Management System
SHS Solar PV Home Systems
SME Small and Medium Enterprise / Entrepreneur
SME FAST SME Funding Access for Short Term Loans
SME FEASIBLE SME Financing for Enterprises and Able Startups with Innovative Businesses
SME FIRM SME Funding for Investment in Regional Markets
SME FIRST SME Financing for Receivables of Suppliers Transactions
SME FLEXIBLE SME Financing for Variable Business Expansion
SME FORCE SME Financing for Organizationally Competent and Excellent Franchise Businesses
SME FRIEND SME Financing Reach for Exporters through Network Development
SME GEAR SME Guarantee for Gearing – up Enterprises without collateral
SME GROW SME Guarantee for Growing Enterprises with partial collateral
SME GAIN SME Guarantee for Gainful Enterprises with available collateral
SMEDSEP Small and Medium Enterprise Development for Sustainable Employment Program
SOP standard operating procedures
SSCM Sustainable (green) Supply Chain Management
SSS Social Security System
SUED Sustainable Urban Energy Development Program
SULONG SME Unified Lending Opportunities for National Growth Program
SWEEP Sustainable Waste Management Eco Enterprise Program
SWITCH - ASIA Sustainable Revival of Livelihoods in Post Disaster Sichuan
SWMP Solid Waste Management Program
TA Technical Assistance
TESDA Technical Education and Skills Development Authority
tR ton refrigerant
TSP total suspended articles
TTEM Technology Transfer for Energy Management
UNCED United Nations Conference on Environment and Development
UNDP United Nations Development Programme
UNEP United Nations Environment Programme
UNFCC United Nations Framework Convention on Climate Change
UP ISSI University of the Philippines Institute of Small Scale Industries
USAID United States of America Agency for International Development
USD US dollars
VSD variable speed drive
WEDO Women’s Environment and Development Organization
WHO World Health Organization

11
Exchange rate development

The graph below shows historical USD exchange rates for the Philippine Peso (PHP) from July 2007
to June 2011. The rate hovers around 45 PHP per 1 USD.

Figure 1 Exchange rate development from July 2007 to June 2011

Figure 2 Selected interest rates as of May 2011

Source: https://www.landbank.com/rates.asp#commercial

12
EXECUTIVE SUMMARY

The Government of the Philippines (GOP) through its Department of Trade and Industry
(DTI) has asked GTZ / GIZ to assist them in mapping out the national strategy for the
development of Micro, Small and Medium Enterprises (MSMEs) for the period 2011 to 2016.
One of the themes identified is Green Economy / Green Growth. This report is the response
to a follow up request to provide information and suggestions on how to support green
economy strategies for SME development for 2011- 2016 through Green Financing (GF).

Climate change will or already has negatively affected the Philippines with the potential to
increase poverty rates. So action is needed. Investment in a sustainable environment will
simultaneously create the necessary jobs that this country needs.

The first chapter of this report presents some background information about the
methodology applied by the study, on the term Green Finance or Green Financing (GF),
on the basic profile of Philippines’ MSMEs, as well as laws, regulations and policies with
regard to environmental issues. The second chapter discusses GF: the rationale for SMEs
and banks as well as issues concerning access and supply of finance in general. The third
chapter describes national and international institutions, banks and NGOs with their GF
products or their efforts to promote GF. The fourth chapter presents investment opportunities
that have a high potential of reducing the ecological footprint, especially investments in
energy efficiency (EE) and renewable energies (RE). Models and financial calculations are
presented in extensive annexes. Chapter Five provides the conclusion of the findings. This
followed by the sixth chapter with recommendations for more environment friendly
investments.

Background information

This report is based on interviews with representatives from government agencies,

international development institutions, universal banks, rural banks and nonbank financing
institutions, various associations, as well as NGOs and green entrepreneurs in the
Philippines. Documents of these institutions were studied. Internet research helped to collect
more data and information on GF for SMEs and on Green investment opportunities.
Although this report cannot portray the entire complex picture of GF in the country, it is
believed to have reasonably reflected on the current situation of GF in the Philippines.

The report eyes SMEs as green investors for which they may obtain GF. SMEs account for
99.6 percent of all 780 000 registered enterprises in the Philippines, those with up to 199
employees and assets up to 100 million PHP (after depreciation and not including land;
equivalent to about 2.2 million USD). This encompasses entrepreneurs with an annual
income below 200 000 PHP, who find it difficult to find a bank for a micro loan, and
entrepreneurs with business loans of more than 50 million PHP from commercial banks and
an annual net income of more than ten million PHP (220 000 USD).

Different definitions exist for green finance. GF is not only credit. The international efforts to
reduce greenhouse gas (GHG) emissions resulted in trade of carbon rights for reducing CO2
and ozone depleting substances, another source of financing. The GOP and international

13
organizations support green investments with various fiscal and non-fiscal measures. They
provide incentives, in particular monetary incentives, such as various subsidies, or incentives
with a monetary value for the investor like technical assistance. GF and therefore also its
related legislation both influence activities and investments that are less dangerous to
ecological sustainability. Green investments reduce the ecological footprint. They improve
energy efficiency (EE), use renewable energy (RE), or control pollution and foster clean
production. In agriculture, for example, cultivators practice organic farming or prevent land
degeneration. With the passage of the Energy Conservation Bill in June 1980 the GOP
developed also the respective institutions such as the Department of Environment and
Natural Resources, DENR and the legal and administrative framework. In its 2011 - 2016
SME Development Plan, DTI aims at “SMEs using …. environment friendly technologies.”

Green SME financing

Going green is good for SMEs. They benefit from reduced operating costs, enhanced public
image, reduced business risks, a stronger competitive position and better access to certain
types of financing. Still, lack of access to finance is a major obstacle for Green investments,
despite GOP’s efforts in encouraging banks to lend to SMEs. SMEs access to GF is hampered
by lack of information about banks, about investment as well as finance opportunities. They have
experienced difficulties to follow general banking procedures as well as specific program
requirements to meet eligibility criteria.

Similarly, banks have good reasons to go green. Indeed, they finance green projects that
result in more sustainability, without a special green facility. Only few banks offer a green
product.

Advantages for banks are access to long term funds at a fixed interest rate beyond the
maturity of subloans (thus improving the balance sheet structure), to technology, to training,
and projecting a great image (“environmentally conscious banking”). Often, GF means for
banks: reduced income caused by commitment fees for unused credit lines, capped interest
rates and additional work for documentation and reporting. For loan officers, who administer
sometimes more than 20 loan programs, it is difficult to offer the right one. Other,
nonenvironmental programs could be more attractive for SMEs.

Informed and qualifying SMEs can benefit from soft loans. They offer lenient conditions, for
example regarding interest, maturity, minimum project profitability or collateral requirements.
BPI, DBP and LBP offer also access to technical expertise (for example walkthrough) and
trade of carbon rights. However, loan amounts should be not less than 500 000 PHP,
preferably more than 1 000 000 PHP.

The World Bank (WB), Asian Development Bank (ADB), Japan International Cooperation
Agency (JICA) / Japan Bank for International Cooperation (JBIC), US Agency for
International Development (USAID), Kreditanstalt fuer Wiederaufbau (KfW) and International
Finance Corporation (IFC) are international agencies that offer financial support for financing
green investments. The WB started in 2010 its Philippine Chiller Energy Efficiency Project
(replacing chillers that use banned refrigerants). SMEs may indirectly benefit from the
Sustainable Urban Energy Development (SUED) program. ADB is advancing a wide range
of financial assistance (FA) and technical assistance (TA) projects upon which a decision still

14
has to be made. ADB announced that they have a 1 billion USD war chest for investing in
clean energy projects. The Seed Capital Assistance Facility (SCAF), a climate finance
option, is a grant based TA jointly implemented with the United Nations Environment
Program (UNEP). JICA (allegedly Official Development Assistance - ODA rank 1 in the
Philippines), continues the Cool Earth Partnership (2008), which includes enhancing the
competitiveness of fresh and semiprocessed agricultural products. Presently, JICA waits for
the GOP’s final action plan on GHG reduction and adaptation to climate change impact on
which FA and TA proposals will be based. For fiscal year (FY) 2010, USAID allocated 11.8
million USD to environment and energy. Since 2010, KfW cofinances loans from Land Bank
of the Philippines (LBP, a government owned development bank) under the Credit Line for
Energy Efficiency and Climate Protection (CLEECP) scheme. IFC, the private arm of WB, is
a direct investor and supports the Sustainable Energy Finance (SEF) program of Bank of
Philippines Islands (BPI) with loan guarantees since 2009.

Box 1 Overview of the report

This report provides information about few banks. The Bangko Sentral ng Pilipinas (BSP)
oversees 19 universal banks (unibanks), 19 commercial banks, 73 thrift banks, 595 rural
banks, 40 credit unions, and 15 nonbanks with quasibanking functions. BSP’s website has
no specific information on GF. Therefore, one has to inquire with each bank separately for
any green product. This report inspected the internet appearance of the ten largest unibanks
representing 76 percent of the national bank assets and 46 percent of all bank branches in the
Philippines.

Three of the ten leading Universal banks market actively GF products

1 BPI’s SEF scheme, supported by IFC, offers interested parties technical assistance.
The bank uses its own funds for the loans so that interest rates are not subsidized
but negotiable. IFC’s 50 percent loan guarantee may contribute to lenient collateral
requirements. Reportedly, BPI has assisted 72 clients with an average loan volume
of about 20 million PHP each.

2 LBP started in 2010 promoting CLEECP. This RE / EE facility offers SMEs long-term
loans at fixed interest rates, which are lower than those of loans with comparable
maturity. The bank has not stipulated a minimum loan amount. Other GF facilities for
SMEs include the Jatropha (cultivating) Financing Program (replacing hydrocarbon
fuels), the Countryside Loan Fund (CLF) and its Credit Support for the Environment,
Agribusiness, Small & Medium Enterprises Program (CREAM), as well as financing
feasibility studies under the Renewable Energy for Wiser and Accelerated Resources
Development (REWARD) project.
3 DBP has most GF facilities in its portfolio. It is not clear whether and the extent to
which DBP finances SMEs from repayments of earlier facilities (second generation
loans) for the following
Environmental Industrial Support Credit Program (EISCP), supported by JICA
Sustainable Solid Waste Management Program (SWMP), funded from KfW
Rural Power Project (RPP) was approved by the World Bank in 2003 and
extended 2009, financing also solar home systems (SHS)
Cleaner Public Transport Financing.

15
 On its website DBP promotes several environment initiatives that are also available for
SMEs
Environment Protection and Management Facility
Climate Change and Carbon Financing (clean development mechanism - CDM)
Facility
new and renewable energy projects
Environmental Development Program (EDP) by JICA with 24 846 million JPY
(about 250 million USD).

Under the Sustainable Entrepreneurship Enhancement and Development Program

(SEED), DBP offers for financing Green investments
SEED Cleaner Public Transport Program
SEED Organic Agriculture Financing Program.

DBP mentions for two further programs that explicitly noted environment as purpose for
loans to SMEs
DBP lending for SMEs
retail lending for micro and small enterprises.

Recently, Banco de Oro (BDO) and Metrobank, two of the top ten unibanks, joined IFC’s
SEF scheme. Other banks, such as Plantersbank, are concerned with environmental issues
but they do not offer their SME clientele a specific green product. Some other thrift and rural
banks, local institutions, engage in financing green microinvestments, such as fuel efficient
stoves or solar home systems (SHS). Measured by their presentations, there are quite a
number of banks with a green agenda but without a GF product.

Other sources of GF include the government, carbon funds and other funds such as the
Asian Clean Energy Fund at ADB. NGOs finance small appliances, for example, fuel efficient
stoves or low capacity SHSs. Venture capital providers and energy service companies
(ESCOs) play rather insignificant roles at present.

Green investments and related GF obtain support from various institutions including
UN Environment Program (design of innovative financing instruments)
European Chamber of Commerce of the Philippines (ECCP) for Energy Smart
and SMART Cebu
Energy Efficiency Forum
Association of Development Financing Institutions (ADFIAP)
Energy Efficiency Practitioners Association of the Philippines (ENPAP)
Philippine Business for the Environment (PBE)
Industrial Environmental Management (IEM) Knowledge Network.

Investment opportunities

There are more discussions about the cost of producing clean and environment friendly
sources of energy resulting in a competitive disadvantage rather than about the savings that
can be obtained from going green. Several green investments save or return amounts
higher than principal installments and interest payments for a respective loan.

16
The contracting PSP program operates in Region 6, Region 7 and Region 8 in the Visayas
and is concerned with three subsectors: tourism, bamboo and the creative sector. Here, PSP
supports value chain approaches.
Green tourism works in a chain, meaning the entire tourism environment, the
supplies and waste disposal should be arranged and produced based on
sustainability, CP, EE and RE considerations. So far, no special finance model for
green tourism investments is known. However, BPI extended a loan through the SEF
facility to finance a green hotel in Palawan, illustrating the potential for tourism
establishments in the Visayas.
Bamboo furniture as a more environment friendly alternative to wood is not yet
regarded as a commonly eligible green investment. The investor would have to
negotiate with the bank and the bank with the fund provider first. For this, it might be
necessary to document potential GHG savings.
Concerning the creative sector, almost everywhere and in all processes, savings of
resources or more environment friendly manufacturing is possible, albeit sometimes
costly. GF is available such as SEF. However, schemes specifically for SMEs may
carry a lower interest rate.
An example for support of a supply or value chain is the Food Supply Chain
Program, which is based on a tripartite agreement by Department of Agriculture (DA),
Department of Finance (DOF) and LBP. A specific finance model for greening a
supply or value chain could not be identified.

The potential of RE investments (including geothermal and hydro power) for increasing the
electricity generation capacity in the Philippines until 2020 amounts to about 16.1 billion USD
or 707 billion PHP. Solar power plays increasingly a role.
Solar water heaters, daily advertised in newspapers, are common RE investments for
SMEs such as hotels and hospitals. They can reduce costs in, for example, food
processing and other activities that require heating or steam.
Decent solar photovoltaic (PV, electricity generating) equipment for lighting and small
electrical appliances costs less than 20 000 PHP (440 USD). It can be purchased
from hardware and electronic retail stores. The prices for solar PV panels more than
halved in the past three to four years and are now within reach of small SMEs. The
capital recovery time is still more than eight years so that either long term GF with a
comparably low interest rate or feed-in-tariffs (FIT, the price electricity firms have to
pay for the electricity from other suppliers) improve sales and thus accelerate
reduction of GHG emissions.

SMEs might consider investments in generating electricity from mini hydropower, from
biogas and from gasification of agricultural and industrial waste for own consumption (saving
costs) and for the public (earning income), when the government decided on FITs.

The technologies or investment opportunities mentioned most often for increasing EE in

commercial and industrial sectors include
heating / boiling, ventilation, air conditioning
lighting, replacing old bulbs with energy efficient compact fluorescent light bulbs
compressed dry air
variable speed drives
high efficiency electric motors
transport.

17
Without considerable additional investment, the construction sector offers increased EE
savings by just choosing the right design and building material.

Organic agriculture is assumed to be more environment friendly, among others thanks to

reduced soil degradation or a higher degree of sustainability.

Investments in sustainable technologies do not necessarily require support from GF. Often,
the investments pay off. They are self liquidating. Solar electricity could be already now an
economic alternative in remote places which are far from the grid with low population
density.

Conclusion

The two government owned development banks, LBP and DBP, offer GF to SMEs. Very few,
certainly less than ten percent of the more than 700 other banks, join in this effort. Green
lending with green products is still an exception.

Information gaps about RE / EE technologies, their achievements, capabilities and their

economic benefits are a severe obstacle for more GF. SMEs have inadequate information to
make right choices. Bank officers are insufficiently prepared and face therefore difficulties to
assess RE / EE loan applications. Equipment providers focus on new investments and
neglect the market for replacements. Entrepreneurs have no information about EE
consultancy, or they regard investment in RE / EE consultancy as unnecessary expenditure.

Banks finance RE / EE measures without applying a special facility or recording these loans
as GF. Almost all new equipment that SMEs acquire is more efficient compared to the old
machinery. Similarly, new processes reduce waste and need less energy. Despite the
availability of GF facilities, banks and often also their clients prefer straight commercial loans
because special green facilities might only be granted if a number of conditions are met.
This means additional effort for the bank and the loan applicant.

Entrepreneurs prefer investments with a payback period of maximum five years, too short for
most viable (predominantly RE) investment opportunities. Despite short payback periods,
entrepreneurs are adverse to invest, for example, when the old equipment is in reliable
running condition (such as old refrigerators and chillers), or when costs can be charged to
others (tenants of buildings with centralized air conditioning). Many just doubt that the
savings potential of green investments can be realized and argue that rather income
increasing investments push the performance.

GOP introduced fiscal and non-fiscal incentives for Green investments. The announcement
of binding FIT will trigger RE investments of about 2.5 billion USD or 110 billion1 PHP in 830
megawatt (MW) power generation (outside hydropower and geothermal power). More green
investments will be realized when the government enforces its environmental legislation and
introduces new legislation that promote resource and energy efficiency.

Nongovernment organizations (NGOs) rely on donors and experience regularly severe

limitations of their funds, when they promote and train people, sell and finally even extend
credits for the purchase of equipment that reduces emission of GHG such as SHSs. NGOs
promote the cause, namely environment and sustainability and miss or even avoid
1
830 MW x 3 million USD / MW (estimated average investment volume) x 44 PHP / USD

18
promoting the economic benefit in a way that the target groups (consumers, banks for loans)
understand it. Few NGO representatives can explain the commercial part, namely the
profitability of the proposed green investments.

Recommendations

GF is the end of a process, which starts with awareness about environment and
sustainability and the activities that endangers them. Experts develop measures, processes
and products to reduce the negative impacts of industries. They cost money. Therefore,
when it concerns greening the industries, it starts with identification of how (much) energy
is produced and used, and where pollution occurs. The second step is the identification of
technologies to enhance sustainable energy production, reduce its consumption and prevent
pollution. The third step is the compilation of related costs. Only thereafter does the question
of financing arise.

The following recommendations are more general in nature as this study did not assess the
capacities and willingness of institutions that would be responsible to follow up on them. It
may well be that some of the suggestions were already realized but not yet made known to a
broader audience.

Investment in environment is of a highly political nature as some question the causality of

CO2 emission and global warming. In contrast, there seems to be the common
understanding that environment protection reduces competitiveness. Whereas the former is
hard to prove there are numerous examples for environment protection and improved
competitiveness going well hand-in-hand.

1 Improved information for SMEs

If GOP wants SMEs to increase their efforts in reducing negative impact on environment
beyond legislation and regulation thus creating a more sustainable environment, it is
proposed to determine first the institution(s) responsible to inform entrepreneurs about a)
green investment opportunities and b) general sources of finance available for this purpose
and GF opportunities in particular. Second, GOP has to provide these institutions with the
necessary means, namely qualified personnel and a budget. It is proposed to investigate if,
for example, National Economic Research and Business Assistance Center (NERBAC)
could take over the respective tasks.

This institution has to decide about how to inform entrepreneurs and other stakeholders. It
has to develop related information campaigns, such as using printed matters (articles in
publications, which entrepreneurs read), films for fairs and television, website presentation in
internet, interviews in radio stations. In short: a media mix exposing the technology progress
and its financial returns, for example, by presenting model calculations. The bottom line is:
green is profitable.

Information for entrepreneurs has to encompass services of RE / EE consultants such as

walkthroughs, the access to more information and expertise and the access to trade of
carbon rights.

19
Measures to enhance directly and indirectly environment awareness of entrepreneurs
include
training staff of National Economic Regional Business Assistance Centers (NERBAC)
attached to DTI (at least 80 offices nationwide in 2012 - 2014), which will be in contact
with enterprises that are ready to reduce their environmental footprint
promotion of RE / EE investment presentations, for example at trade fairs
information seminars for SMEs focusing on environment and law, increasing
efficiency with less input, means to reduce expenditures for power, web based
research, certification schemes and labeling etc
energy conservation campaigns with walkthroughs (preliminary energy audits) being
part of it. They identify and assess RE / EE investment as well as savings
opportunities. It is proposed to also include initial estimates on the income or savings
volume versus the respective investment volume. Cooperation with banks for
standardized reports is recommended so that the walkthrough report could become a
decisive document for the loan proposal.

In view of the fact that resource and energy efficiency can be improved almost in all aspects,
it is recommended to define priority sectors or industries where to address them first.

The PSP’s creative sector enterprises should be checked on EE potentials based on

checklists as presented in Chapter 4.2.1.

2 Strengthening the role of financial institutions

Banks trigger loans and subsequent green investments. It is necessary to prepare them with
information about
sectors, industries and investment opportunities
how environment protection works (self-liquidating loans)
models to assess loan applications for sustainability and environment protection
rough cost and income estimates for green investments – indicating the dimensions
financial and other benefits for borrower and lender
threats of noncompliance with environment regulations.

It is proposed to develop a small compendium for loan/account officers with basic

information (fact sheets) as guidelines for loan assessment in cooperation with bank
associations and the Energy Efficiency Practitioners Association of the Philippines (ENPAP).

Regional and national awards as well as competitions for banks or bank branches for green
loans each for unibanks, rural banks and other banks classified according to loan amount or
enterprise categories (micro, small, medium) shall honor the efforts of bank staff.
Simultaneously, it is expected to identify innovative approaches to financing green
investments (best practices) for replication.

It is proposed to explore, whether the Small Business Corporation (SBC) could and should
develop an attractive green wholesale lending product. This would be a possibility to
implement a broad based and SME accessible GF initiative in rural banks and cooperatives.

20
3 Enhanced role of the government

The government can play a stronger role, a role that goes beyond acting as facilitator (as
described above) and impose legislation as well as regulation. The government may, among
others
demand mandatory energy audits or walkthroughs, for example once in three to five
years, depending on the size and type of industry
force and supervise outphasing (and destroying) inefficient and environment polluting
equipment and machinery, also imposing sanctions
introduce more rating systems (similar to yellow labeling), for example for buildings;
those with an inferior energy efficiency might become candidates for a higher
property tax, legally capped rents, etc
subsidize interest for loan financed investment in RE / EE and other resource saving
measures
allow accelerated depreciation (resulting in deferred income tax payments) of green
investments.

21
1 Introduction

1.1 Background and Purpose of the Study

The Philippine Government through its Department of Trade and Industry (DTI) has asked
GTZ (since January 2011: GIZ) in the framework of the cooperation in the Private Sector
Promotion - SME Development for Sustainable Employment Program (PSP – SMEDSEP)2
to assist in mapping out the national strategy for the development of Micro, Small and
Medium Enterprises (MSMEs3) for the period 2011 to 2016. This was a follow up on an
earlier request to evaluate the 2004 to 2010 SME Development Plan.4

Increasingly, environmental issues and climate change discussions influence the policies of
governments. Some big economies of the future – Bangladesh, India, Philippines, Vietnam
and Pakistan – are most at risk from climate change. The new the Climate Change
Vulnerability Index (CCVI), released by the global risks advisory firm Maplecroft,5 enables
organizations to identify areas of risk within their operations, supply chains and investments.
The Philippines ranks third only behind Vanuatu and Tonga and ahead of Solomon Islands,
Guatemala and Bangladesh in the CCVI, which incorporates exposition to natural disaster,
vulnerability, susceptibility, capacity to solve the problems and to introduce adoptive
measures. Similarly, most people in the Philippines attribute more and stronger typhoons,
changing rain and general weather patterns to climate change as a result of industrialization
over the past 150 years. On 28 May 2011, a fishkill of more than 500 metric tons struck Taal
Lake in Talisay and Laurel, Batangas. “The apparent cause of the fishkill was the change of
climate in the area.”6

A strategy to influence SME development in the direction of decoupling economic growth

from increased carbon emissions and from negative impacts of climate change is expected
to result in a noteworthy impact considering the relevance and importance of SME in the
Philippine economy. These themes have to be linked to questions of competitiveness.

This study contributes to assess the Philippine situation with regard to existing and possible
national and international (ODA7) windows for financing investments in green technologies.
Based on this, the study elaborates proposals on how to promote a Green Economy and
consequently create green jobs and green growth in the Philippines.

The following is based on reviews of existing reports and documents on GF relevant to the
Philippines and the attempt to establish the status of the discussion by talking to various
respondents in the Philippines on GF available for Philippines’ SME. The question on
whether microfinance can address environmental issues is dealt with in Annex 29.

2
For more details on PSP see Annex 2
3
In the following, the term SME includes also micro entrepreneurs / enterprises.
4
For more on PSP SMEDSEP see Annex 2 Private Sector Promotion - SME Development for Sustainable
Employment Program (PSP – SMEDSEP)
5
http://maplecroft.com/about/news/ccvi.html 21/10/2010
See also: http://www.spiegel.de/fotostrecke-69241.html, (15 June 2011)
6
Batangas fishkill, Manila Bulletin, 29 May 2011, p1; two days later it was reported that the fish perished because
of other circumstances not attributable to a climate change.
7
Official Development Assistance

22
Box 2 Challenges

Sustainability and stable environment against increasing demand for energy and goods.
Producing influences the environment. Pollution of air, water, land trigger health hazards.
Greenhouse gas (GHG) emission may give rise to
 climate change
 environmental degradation
 unemployment
 poverty.

Therefore
 there is a demand for carbon (equivalent) neutral production.
 not only the government and large enterprises, also SME have to invest in reducing
their environmental footprints.

Green loans finance these investments. And generate Green Jobs.

1.2 Scope of the Study

The Consultant team
reviewed existing reports and documents on GF relevant to the Philippines
established the status of discussion in the Philippines on GF through intense
interactions with different stakeholders from various sectors
presented the results and findings to PSP SMEDSEP, DTI and further identified
major the stakeholders
prepared this study report.

The time allocated for this study allowed obtaining the presented general impression of GF
facilities available for SMEs in the Philippines. There are certainly many more initiatives with
the intention to mitigate the impacts of climate change and degradation. However, no
complete centralized information was found.

1.3 Methodology
The team reviewed existing literature like8
GIZ reports and documents
studies conducted by international development agencies
reports from interviewees and their institutions as published in the internet
and did extensive further internet research.

The consultant team conducted interviews from 16 to 31 May 2011 in Manila and in Cebu.
The team interviewed face-to-face and in some cases via telephone representatives from
the public sector: DTI
the private sector: ECCP, Nature’s Legacy, ADFIAP, Envirofit, Penwood,
Microenterprise Access to Banking Services (MABS), Hystra Corporation; Asian
Social Enterprise Incubator, vendors of air conditioners, solar heaters, and solar
home systems

8
PSP SMEDSEP 2010, Climate Change and Private Sector Development Integrating green growth strategies
into the SME Development Plan 2011 - 2016

23
 financial institutions: BPI, DBP, LBP, SB Corporation, Fair Bank (Rural Bank)
NGOs: Approtech Asia, Solar Energy Foundation
industry associations: ENPAP, Rural Bankers Association of the Philippines
international development agencies: GIZ, KfW, IFC, JICA, USAID.

In order to broaden the database, the team asked the respondents for recommendations on
other institutions involved in GF.

The team elaborated the main results and prepared a presentation, which was discussed
with DTI representatives headed by DTI Undersecretary Engr Merly M Cruz on 30 May
2011.

1.4 Definition of Green Finance (GF)

Wikipedia refers the search for Green Finance to Green Bonds financing (created by the
environmental activist Pano Kroko) and defines Green Lending as lending dependent on
environmental criteria for the planned use of funds. Wikipedia presents just four lines relating
to efforts of Wells Fargo and Bank of America. It was last modified in 2008 (search result
from July 2011). This invites the questions: Does GF exist? Is GF only a phrase?

For the following GF is defined as support for measures that reduce or offset negative
impacts on environmental sustainability. For this, the investors obtain an incentive for related
tangible and intangible investments (including ancillary costs) and activities that will reduce
their costs or increase their income, such as lenient loan conditions, subsidy transfers, tax
reduction, or services (for example, free or subsidized technical advice).

The following presents also institutions and activities from which entrepreneurs can benefit,
such as the holding of conventions or conferences that discuss and inform about green
issues that are relevant for the company management. It is acknowledged that this is
farfetched, however GF is embedded in an environment that goes beyond the financial
institution and therefore deserves to be mentioned. Finally, also banks can acquire
technological know-how.

A unanimous definition for GF still needs to be established. Sometimes, GF appears to be

just as a slogan to attract attention. The word green is used indiscriminately. For more
background information and various other definitions see Annex 31.

1.5 Profile of SMEs

In this report, the term SME includes also microenterprises despite the fact that only one out
of 11 MSMEs is actually an SME (67 000 versus 711 000). In this respect Philippines does
not remarkably differ from most other countries. The inaccuracies result in varying
perceptions. The character of microenterprises differs fundamentally from the others.
Presumably, most microentrepreneurs, the self-employed or those who employ family
members are just looking for a side income or they would have given up if they could find a
regular income as employee. A majority of the small and medium entrepreneurs are those
with entrepreneurial spirit.

24
Microenterprises are governed by Republic Act (RA) 9178, an act aimed at promoting the
establishment of Barangay Micro Business Enterprises (BMBEs) providing incentives and
benefits (for selected chapters of this RA see Annex 4). Also, SMEs are governed by RA
6977 as amended by RA 8289 and further amended by RA 9501, also called the Magna
Carta for Micro, Small and Medium Enterprises.9 This act aims at promoting, developing and
assisting SMEs through the creation of a Micro Small and Medium Enterprise Development
(MSMED) Council and the rationalization of government assistance, programs and agencies
concerned with the development of SMEs, and for other purposes (statistics etc).

Most of the registered businesses are microenterprises with a capital of up to 3 million PHP.
This is exclusive of the value of land but includes the value of land development (buildings).
SMEs account for10
• 99.6 percent of total firms
• 61 percent of employment
• 35.7 percent of value-added
• 60 percent of all exporters.

Sectorwise, half of the SME are involved in trade

trade 49.9 percent
manufacturing 14.4 percent
hotel and restaurant 12.5 percent
others 23.5 percent.

Table 1 SME Profile in the Philippines11

Category Enterprises In % of SMEs Maximum loan amount (Ᵽ )

(No.) total Asset No. of Based on about 50% As assessed by
12
value employees max. equity banks
PHP PHP PHP
million
Micro 710 822 91.1 3 or less 1- 9 1.5 million up to 150 000
for housing 300 000
Small 63 529 8.1 > 3 - 15 10 - 99 7.5 million up to 10 million
13
Medium 3 006 0.4 > 15 - 100 100 - 199 50.0 million about 250 million
Large 3 080 0.4 > 100 > 199

Remarks: For the classification either asset value or number of employees is relevant.
Source: DTI

9
For more government laws, programs and pronouncements for SMEs see: http://www.sme.com.ph/sme-
resources-tools/resources-tools.php?page=govtlaws;
SME.com.ph was innovated and is being operated by SME Solutions, Inc, a joint venture of the World Bank's
International Finance Corporation (IFC) and Planters Development Bank
10
Data for 2009: http://www.dti.gov.ph/dti/index.php?p=321; Leaño, Rhodora M (Director Bureau of SME
Development, DTI), SME Development Plan 2011 - 2016, mimeo; compare also: Villanueva, Luzviminda A,
Philippine Commission on Women (PCW), Gender Issues in SME Finance, presentation at APEC Workshop
on Microfinance 7 -8 April 2011, Hanoi
11
Leaño, Rhodora M, Director, Bureau of SME, Department of Trade and Industry (DTI), SME Development
Plan 2011 - 2016, 2009 List of Establishments, Based on data from NSO, 2009 List of Establishments; own
observations and interview results
12
* RA 6977 as amended by RA 8289 and further amended by RA 9501 or the Magna Carta for Micro, Small and
Medium Enterprises defines SMEs according to assets exclusive of the land. However, available statistics from
NSO are still categorized according to the number of employees.
13
Surprisingly, the number of large enterprises is higher (3080)

25
Almost half of these enterprises are concentrated in the National Capital Region (NCR), the
Cavite – Laguna – Batangas - Quezon area (CALABARZON) and Central Luzon. The number
of SMEs in PSP’s program area in Region 6, Region 7 and Region 8 is less than 25 percent
of the total.

Additionally, there are presumably (professional guestimate) more than five million
unregistered microentrepreneurs with most of them busy in the retail business, services and
food processing, including roadside kitchen operators.

1.6 SME Development Plan 2011 - 2016

The SME Development Plan 2011 - 2016 mentions 11 Productivity and Efficiency (P&E)
challenges for SMEs. One relates to environment: “The production systems of SMEs are not
environment friendly.” In this respect, DTI’s 2011 - 2016 new development plan is meant to
improve the production and delivery of competitive, standards compliant and
environment friendly products and services
take into consideration global themes and crosscutting issues related to gender,14
climate change, corporate social responsibility and migration.

The targets for P&E include

1 The working environment of SMEs fosters greater productivity and efficiency among
the workforce.
2 SMEs are using environment friendly technologies.

DTI is convinced that Climate Change / Green Growth

• can bring business opportunities to SMEs
• leads to greater resource productivity and efficiency.

This is in line with good common sense. For example, increasing resource efficiency would
also result in savings of these resources, leading to lower costs, higher income (welfare) and
/ or superior competitiveness. In turn, this increases the SMEs’ capacity to access finance.
For viable investments in resource savings it is certainly a wise option to start as soon as
possible with its realization - and for this, many SMEs might need a credit first – and then
repay the loan from the aforesaid resource savings.

1.7 Legal and Regulatory Environment

The GOP pays more attention to environmental issues than many other Asian countries.15
The Philippines passed the Energy Conservation Law already in 1980. The 1987 Omnibus
Investment Code incorporated regulations on pollution control devices. The Clean Air Act
(RA 8749) was passed in 1999 and the Ecological Solid Waste Management Act (RA 9003)
in 2000. A national energy efficiency and conservation (EE&C) program was presented in
2004. Two years later, in 2006, the GOP enacted the Biofuels Law (RA 9367). In 2007, the
GOP adopted the Philippine Energy Plan (PEP) 2007 - 2014, which is updated every year. It
includes an attainment of energy savings equivalent to 5 percent of annual final demand
(2008 - 2030). In particular, the Renewable Energy Act (RA 9513) of 2008 provides a long

14
For gender and environment see Annex 10
15
http://www.asiaeec-col.eccj.or.jp/eas/04/doc/10_ee-c_ measures_in_ east_asian_countries100208_s-web.pdf

26
list of fiscal and nonfiscal incentives for investors (see Annex 5: Incentives for RE
developers). In 2010, President Arroyo signed RA 9729, the Climate Change Act (CCA),
which serves as the guide in formulating the National Climate Change Action Plan (NCCAP).
Since early 2010, financiers have been waiting for the government to publish feed-in tariffs
for alternative energy sources.16

Table 2 Salient Points of the 1980 Energy Conservation Law and 2006 Biofuels Law
Energy Conservation Law 1980
Objectives
• institutionalize energy conservation and
enhance the efficient use of energy in the
country
• strengthen conservation programs such
as
- nationwide energy monitoring program
- product labeling (energy efficiency
ratings)
- energy efficiency promotion
17
Biofuels Law (RA 9367) 2006
Required : 1 percent biodiesel,
5 percent bioethanol
Needed : Investment amount approximately
1 billion USD over next five years
Drivers for implementation
- reduce dependence on imported fuels
- reduce pollution / health risks
- catalyze agribusiness sector
- export opportunities
Feed stocks
- bioethanol - sugarcane and sweet sorghum
- biodiesel - coconut, jatropha, palm

Source: Adopted from Biason, Annette A, BPI Sustainable Energy Finance (SEF) 2010

The 2009 Renewable Energy Policy Framework (REPF) projects an increase in RE based
capacity by 100 percent within the next ten years (2009 - 2020, this is plus 7 percent per
annum compounded). At an average investment of 3 million USD per MW for 5,335 MW, the
total investment volume amounts to about 16.1 billion USD or 707 billion PHP,18 equivalent
to almost 25 percent of the country’s total present outstanding bank credits.

Table 3 2009 update of the Renewable Energy Policy Framework Target 2020

Resource Existing Capacity Additional Total Capacity

(MW) (2008) Capacity (MW) (MW)
geothermal 2 027 1 070 3 097
hydro 3 367 3 400 6 767
wind 33 515 548
solar 5 30 35
biomass 68 200 268
ocean 0 120 120
Total 5 500 5 335 10 835

Source: Department of Energy

16
Presently, a decision is expected for the second semester 2011. The feed-in tariffs are proposed to be capped
at 830 MW capacity and should not exceed 17.9 PHP / kWh against about 7 PHP / kWh and a consumer’s total
bill of about 12 PHP / kWh (including distribution, taxes and various other levies).
17
The use of biofuels and its implication on food prices is an issue also discussed in the Philippines, for instance
by Alabano, Imelda V, Biofuels competing with food crops in Philippines: “The government wants farmers to
plant crops for biofuels on a vast scale. But could the quest for green energy create food shortages?”
http://www.ru.org/index2.php?option=com_content&do_pdf=1&id=269
18
Exchange rate: 1 USD = 44 PHP

27
The GOP issued also regulations that are meant to motivate the general public to reduce
energy consumption. Yellow labels attached to electric appliances inform consumers about
electricity consumption. The most exposed products using yellow labels are bulbs for
lighting, air conditioners and freezers. The list does not include split type air conditioners,
which are increasingly popular despite its higher price.

Table 4 Yellow Labeling in the Philippines

○1991 standards and labeling: window type room air conditioners

○1999 refrigerators
○2005 CFL
○2007 linear lamps, ballasts
2009 washing machines, TVs, refrigerators, green buildings
Note: The plan was deferred for further study in 2010.

Figure 3 Sample Yellow Label

The regulations cited above do not cover the full spectrum of national government efforts to
persuade, convince and force people to act more environment friendly. SMEs have also to
observe local legislation and regulations that govern environmental issues.

In a quite different field, the GOP issued an instruction to procure 25 percent of school chairs
and tables produced using bamboo as the more environment friendly material (grows five
times faster than wood).19

19
President Arroyo’s EO 879; see also: The Green Products project in Mongolia is working with the government
to implement programs intended to help increase domestic demand for more sustainably produced goods.
Engaging the Supply Chain to Promote Sustainable Consumption and Production, A Thematic Study of
SWITCH - Asia Projects, 2010, SWITCH - Asia Network Facility, implemented by UNEP / Wuppertal Institute
Collaborating Centre on Sustainable Consumption and Production and Wuppertal Institute for Climate,
Environment and Energy

28
The list of national laws and local regulations incorporating environmental issues is quite
long. LGUs have separate budgets and finance or cofinance from these various green
programs and investments such as cleaner local transport, photovoltaic lighting, clean water
and sewage systems, etc. No institution could be identified that collects data about local
environmental programs and GF facilities. Presumably, the amounts involved as GF in every
single of these often unreported measures from which SMEs could benefit are below 3
million USD, the median perhaps even below 0.5 million USD.

The GOP emphasized again the importance of environment and climate change when in
May 2011, President Benigno Aquino III signed Executive Order 43 formally establishing five
cabinet clusters to address key priority areas of his administration 1) Good Governance and
Anti-Corruption; 2) Human Development and Poverty Reduction; 3) Economic Development;
4) Security, Justice and Peace; 5) Climate Change Adaptation and Mitigation.

The Climate Change Adaptation and Mitigation cluster is chaired by the DENR Secretary
with the Climate Change Commission functioning as secretariat. Its members are Housing
and Urban Development Coordinating Council (HUDCC) chair, the secretaries of
Department of Science and Technology (DOST), Department of Interior and Local
Government (DILG), Department Public Works and Highways (DPWH), Department of
Social Work and Development (DSWD), Department of Agriculture (DA), Department of
Agrarian Reform (DAR), Department of Energy (DOE) and Department of National Defense
(DND); and the head of the Metropolitan Manila Development Authority (MMDA).20

The National Economic Development Authority (NEDA) published the “Green Philippines
Component of the Medium Term Development Plan (Forest Management, Pollution and
Hazard Control, Energy Independence, Protected Area and Wildlife Management),” which
provides the policy framework for Environment and Natural Resources (ENR) projects in the
country. NEDA also gave an overview of different forms of Official Development Assistance
(ODA) extended by bilateral and multilateral development partners with present ties with the
Philippines. 21

20
Amita O Legaspi / KBK, GMA News, Aquino signs EO establishing 5 Cabinet clusters 16 May 2011
http://www.gmanews.tv/story/220714/nation/aquino-signs-eo-establishing-5-cabinet-clusters
21
See: Encabo, Shiela Marie, OIC - Director of the NEDA, ENR Policy and Financing, 2009, ppt presentation at
http://ecogovproject.denr.gov.ph; see also http://www.scribd.com/doc/22652797/2-NEDA-Shiela-Marie-Encabo

29
2 Financing Green investments

2.1 SME Financing

2.1.1 Rationale for Green Financing for SMEs

The Philippines regularly experiences natural disasters. The increasing number and force of
typhoons is assumed to be a result of climate change provoked by human made changes to
the atmosphere, in particular the release of GHG from combustion engines.

There are 5.53 million registered vehicles in the Philippines that contribute 65 percent to the
air pollution. Many of these are commercially operated by microentrepreneurs (tricycles),22
the stationary engines 21 percent. Transport utilizes 38 percent of the energy, even more
than industries (25 percent). Increasingly, financing energy generation, in particular, use of
renewable energies (RE) now comes within the financial reach of SMEs with prices for solar
photovoltaic (PV) systems dropping to half of 2007 levels.

SMEs, which include micro entrepreneurs, are dominant in the Philippine economy. (see
Chapter 1.4). However, their environmental awareness deserves and needs enhancement.
SMEs should adopt clean production technologies, says ADB, and gives five reasons why
green is good even for SMEs. 23 They will benefit from
1 reduced operating costs and greater profitability through greater production efficiency
2 an improved public reputation as an environmentally responsive firm
3 better access to certain types of financing
4 reduced business risks from accidents and regulatory enforcement
5 an increasingly stronger competitive position, especially in international trade.

Green Financing
 eases and facilitates an adaptation process to conform with environmental
regulations
 provides a financial incentive for nonmandated investments in sustainability
 attracts attention to financial institutions in their effort to market a product (credit,
loan) and enhance their reputation.

2.1.2 SMEs and access to finance (A2F)

According to their statements, SMEs face several obstacles in accessing bank and other
formal finance.24 These problems arise when SMEs consider financing investments,
including those that are green

1 SMEs find difficulty in accessing available funds from financial institutions because of
stringent and voluminous requirements and long processing time of loan applications
(compare Annex 8).

22
For more details see ADB, Air and Noise Pollution Reduction from Tricycles, A Strategic Plan for Quezon City
and Puerto Princesa City, Philippines, 2005
23
http://toolkit.sme.com.ph/operations/operations-ht-13.php
24
Leaño, Rhodora M, DTI, SME Development Plan 2011 - 2016, 2009 List of Establishments, Based on data
from NSO, 2009; Own observations and interview results.

30
 2 The interest rate for loans is very high.
3 SMEs find the minimum loan requirement and the short repayment period restrictive.
4 The financial packages for SMEs in several regions are only available in urban areas.
5 SMEs lack the capacity for financial management.
6 There are no funds available for startup SMEs in several regions.
7 SMEs do not have access to venture capital funds.
8 It is difficult to restructure loan that means adjusting loan conditions retroactively,
mostly because of repayment (seasonal cash flow) problems.
9 SMEs have limited access to information regarding the sources of funds and on how
to access these.

2.1.3 Obstacles for Green Financing

The availability of specific GF for even profitable investments does not automatically result in
related loans. The following is a collection of reasons for this.

Obstacles related to SMEs

Entrepreneurs are not informed about investment and finance opportunities.
Representatives of machinery suppliers service also old machinery. They are
reluctant to recommend the purchase of new machines, because they lose business.
Ageing machines need service and repair more frequently than new greener
equipment.
Investment costs (like for solar panels and various other electronic devices and
sensors) drop in line with prices for other electronic goods. People expect prices to
drop further and therefore postpone their investments. The profitability of an
investment increases with waiting longer.
The customers are not informed about which banks would most probably finance
their specific project. If one bank denies financing, only few SME investors would try
applying with another bank.
SMEs lack the capacity to prepare loan proposals for the envisaged green
investments due to lack of information on appropriate technology.25
Some financing programs are too complicated and / or too expensive for SMEs
(capturing methane from small piggeries). The introduction of measuring, recording
and verification (MRV) technologies is too expensive and too cumbersome.

Prior to the 2008 enactment of the Magna Carta for SMEs, an IFC PEP26 study indicated that
the total credit volume for SMEs is in the region of 250 billion PHP comprising of 226 billion
PHP from banks. The estimates for unmet demand varied from 67 billion PHP to 180 billion
PHP.27 This compares with more than 3.149 billion PHP total outstanding loans recorded by

25
DOE organized with the assistance of energy consultants two day workshops all over the country
encompassing 15 sessions for operators of hospitals and hotels. These workshops proved that the technology
awareness and the preparedness of financial institutions (FI) to assist SMEs was not the major problem. One
of the hurdles identified was that SMEs could not write a loan proposal for the envisaged investment.
26
IFC's PEP - Philippines project (2006 - 2009), with support from AusAID and CIDA, supported the growth of
SMEs in the Philippines, particularly in Mindanao. The project provided assistance in line with the IFC’s five
global business lines for its TA projects: 1. Business Enabling Environment; 2. Access to Finance; 3. Value
Addition to Firms; 4. Sustainability; and 5. Infrastructure.
27
Lagua, Benel P, Finance gap in small enterprises, Manila Bulletin, 19 May 2011; the author is President / COO
of the Small Business Corporation (SBC).

31
all banks (09/2010). The market share of Thrift Banks is about 11 percent (350 billion PHP)
whereas Rural and Cooperative Banks contribute approximately 3 percent to the total (about
95 billion PHP). Characteristically, SMEs obtain formal finance from cooperatives and rural
banks as well as Thrift Banks. However, rural and cooperative banks cannot at all fulfill the
credit demand of SMEs. SMEs obtain also loans from commercial banks.

SME demand (min, max)

SME bank loans
Rural Banks and Cooperatives
Thrift banks (11%)
Total bank loans (100%)

0 1000 2000 3000 4000

Figure 4 Loan Demand and Supply (billion PHP)

Most interviewees in this survey pointed to the limitations for SMEs to obtain finance in
general. Informal finance from family members and friends exists. More often it is not
available, insufficient, or only for short periods of time. Similarly, informal lenders provide
short term loans repayable within six months. NGOs are among nonbank lenders offering
funds mostly for small informal (unregistered) SMEs for a period of more than six months.
These microcredit schemes reach many people, but the volume is – compared to the
banking system – certainly rather modest.

With increasing business and loan demand, advanced SMEs with loans from small regional
banks wish to obtain less costly advances from commercial banks. SMEs have access to
loans from commercial banks, when the loan amount exceeds 0.5 million PHP or even 1.0
million PHP, and when the required documents as well as bankable collateral is available.

In response to these difficulties, the Magna Carta on SMEs requires all banks to lend at least
eight percent of their credit portfolio to MSEs and two percent to medium enterprises for a
period of ten years. This includes wholesale loans to rural banks. Reportedly, some banks
prefer paying a fine or providing funds to other institutions such as SBC (see Annex 24 and
Annex 34).

Box 3 BMBE Law (RA 9178) on Barangay Microenterprises

Section 9 stipulates about credit delivery that government financial institutions (GFI) are
responsible for financing SMEs. The Land Bank of the Philippines (LBP), the Development
Bank of the Philippines (DBP), the Small Business Guarantee and Finance Corporation
(SBGFC = SBC), and the People's Credit and Finance Corporation (PCFC) shall set up a
special credit window that will service the financing needs of BMBEs registered under this
Act consistent with the Banko Sentral ng Pilipinas (BSP) policies; rules and regulations. LBP
and DBP provide wholesale loans to Rural Banks, cooperatives and other financial
institutions in order to fulfill this task.

Summarized, when GF products are channeled through commercial banks, few SMEs, in
particular not the average and small SMEs, will have access to these facilities.

32
2.2 Bank Financing
The Philippines has a comprehensive banking system encompassing various types of
banks: 19 universal banks (unibanks), 19 commercial banks, 73 thrift banks, 595 rural
banks, 40 credit unions, and 15 non-banks with quasibanking functions, all licensed with the
Bangko Sentral ng Pilipinas (BSP), Central Bank, under Republic Act (RA) 8791, also known
as the General Banking Act of 2000.28
Box 4 Bank Data as of
Large banks are active in the wholesale loan business.
September 2010
They provide loans to financial institutions such as rural
Total assets: 6418 billion PHP
banks and credit unions (cooperatives), which they in turn
Loan portfolio: 3149 billion PHP
Branch offices: 8085
forward as micro and small loans to SMEs.

Three of the ten largest universal banks are active in promoting GF products: BPI, LBP and
DBP. Two more unibanks, BDO and Metrobank, started just recently their cooperation with
IFC in the SEF facility.29

In general, rural banks offer only small (about 100 000 PHP) business loans, mostly for
working capital. They are not yet inclined to present innovative products.

2.2.1 Motivation for banks to go green

Participation in GF programs can be attractive for banks

• They can obtain and offer scarce long term finance (observing congruency of
maturities).
• The interest rate is below market rate; they can offer their clients an attractive
product and gain new clients as well.
• Being selected by an international partner increases the bank’s reputation.
• The bank’s name is more often mentioned in the media, being inexpensive
promotion.
• technical assistance (TA) allows the bank’s credit officers to get intensively
acquainted with a number of new project types and access to new or future growth
markets (EE replacements, RE alternative energy).
• TA for clients, such as a free walkthrough, is an extra bonus for marketing.
• The bank can decrease the default risk, in particular with back-to-back collateral or
credit guarantees.
• Selection of environmentally aware debtors who are considered superior
customers.30

At present, banks do not need additional foreign official development assistance (ODA)
funds

28
http://en.wikipedia.org/wiki/List_of_banks_in_the_Philippines, last modified on 8 July 2011
29
Whereas the SEF facility is based on bank financing, LBP’s CLEECP (see below) is 80 percent KfW financed
for projects up to 200 million PHP.
30
Some proponents for GF are often savings minded in general. They save energy first, but this behavior
spreads to other fields. They operate more economically. They control cost. They reduce the danger of
overspending, financial difficulties and loan default. However, there are also environmentalists who put the
environment first and loan repayment second.

33
 • With less than 50 percent of their assets invested in lending, banks in the Philippines
do not need more funds for onlending.
• Banks obtain already funds at low costs. The interest rate for savings deposits is set
at 0.5 percent per year. Universal Banks pay about 3 percent per year for a 2 year
100 million PHP deposit. Preferential FA costs banks about 3 percent – 4 percent per
year just for hedging against the currency risk and fees charged by the government.
A foreign loan provided with zero percent interest would be more expensive than
local funds, however only at first glance. Long term funds can cost banks more than
7 percent per year.

Banks consider TA as perhaps the strongest argument for participation in GF schemes. TA

supports opening new markets for EE and RE investments with a considerable volume
beyond the particular loan program.

Box 5 Drivers for Sustainable Finance

Reasons for adopting sustainable finance (new term)
1 social responsibility (identified by 13 out of 19 respondents)
2 enhanced reputation (identified by 9 out of 19 respondents)
attract new capital and customers
improve stakeholder relations
3 direction of industry (identified by 7 out of 19 respondents)
4 competitive advantage (identified by 6 out of 19 respondents)
efficiently react to changes in business environment
reduce / avoid sustainability risk
early entry into new socioenvironmental markets

31
From: UNEP, Survey among ADFIAP members, 2005

2.2.2 Processing financing proposals

The following describes the banks’ general approach towards loan decisions. Individually,
banks may deviate from this pattern.

Bank financing is available as long as the proponent fulfills the 5C criteria: character, capital,
condition, capacity and collateral (respectively collateral substitute). In their assessments,
banks pay first attention to the character of the proponent and the credit history, second
comes collateral aspects.

Some banks disclose a reason for the denial of a loan. The bank might mention other
reasons, when the denial is based on the applicant’s perceived character. Often, banks are
specialized on clientele, industries, specific collateral, etc. They may deny a loan for
particular economic sectors for which they have insufficient expertise or from certain areas
(typhoon prone area) or various other reasons.
Banks provide loans for green purposes after assessing the viability of the loan purpose. In
most cases the entire enterprise or investment project will be assessed, and its profitability
(IRR / FRR) and cash flow until a scheduled loan repayment is established. The IRR / FRR

31
http://www.unepfi.org/fileadmin/regional_activities/aptf/aptf_adfiap_presentation_20050513.pdf

34
is gauged against a bank’s internal minimum rate, which is higher than the loan interest rate.
Loan proposals have to surpass this threshold. A very high IRR will not overrule other
considerations. Banks will not prioritize projects with a higher IRR compared to other loan
proposals because they have sufficient funds.

Box 6 RE / EE Investments
An RE investment of a new enterprise has to meet the bank’s IRR requirements, if it is not
an integrated part in an enterprise. A particular EE or green investment of an existing
company does not need to reach the IRR benchmark. However, the bank would like to
know how this investment influences the IRR of the entire company.

For example, a bank would not finance PV electricity generation of a new enterprise without
guaranteed feed-in tariffs, because the IRR would probably be still too low. Investments in
pollution control devices have a negative IRR. However, banks will not take this as a reason
to deny a loan, when the law requires a factory to employ these tools and / or when the
company’s IRR meets bank requirements.

Box 7 Clean Production

Investments for pollution abatement do seldom generate income or reduce costs (seen
apart from replacements with higher efficiency). Entrepreneurs invest because of
government regulations to be able to obtain or retain the operating permit. The enterprise
has to be profitable despite forced green investments.

Banks are concerned about cash flow for loan repayment. It may well be that some company
managers discount the dangers that loom, when they do not adhere to laws and regulations.
Even a timely limited factory closure interrupts the cash flow and reduces the loan
repayment capacity. Therefore, it is common that banks demand from enterprises copies of
their permits, which include ECCs if compulsory. It would be gross negligence when banks
do not check the required permits. Unfortunately, loan applicants regard this only as
cumbersome. They complain about paper work which makes it difficult to avail of a bank
loan.

2.2.3 Obstacles to Green Financing related to banks

Obstacles for GF related to banks include

Bank officers are reluctant to offer specific GF facilities because it involves additional
work. They do not see an incentive to do so.
Bank staff is not familiar with green technologies and therefore not very price
sensitive to system costs, which could result in wrong loan decisions.
For banks it is almost impossible to project the impact on the business, when an
entrepreneur applies for a 20 000 USD (or even more) loan for financing green
certification of the enterprise and its products.
Loan monitoring items may include units bank staff is not familiar with such as power
generation (MWh), fuel consumption (t, m3 or liter), fuel heating value (GJ/t), CO2
emission factor per unit of fuel (t CO2/GJ), or various chemical substances in air and
water, and many more.
Although investment in EE / RE measures may be profitable, banks will not finance
them when the overall creditworthiness of the investor or the enterprise does not
fulfill the bank internal requirements.

35
 Some programs are insufficiently geared to the needs and requests of investors. For
example, benefits from the World Bank Chiller Program are denied when the investor
needs a smaller chiller for replacement thanks to various energy saving measures.
A regulatory framework to encourage GF, like an equivalent to SME financing.
The GOP announces incentives but hesitates with the implementation of laws
(example: FIT).
The government is not consistent with its policies (example: mandating the retrofitting
of two stroke motorcycles then revoking the regulation later).

Box 8 Bank Procedures

The bank branches receive loan requests and forward them to lending centers (LBP, DBP) where
account officers process the loan applications. They prefer proposing the normal, standard loan
because: firstly, they would have to identify the most appropriate loan product among some 20
alternatives for which they would have to know the conditions. Secondly, they would have to
investigate whether funding is still available (unused facility or revolving). Thirdly, regularly, program
loans mean additional work, mostly concerning documentation, without the account officer receiving a
reward or a lower target.

Alternative loan programs can compete with GF. For example the Self-Employment
Assistance Program (SEAP) offers SMEs superior loan conditions (see box below). The loan
can be used for investment in green products.

Box 9 Self Employment Assistance Program (SEAP)

Business / Self-Employment Assistance In 2009, there were 1389 SEA-K projects

Program (SEAP) in the Department of Social
Welfare Services (DSWS)
The Self-Employment Assistance sa Kaunlaran
(SEA-K) Program provides additional capital
assistance to qualified beneficiaries: self-
employed, entrepreneurs, small business owners.
established benefiting 28 939 families nationwide.
Funds amounting to 143 089 000 PHP (5000
PHP per family) have been released as seed
capital for the livelihood projects. Under SEA-K,
livelihood assistance is granted in a form of soft
loans with zero interest, payable within two
32
years.

2.2.4 Perceptions and attitudes

Many people, also bank officers, simply associate GF loans with below market interest rates
financing investments with a questionable economic benefit.

GF is not new. Banks without a specific green product extend repeatedly loans for
investments that others would declare green. But they do not see the necessity to name
these loans differently, to treat them and assess them in another way nor to record them
separately.

32
http://www.affordablecebu.com/load/business/how_to_avail_business_self_employment_assistance_program_i
n_dsws_or_department_of_social_welfare_services_in_cebu/6-1-0-437#ixzz1R5K9YJH6
http://www.affordablecebu.com/load/business/how_to_avail_business_self_employment_assistance_program_
in_dsws_or_department_of_social_welfare_services_in_cebu/6-1-0-437#ixzz1R5KDEiat

36
In principle, loans for replacements or upgrading of investments are often - or even almost
always - green, because entrepreneurs have to abide to stricter environmental laws and
regulations, and competition forces them to save, thus reduce material and energy costs as
far as possible. New products are engineered this way. Even financing a coal power station
can be named green when it replaces an old one with lower efficiency.

In their loan agreements banks refer to that the debtor has to abide by government laws and
regulations. Sometimes, banks stipulate a covenant expressively related to environment
such as submitting copies of environmental assessments and related documents, like the
Environmental Compliance Certificate (ECC).

For new enterprises, including SMEs, government regulations demand an environmental

assessment or impact study before issuing operational permits (depending, among others,
on the enterprise size and industry). It is questioned whether a loan is green just because
the bank demands a copy of the ECC. Banks and investors are advised not to risk closure of
a factory due to missing permits. They would endanger an envisaged income (profit for the
entrepreneur, interest for the bank) and, most of all, the loan repayment. For instance, banks
would also not finance house construction without a building permit. Admittedly, some small
banks take higher risks, but mostly unintentionally – they are not informed.

So far no case could be identified when a bank demands from its debtors’ adherence to
higher environmental standards than demanded by law for their usual loans. There are
cases when a bank awards clients an incentive for reduced levels of emission, pollution or
fuel consumption by offering preferential loan conditions. In most of these cases the bank
obtains an incentive itself.

Some bank managers regard GF in particular as a matter of corporate social responsibility

(CSR), environmental initiatives taken beyond what is legally required. Some banks portray
environmental issues in their corporate communication as charity work, such as cleaning
beaches. An exception is the Industrial and Commercial Bank of China (ICBC), whose CSR
report refers to environmental risk management. Similarly, DBP, LBP and ADFIAP – for
example - published separate annual environment reports describing their ecological
footprints.

The unaccounted but undoubted benefit of using the term GF is that it attracts the attention
of the bank staff to environmental issues. They are competent in financing, but not at all of
them are familiar with the protection of the environment. GF involves high capacity people
who have never seriously been directly confronted with green technologies. Enhanced
awareness leads gradually to a change in attitude, behavior and finally action, such as
developing and promoting a GF product.

37
2.2.5 Environmentally conscious banking

An environment conscious investor would address a bank, which subscribes to the Equator
Principles.

Box 10 Equator Principles

The term environmentally conscious banking appeared in  corporate social responsibility
connection with huge mining and energy projects (open  ethical investing
pits and tailings, construction of dams) and their impact on  ethical banking
the surrounding ecosystem and population. In 2003, banks  global warming
formulated the Equator Principles about environmental risk  income redistribution
assessment.33 The Equator Principles proclaim social and  socially responsible investing
environmental responsibility, doing no harm and seeking positive change through its
products, people and activities.34 The Equator Principles are a voluntary set of standards for
determining, assessing and managing social and environmental risk in project financing. No
Philippine bank subscribed to these principles. Several foreign banks that adopted the
principles are active in the Philippines through branches or subsidiaries, namely, ABN Amro,
Bank of America, Citibank, ING Bank, JPMorgan Chase & Co, Mizuho Corporate Bank, and
Standard Chartered Bank. None of these banks is known for offering a GF product in the
Philippines.

Environmentally Conscious Banking35 is the central approach in greening investments and

incorporating climate change in banking activities. Environmentally Conscious Banking
describes the process whereby banks anticipate and consider
impacts of their operations, products and services on the environment
effects on their own operations resulting from profound changes in the environment;
these can also be changes in the opinion of people.36

Environmentally Conscious Banking is the suitable approach for modern banking operations
because
Banks are highly important intermediaries in market economies and can make a
major contribution to the greening of economies (worldwide credit volume in 2009:
109 trillion USD).
Banks are confronted by high potential risks due to Climate Change.

Possible courses of action for banks include

environmental and social risk assessments (a must to prevent default)
adoption of uniform standards: Equator Principles, Principles for Responsible
Investment, IFC Performance Standards
development of green investment indices and funds.

33
Until January 2011, 67 financial institutions in 27 countries adopted the Equator Principles.
34
http://www.ingforsomethingbetter.com/our_approach/business_principles/
35
Schaefer, Jakob, GIZ, Innovative Approaches
36
Schaefer, Jakob, GIZ, Innovative Approaches

38
UNEP promotes innovative financing for environmental sustainability. The UNEP Finance
Initiative represents the backbone of these interventions.37 By signing up to the Statements,
financial institutions openly recognize the role of the financial services sector in making the
economy and lifestyles sustainable and commit to the integration of environmental
considerations into all aspects of their operations. At least three Philippine banks joined this
initiative
Land Bank of the Philippines
Development Bank of the Philippines
Planters Development Bank.

2.3 GF incentives and Facilities

GF incentives have more often a maximum rather than a minimum limitation. They are, in
principle, accessible to SMEs. In reality, the provisions attached to these facilities make the
application process often difficult, cumbersome and expensive in relation to the benefit that
they provide for SMEs.

The most popular and financially voluminous GF incentives are granted by international
organizations and by governments, mostly channeled through government institutions and
financial institutions, preferably banks.

Government interventions come in the form of support, especially financial incentives for
easing an adaptation process (for example outphasing hazardous chillers), but also as a
disincentive (penalty, fine) for not complying with green regulations.

The government has several financial and nonfinancial possibilities to support enterprises in
their green investments and for their green investments, such as
providing information (reduces costs for collecting intelligence)
direct transfer from the public coffers to the enterprise, a subsidy (like refunding a
percentage of the investment cost)
reducing expenditures through tax reduction (reduced import tax)
increasing income through tax regulation (depreciation policy)
invitations to fairs (the enterprise saves costs for promotion)
public exposure, for example presentation of awards (the enterprise gains reputation)
and others. GOP supports green investments with a range of fiscal and nonfiscal incentives
for investors (see Annex 5)

A popular incentive measure is the provision of soft loans, first from the government or
international sources to local banks and then to end users. Characteristics of soft loans are,
for example
• reduced processing fees
• below market interest rate
• extended grace periods
• extended repayment periods
• less strict collateral requirements, such as a credit guarantee as collateral substitute.

37
http://www.unepfi.org/statements/fi/index.html

39
Soft loans have only advantages for investors that lack funds.

The free or subsidized provision of TA, technical expertise, advice or consultancy, is a

measure that reduces costs for the investor. For example, walkthroughs where
environmental specialists inspect the energy savings potential of a factory on the spot are
linked to a GF program,38 but they are provided without the obligation to apply for a loan.
Bank staff training is another popular TA feature. It reduces costs of banks (transaction
costs). Trained staff will offer access to loans for specific purposes. Banks might contact
large SMEs for proposing a loan.

Recently, sale of carbon rights (CER) became another popular, but unreliable 39 source of
income for investors for their contribution to reducing GHG.

Feed-in-tariffs (FIT) for electricity produced from renewable energies are a fundamental
financial incentive to initiate investments in alternative power generation. The FIT are much
higher than the cost of electricity from coal or thermal power stations, sometimes higher than
the consumers’ end price.

In some cases, incentives are only granted when the investor, instead of just complying with
environmental regulations, agrees to observe voluntarily even stricter environmental targets.

2.4 Characteristics of Green Loans

A considerable part of investments in green technologies are not recorded as green
investments and financed with common or conventional commercial loans. The following
describes some characteristics of green loan programs.

Purpose

Tangible assets: In general, GF relates to investments in fixed assets. They are classified as
investment loans. Some of the schemes are explicitly offered also for working capital. This is
a justified option. For instance, rice husks (burning for electricity generation) can only be
bought during the harvest time. Often, investments in fixed assets (like purchase of a new
machine) require simultaneously an increase of the permanent working capital.40

Intangible assets: Banks would not directly finance cost of ecolabeling, ecodesign, or costs
involved with documentation of CO2 reduction for CERs. A special financing facility for this
purpose is not known. Entrepreneurs might better request a midterm working capital loan for
financing these nontangible assets.

38
For example, BPI’s SEF, LBP’s CLEECP
39
Seen apart from scams in the trading of these rights, the price fluctuates wildly and uncontrolled.
40
The permanent working capital is the minimum supplies that a firm wishes to keep on stock so that delays in
procurements do not immediately result in a production stop. When the minimum stock of husks (permanent
working capital) is X ton for one generator before placing a new order, then the minimum stock is 2X ton for
two generators.

40
Box 11 Financing Certification

Reportedly, a cradle-to-cradle (C2C) certification costs up to 30 000 USD (about 1.3 million PHP). For
a bank, the value of such a certification is difficult or almost impossible to assess. Banks have also no
experience in how far these intangible assets can be capitalized and how they will influence cash
flows. Often, persons active in the environment sector are more socially engaged rather than
economically fit. They find it difficult to explain to bank staff the commercial advantages, let alone
present profound financial projections. “Certificates do not impress banks,” according to Pete Delantar
of Nature’s Legacy, Cebu.

Eligibility criteria

Loan terms differ according to finance provider, program and bank. Below are, just for
illustration, subborrower (investor) qualification criteria for ADB’s Air Pollution Control Credit
Facility channeled through LBP.

Box 12 Green Financing Terms

Eligible Subborrowers (investors) Subborrowers’ (investors) qualifying criteria

Sole Proprietorship
Partnership
Corporation (at least 70 percent Filipino
owned)
Multipurpose cooperative
Eligible Projects
purchase / installation of air quality
monitoring equipment
purchase / installation of pollution control
equipment
procurement of new processes and other
source equipment, and
procurement of new and rehabilitation of an
existing public transport fleet.
Loan Purposes
Project related expenses not exceeding 75
percent of the total costs shall be eligible for
financing.
The fund will be available for
fixed asset acquisition and
working capital (initial and / or incremental)
A debt to equity ratio within the 75:25
benchmark
A profitability track record of at least three (3)
years, although startup enterprises are also
eligible
No ownership or labor disputes for the past
three (3) years
An acceptable account profitability ratio of at
least 3 percent
A satisfactory result in the credit, trade and
background investigation
Fully secured by tangible collaterals as
required by bank
Debt service cover of 1.25 times on an
average basis over the term of subloan with a
minimum of 1.00 time in any year and
Each qualified project generating an annual
positive cash flow equivalent to at least 100
000 USD shall have a Financial Internal Rate
of Return (FIRR) of at least equal to the cost
of capital.

Loan amount

Private parties, moneylenders and NGOs provide loans below 10 000 PHP (USD 220 USD).
Typically, rural and thrift banks have 10 000 PHP as their minimum loan amount. The most
popular loan size is around 100 000 PHP to 150 000 PHP (about 2200 USD to 3300 USD).
For clients of Plantersbank (The SME Bank), SME loan range is from 250 000 PHP (about
5500 USD) to 10 million PHP (about 220 000 USD). DBP’s Retail Lending for Micro and
Small Enterprises starts at 150 000 PHP and sees also 10 million PHP as its maximum,
according to the bank’s flyer.

41
Some unibanks started more recently to pay more attention to SME businesses and loan
requests below 1 million PHP (22 000 USD), because the market for larger loans is
increasingly saturated.

Large private banks consider loans up to 15 million PHP as small and up to 500 million PHP
still as SME lending. Typically, commercial banks start their minimum amounts for business
loans with 1 million PHP or even higher. Thus, commercial banks focus on about less than 5
percent of the registered enterprises. They hand out loans that they consider SME loans to
enterprises that (by their assets) would fall under the category large enterprise.

Some institutions provide GF with a cap. They limit their share in the total loan amount and
the maximum amount per investment. Thus, the fund can provide loans to more and smaller
investors. For example, KfW limits its GF contribution to maximum 80 percent of 200 million
PHP in LBP’s CLEECP. The investor or the bank needs to find new sources of funds if the
investment volume exceeds this threshold.

It is common that banks demand from the investor a commitment, like contributing at least
10 percent to the investment.

Interest rate

The interest rate for bank ODA loans is basically determined by (1) the currency (hedging
cost against foreign exchange rate movements), (2) amount (decreasing with increasing
amounts), and (3) the tenor (mostly increasing with increasing maturity).41 The loan purpose,
collateral and customer category (borrower risk rating BRR) are further dominant determents
for loan interest rates.

Interest rates for GF indicate the creditor’s value of the facility. A low interest rate reflects the
initiator’s desire to attract investors to a particular investment: A low interest rate lifts the
profitability of loan financed investments.

For bilateral or multilateral loans, fixed below market interest rates for tenors of ten and more
years are common.

Table 5 Interest Rate Schedule (% per year)

Interest rate for a foreign exchange ODA loan (maturity 25 years, grace five years) 1.0%*)
Foreign change risk hedging substitute**)
Philippine Government repayment guarantee 4.5%
Philippine Government, handling fee
Cost for Philippine bank 5.5%
Handling cost, risk of Philippine bank 3.0%
Interest rate charged to client (maturity ten years, grace period three years) 8.5%
Market interest rate for a loan with similar amount, tenor, etc. but different purpose 11.0%

*) Normally subsidized against a higher market rate valid in the donor’s country. The donor country could earn
a higher income, like 2.5 percent, from lending these funds to the market.
Comparison: time deposits earn investors up to 4 percent pa minus 20 percent withholding tax.
**) Market for foreign exchange risk hedging with forward contracts of more than two years may not exist (data
not published / not available / almost no transactions).

41
Interest depending on BRR
Premium 1 percent for fixing interest rate three to five years
Premium 2 percent for fixing interest > five years

42
Box 13 Foreign Exchange Hedging

A foreign exchange hedge (FOREX hedge) is a method used by companies to eliminate or

hedge foreign exchange risk resulting from transactions in foreign currencies (see Foreign
exchange derivative). This is done using either the cash flow or the fair value method.
When companies conduct business across borders, they must deal in foreign currencies.
Companies must exchange foreign currencies for home currencies when dealing with
receivables, and vice versa for payables. This is done at the current exchange rate between
the two countries. Foreign exchange risk is the risk that the exchange rate will change
unfavorably before the currency is exchanged, or, in case of credit, repaid.
A hedge is a type of derivative, or a financial instrument, that derives its value from an
underlying asset. Hedging is a way for a company to minimize or eliminate foreign exchange
risk. Two common hedges are forwards and options. A forward contract will lock in an
exchange rate at which the transaction will occur in the future. For loans, this future can be
more than ten years. An option sets a rate at which the company may choose to exchange
currencies. If the current exchange rate is more favorable, then the company will not
exercise this option. For this transaction, a partner is needed

Source: http://en.wikipedia.org/wiki/Foreign_exchange_hedge

In mid2011, prime customers pay 6 percent to 7.5 percent for a one to two year fixed interest
loan with interest rates being adjusted according to market rates afterwards. Five-year loans
with fixed interest rate cost about 10 percent. Many customers, in particular SMEs, prefer the
benefit from lower interest for short term loans now and take the risk of higher interest rates
in future. Large enterprises benefit from the long term loan itself (safer capital structure) and
from fixed interest rates (decreasing business risks).

Some schemes allow a client opting for a flexible interest rate now and switch anytime to the
fixed interest rate with no option to reconvert later.

The loan contracts with ODA FA providers include commitment fees, which become a
financial burden for the local banks, when they cannot identify debtors or when the investors
or the required documentation delay the implementation of projects. Another time consuming
factor is when investors negotiate with other banks for better terms. Altogether, it may take
two years or more from investor identification, designing a loan facility, collecting the
documents, board decision until the first loan tranche is disbursed.

Tenor

Banks find the tenors attractive that GF program funders offer them. They receive funds for a
long time thus contributing to an improved liability structure. Banks benefit from the shorter
time it takes to recover the loans from subborrowers (investors), particularly the time when
they have to return the loan to the program funder.

43
Table 6 The Definition of Short, Medium or Long Term Business Loans

Short term loan: 6 – 12 months

Medium term loan 1 - 3 years, 1 – 5 years
Long term loan: > 3 years, > 5 years
Maximum like for RE projects: up to 15 years

Collateral

Regularly, the bank decides about the collateral. Risk sharing (such as guarantees provided
by IFC) is particularly attractive for banks when entering a new market. Risk sharing or
guarantees serve as collateral substitutes. It will provide the bank with liquidity for the time
until the loan amount can be recovered, a process that could sometimes last for many years.
Missing or insufficient bankable collateral is repeatedly a reason for not responding to
financing loan requests.

Other covenants

In a number of cases, GF burdens both the end user and the bank with additional reporting
requirements. For example, a donor might require data about reduced GHG emissions. For
this, customers need a GHG measuring, reporting and verifying (MRV) system, which could
be costly (investment for measurement instruments such as gauges etc, dedicated staff for
data recording and data processing).

2.5 Other Financing Models

The following describes alternative financing of green investments.

2.5.1 Microcredits

Terms for micro credits differ from those of credits to established medium and large
enterprises. Donations and CSR programs provide GF to NGOs, which in turn transforms
them into small micro loans. The following describes a scheme financing fuel efficient stoves
and solar lanterns.

Loan amounts can be as low as 4000 PHP (90 USD). Interest amounting to 15 percent (not
per year!) or 600 PHP is added so that the total amount to be repaid is 4600 PHP. The
repayment period is 25 weeks so that the debtor has to pay 4600 PHP / 25 = 184 PHP
(about 4 USD) per week. The effective annual interest rate in this case exceeds 60 percent,
because on average, only about half of the loan amount is outstanding (decreasing with
every repayment), and the NGO can revolve the loan at least twice a year.42 Effective
interest rates exceed 100 percent, when the borrower has to deposit a certain amount as
cash collateral. A considerable proportion of what is named interest is actually attributable to
the cost of loan administration and cost of collecting the loan (sometimes daily!).

42
The financial institution earns 600 PHP twice a year (= 1200 PHP) on average outstanding amount of 2000
PHP; the interest rate is roughly 1200 PHP / 2000 PHP = 60 percent.

44
Consequently, green microfinance loans for microentrepreneurs seem to have no special
advantage if compared to consumption loans that credit unions and rural banks offer.

2.5.2 Leasing

Informal or micro entrepreneurs have often to manage heavily fluctuating cash flows. A
model practiced by an NGO for financing solar PV equipment offers a photovoltaic lantern
for rent (10 PHP / day). After 360 cycles (one year), the borrower becomes owner of the
lantern. This model allows users to rent and pay for the lamp according to their cash flow.
Microinvestors do not carry the risk that the equipment needs repair or even cannot be
repaired anymore. In contrast, the owner of a defunct appliance may still have to serve the
microcredit. The costs of administering these leasing contracts are high. Reportedly, rural
people favor this financing model rather than being obliged to follow a strict repayment
schedule. It is questioned if, at present, this is a viable model that survives without outside
assistance.

BPI offers for its SEF facility (see Chapter 3.2.1) optional leasing contracts.

2.5.3 Venture capital

The Department of Science and Technology (DOST) through its Technology Application and
Promotion Institute (TAPI) offers Venture Financing for Environmentally Sound Technologies
(Program 35). The program aims to accelerate the commercialization of new technologies
with close attention to environmental soundness.43 This specialized venture financing facility
intends to strengthen the competitiveness and productivity of local manufacturing industries
in a sustainable manner through the adoption of cleaner production technologies and
equipment. Priority sectors are food processing, metal finishing, plastic recycling and wood
furniture industry. In addition to the financial assistance, technical assistance and expertise
on the selection of the technology and equipment may also be provided. TAPI likewise offers
support for prototype development and product development. For more see Annex 28.

Box 14 IPVG Corporation, Venture Capital Firm

Philippine based venture capital firm IPVG Corp has secured a loan for 105 million PHP to build a
data center for the collocation market in Bonifacio City, Taguig, Metro Manila. The loan has been
granted by the Banco de Oro and will be put towards a state-of-the-art green data center facility that
will incorporate technologies aimed to increase EE and conservation.

43
Llanto, Rene Burt N, (DOST) Philippine Experience in the Promotion of Environmentally Sound Technologies
(ESTs)

45
2.6 Carbon Trade
Investors can access additional financial resources through project based carbon trading
under the clean development mechanism (CDM), which is a market based mechanism
included in the Kyoto Protocol. 44

Box 15 Introduction to CDM Mechanism

Enterprises that reduce GHG emission are in principle eligible to obtain a reward for their effort. An
investor in a hydropower unit produces electricity without generating CO 2. On average, in the
Philippines, the production of one kWh is accompanied by the production of 0.6 kg CO 2 resulting from
burning oil or coal in power plants. The hydropower unit runs 5000 hours a year and produces 1 000
000 kWh electricity per year (for about 1000 rural households), which is sold at 5 PHP / kWh
(revenue: 5 million PHP per year). The electricity production avoided CO2, namely 1 000 000 kWh x
0.6 kg/kWh = 600 000 kg or 600 t. The entrepreneur could obtain 600 certificates for saving 600 t
CO2. The sales value of one certificate is about USD 10/t. The electricity producer obtains about 600
certificates x USD 10 USD / certificate X 45 PHP / 1 USD = 270 000 PHP in addition to the 5 million
PHP for the electricity.

Unfortunately, the system involves costs for membership (about 30 000 USD once) and annual
supervision and verification (about 15 000 USD). The annual costs exceed already the income. LBP
and DBP try to group these small CO2 savers so that the annual costs can be shared among group
members. However, the services of the bank can cost 50 percent of the revenues from the sale of
certificates.

The Philippines ratified the Kyoto Protocol in November 2003. The Designated National
Authority (DNA) in the Philippines was established in 2004 as an arm of the Department of
Environment and Natural Resources (DENR). Projects are first submitted to the DNA and
are then assessed and evaluated by the Technical Evaluation Committee (TEC). Eligible
project proposals are forwarded to the CDM Steering Committee (CDMSC) for approval. The
final decision lies with DENR and is based on a report produced by the CDMSC.45

The Philippines has registered 64 CDM projects (2011). Out of the 304 registered
participants, 241 (80 percent) belong to small scale recipients under the Program of
Activities (PoA) scheme (see Annex 30), in which several enterprises using the same
technology are bundled. The 241 activities earned 79 000 CERs per year. One CER is
issued for a 1 ton CO2 equivalent reduction and sells for about 5 USD to 25 USD. The total
amounts to a value of about 1 million USD or roughly 4000 USD per activity annually. Most
activities are in the farming sector and involve methane and biomass-generated electricity,
and small scale hydropower plants.46 The remaining 20 percent of project proposals are
expected to generate between 53 000 and 582 000 CERs. These largely entail renewables
(wind, geothermal energy and hydropower), wastewater and landfill gas. According to other
sources, more than 1000 projects were registered by end of 2009.47

44
The CDM arrangement under the Kyoto Protocol allows also industrialized countries with a greenhouse gas
reduction commitment to invest in initiatives that lessen emissions in developing countries as an alternative to
more costly emission reduction measures at home.
45
For a more detailed flow chart and additional explanations see: http://www.scribd.com/doc/24210517/09-CDM-
Experience-Pangea-by-Mr-Danilo-Cruz
46
http://www.jiko-bmu.de/english/service/host_country_information/doc/798.php
47
http://www.scribd.com/doc/24210517/09-CDM-Experience-Pangea-by-Mr-Danilo-Cruz

46
Table 7 Small Scale CDM Activities

CDM in the Philippines Project types (small scale)

The CDM Project Cycle Step
1 Project Design Step
2 Validation and
Registration Step,
3 Monitoring Step;
4 Verification and
Certification Step;
5 issuance of Credits
mostly methane recovery and electricity generation projects
methane avoidance from biomass decay via composting
bagasse (from an ethanol distillery) - biogas (wastewater
treatment) cogeneration
biomass
mini hydropower
watershed rehabilitation
tricycle retrofitting

The process to obtain the CER value includes costs for monitoring, recording, reporting and
verification (MRV). Bundling PoA, offered by LBP and DBP, is a possibility for SMEs to
access these funds against sharing up to 50 percent with the bank as arranger. Most SMEs
are too small. The income from sale of CERs would hardly balance these costs. For example
(as a rule of thumb), the facilities are attractive for piggeries with a minimum sow level of 500
(equivalent to about 5000 heads). For more on carbon trade see Annex 30.

DBP and LBP are arrangers for CDM participation of SMEs. DBP’s assistance services
include
financing of underlying project
arranger / integrator of CDM projects through
o individual project registration
o bundling
o Program of Activity (PoA)
arrange financing of CDM transaction costs.48

Box 16 CDM Experience: Quezon City (Payatas) Controlled Disposal Facilities

The CDM registration and issuance process is not only very rigorous, it also requires
strong technical experience, skills, and know-how from the engineering design,
construction and operational perspectives
knowledge of CDM requirements and methodologies and the DNA approval process
experience in emission audit and verification conducted by the DOE
capacity to invest and willingness to work hard without immediate revenue generation in
order to take advantage of the positive carbon market opportunities
in depth knowledge of the CER markets, both primary and secondary, and factors driving
CER prices

Source: http://www.scribd.com/doc/24210517/09-CDM-Experience-Pangea-by-Mr-Danilo-Cruz

48
Ivie L Sabellano Oscar E Sarmiento, Jr in DBP, Developmental Thrusts; SME and Enterprise Development -
Micro, Small and Medium Enterprise, 2011;
http://www.slideshare.net/ErnestoJrCasiple/2011-region-12-bamboo-forum

47
3 Financing Green investments

In general, all providers of finance are also potential providers of GF. GF can be found
everywhere – if it is defined in its wider sense as finance used to enhance environmental
sustainability and / or reduce negative impacts on sustainability. However, few and limited
GF facilities are available in defining GF in a very narrow sense, when the borrower has to
measure and verify ecological achievements such as the amount of GHG reduction.

Providers of GF are (the list may not be exhaustive)

• multilateral and bilateral FA (ODA), channeled through local banks
• commercial banks (universal, thrift, rural, cooperatives)
• development banks49
• government institutions
• funds (Carbon funds such as the Asian Clean Energy Fund [at ADB])
• venture capital companies
• leasing companies
• energy service companies (ESCOs)
• NGOs (national) and foreign NGO cooperating with national NGOs
• CSR programs
• private parties such as retail stores when they provide a loan to finance low energy
consuming appliances.

3.1 Multilateral and Bilateral Financial Assistance (ODA)

Ms Sheila Marie Encabo, OIC Director, Agriculture Staff, NEDA, presented an overview on
Official Development Assistance (ODA) facilities and ODA funded ENR projects in the
Philippines. Out of a total of about 11.5 billion USD in 2008, approximately 10 percent refers
to financing agriculture and agrarian reform and some 7 percent was allocated to trade,
tourism and industry.50

Multilateral and bilateral loan facilities are granted to Governments and administered by
GFIs. GFIs will offer these facilities to wholesale and retail borrowers in accordance with the
stipulations in special agreements with the lender (two step loan). The tenors of these loans
to banks are regularly longer than those of the individual subloan agreements. The recipient
bank could use the loan repayments for revolving the funds to further applicants for the
same purpose (second generation loans). The GFIs do not publish whether the facility is
already closed or repayments are available for financing additional projects (revolving). Once
the funds were disbursed and the loan closed, the providers of finance or donors seem to be
not particularly interested in whether or not loan repayments are revolved for the same
purpose.

49
Aside from Greening the Industries, the state owned DBP and LBP offer GF to local government units (LGU).
The smallest units are a total of 42 025 barangays as potential customers throughout the Philippines in addition
to 1512 municipalities, 120 cities and 80 provinces (2010). The total number of LGUs is almost two thirds of the
combined number of large, medium and small enterprises (69 615).
50
http://www.scribd.com/doc/22652797/2-NEDA-Shiela-Marie-Encabo

48
Details are seldom published on whether and how funds are directly accessible for SMEs
and the financing conditions. SMEs might benefit from subcontracts but even when they
obtain advance payments or easier access to loans based on a contract with an LGU about
a green investment. These loans are hardly documented as GF.

3.1.1 World Bank (WB)

a) Chillers Energy Efficiency Project

The World Bank will help the Philippines replace about 375 chillers used in industrial,
commercial, service and institutional establishments with more energy efficient and
environmentally cooling technology.51 Despite technical and economic viability, enterprises
hesitate replacing old inefficient chillers. Against a replacement potential of more than 500
units, program financing reaches less than 25 units after one year, despite numerous
marketing efforts (walkthroughs, seminars, publications). The facility and replacement of
chillers in general does not attract many investors.

Box 17 World Bank: Philippine Chiller

Energy Efficiency Project 2010
Objective: To accelerate replacement of CFC
based chillers to new and more energy
efficient technology.
Chiller Qualification for Replacement
1 centrifugal, screw and reciprocating
2 using CFC, HCFC (ozone depleting
substances)
→ R11 prohibited by 2010
→ R22 freeze consumption by 2010
3 age of chiller is not more than 14
years old
4 minimum cooling capacity is 100 TR
Components
5 1 WB to finance 15 percent of the
cost of chiller
6 80 percent through financing or
equity
7 5 percent exemption from import
duties + taxes
8 technical assistance
9 4 Project Management
The Chillers Energy Efficiency project provides
financial incentives, among others to property
managers or owners, to encourage the disposal
of old chillers, which emit harmful GHG and use
50 percent more energy than newer ones. The
old chillers consume up to 70 percent of the
buildings’ total energy requirements.
The project will be financed by a 2.6 million USD
grant from the Global Environment Facility trust
fund, a 1.6 million USD grant from the
multilateral fund for the Montreal Protocol, an
international agreement that aims to protect the
stratospheric ozone layer, and a 7.3 million USD
Clean Development Mechanism (CDM)
financing, with the German reconstruction bank
(Kreditanstalt für Wiederaufbau KfW) as the
carbon buyer. This facility is accessible, for
example, from BPI.

51
http://www.ecoseed.org/energy-efficiency/power-plants/article/77-power-plants/7381-philippines-turns-to-
greener-chillers-with-world-bank%E2%80%99s-help

49
b) Sustainable Urban Energy Development (SUED) program

Box 18: Annual GHG Emissions in Cebu52

Source GHG emissions In 2011, Cebu City has been chosen as one
public vehicles 8500 tons of three cities in East Asia to pilot the
solid wastes 2000 tons Sustainable Urban Energy Development
electricity 9000 tons (SUED) program of the WB. SUED is also
streetlights 6000 tons funded by grants from the Australian Agency
public buildings 2000 tons for International Development (AusAid).
water and wastewater <1000 tons
In a presentation on the Bus Rapid Transit (BRT) system in May 2011, the WB noted that
Cebu City is already on track in upgrading its transportation system, as jeepneys are
considered inefficient and harmful to the environment.

The impact on SMEs operating jeepneys remains unclear. They might be allowed to
continue operation after retrofitting the engines, maybe plying other routes, or they are
offered the operation of the 50 CNG pilot buses. Specific financial support to bus operators
has not been mentioned. Banks could offer a conventional loan for changing from diesel to
CNG or for acquiring a bus. Reportedly, local governments offered assistance in similar
cases, for example low interest loans.

c) Carbon Credit Purchase

A three year 2.437 million EUR CER purchase agreement between LBP and WB was signed
in January 2010 for the carbon credits generated by LBP’s methane project. This project
gives incentives to livestock projects (piggeries, poultry and cattle, including SMEs’
businesses), and to landfill operators (often LGUs) capturing methane generated from their
industry and use it as fuel to generate their electricity.

Additionally, LBP will also establish subproject agreements with LGUs, private piggeries,
project developers and service providers to acquire carbon credits from them for sale to the
WB.53

d) Other environment oriented activities

WB is prepared to provide 700 million USD to 1000 million USD per year for the next three
years to the Philippines. The new Country Assistance Program aims to help achieve
inclusive growth through several strategic objectives with reducing vulnerabilities, mitigating
disaster and climate change related risks, and reducing GHG emissions in key sectors being
one of them. It is not yet clear in in which way and how far SMEs will benefit from these
funds.

52
http://www.sunstar.com.ph/cebu/local-news/2011/05/30/cebu-chosen-world-bank-program-pilot-city-158244
53
The detailed Carbon Finance Support Facility Safeguards Framework Manual explains the burden banks
experience when involved with an environmental project. http://www-
wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2010/01/27/000333038_20100127013034/R
endered/INDEX/E22850v20revis1s0framework0and0EMPs.txt

50
3.1.2 Asian Development Bank (ADB)

ADB is the third largest ODA partner of the Philippines with 878.3 million USD ongoing as of
2011. Out of this, 289.9 million USD is allocated to Private Sector Operations. For 2011 -
2013 an indicative lending program of 2.9 billion USD is proposed. ADB is still formulating its
Country Partnership Strategy (CPS) for 2011 - 2016, along with its Country Operations
Business Plan (COBP) 2011 - 2013. While still under preparation, the most likely thrusts of
the CPS include reduced environmental degradation and vulnerability to climate change and
disasters.

Box 19 ADB Safeguard Policy Statement

ADB announced in 2009 the
implementation of the Safeguard
Policy Statement that shall help
mitigate the environmental damages
any of its projects might bring. ADB
does not extend loans to SMEs. But,
loans originating from an ADB
program might have more green in
it than other loans.
ADB plays an important role in helping the region move
towards a low carbon and climate resilient
development pathway. It is advancing a wide range of
FA and TA projects in climate change mitigation and
adaptation. Regularly, the description of the facilities
(many of them are still in the planning stage) misses to
explain the mechanisms and how private parties,
including SMEs, can access these funds.

a) List of Projects by strategic priority

1 Expanding the Use of Clean Energy

a Pasuquin East Wind Farm Development Project (200 000 USD for data gathering
and strengthening policies)
b Philippine Energy Efficiency Project (46.5 million USD: retrofit lighting in selected
government buildings; provision of 13 million CFL to consumers; mercury waste
management for fluorescent lighting; establishing an ESCO)
c Renewable Energy and Livelihood Development Project for the Poor in Negros
Occidental (2 million USD: three micro hydropower plants, 350 000 USD
microcredit fund for poor communities)

2 Managing Land Use and Forests for Carbon Sequestration / Crosscutting Projects
a Integrated Natural Resources and Environmental Management Sector
Development Program (1.15 million USD for a study), for more see below

3 Promoting Climate-Resilient Development

a Strengthening Climate Change Resilience in the Integrated Natural Resources
and Environmental Management Sector Development Program (100 000 USD for
a Climate Impacts Risk Atlas)

b) Integrated Natural Resources and Environmental Management Project

The 2011 Lending Program supports an Integrated Natural Resources and Environmental
Management Project (loan 100 million USD, TA component 291 000 USD) and the 2009
Multitranche Finance Facility (MFF) Mitigation of Climate Change through Increased Energy
Efficiency and Use of Clean Energy (TA Special Fund of 225 000 USD). The proposed
components for studies are

51
 1 Renewable Energy (RE): grid connected distributed rooftop solar power, runoff river
hydro and a wind power generation
2 Energy efficiency: distribution (as hire purchase) of energy efficient appliances (TV,
air conditioners, fridges and fans). This component may also finance scaling up the
public lighting and efficiency buildings components of the Philippine Energy Efficient
project
3 Market for electric vehicle: distributing (lease or hire purchase) about 20 000 electric
tricycles replacing 2 stroke and 4 stroke tricycles that are common in Metro Manila
(200 000 units) and across the country (3 500 000 units). Tricycles produce about 10
million tons of CO2 in the Philippines.

The 2011 Nonlending Program with environment background encompasses

Rural Community based Renewable Energy Development in Mindanao54
Disaster Risk Financing (proposed TA 800 000 USD for 2011 and FA 100 million
USD for 2013)
Managing Manila’s Disaster Risks, a Paradigm Shift: from Relief and Response to
Disaster Risk Management.55

c) Seed Capital Assistance Facility (SCAF)

SCAF for venture capital was funded from the Global Environment Facility with 9.8 million
USD in 2008.56 The SCAF, a climate finance option is a grant based TA jointly implemented
by ADB and the United Nations Environment Programme (UNEP). ADB announced in June
2011 its plan to provide from SCAF one million USD each to two clean energy focused
private equity fund managers, one with Philippines as codomicile.57 SMEs would have to
address these - presently not yet known - fund managers once they have been selected.

d) Carbon Fund

ADB has setup a new fund which will provide financing for green projects in the Asia Pacific
region that can generate carbon credits beyond 2012. The initial fund size is 100 million USD
and could be increased to 200 million USD if the demand calls for it.58

ADB is concerned that since the Kyoto Protocol’s first commitment period expires on 31
December 2012, this could hamper the trading in post 2012 carbon credits. In turn this will
affect the interest in developing new clean energy projects and other climate change
initiatives in developing countries. With the lack of long term price incentives for reducing
GHG emissions, investment trends in green projects could return to normal levels. But with
this fund in place, ADB hopes to stimulate new investments in clean energy projects even
before a new international agreement is reached. The Future Carbon Fund also goes with
ADB’s Carbon Market Initiative (CMI), which provides project cofinancing facility, carbon

54
http://www.adb.org/Documents/TARs/PHI/44132-01-phi-tar.pdf
55
For more see Yodmani Suvit, Disaster Risk Management and Vulnerability Reduction: Protecting the Poor, at:
http://www.adb.org/poverty/forum/pdf/Yodmani.pdf
56
Meanwhile the funding increased to 10.5 million USD; see more:
http://www.climatefinanceoptions.org/cfo/node/42
57
http://www.asiandevbank.org/Documents/Climate-Change/SCAF-Announcement-June2011.pdf
58
http://www.alternat1ve.com/biofuel/2008/07/08/asian-development-banks-future-carbon-fund/

52
credit marketing program, and technical support for project preparation and implementation
of CDM eligible projects and their developers.

e) Clean Energy Projects

ADB announced that they have a 1 billion USD war chest for investing in Clean Energy
Projects. The bank has not yet announced how to employ it. The announcement provoked
fierce criticism. For more details see Annex 7.

3.1.3 Japan International Cooperation Agency (JICA) and Japan Bank for
International Cooperation (JBIC)

Previously managed by the Japan Bank for International Cooperation (JBIC), the bilateral
loans are concessional loans provided to developing countries and the facility is part and
parcel of new JICA schemes. This follows the merger of JICA and JBIC’s former Overseas
Economic Cooperation Operations in 2008.59 JICA cooperates with DBP (two step loans with
relending facility). JBIC does not provide facilities directly for SMEs.

JICA (allegedly ODA rank 1) continues the “Cool Earth Partnership” (2008),60 (For more
details please see Annex 6). One component of the Technical Cooperation with the
Philippines concerns enhancing the competitiveness of fresh and semiprocessed agricultural
products through appropriate and sustainable packaging technology.

Box 20 Workshop on GF: Tools and Opportunities for Banks

The Japan Bank for International Cooperation (JBIC) held a workshop on GF: Tools and
Opportunities for Banks on 12 May 2011 with the Association of Development Financing
Institutions in Asia and the Pacific (ADFIAP), and the Development Bank of the Philippines (DBP).

Attended by about 30 participants from the country's two public financial institutions that could
become prospective partners for “Global Action for Reconciling Economic Growth and Environmental
Preservation” (GREEN) operations JBIC will conduct in the Philippines and from three private sector
financial institutions and other relevant agencies. They actively exchanged views on such issues as
the role of private financial institutions in GF, JBIC's GREEN operations, and the utilization of the J-
*
MRV Guidelines for measuring, reporting and verifying GHG emission reductions in JBIC's GREEN
operations.

Also in 2008, JBIC presented a newly launched financial instrument called Global Action for
Reconciling Economic Growth and Environmental Preservation (GREEN). GREEN supports
projects that help mitigate the effects of global warming as well as its complementary
Guidelines for Measurement, Reporting and Verification (MRV) of the GHG Emission
Reductions.61

Presently, JICA waits for the GOP’s final action plan on GHG reductions and adaptation to
climate change impact on which FA and TA proposals will be based. Apart from TA (policy
advisor, EE training), FA might come in form of a project loan with potential focus on forestry
or reforestation disaster risk management, or in form of a two step loan for RE or EE.
59
Nowadays, JBIC finances the private sector, comparable to IFC.
60
http://www.mofa.go.jp/policy/economy/wef/2008/mechanism.html
61
http://www.jbic.go.jp/en/about/topics/2011/0613-01/index.html

53
JICA’s finance in the Philippines includes infrastructure projects that could well be green and
fall under the Climate Change facilities, such as the River Flood Control Project. This facility
is not a direct green facility for SMEs, who may benefit only indirectly, for example as
subcontractors.

3.1.4 United States Agency for International Development (USAID)

USAID (ODA rank 4) developed a Philippines Country Assistance Strategy for 2009 - 2013
covering four priority areas, with Environment and Energy being one. Approximately 10
percent or 11.8 million USD out of the 115.9 million USD funding requirement for US Fiscal
Year (FY) 2010 was allocated to Environment and Energy.

Microenterprises Access to Banking Services (MABS) is a USAID assisted program of the

Rural Bankers Association of the Philippines (RBAP). The average loan size is 100 000 PHP
to 150 000 PHP. It features the green efforts of First Macro Bank (see Chapter 3.3.3) being
one of its partners.

USAID supported a symposium in October 2011 questioning “How does the Green Loan
affect the local environment?” An inspirational Green Award shall be given to a Rural Bank.

A convention on Climate Change (providing information for entrepreneurs) is planned for

May 2012.

3.1.5 Kreditanstalt für Wiederaufbau (KfW)

KfW’s website on programs and projects in the Philippines does not present any activities in
the field of SME support to finance green investments.

In 1996, KfW started together with DBP the Industrial Pollution Control Lending Program
(IPCLP I) being followed by a second phase in 2000 (IPCLP II). Presently, KfW supports
LBP in the CLEECP, a loan program aimed at reducing primary (fossil) fuel consumption and
GHG emissions (for more details see Chapter 3.2.2 e on LBP and Annex 21). The particular
feature of KfW backed loans is their long term fixed interest rate about 2 percent below the
market rate.62 KfW is also registered as carbon buyer.

3.1.6 International Finance Corporation (IFC)

IFC, the private arm of World Bank, is a direct investor and supports the Sustainable Energy
Finance (SEF) program of Bank of Philippines Islands (BPI) since 2009.63 In 2010, IFC and
Banco de Oro Unibank, Inc (BDO), the country’s largest bank, commenced their SEF
cooperation. The project entails a risk sharing facility (“the Facility”) of up to 44 million USD.
In 2011, Metrobank joined. Furthermore, IFC invested in Plantersbank (see Chapter 3.3.2)
and supports the ECCP’s Energy Smart Program (see Chapter 3.5.3).

62
LBP calculates and offers the exact interest rate to loan applicants only after completing the loan assessment
process.
63
For more details on SEF see Chapter 3.2.1 on BPI.

54
IFC with support from the Global Environment Facility (GEF)64 works hand-in-hand with
banks to enable businesses to finance their EE and RE projects. IFC’s technical experts, a
TA component, determine possible energy projects that can help lessen electricity costs,
improve production and operational efficiency, increase company profitability and reduce
GHG emissions.

Box 21 IFC and Environmental Issues When Choosing Partner Banks

IFC assesses its partner banks’ (BPI, BDO, Metrobank, RCBC) capacity to manage social and
environmental risks and review their labor practices according to “IFC’s Performance Standards 2:
Labor and Working Conditions.” If required, IFC will suggest supplemental actions to address any
gaps identified. Based on the review, the banks will be required to
develop and / or upgrade, if necessary, any existing Social and Environmental Management
System (SEMS), prior to disbursement to the satisfaction of IFC
implement the SEMS, to ensure that its investments / activities are in compliance with the
applicable performance requirements
identify responsible, qualified persons to manage and implement the SEMS.

Whereas the SEF and support in ECCP’s Smart program addresses also SMEs, IFC
engages also in large RE financing with a 4.1 billion PHP loan (almost 100 million USD) for
the Energy Development Corporation (the privatized PNOC EDC) to fund investments in the
geothermal sector.65

3.2 Environmental Loan Programs of Universal Banks

Universal Banks account for 84 percent of the total loan portfolio of the entire banking
system. In real terms, lending to the micro and small sector has declined in the past decade.
Banks are less compliant with BSP lending targets, in particular in the micro-small loan
sector (accomplishment: 61 percent of the target)66.

A table in Annex 32 provides an overview about the ten largest universal banks, which
account for about 76 percent of total assets in the banking system and 47 percent of bank
branches. For reasons of comparison, information about Plantersbank is attached. It is a
leading thrift bank, one of the most accepted SME banks, a “private development bank.”

Three banks are outstanding in the promotion of GF and presented in the following
• BPI, a leading private bank, offering the SEF program; Banco de Oro Unibank [BDO]
joined in 2010, and Metrobank in 2011
• LBP, a government bank
• DBP, a government bank with one of the most extensive branch networks.

64
GEF unites 182 countries in partnership with international institutions, NGOs and the private sector to address
global environmental issues. GEF is the largest public funder of projects to improve the global environment.
Since 1991, GEF provided 9 billion USD in grants and leveraging 40 billion USD in cofinancing. For more
details see: www.thegef.org.
65
http://www.alternat1ve.com/biofuel/2008/11/26/edc-gets-ifc-funding-for-re-projects/:
66
Lagua, Benel P, President and COO. Small Business Corporation, Philippines, 2011

55
3.2.1 Bank of Philippines Islands (BPI)

BPI is a bank with a dedicated GF hallmark which is the Sustainable Energy Finance (SEF)
Program.67 BPI promotes SEF with a special brochure asking customers to Invest in Energy
Efficiency, to Cut Power Costs, and to Explore New Technologies, Be Environment-Friendly.

The SEF Program provides financing to invest in technologies aimed at improving the
efficiency of energy generation, energy distribution and energy use. Sustainable energy
projects include EE modifications and RE technologies.

BPI projects that such technologies can reduce operating and energy expenses by at least
20 percent, “savings that go straight to your company’s bottom line.” “This is also an
opportunity to lessen carbon emissions, which greatly contribute to the worldwide issue of
global warming.”

BPI has set up the SEF program with IFC support and advertises investing in EE as
commercially viable: Turning your Business GREEN to GOLD. The bank offers its clientele
technical expertise, advice, and data for the loan proposal (these are cost savings for
applicants / entrepreneurs) and linking with technology vendors, suppliers and consultants.

Product essentials include

working capital financing for purchasing of raw materials and consumables such as
light bulbs, cooling refrigerants and other short term financing needs.
capital expenditure financing for financing fixed asset acquisition: new plant or
building construction, for expansion or modernization, acquisition of machinery and
equipment such as cooling systems.
leasing as a method of paying for the use of an asset over a specified period of time,
an alternative mode of financing an asset compared to outright purchase or
borrowing. Any type of asset can be leased as long as it is durable, identifiable,
insurable and has a good secondary market and reliable after sales support.

Industrial machineries such as generators, compressors air conditioners and manufacturing

equipment can also be leased through the SEF Program.

IFC guarantees 50 percent of the loan with a maximum amount of 150 million PHP. The
details of the guarantee have not been explored. For RE and EE projects, the average loan
amount exceeds 100 million PHP. Clients have to submit various contracts, permits, and
licenses, including ECCs.

BPI has assisted 72 clients through TA and preliminary Walkthrough Energy Audits and
generated a loan volume of 1.340 million PHP.68 Reportedly, less than 10 percent of the
walkthrough assessments for commercial buildings targeting the inefficiency of old chillers
resulted in loans in the same year. Seen apart from the free Walkthrough Energy Audits,

67
http://www.mybpimag.com/index.php?option=com_content&view=article&id=712:sustainable-energy-finance-
program&catid=40:article&Itemid=857
68
http://www.mybpimag.com/images/pdf/2009_SR/2009%20BPI%20Sustainability%20Report.pdf

56
other advantages for clients of the SEF program loan particularly a straight commercial loan
is not immediately evident.

The BPI group has so far disbursed Ᵽ 3 billion of its loan portfolio for SEF (about 0.4 percent
of the loan portfolio), including the accounts in the books of its leasing arm BPI Leasing
Corp, BPI Assistant Vice President Nanette Biason said in a briefing. With another 2 billion
PHP in the pipeline, the bank is seen on track with the goals of the green program.69

The idea to offer free walkthroughs, identifying investment opportunities and propose a
related loan is attractive. However, it seems that the ratio of number and cost of free
walkthroughs related to income from loans that are generated this way, is not in favor for an
expansion of this activity. Besides, BPI promotes the SEF also in other ways, like
presentations in meeting with selected entrepreneurs.

BPI does not publish loan conditions such as interest rates and tenors. They follow those of
other commercial loans and are negotiable.

Box 22 Banco De Oro Unibank (BDO) Joins in SEF

In 2010, top lender Banco de Oro Unibank Inc (BDO) has signed an agreement with IFC on local
private sector financing for “sustainable energy investments that will help the country manage
climate change.” BDO sees a lot of investment potential in the EE and RE markets as well as in
CDM finance. IFC’s support for the Sustainable Energy Finance (SEF) program builds on a 150
million USD equity investment in the bank earlier this year and a 90 million USD subordinated note
investment in 2007.

3.2.2 Land Bank of the Philippines (LBP), Landbank

LBP’s green color refers to this state bank’s first priority sector: agriculture. Meanwhile, LBP
defined nine priority sectors with environment being one of these. It developed a Corporate
Environmental Policy.

A bridging loan from LBP to the Philippine Reef and Rainforest Conservation Foundation, Inc
(PRRCFI) in 1994 was the bank’s first ever environmental loan.70

The PRRCFI, a nonstock, nonprofit corporation established in 1994, raised funds for the
purchase of Danjugan Island (43 hectare uninhabited) in Brgy Bulata, Cauayan, Negros
Occidental for conservation.

69
Business Inquirer, 8 February 2011
70
The loan was the bank’s first ever environmental loan and was priced at T-bills + 2 percent points. The bridging
loan had a term of five years and was paid in three years http://www.prrcf.org/about_prrcfi.html

57
Of the total approved loans, RE
sources such as geothermal, hydro
power and biomass received 3.7
billion PHP (about 90 million USD)
while much smaller biofuels projects
accounted for 226.2 million PHP (5.4
million USD). Measured by its total
portfolio, about 2 percent is invested
in green environmental finance.

The Land Bank has LGU exclusive GF

facilities. However until 2010 no
specific financing window for SMEs
was established although existing
financing programs for SMEs such as
the Retail Countryside Fund (RCF)
and the Countryside Loan Fund (CLF)
can support investments in
environmental initiatives. LBP makes
it mandatory for borrowers / project
proponents to prepare and submit IEE
/ ECC for projects submitted for RCF
and CLF financing.

LBP is sourcing increasingly funds

from its multilateral and bilateral Figure 5 Landbank Corporate Environmental Policy
partners for onlending to cooperatives,
SMEs, LGUs, agribusinesses and other development players.71 LBP is currently negotiating
a total of 102.98 million USD from the European Investment Bank (EIB) and the KfW.

LBP employs specialists who shall assist clients to access their CER certificates through a
Program of Activities (PoA, please see Annex 30).

a) Carbon Finance Support Facility (CFSF)

The LBP’s Environment Program and Management Department manages the CFSF, a
noncredit product. The CFSF was established to provide the following services in order to
implement GHG emission reduction through potential CDM projects
a Funder / Arranger of CDM projects
b assistance to project proponent / carbon seller
c assistance to carbon buyers.

For more details about the CFSF please see Annex 9.

71
https://www.landbank.com/newsdetails.asp?id=307

58
Table 8 Potential RE / EE Projects

Project Type Example

Renewable Energy Hydro, solar, wind, biomass, geothermal, tidal and wave power
Fuel Switching Coal to natural gas, diesel to biodiesel (cocodiesel); coal to rice hulls /
bagasse
Energy Efficiency Modifying processes at the demand side to reduce amount of electricity
required (like modernization / upgrading of equipment)
Waste Management Capturing methane gas from wastes to generate power
Forestry Planting trees (reforestation)
Industrial Reducing clinker in cement production; emission reduction on steel and
aluminum production

b) Jatropha Financing Program

SMEs, farmer organizations, and large agribased corporations are potential participants in
the Jatropha Financing Program which supports biofuel projects sourced from jatropha
curcas or tuba-tuba.

Table 9 Facts about Jatropha

Jatropha, commonly known as grows almost everywhere

tuba-tuba is a nonedible, fruit
bearing shrubs with high oil
content seeds which has a wide
range of uses such as,
pesticide, soap, fertilizer, oil for
lighting and fuel.
grows best in undulating land with adequate rainfall
starts to bear fruit after 8 months
survival rate: 90 to 95 percent (drought resistant)
productive life: 35-50 years
oil recovery rate: 28 - 40 percent
yield: 2 to 10 tons of seeds / hectare depending on its age

Box 23 Jatropha Financing Program

Loan Ceiling: 43 205 PHP per hectare

Cost sharing ratio: LBP 76 percent; PNOC-AFC 9 percent; Growers 15 percent
Loan tenor: seven years
Grace period: three years on principal
Deferred interest for the first three years to be spread over the remaining term
Eligibility Criteria:
 must pass the technical validation of the Anchor Firm*)
 must pass LBP’s lending criteria
 must sign Production, Technical, Marketing Agreement (PTMA) with Anchor Firm*

Anchor firm
*) Anchor Firm is a duly registered business entity engaged in biofuels development that is capable
of assuring the market for jatropha seeds / oil / biodiesel in commercial quantities, and providing
technical assistance to the growers.

59
c) Countryside Loan Fund (CLF)
World Bank finances LBP’s Countryside Loan Fund (CLF), a wholesale credit facility. It is
made available through LBP to participating (accredited) financial institutions (open to all
banks72) for relending to eligible subborrowers, like
sole proprietorships
partnerships
corporations (at least 70 percent Filipino owned)
cooperatives / associations.

LBP mentions explicitly environmental protection projects (like wastewater treatment facility,
biogas, etc) as eligible under the Credit Support for the Environment, Agribusiness, Small
and Medium Enterprises Program (CREAM). Also, tourism related projects can obtain
finance under this scheme.

d) REWARD
To help in further promoting the development of alternative fuel and energy sources, LBP
has opened a loan facility called Renewable Energy for Wiser and Accelerated Resources
Development or REWARD. It may be availed of by entrepreneurs (whether sole proprietor,
partnership or corporation), cooperatives, LGUs and NGOs to help them undertake project
feasibility studies or provide working capital and fixed asset investment for RE projects.
Eligible projects for financing include biofuel, biomass, hydropower, wind projects,
geothermal, solar photovoltaic, solar water heaters and cogeneration projects.

e) Credit Line for Energy Efficiency and Climate Protection (CLEECP)

LBP partnered up with KfW to offer about 1.2 billion PHP of GF to priority sectors for clean
energy projects.73 Dubbed as LBP’s Credit Line for Energy Efficiency and Climate Protection
(CLEECP) approved projects for financing will be able to avail of a low interest long-term
loan up to ten years in length.

Those considered as priority sectors for loan approval of clean energy projects include: small
farmers, fishers, SMEs, sole proprietorships, partnerships, corporations (at least 70 percent
Filipino owned), cooperatives, associations, local government units (LGU) as well as
government owned and controlled corporations (GOCC).

Examples of green energy projects that fit the criteria for loan approval are
1 reduction of primary energy (like diesel, coal, gas) consumption
2 reduction of direct GHG emissions (replacement, retrofitting or energy efficient
modernization of CFC, HFC and HCFC chillers)
3 installation or EE modernization of biomass cogeneration facilities
4 replacement or EE modernization of machinery and equipment powered by primary
energy resources.

72
Also, unibanks participate: Banco de Oro (BDO)
73
http://www.alternat1ve.com/biofuel/2009/02/20/landbank-and-kfw-offers-green-financing-for-small-
businesses/:

60
In principle, CLEECP is also available for SMEs. A maximum loan amount for the low
interest KfW financed share has been stipulated (200 million PHP), but no minimum. For
more details on CLEECP please see Annex 21.74

3.2.3 Development Bank of Philippines (DBP)

DBP vigorously pursues its commitment to environmental protection and sustainable

development. DBP is one of the first Philippine banks to integrate environmental
considerations in all aspects of its operations. The bank has established an Environment
Management System (EMS) and obtained ISO 14001 EMS certification (for more details
please see Annex 20). DBP provides financing as well as technical assistance to projects
that pass environmental criteria (sound). The bank works hand-in-hand with key players from
both the private and public sectors such as LGUs, national agencies, private corporations,
multilateral and bilateral lending institutions, private banks, rural banks, cooperatives, among
others. DBP plays also an active role in encouraging clients and their participating financial
institutions under its wholesale lending program, to include environmental considerations in
their businesses and thrusts.

Box 24 DBP Environmental Policy Statement

The DBP, in its developmental mission and initiatives, is committed to environmental protection
and sustainable development and shall integrate and implement environmental considerations
into all aspects of its operations and services, asset management and business decisions. In
pursuit of this policy, DBP commits to
develop, implement and continually improve an Environmental Management System
encourage other institutions to pursue environmental protection and pollution prevention
through the Bank's lending and technical assistance programs, and pursue environmental
management practices, including environmental due diligence inquiry in risk assessment
and management
comply with relevant environmental laws, regulations and agreements to which DBP
subscribes
set and review environmental objectives and targets along identified significant
environmental aspects and
ensure that all employees at all levels are made aware of and are actively involved in the
Bank's Environmental Policy and programs through appropriate training and information.

DBP’s commitment to environment is mirrored in the establishment of the Environment and

Climate Change Unit Program Development. The bank employs specialists who are
frequently (at least once annually) trained to handle environmental issues.

DBP actively promotes investments in

clean technology rural electrification / rural power
solid waste management natural resources conservation
new and renewable energy pollution abatement and control
carbon investment banking water supply and watershed management.

74
LANDBANK - Wholesale Lending Department, LANDBANK Plaza, 1598 M H del Pilar St cor J Quintos St
Malate, Manila, phone: 551 2200: fax: 528 8503

61
DBP offered already more than 15 years ago, what is today named GF. Past programs
include75
a Environment Infrastructure Support Credit Program (EISCP, 1996), a 5 billion JPY
facility from JICA that supported 18 firms (50 million USD) with SME related
investments in clean technology and pollution control, efficient management of
natural resources, pollution monitoring equipment, Environmental Management
Systems (EMS) and ISO 14000 certification
b Industrial Pollution Control Lending Program (IPCLP), a 10 million DEM KfW facility
in 1996, with target market SMEs engaged in food processing, piggeries,
slaughterhouses, leather tanning, metal working, furniture; it was followed by IPCLP
II.
c Credit Line for Solid Waste Management (CLSWM), a KfW facility signed 2003 and
closed December 2010. The implementation of the KfW CLSWM is part of the
SWMP.76 The CLSWM is a facility that assists local government units and about 70
private enterprises77 in implementing improved and comprehensive solid waste
management services. Eligible projects include conversion of open dumpsites intro
controlled dumpsites and sanitary landfills; construction of sanitary landfills including
acquisition of equipment for waste disposal and treatment; waste collection and
transport including collection vehicles and other equipment; facilities for waste
treatment and recycling; and consulting services for project preparation and
implementation.78

By 2004, DBP has assisted close to 100 industrial enterprises through the EISCP and IPCLP
which include also SMEs (as mandated by the 2008 RA 9501 Magna Carta).79

3.2.4 DBP environmental loans, no active marketing

The following describes four green loan facilities which are not actively marketed (not on
DBP’s website). The program might still be accessible on demand with new loans financed
from repayments of earlier loans (second generation loans).

a) Environmental Industrial Support Credit Program (EISCP)

Supported by JICA, this project’s objective was to affect improvements in the disposal of gas
emissions, wastewater and solid waste, and in production processes, by providing credit to
support environmental investment. DBP conducted environmental performance monitoring of
its clients. The bank advertised: “Go green. Make use of the EISCP window to invest in
environmentally sound operations. Finance your operational and capital assets that affect
reduction of waste and conservation of energy through this program.”80

75
Garcia, Edgardo F, (COO, DBP), Environmental Leadership in Banking, ppt presentation,
http://sdsap.org/data/T Edgardo Garcia DBP.pdf
76
http://www.iu-info.de/cms/philippines.html
77
http://www.neda3.ph/index.php?option=com_content&view=article&id=110&Itemid=110#CreditLine
78
http://www.mb.com.ph/node/172559
79
DBP lends 10.4 PHP billion to ‘green’ projects, http://www.mb.com.ph/node/172559, 19 July 2004
80
http://www.mybpimag.com/index.php?option=com_content&view=article&id=172&Itemid=205

62
Table 10 Outline of EISCP Loan Agreement81

Disbursed Amount 5058 million JPY(50 million USD)

Loan Agreement March 1996
Interest Rates 2.5%
Repayment Date 30 years
Grace Period 10 years
Final Disbursement Date July 2002
Terms and conditions for subborrowers
Loan limit 80% of total project costs (eligible components)
Interest 11%, fixed
Repayment 3 - 15 years
maximum deferral 5 years

b) Sustainable Solid Waste Management Program (SWMP)82

Funded from KfW, SWMP is designed primarily to assist the local government units (LGUs)
in the development and implementation of their respective solid waste management
programs / projects. Eligible beneficiaries are LGUs and private enterprises with at least 70
percent Filipino ownership and minimum 20 percent equity participation. SWMP promotes
the activities pertaining to the following
- control of waste generation
- collection
- transfer and transport
- storage
- disposal
of solid wastes and solid waste processing. Investments suitable for SMEs may include
garbage trucks, trailers, composting or biogas plants, facilities for sorting recyclables and
others.

c) Rural Power Project (RPP)

The Rural Power Project (RPP) was approved by the World Bank in 2003 through the Global
Environment Facility (GEF, 12 million USD grant fund). The project also aims to contribute
towards the global objective of mitigating climate change caused by GHG emissions through
wider use of clean and RE technologies in power generation. The RPP targets were:
financing access to electricity for 10 000 houses with 40 million USD or about 4000 USD
(175 000 PHP) per house. The RPP promoted solar home systems (SHS) of about 20 - 50
watt peak capacity for individual households and 100 watt peak capacity or more for small
business or communal use. The systems are distributed and serviced on commercial basis
by “Accredited Participating PV Companies” and provided appropriate incentives by the
project.

DBP differentiates between four project types. Those relevant for SMEs and cooperatives
are
Type A: For development and construction of small scale energy generation and mini
grid rural electrification projects thru conventional and RE resources.
Type D: Any project which improves the reliability and efficiency of rural power supply
and increase access to electricity services by unserved customers.

81
http://www.jica.go.jp/english/operations/evaluation/oda_loan/post/2005/pdf/2-17_full.pdf
82
http://emb.gov.ph/nswmc/PDF/funding/ISWM-Source%20Book%20for%20LGUs-Booklet-
Vol%201%20Only.pdf

63
The interest rates fixed for up to 15 years are 9 percent per year for the initial five years and
10 percent per year afterwards.83

The project was successful: World Bank approved additional finance (almost 50 million USD)
in 2009.84 Today DBP offers GF for New and Renewable Energy Projects (see below).

Box 25 Power Project: DBP Wins Two Regional Awards

VANCOUVER, Canada - The Association of Development Financing Institutions in Asia & the Pacific
(ADFIAP) has once again recognized DBP’s development projects and initiatives during the 33rd
ADFIAP Annual Conference, 10 – 12 May 2010.

DBP’s Rural Power Project (RPP) was cited under the Environmental Development category for its
significant impact in minimizing or eradicating environmental risks and in promoting environmental
management practices. Through this WB funded credit facility, DBP has embarked on the sustainable
provision of adequate, affordable and reliable energy services particularly in rural areas.

Aside from its goal of enabling barangays and about 90 percent of households in rural areas to have
access to electricity services upon project completion, the RPP also seeks to contribute to global
efforts towards mitigating climate change caused by greenhouse gas emissions. Towards this end,
the RPP supports projects that promote wider use of clean, RE technologies in power generation,
thus avoiding harmful CO2 emissions.

Box 26 Empowering Rural Communities with Shell Solar Home Systems (SHS)

Shell Solar Philippines Corporation (Shell Solar), in partnership with the Department of Energy (DOE)
and seven microfinancing institutions (MFI), initiated the commercial distribution of solar photovoltaic
(PV) systems in the country through the WB funded Rural Power Project dubbed as the Incubator
Program. The Program, aims to install about 1000 solar PV systems or 100 - 200 systems per partner
institution within a period of six months starting in April 2007. This pilot project shall develop solar PV to
grow into commercial scale. It endeavors to implement decentralized electrification within selected
partnerships in all parts of the country. The MFI partners were chosen for their capability to reach the
remote barangays not connected to the electric grid.
Box 27 Examples of Green Projects

Examples of green projects which can avail of these loans from the approved financial lenders are
acquisition of brand new vehicle (at least EURO 2 compliant)
conversion of two-stroke to four-stroke engine for tricycles
retrofitting of engine
diesel particulate trap for buses and jeepneys
installation of catalytic converter and
use of alternative fuels such as
o compressed natural gas (CNG),
o liquefied petroleum gas (LPG) and
o biofuels.

d) Cleaner Public Transport Financing

83
Mendoza, Eufemia, Vice President DBP, Project Briefing on DBP’s Credit Facilities, 2 August 2003;
http://www.developmentfunds.org/pubs/Eufemia%20Mendoza%20paper.pdf
84
http://web.worldbank.org/external/projects/main?Projectid=P113159&theSitePK=40941&piPK=73230&pagePK
=64283627&menuPK=228424

64
In 2007, DBP announced a 1 billion PHP Cleaner Public Transport Financing Program. This
program extends credit to credible financial institutions at 8 percent interest per year which in
turn they can use to finance lending programs to transport groups seeking to comply with the
Clean Air Act of the Philippines RA 8749. Up to 90 percent of the total project cost can be
covered by the loan.85

DBP’s promoted environmental facilities

On its website DBP promotes several environment initiatives. Below are profiles of those
facilities that do not exclude SMEs from participation.

a) Environment Initiatives

Table 11 DBP Environment Protection and Management Facility

Aspect Details
Priority Projects cleaner technology investments
pollution abatement technologies
solid waste management
sanitary landfill
materials recovery facilities
waste segregation / reduction
industrial pollution prevention / reduction projects
Eligible Borrowers private enterprises
local government units / government owned and controlled
corporation
participating financial institutions
Terms up to 12 years with 3 years grace period

b) Climate Change and Carbon Financing (clean development mechanism CDM)

Facility

The CDM is a promotion of the JBIC 6 facility.86

Table 12 Climate Change and Carbon Financing Facility

Aspect Details
Priority Projects CDM projects
any project which has business relations with Japanese enterprises
Eligible Borrowers private enterprises
local government units
cooperatives
Terms can extend to five (5) years, dependent on cash flow
c) New and Renewable Energy Projects

85
http://www.alternat1ve.com/biofuel/2007/08/27/philippine-government-bank-offers-green-transport-
lending/#more-461:
86
Volume: USD 105 million; for more details see: adfiap.org/wp-content/uploads/2010/01/Sumio-Ishikawa.doc

65
The program for new and renewable energies is meant for larger enterprises but still within
the reach of small and medium incorporated enterprises (approximately maximum loan for a
medium enterprise is USD 1 million USD). The facility finances EE projects without any
indication of a minimum loan amount. While it is intended also for private enterprises, there
may be few takers among SMEs for this type of loan.

Table 13 New and Renewable Energy

Aspect Details
Priority Projects power generation
- renewable energy
- conventional
power transmission and distribution
energy efficiency
alternative fuels
Eligible Borrowers private corporations (at least 70 percent Filipino owned)
local government units
electric cooperatives
private financial institutions
government owned and controlled corporations
Terms up to 15 years inclusive of up to 5 years grace period based on cash flow

d) Environmental Development Program (EDP)

The EDP is a policy based lending facility funded by the Japan International Cooperation
Agency (JICA) with 24.846 million JPY (about 250 million USD) in 2008.87 It is intended
mainly to support viable environmentally sound and profitable investments in new and RE,
water supply and sanitation, industrial pollution prevention and control as well as solid /
healthcare / hazardous waste management.

Loan amounts range from 500,000 PHP (11 000 USD) to 5 000 000 PHP (110 000 USD),
therefore in reach even for micro enterprises. The repayment terms are up to 15 years with
up to five years grace period, the interest rate fixed throughout the loan period. For private
enterprises maximum financing is 80 percent of the investment costs. These include the
preparation of the feasibility study, initial working capital and capital investment exclusive of
land and other real properties.

EDP is based on the principle of sustainable development for both government and private
sectors. Its components are
credit programs
Clean Development Mechanism (CDM): assist CDM eligible projects in securing
carbon credits88 (enhancing project viability with additional revenues)
TA to borrowers.

87
http://www.jica.go.jp/philippine/english/office/about/about06.html
88
For details on DBP’s Carbon Financing see: http://www.docstoc.com/docs/67930866/Climate-and-Carbon-
Finance-Nov-17

66
Supported projects include
power generation and distribution
clean alternative transport fuel, such as LPG, CNG
water supply, sanitation services
waste management
water and air pollution prevention and control
ecotourism
carbon sequestration.

Additional programs concern

Sustainable Waste Management Eco Enterprise Program (SWEEP)
Sustainable Partnership for Eco Enterprise Development (SPEED).

i) Sustainable Entrepreneurship Enhancement and Development Program (SEED)

SEED is DBP’s umbrella program for SMEs. Consistent with the DBP’s developmental
thrusts, the program aims to enhance the access of SMEs to credit facilities and fast track
the credit process.89

i1) SEED Cleaner Public Transport Program

DBP announced a 1000 million PHP “Cleaner Public Transport Financing Program. This
program extends credit to credible financial institutions at 8 percent interest/year which in
turn they can use to finance lending programs to transport groups seeking to comply with the
Clean Air Act of the Philippines RA 8749. Up to 90 percent of the total project cost can be
covered by the loan. (See also Chapter 3.2.3.1 d.)

Table 14 SEED Cleaner Public Transport Program

Priority Projects public transport sector

Eligible Borrowers transport operators (tricycles and jeepneys)
Terms maximum of five years inclusive of three months grace period

i2) SEED High Value Crops Financing Programs

Priority projects concern selected fruits, vegetables and plantation crops.

Table 15 SEED High Value Crops Financing Programs90

a fruits banana, pineapple, mango, durian, pomelo, calamansi, pili, lanzones,

papaya, mangosteen
b vegetables asparagus, broccoli, shallot, cabbage, celery, cauliflower, etc
c plantation crops rubber, coffee, oil palm and cacao
Terms up to ten years inclusive up to three years grace period

89
Read more: http://www.pinoybisnes.com/finance/development-bank-of-the-philippines-dbp-microfinancing-
program/#ixzz1QJDNgPTm
90
Read more: http://www.pinoybisnes.com/finance/development-bank-of-the-philippines-dbp-microfinancing-
program/#ixzz1QJDhoipQ

67
i3) SEED Organic Agriculture Financing Program
The facility is for the production of organic rice, muscovado sugar and organic vegetables /
processed organic vegetables (pickles, chunks, etc). The wholesale credit has terms up to
five years inclusive up to three years grace period. The maximum interest rate for
subborrowers (up to 18 percent per year) indicates that this wholesale loan addresses the
lower SME segment.

Table 16 SEED Organic Agriculture Financing Program

Borrower conduit SEC registered financing company

- thrift banks, rural banks, MF banks, cooperative banks
- nonbanks / NGO, cooperatives
Collateral subborrowers own titled land
crop insurance to be assigned in favor of DBP
Balance of deposit account: minimum five percent of outstanding balance
Interest rates DBP to borrower conduit: minimum 8 percent per year
Borrower conduit to subborrower: maximum 18 percent per year

j) DBP Lending for SME

DBP Lending for SME is another facility which is general in nature, but available for financing
green measures. Loan purposes include modernization and acquisition of new technology.
In most cases, these purposes are simultaneously resource and / or EE improvements.

Table 17 DBP Lending for SME

Interest Rate market based, fixed or variable

Maturity 15 years, three years grace
Collateral any form acceptable to DBP
Others loans counseling

k) Retail Lending for Micro and Small Enterprises91

Eligible Borrowers: start-up or existing small enterprises with assets of not more than 15
million PHP and with loan requirements of over 150 000 PHP and maximum 10 million PHP
Loan amount up to 90 percent of total project cost
Maturity ten years
Grace period three to five years

l) DBP in joint RE projects with foreign firms

DBP president, Reynaldo David, said that they have entered into an agreement with three
foreign companies for the possibility of exploring RE projects in the Philippines. The three
companies are
1 American firm Constellation Energy Corporation; the firm’s business is exploration,
development, utilization and commercialization of RE projects, primarily in ocean,
solar, wind, biomass, hydro and geothermal power. They have already applied with

91
Read more at: http://www.pinoybisnes.com/finance/development-bank-of-the-philippines-dbp-microfinancing-
program/#ixzz1S3ba69RU

68
 the DOE for the rights to develop wind power sites in Ilog in the province of Negros
Occidental and in Pamplona in Negros Oriental.
2 Canadian’s Foundation Markets, an investment bank and limited market dealer
focused on assisting companies to raise private capital and go public,
3 Enerasia Renewable Corporation, a Filipino - Canadian firm, an emerging developer
of RE opportunities in Asia.

DBP has already announced earlier that they have a 50 billion PHP (1.1 billion USD) fund for
RE financing, which developers can tap for loans.

m) Sustainable Development Report

DBP proved its concern for the environment with publishing an annual Sustainable
Development Report.92

Table 18 DBP’s 2008 Sustainable Development Report

DBP obtained an award for a comprehensive presentation of its 2008 performance based on the triple
93
bottom line framework . With the theme, The Bigger Picture, this annual publication seeks to track
the DBP’s progress vis-à-vis addressing sustainability issues involving the economic, ecological and
94
social impact of its programs and activities. The 2008 Sustainability Report is available for download.
This report presents environmental financing examples such as clean water, or mini hydro power
(RPP). DBP’s website fails to offer access to a 2009 Sustainability Report, if it was written.

3.2.5 Dungganon Thrift Bank and Negros Women for Tomorrow Foundation Inc
(NWTF)
Negros Women for Tomorrow Foundation, Inc (NWTF) began in 1984 as a NGO that aimed
to help women achieve self-sufficiency and self-reliance, particularly in Negros’ low income
and depressed urban and rural communities. NWTF replicated the Grameen credit
methodology. Today, it serves 80 000 members.

Another project of the NWTF is the Dungganon Thrift Bank, a microfinance thrift bank and
the first thrift bank in the Visayas. The bank is used as a vehicle for funds mobilization in
financial products and services for valued clients, especially the poor to receive the
professional services and opportunities. One of the loan products refers to energy efficient
stoves, a green microloan.

Box 28 Loans for Energy Efficient Oven (for household use or microenterprise)

o Cost of energy efficient oven: 2500 PHP per unit

o payment terms: 6 - 12 months
o weekly installments: about 100 PHP per week (2.20 USD)
o 97 percent collection efficiency.

92
http://www.unglobalcompact.org/system/attachments/9241/original/2008_DBP_Sustainable_Develoment_Repo
rt.pdf?1297136239
93
Triple bottom line: profits, people and the planet
94
http://www.dbp.ph/UserFiles/SDR%202008%202.pdf

69
 3.3 Banks with Green Agenda but No GF Product

3.3.1 Citibank NA (CITIBANK)

Citibank, a subscriber to the Equator Principles, uses the environment concern to improve its
image. So far, it missed offering specific GF facilities in the Philippines.

The country's largest foreign bank is inviting clients to join it in its campaign to save the
environment. Since 2001, Citibank is encouraging its more than one million customers to
make the switch from paper to electronic based statements. “Go paperless, save a tree!”
Besides helping reduce the amount of paper being used, clients who choose to receive e-
statements will “enjoy other key benefits, including greater convenience, security and
speed.”

Box 29 “Go paperless, save a tree!”

"Citi e-Statements are just one of our many initiatives to protect the environment," related Citibank
Country Business Manager Mark Jones. "A few months back, we teamed up with leading
supermarket chains to distribute recyclable and reusable bags to our customers to help cut down on
use of plastic shopping bags.” Back in October, Citibank cardholders who shopped at participating
SM supermarkets received a reusable …. more than 20 000 green bags were distributed…

Box 30 Citibank: Green Tips

95
On the website, Citibank does not offer a GF product, but provides Green Tips
recycle
plant trees
use your car less
check tire pressure
change your light bulbs
set room temperature to 25°C
unplug electrical appliances when not in use
turn off lights and electric appliances when not in use
Realization of these proposals is possible without finance.

In another marketing effort Citibank invited premium customers and provided information on
how they can lessen their carbon footprint while formally launching its Great Arctic Eco Tour
promotion where clients could win a trip for two to the Arctic Circle (see Annex 11 Investing
for a green future).

Citibank Country Business Manager Mark Jones with ABS CBN

Foundation managing director Gina Lopez visited the three hectares
adopted by the bank inside the La Mesa Watershed. Previously, Citibank
pledged to plant trees on behalf of customers who will switch from paper to
electronic based statements. The successful campaign led to the planting
of more than 1500 different tree species in the Citibank adopted sites. ABS
CBN Foundation, through affiliate Bantay Kalikasan, spearheaded the
planting and will be maintaining the sites for the next three years

Posted on 10 January 2008

Figure 6 Citibank Tree Planting inside La Mesa Watershed

95
http://www.citibank.com.ph/global_docs/microsite/estatement/green-tips.html

70
3.3.2 Planters Development Bank (Plantersbank, PDB)
Planters Development Bank is one of the largest Thrift Banks in the Philippines and the
largest private development bank. On its website PDB offers term loan for business
expansion, equipment acquisition or factory construction. Loans cover the range 250 000
PHP to Ᵽ10 million PHP. This bank is certainly financing green investments of SMEs, having
not developed a specific green product.

Already ten years ago, IFC invested in PDB. Other institutional partners help the bank
providing its clientele with global expertise and resources (see box). Recently PDB obtained
the Philippine President’s Citation for Best Practice in Improving Access to Finance for
Micro, Small and Medium Enterprises presented during National SME Week 2009.

Box 31 Plantersbank: Institutional Partners The bank publishes SME, a bimonthly

1 International Finance Corporation (IFC)
2 Netherlands Development Finance Company
(FMO)
3 Asian Development Bank (ADB)
4 Land Bank of the Philippines (LBP)
5 Development Bank of the Philippines (DBP)
6 PDB SME Solutions, Inc
7 UNEP (since 2001)
journal. In its 4 / 2010 edition, PDB’s
Chairman and President96 reported about the
years of steering the bank towards Triple
Bottom Line Banking (3BL) showing that it
is possible making Corporate Social
Responsibility the heart of the enterprise.
“Combining social development goals and
respect for the planet with investment
objectives is good business sense.”97

2010 was a banner year in transforming PDB to a Triple Bottom Line institution promoting
green alternatives. The year also saw the opening of the 1st Plantersbank Green Exhibit,
which was part of the internal information campaign to promote an environmentally
sustainable workplace and carbon neutral lifestyle among employees and clients.
Plantersbank chairman Ambassador Jesus P Tambunting led employees in viewing displays
featuring environment friendly products, energy saving illumination technology, tips for
greening the workplace and the online hub where visitors could calculate their carbon
footprint.

3.3.3 First Macro Bank (FMB), Rural Bank

Out 595 rural banks, only very few institutions might have established a special
environmental or green loan product.

First Macro Bank (FMB) is a Metro Manila based rural bank (Rural Bank of Pateros) with ten
branches, assets 14 million USD (2009), 7268 borrowers (average balance 1360 USD). The
bank obtains USAID support (see Chapter 3.1.4). It promotes group loans as the only
special loan facility. FMB named the 2010 winner in the Special Awards Category – Green /
Sustainable Enterprise, entrepreneur Mr Ismael Adiaton, who runs a can recycling business.

96
Publisher’s Message:” SMEs and Social Responsibility,” http://www.plantersbank.com.ph/wp-
content/uploads/2010/08/sme-vol-5-no-4-2010.pdf
97
http://www.businessethics.ca/3bl/, Triple Bottom Line refers to people (social), planet (environmental), profit
(financial) aspects; see also: What's Wrong With the Triple Bottom Line? "Good old fashioned Single Bottom
Line plus Vague Commitments to Social and Environmental Concerns."
http://www.businessethics.ca/3bl/whats-wrong-3bl.html

71
He was awarded in particular for processing the collected cans.98 He obtained various loans
for the purchase of machinery. For more details please see Annex 12.

Box 32 Financial Program: First Macro Bank99

a) Micro finance loan (individual and group lending); entrepreneurs with existing business for two
years; loan size 5000 PHP to 150 000 PHP; interest 2.5 percent per month; loan maturity six
months; payable weekly;
b) Macro Asenso (SME Loan); entrepreneurs with existing business for two years; 50 000 PHP to 15
million PHP; interest 17 percent per annum; loan maturity two years to five years; payable
monthly;
Collateral / security: real estate mortgage
Requirements: ID; proof of income

3.3.4 First Agro-Industrial Rural Bank (FAIR Bank)100

FAIR Bank of Bogo, Cebu, is a customer oriented and stable banking institution that serves
over 20 000 female microentrepreneurs. It is professionally run by dynamic, highly motivated
managers and well trained employees who work for the mission: “Develop a long term and
equally beneficial banking relationship with customers through fast, efficient and quality
service of innovative banking products and services designed for the appropriate needs of
the client.”101 Despite being regarded as innovative, the management has not yet discussed
the issue of GF and has not yet developed a green loan product.

This Region 7 (Central Visayas, Cebu) based MF rural bank participated in cash flow based
lending trainings and consultancies offered by PSP during Phase 2.

Box 33 Profile of FAIR Bank102

Assets 13.3 million USD Comment

Loans 9.2 million USD (69%) FAIR Bank’s ratio loans / assets (69 percent)
Deposits 3.5 million USD (26%) show the engagement to extend loans. For
Offices 12 comparison, unibanks’ ratio is < 50 percent. The
Personnel 359 bank finds it difficult to mobilize deposits.
Active borrowers 21 775 Refinancing with expensive bank loans is
Women borrowers 86.7% necessary.
Average loan amount 422 USD

98
It was the 8th run of this prestigious award sponsored by Citibank and the Microfinance Council of the
Philippines (MCPI), and supported by the Bangko Sentral ng Pilipinas (BSP). The nationwide search was open
to all microfinance organizations representing the rural banking sector, credit cooperatives and microfinance
NGOs, but only ten awardees were selected from the various nominations to represent the New Heroes of
Today, as BSP Governor Amando Tentangco called them in his keynote speech. All awardees received a cash
prize and a trophy. The account officer and branch managing the account of the awardees also received cash
prizes and plaques.
99
http://loanphilippines.net/first-macro-bank-inc-loans/
100
FAIR Bank has benefited from GIZ’s Private Sector Promotion (SMEDSEP) Program and showed interest in
pioneering new processes and products.
101
http://www.mixmarket.org/mfi/fair-bank
102
Data for 2009 according to: http://www.mixmarket.org/mfi/fair-bank

72
3.3.5 Green Bank
Green Bank, also known as Rural Green Bank of Caraga, headquartered in Butuan City,
Agusan del Norte, was founded 1975. With its 46 branches scattered across the Visayas
and Mindanao it is the largest bank in the Caraga region in terms of assets (more than 2
billion PHP, 45 million USD [2007]). The color green refers to the intention of helping poor
farmers gaining access to credit (“Everything we touch grows”). The bank does not offer a
specific GF product, but calls the micro loans Trees. Terms for micro loan Trees
Interest: 2.5 percent flat rate per month (> 50 percent per year effective)
Amount: 4000 PHP – 50 000 PHP
Tenor: payable up to six months.

Green Bank obtained the USAID EAGLE Award (criteria: Efficiency, Asset Quality, Growth,
Liability Structure and Earnings).

3.4 Nonbank GF Providers

The following sheds some light on the green programs of various national and international
institutions active in supporting GF for SMEs. The programs are limited according to
investment, geographical area, recipient etc resulting from limited funding. Several
organizations get into contact with the target group through intermediaries. A more complete
report would identify certainly hundreds of initiatives such as the Solar Energy Foundation
Philippines. It is common that organizations are connected in networks. Just for example
Asian Social Enterprise Incubator, Quezon City103 or Hybrid Network, are both
supported by Stiftung Solarenergie (Solar Energy Foundation, Germany).104
The project titled “Save the Climate, Save Boracay” has been a Greenpeace
Southeast Asia initiative with the help of the municipality of Malay, Department of
Tourism, the Department of Environment and Natural Resources (DENR), Boracay
Foundation Inc, Boracay Chamber of Commerce and Industry, and Mother Earth
Foundation. For more details please see Annex 16 b.

The following shall only indicate that institutions other than banks provide GF, albeit limited
in almost any respect. For more see also Annex 25 (Foundation for a Sustainable Society,
wholesaler of GF), with respect to value chain financing Annex 26 (Department of
Agriculture) and Annex 28, about the People’s Credit and Finance Corporation (PCFC),
supporting promotion of the small scale RE solar home system / solar lanterns.

The Small Business (Guarantee and Finance) Corporation (SBC), a prominent collector of
funds for SMEs, is not among the institutions providing GF or with a green agenda. Because
of its importance for financing SMEs, some information about SBC is presented in Annex 33.

3.4.1 Government Institutions

Local financing institutions with an environmentalist agenda are Municipal Development
Fund Offices (MDFO) and LGU Guarantee Corporation (LGUGC). MDFO only provides
loans to LGUs - not for private enterprises. LGUGC provides guarantees for LGU loans.

103
http://www.asei.com.ph
104
http://www.stiftung-solarenergie.org/#pl2364

73
The Department of Agriculture, Agricultural Credit Policy Council, provides loans in the
framework of the Agri-Fishery MF Program (AFMP). The maximum individual loan amount is
50 000 PHP; for Value Chain Financing it is 100 000 PHP.

DOST may be the most suitable partner for GF on national level. The department has
developed Set-Up, a credit line for SMEs. It might even provide grants105 for micro and very
small enterprises with a considerable potential to improve CP and EE subject to availability
of funds. DOST might also sponsor full energy audits. For more details about DOST’s Set-
Up facility see Annex 28.

Envirofit Philippines Foundation Inc promotes retrofitting fuming two stroke motorcycle
engines with less polluting and less fuel consuming four stroke engines.106 The cost amounts to
18 500 PHP (430 USD). As an incentive to drivers and owners, the City of Puerto Princesa
shouldered half of the cost.107 This is one example of GF provided from the government. The
total amount and number of beneficiary SMEs who benefit from the government’s GF
initiatives is apparently not recorded.

3.4.2 Energy Service Companies (ESCOs)

ESCOs play a role in financing green investments. Some of them offer clients an entire EE
or RE package including financing, building and operating. Energy savings are shared
among the facility owner and the ESCO for a number of years.108

Box 34 Energy Service Companies (ESCO)

An energy service company (acronym: ESCO or ESCo) is a commercial business providing a broad
range of comprehensive energy solutions including designs and implementation of energy savings
projects, energy conservation, energy infrastructure outsourcing, power generation and energy supply
as well as risk management. The ESCO performs an in-depth analysis of the property, designs an
energy efficient solution, installs the required elements, and maintains the system to ensure energy
savings during the payback period. The savings in energy costs is often used to pay back the capital
investment of the project over a five to twenty year period or reinvested into the building to allow for
capital upgrades that may otherwise be unfeasible. If the project does not provide returns on the
investment, the ESCO is often responsible to pay the difference.
Source: http://en.wikipedia.org/wiki/Energy_service_company

The following respondents mentioned these ESCOs

CPI Energy Phils Inc was established in 1996 when the country was barely out of the
energy crisis that engulfed the Philippines in the 1990s. Its initiation in project
development in the IPP business, its principal mandate, brought the company into
diverse areas of consulting and engineering intertwined with innovations and
technologies in energy, environment, transportation and communication.109

105
Info from ECCP
106
For details see the Project Design Document Form for CDM at
http://cdm.unfccc.int/filestorage/H/K/9/HK9V413TN8I76UQYDJO2BML0PCG5WZ/SSC%20New%20Methodolo
gy%20PDD.pdf?t=REl8bHhiMTV2fDBVMYNr5Qao-s_A0sJqs2lQ
107
http://www.philstar.com/Article.aspx?articleId=37776, 09 January 2008
108
For more details see: Hansen, Shirley J; Langlois, Pierre; Bertoldi, Paola; ESCOs Around the World: Lessons
Learned in 49 countries, 2009, p204ff
109
http://www.cpi-energy.com/projects.htm

74
 PhilCarbon provides a full cycle and integrative service from project
conceptualization, formulation of project feasibility study, project finance packaging
(“We assist in financing arrangements with financial institutions.”), strategies
formulation in the development of RE sources for power generation as well as the
related transaction documentation for projects eligible under the CDM and trading of
carbon credits following the rules and practices under the Kyoto Protocol.110
The Cofely AG (until August 2009: Axima AG) with headquarters in Zürich is a Swiss
company in the field of plant engineering and facility management. It offers complete
solutions for heating, ventilation, air conditioning, refrigeration, sanitary installations,
building automation, energy and electrical engineering, telematics, as well as
industrial media. In the Philippines, Cofely worked together with IFC. With the Cofely
partnership, BPI intends the promotion of the ESCO model of energy management
and guarantee in savings among its clients. This ESCO will conduct an investment
grade study of the premises, recommend and select appropriate technologies, and
operate the machineries.
Penwood111 started in 2008 in the Philippines as a professional project development
and management group composed of project developers and technical experts with
actual experience in RE and Biofuels Project Development. Penwood specializes in
biomass based power generation and bio-ethanol distillery development and
implementation, agriculture and agribusiness development, plant design, financial
planning, commercial contracts design and negotiations, risk analysis and mitigation,
and operations management. Penwood is also involved in wind and solar energy
generation projects in the country. Penwood cooperated with DBP on a 2400 million
PHP biofuel project in Cavite, and with LBP on a 400 million PHP rice husk burning
project. No report referred to smaller projects that would be implemented by SMEs.
ESCOPhil was registered in 2005, but none of its various purposes is related to
financing green investments.

Facility owners pay a predetermined amount to ESCOs for the provision of heating, chilling,
or light, normally less than they pay now, for an agreed period of years. The ESCOs are
responsible for the investment and operation of the new EE devices. They have to come up
with financing the investment. They take the risk of realizing the projected energy savings.
For facility owners these contracts have the advantage that no additional loan burdens their
balance sheet.

In general, only companies with investments exceeding 200 000 USD (about 10 million PHP)
call ESCOs for optimizing their energy management.

3.4.3 Carbon Funds

The Clean Development Mechanism (CDM) provides further financial resources. The
project based carbon trading is a market mechanism included in the Kyoto Protocol. In
order to meet their GHG reduction commitments, companies in industrialized countries
purchase certified emission reduction units (CERs) from projects that contribute to
sustainable development and climate change mitigation in developing countries being
not bound by emission reduction targets. These projects should result in real,
110
www.philcarbon.com
111
http://penwood.com.ph/index.html

75
measurable and long term GHG reductions, which are in addition to any that would
otherwise occur. Locally, LBP and BPI engage in the purchase of CERs from its customers.
World Bank and KfW act as buyers of CERs.112

The Multilateral Fund for implementation of the Montreal Protocol on reducing GHG
emission was established in 1991. Its aim is to finance projects, which phase out ozone
depleting substances (ODS) in countries where rates of consumption are below 0.3 kg per
capita. It therefore targets the 147 Article 5 countries (2009)113 those that are allowed to
delay implementation of control provisions, including the Philippines. Four implementing
agencies carry out the work on the ground: the UNEP, the UNDP, the UNIDO and the WB.

The Green Climate Fund (GCF)114 which aims to finance efforts to adapt to climate change
and reduce carbon emissions, was adopted in December 2011.115 It was designed by a
panel composed of 15 developed and 25 developing countries representing the 193
members of the United Nations Framework Convention on Climate Change (UNFCCC). It
shall generate the bulk of the 100 billion USD long term climate finance annually. The Board
should start its work on 2 January 2012.

3.4.4 ApproTech Asia

The Asian Alliance of Appropriate Technology Practitioners Inc. (ApproTech Asia)116 was
established as an NGO in 1981. It aims at increasing the access of the poor to technologies
and processes appropriate to their increasing needs and expanding capacities. Its primary
role is to facilitate the sharing of appropriate technologies and cooperation among its
members and partner organizations.

The Alternative Energy Technologies program develops, promotes and exchanges energy
technologies that will improve the life of the poor. This includes “technologies and social
services related to improved cook stoves for cooking and heating, kitchen improvement,
indoor air pollution reduction and enterprise development as well as climate change
adaptation and disaster mitigation, taking into consideration the gender117 dimension in
development.”

The NGO’s Improved Cook Stove Program of the Philippines (ICS - P) facilitates the transfer
of technology on solar dryers for fish drying, herbals, fruits, etc, and rice hull fruit
dehydrators.

Approtech Asia promotes also a solar PV system for energy for lighting,118 communication
(charging mobile phones) and water purification during disaster – a tool to mitigate the
effects of climate change.

112
For more details see Annex 30
113
http://ozone.unep.org/Ratification_status/list_of_article_5_parties.shtml
114
http://climate.gov.ph/index.php/en/news/ccc-in-the-news/133-philippines-to-help-establish-global-climate-fund,
Business World, 12 April 2011
115
http://www.twnside.org.sg/title2/climate/news/durban01/durban_update27.pdf
116
http://www.approtech.org
117
For GF and gender issues see Annex 10
118
Toughstuff is another. http://www.toughstuffonline.com/

76
Box 35 Approtech Asia’s Cook Stove and Lighting Program

Approtech Asia’s expanding improved cook stove program for roadside food vendors, in partnership
with the Quezon City Vendors' Alliance (QCVA), advocates the use of Mabaga charcoal cook stoves
to reduce the use of charcoal, the costs, the CO 2 emission and hazardous smoke each by about 50
percent. This increases income and welfare of micro entrepreneurs. One of these projects is located
in Intramuros (Metro Manila). Over 25 food vendors are already using the Mabaga kalan in cooking
and enjoy the savings respectively higher net income. The second component refers to lighting at
night, the busiest time. Three food kiosks share the solar energy for lighting two 7 watt CFL for each
kiosk. The project provided financial support for the initial cost of the solar panel and accessories
which the food vendors pay within six months. Thereafter, they will own the facility which can be used
for 15 - 20 years. There is ongoing initiative for expansion (from Aksyon Balita, 7 – 14 May 2010).

Box 36 Microentrepreneurs and Entrepreneurship

Few of those who prepare and sell food at the roadside are entrepreneurs by dedication. Many look
for an additional income to make ends meet and overlap sometimes. Changing the mindset towards
an entrepreneurial spirit, NGO representatives say, takes at least five years. The project seeks to
accelerate this with increasing the overall capacity with training (five modules not only for budget and
business planning but also for health and clean sanitation). The improved cooking facility reduces
more than 50 percent of the common CO2 emission. It reduces hazardous smoke.

Financing

ApproTech developed also the appropriate GF program for the purchase of the cooker
(about 1000 PHP) and a solar lantern.

In 2005, ApproTech obtained from the UNDP Renewable Energy Program for Poverty
Reduction a modest 150 000 PHP (about 3300 USD) fund. The NGO offers to SMEs a first
loan with 5000 PHP (110 USD) as maximum ceiling, 75 repayment days over three months:
66.70 PHP for principal repayment and about 14 PHP for interest, which is much more than
3 percent per month as stated by the respondent. The maximum ceiling for a follow up loan
is 10 000 PHP. Consequently, this NGO can support about 100 microentrepreneurs in one
year provided loan repayments are revolved. Meanwhile, the total fund grew to 1 million PHP
thanks to capital buildup and deposits (as reported by ApproTech representatives).

Box 37 Market Interest Rates

Micro entrepreneurs in the markets are used to interest charges of up to 10 percent per day for their
working capital requirements. A checking account would allow to benefit from a 30 days advance
(postdated checks are common). Within a month, the entrepreneurs would save approximately 20
working days x 10 percent = 200 percent of the daily purchase of goods. The microentrepreneurs face
the difficulty that banks require a minimum deposit of 10 000 PHP before they provide a check book.
The NGO negotiated a minimum 2500 PHP deposit with PNB for the project participants.

An illegal electricity connection for lighting costs ambulant food sellers about 20 PHP rent
per day, or approximately 300 days x 20 PHP = 6000 PHP (about 135 USD) per year. This is
about the investment cost for a decent solar powered lantern unit. ApproTech introduced a
six month rent-to-own scheme with more flexible (weekly) collections. The deficit is borne by
donations.

77
3.4.5 Envirofit Philippines Foundation, Inc
Envirofit imports also fuel efficient stoves from PR China by container and sells them through
the Negros Women for Tomorrow NGO at 2500 PHP per unit. The buyers can choose to
purchase the stove with weekly payments over six to 12 months, which results in handy
installments far below 100 PHP.

Box 38 Death from Open Fire Stoves

Nearly half the world’s population relies on crude open fire stoves. They produce hundreds of millions
of tons of climate damaging carbon dioxide and are often detrimental to the health and even lethal to
their users. According to World Health Organization (WHO), a person dies every 20 seconds from
illnesses brought on by inhaling the toxins in the soot from wood, animal dung or other detritus that
119
serves as fuel.

Stove

Solar panel and LED light from

ToughStuff (blister packs)
Figure 7 Sample Products

For financing solar lanterns and home PV systems see also Annex 27 People’s Credit and
Finance Corporation (PCFC).

3.4.6 KIVA NGO international

Kiva’s green loans work like its existing loans.120 Kiva makes the loans through more than
170 microfinance institutions worldwide, six in the Philippines,121 called field partners. Low
income borrowers pay interest to these local partners (for financing facilitation and
promotion), but much less than they would pay in the informal marketplace. The - mostly
foreign - philanthropic lenders do not receive interest. Whereas Kiva’s loans are for SMEs,
green loans are also available to consumers.

119
http://www.envirofit.org/blog.html
120
http://theenergycollective.com/marcgunther/56729/kiva-pushing-envelope-green
121
Alalay sa Kaunlaran, Inc. (ASKI), Center for Community Transformation Credit Cooperative (CCT), Ahon sa
Hirap, Inc. (ASHI), Paglaum Multipurpose Cooperative (PMPC), Hagdan sa Pag-uswag Foundation, Inc.
(HSPFI), Gata Daku Multipurpose Cooperative (GDMPC). Source: http://www.kiva.org/partners

78
Box 39 KIVA Facts

Enterprise and Technology) loaned a client

Thelma Langga, recycling in the Philippines
Green loans differ from Kiva’s traditional
loans because they are available to
consumers as well as entrepreneurs. For
example, a nonprofit organization called
KADET (Kenyan Agency for Development of
300 USD to buy a solar powered device to
light his home, replacing diesel powered
lanterns, which are more polluting and more
costly in the long run. Most loans continue
to go to very small businesses: a woman in
the Philippines who borrowed 475 USD to
buy scrap metal and plastic for her recycling
business; a taxi driver in Bolivia, who
borrowed 500 USD to power his car with
liquid natural gas rather than gasoline; a
woman in Mongolia, who borrowed 575
USD to purchase seeds to grow trees to
generate income. Just as it takes upfront
capital to buy hybrid car or solar panels or
home insulation in the US, these upfront
dollars can save money in the long run for
borrowers in poor countries.

3.5 Institutions Supporting Green Financing

The following chapters provide information about associations, consultants and networks
concerned with environment and finance. The formation of an International GF Association
in support of green industry and green economy in general was proposed at the UNIDO /
UNEP / UN ESCAP / ILO conference on Green industry in Asia, held in Manila, the
Philippines in 2009 (see Annex 3). The following presents institutions that support SMEs to
obtain GF by advocacy and similar efforts.

The Microfinance Council Philippines Inc (MCPI)122 does not refer to environmental issues in
its Vision and Mission.

3.5.1 United Nations Environment Programme (UNEP)

The UNEP Risoe Centre on Energy, Climate and Sustainable Development (URC) supports
the UNEP in its aim to incorporate environmental and development aspects into energy
planning and policy worldwide, with special emphasis on assisting developing countries.
URC operates under a tripartite agreement between the Ministry of Foreign Affairs of
Denmark, Risoe National Laboratory for Sustainable Energy at the Technical University of
Denmark (Risoe DTU), and the United Nations Environment Programme.

The project designed innovative financing instruments and a strategy integrating RE lending
in the policies of local private and government banks. A distinction was made between
ongrid and offgrid RE because of their diverse financing requirements and business models.
The project was co-financed by the EC-ASEAN Energy Facility, and implemented by the

122
For more details please visit http://microfinancecouncil.org/

79
International Resources Group Philippines, the Risoe National Laboratory (Denmark), the
Energy Economy Environment Consultants Co Ltd (Thailand) and IT Power (UK).123

3.5.2 German Development Cooperation (GTZ) / Deutsche Gesellschaft fuer

Internationale Zusammenarbeit (GIZ)

Microinsurance Innovations Program for Social Security (MIPSS)

Microfinance experts understand the microinsurance payment as a microsavings process
with the savings withdrawn only when a predetermined emergency happens. The victim can
not only withdraw its own payments but also tap the savings of other persons (risk based
insurance). Climate change increases the vulnerability against which the insurance is a
protection.

Cash flow based lending

Cash flow based lending - in contrast to collateral based lending - shall allow banks to
finance enterprises that lack sufficient bankable collateral and / or collateral substitutes.
GTZ’s PSP trained representatives from 48 rural banks and two thrift banks including FAIR
Bank, see Chapter 3.3.4) during the first and second phases from 2005 to 2009. Some of these
banks are probably better prepared to pioneer GF for SMEs.

3.5.3 European Chamber of Commerce of the Philippines (ECCP)

The European Chamber of Commerce of the Philippines (ECCP)124 is a service oriented
organization whose main goal is to foster close economic ties and business relations
between the Philippines and Europe.

ECCP is not a financing institution. Instead, it contributes with enhancing awareness,

preparing financial infrastructure, and providing knowledge to banks so that loans to SMEs
for green investments happen. In the framework of networking, ECCP implements two
projects: Energy Smart and SMART125 Cebu.

Energy Smart
Along with its founding partners ECCP launched the Energy Smart Program in July 2010.126
This EE program is a private sector led initiative that aims to encourage like-minded
organizations to identify, implement and share best practice on energy management
programs that encourage EE and sustainability. It is supported by leading companies in the
energy sector, international organizations such as the IFC and other key players in the field
of energy management. The Energy Smart Program, targeting bigger companies with high
cost of energy, also aims to achieve the following
raise the interest in and awareness of EE as a source of competitive advantage in
the market place
increase the implementation of energy saving projects and programs

123
http://uneprisoe.org/REPhilippines/index.htm
124
ECCP is the official representative (Aussenhandelskammer AHK) of the German Chamber System (Deutscher
Industrie- und Handelskammertag DIHK) in the Philippines.
125
SMEs for environmental Accountability, Responsibility and Transparency
126
http://www.eccp.com/project-page.php?catalog_id=53

80
 develop a supportive network of EE organizations and suppliers
recognize the effort and achievements of the program’s partners to promote greater
action
recognize / award the efforts of companies that continue to implement EE Programs
and their achievements.

In July 2011, the ECCP has completed the energy audit of ten companies that were selected
earlier in the year as part of its EE drive. The walkthrough assessment was done with IFC
assistance which is supporting the Energy Smart program until 2015.

SMART Cebu
SMART Cebu is a project funded by the Box 40 SMART Cebu Target 2013127
European Union under the header EU SWITCH awareness sensitizing 450 SMEs
ASIA, and the German Federal Ministry for walkthrough (initial assessment) 150 SMEs
Economic Cooperation and Development. A expected green financing up to 20 SMEs
128
consortium of European and Philippine organizations in Cebu implement SMART being
aimed at increasing the competitiveness of SMEs in the home and lifestyle sectors129 by
promoting clean production (Sustainable Consumption and Production - SCP) of ecofriendly
products and entering the Green markets in Europe and Asia. This project has various
activities for about 400 to 450 SMEs with facilitation of access to finance for SME investing
green being one of them. Presently the project has not yet reached the stage that SME
would come forward with requests for GF. It has secured ADFIAP (see Chapter 3.5.4) as
project partner or for access to finance (ADFIAP is not a financing agency). Lead partner is
SEQUA gGmbH; partners are the Cebu Furniture Industries Foundation, the Association of
Fashion Accessories Manufacturers and the Association of Gift, Toys and Housewares
Manufacturers.

Energy Efficiency Forum

ECCP with IFC as partner organized the first Philippine Energy Efficiency Forum (EEF) in
2010 and repeated the success in 2011 (participants: about 500 after 410 in 2010, and 100
exhibitors). One week later, Cebu was drawing at least 150 delegates and 30 exhibitors for
the first EEF. The EEF is announced as a “Platform for Knowledge and Best Practice
Sharing, Benchmarking, Business Networking and Partnerships, Policy Dialogue, Investment
and Finance Prospecting.” Financial institutions participated and one session featured
“Financing Energy Efficiency Projects: Financing Energy Efficiency Projects through Banks,
Financing through Performance Contracting / ESCO Service.”130 For more details please see
Chapter 3.4.2.

3.5.4 Association of Development Financing Institutions (ADFIAP)

The Association of Development Financing Institutions in Asia and the Pacific (ADFIAP) with
120 members from 43 countries was founded 1976. Headquartered in Manila, ADFIAP is a

127
http://www.usnewslasvegas.com/national/eccp-completes-energy-audit-of-10-companies/
128
Implemented by sequa gGmbH, Germany in cooperation with ADFIAP, Cebu FAME, CFIF, GTH foundation,
ECCP (European Chamber of Commerce in the Philippines), EFA/Germany
129
Furniture, fashion accessories, and toys, gifts and housewares industry sectors, small assemblers,
subcontractors, very informal production facilities spread all over the country
130
http://www.eefphilippines.com/forum.php

81
member of the UNEP Finance Initiative Asia Pacific Task Force and EU - Asia Pro Eco
Program grantee on Environmental Governance.

ADFIAP’s greening initiatives include, Box 41 ADFIAP’s Philippine Member Banks

among others, ADFIAP’s Greening of DFIs,
Project, the EU supported Environmental
Governance Standards131 and the SMART
Cebu132 projects as well as its GRI
133
registered sustainability reports, climate
change policy statement and partnerships
with international organizations
environment, social and governance (ESG)
issues.
Al Amanah Islamic Investment Bank of the
Philippines
Development Bank of the Philippines
Land Bank of the Philippines
Planters Development Bank
Philippine Postal Savings Bank, Inc
on Queen City Development Bank
RCBC Savings Bank
Additionally: several nonbank FIs

ADFIAP, also an advocate of disseminating noncollateral lending, creates the network for
financial institutions and other parties. Among ADFIAP’s Annual Awards (for the
Distinguished Person Award, the nominee could also be someone outside of the member
institution) Category 2 is for Environmental Development achievements.134 Furthermore,
ADFIAP is promoting Sustainable Consumption and Production (SCP) supply chain finance.
For more details see Chapter 3.5.4 and Chapter 4.1.4.

ADFIAP expresses the concern for environment by issuing the 2008 Integrated Annual and
Sustainability Report. Among others, it informs about electricity, water and paper
consumption as well as about voluntarily buying carbon offset (CO2 compensation) for air
miles of the Secretariat.135 The report serves as another indicator for the environmental
mainstream concern of bank representatives in the Philippines.

Summarized, ADFIAP is an address for identifying financial institutions that have GF

products or are receptive for loan applications with an environment background.

3.5.5 Energy Efficiency Practitioners Association of the Philippines (ENPAP)

ENPAP was formed in 1973 under the name Energy Management Practitioners Association
of the Philippines (ENMAP). ENPAP cooperates with DOE and international institutions such
as IFC and UNIDO. ENPAP experts are specialists in the following
energy consultancy services
energy audits
new energy technology
training and services
EE and conservation
renewable energy.

131
www.egs-asia.com
132
http://www.smartcebuproject.com/
133
Global Reporting Initiative, for more se: http://www.globalreporting.org/Home
134
http://www.adfiap.org/30th/awards.html
135
www.apafs.org/APAFSWebsite/current.../2008-ADFIAP-Annual-Report.pdf

82
Banks may call ENPAP members for the technical verification of loan proposals. This
seldom happens. Reportedly, no consultant can make a living out of these orders.

3.5.6 Philippine Business for the Environment (PBE)

The Philippine Business for the Environment (PBE)136 is an environmental non-profit
organization established in 1992 by private individuals with the mission to help Philippine
industry address its environmental concerns and responsibilities.

Table 19 PBE Bank Membership and PBE Corporation Training Services

PBE Bank Membership PBE Corporation Training Services

PBE Charter Members
Development Bank of the Phils.
Banco de Oro (formerly Equitable PCI)
Regular Members
ING Bank
RCBC Rizal Commercial Banking Corp
Land Bank of the Philippines
EM Foundation Course for Industry
Environmental Legislation and Policy Affecting Industry
Environmental Leadership and Workforce Motivation
Managing and Assessing the Environmental Impacts
and Risks of Business and Project Operations
Managing Wastewater as a Resource
Solid Waste Management for Better Business
Performance

Vision: For an economically developed, yet environmentally healthy Philippines where

business and industry act responsibly to protect the environment for the present and future
generations, through the pursuit of sustainable development programs, where economic
growth is balanced with environmental responsibility.

3.5.7 Industrial Environmental Management (IEM) Knowledge Network

PBE manages the IEM Knowledge Network.137 It was established with assistance from JICA
through the Environmental Management with Public and Private Sector Ownership
(EMPOWER) Project. It is currently being hosted by DBP.

PBE has been helping local industries to become aware of their impact on the environment
and their responsibility for protecting the resources on which their own survival depends.
PBE has done so by providing business with related updates on
environmental information
environmental technologies
environmental events
resources to assist companies in the effort to adopt environmental management
or as a repository of information on available technology suppliers and other service
providers.
PBE acts as intermediary between the private sector, business and community using
networking opportunities and linkages. PBE published three “Philippine Case Studies on
Environmental Management” funded by German development partners.138

136
http://www.pbe.org.ph/
137
www.iem.net.ph
138
The Environmental Management Capacity Building for the Philippines (EMCBP) Project promotes cleaner
production, environmental management and environmental management accounting, using an onsite
mentoring approach. With funding from Internationale Weiterbildung und Entwicklung gGmbH (InWEnt)

83
4 Green Investment Opportunities for SMEs
Green investments enhance the competitiveness of SMEs in two ways: first, most
investments are less resource intensive - which consequently means less cost than the
investment they replace. Second, green investments – if exposed to the public – have the
potential to enhance attention and improve the image and reputation of the enterprise thus
attracting more business.

Green loans finance investments in environmentally sound technologies (ESTs). The

definition of ESTs is based on the Agenda 21, which arose from the UN Conference on
Environment and Development (UNCED), otherwise known as the Earth Summit, held in Rio
de Janeiro, 1992. Chapter 34 of Agenda 21 defines ESTs as technologies which
protect the environment
are less polluting
use all resources in a more sustainable manner
recycle more of their wastes and products, and
handle residual wastes in a more acceptable manner than the technologies for which
they are substitutes.

ESTs are technologies that have the potential for significantly improving environmental
performance relative to other technologies.139 This may have created the impression that GF
is linked to new, untested, risky technologies with looming danger of failing and subsequent
loan default. Some of these technologies may have been new one or two decades ago.
Today, almost all major green investments rely on proven technologies.

Table 20 Environmental Sensitive Sectors

Renewable energy Pulp and paper

Agriculture, agro farming Brick manufacturing
Agribusiness (poultry and dairy) Construction and housing
Fisheries Engineering and basic metal
Leather (tannery) Ship breaking and building
Textile and apparels Hospital, clinic
Sugar and distilleries Chemical processing and trading

4.1 PSP Related Programs

PSP is concerned with three sectors or subsectors in Region 6, Region 7 and Region 8 in
the Visayas: tourism, bamboo and the creative sector. Chapter 4.1.4 highlights the issues of
greening supply and value chains, another focus of PSP.

formerly Carl Duisberg Gesellschaft (CDG), three company case studies on EMS implementation are featured,
namely
Malay Resources, Inc - a company engaged in terminaling and storage facilities
Eugenio Lopez Center - a training center
HMR Envirocycle, Inc - a remanufacturer of electronic / electrical equipment
139
International Environmental Technology Centre, Division of Technology, Industry and Economics, United
Nations Environment Programme, 2003, Environmentally Sound Technologies for Sustainable Development,
http://www.unep.or.jp/ietc/techTran/focus/SustDev_EST_background.pdf

84
4.1.1 Tourism
Green tourism is a business and a marketing model. It appeals to a particular clientele
enjoying a special environment. It will flourish as long as there is demand for it. It works in a
chain, the entire environment and the supplies should be arranged and produced based on
sustainability, CP, EE and RE considerations. It is even possible to arrange for Sustainable
Flying by paying CO2 compensation.140

Banks could declare loans in the framework of financing Save the Climate, Save Boracay as
GF. The funds may contribute to reduce or prevent unnecessary pollution and GHG
emission. For more details and components of Green or Ecotourism Boracay see Annex
16b.

Financing tourism means financing along an extended value chain, which covers various
economic sectors and segments simultaneously. GF for tourism is in its narrow sense
therefore a special case of financing a green value chain as presented below.

LBP’s CLF facility finances tourism related projects (see Chapter 3.2.2 c). A Green tourism
finance program in the Philippines could not be identified.

The government promotes tourism in Region 6, Region 7and Region 8. These are areas with
the highest electricity tariffs in the country. Investments in alternative energy generation have
here highest profitability.

Box 42 Palawan’s Hotel Sheridan Markets itself as a Green Hotel

The hotel has invested in equipment and technology considered sustainable. These include
using LED and CFL lights, solar powered street lamps, a rainwater harvesting system and a
comprehensive recycling system. According to Sheridan, the use of green technology
enables them to save 30 percent on energy costs and 40 percent on their water bill.
Sheridan resort in Palawan availed of a loan through BPIs SEF facility for the construction of
their resort.

Source: http://www.abs-cbnnews.com/business/03/22/11/bpi-ifc-fund-green-hotel-palawan

4.1.2 Bamboo for furniture and construction material

Deforestation is a major contribution to the region’s GHG emissions.141 GOP promotes
growing bamboo as the greener alternative to reforestation, because it grows five times
faster. Replacing wood with bamboo is therefore of high ecological value. Additionally, use of
bamboo as a locally available resource reduces transport cost from distant forests and
related energy consumption and pollution.

140
The compensation is small compared to security costs and airport tax:
For example, a round trip flight Amsterdam - Beijing: CO2 released:
1.56 t CO2/passenger; compensation: 6.05 EUR / t CO2 x 1.56 t = 9.44 EUR (about 550 PHP).
The price per t CO2 fluctuates mostly in a range from 5.00 EUR to 25.00 EUR;
Manila – Los Angeles round trip: 2.7 t CO2, x 400 PHP / t CO2 = 1080 PHP
http://www.klm.com/travel/nl_en/business/bluebiz_premium/co2_compensation/index.htm
http://www.carbonfund.org/Calculators
141
Wei Zhao, “As the largest contributor to the region’s GHG emissions (75 percent in 2000), the land use
change and forestry sector holds the key to successful emissions reduction. This can be achieved by reducing
emissions from deforestation and degradation, encouraging afforestation and reforestation, and better forest
management.”

85
Bamboo as construction material substitutes imports of non-renewable construction
materials, such as steel pipes and cement, a material which requires much energy and water
for its production. Growing bamboo gives famers an alternative source of income which
reduces rural poverty. Bamboo processing creates entrepreneurship and jobs in rural areas.
It is therefore of high socioeconomic value.142

DTI is the lead implementing government agency of the Engineered Bamboo (E-bamboo)
Project, one of GOP’s priority projects (promotion of bamboo in Region 6). Engineered
bamboo is made of processed bamboo slats. GOP develops standards that also cover
school furniture: chairs, tablet arm chairs, tables, and desks.143 GOP introduced a regulation
which requires schools to use at least 25 percent of bamboo furniture. Recently, the “first full
bamboo school” in the Philippines was completed in Camarines Sur.144 The bamboo
construction withstands better the powerful tropical winds, which, some people say, indicate
the climatic change.

DBP offers loans for bamboo industries under its SME Development facility and under its
DBP Forestry program.145

Table 21 New Bamboo Manufactured Products

Product Description
Bamboo parquet block composite material made of wood veneers and bamboo slots
Bamboo particle board combination of ipil ipil wood and bamboo particles glued and
pressed to form a board
Resin bonded bamboo mat urea formaldehyde is used to glue bamboo mats
Corrugated bamboo sheet woven, glued and hot pressed bamboo slivers in the fabricated
(CBS) corrugated mold
Bamboo plyboard pre-painted panel board made basically out of waste plastics, rice
hull ash and bamboo
Bicycle Chassis Branches of Bayog variety at about 1.25 inch diameter
(Calfee Design, California)

Source: copied from various bamboo researchers, Philippine National Report on Bamboo 2010
http://anythingaboutbamboo.blogspot.com/2010/11/philippine-national-report-on-bamboo.html

4.1.3 Creative sector

PSP’s creative sector support is active in Region 7. This sector covers a variety of
enterprises such as producers of toys, furniture, personal fashion accessories, home
accessories (pottery).

142
See also: SWITCH-ASIA Sustainable Revival of Livelihoods in Post-Disaster Sichuan: Enhancing ecofriendly
pro poor bamboo production supply chains to support reconstruction effort,
http://www.inbar.int/publication/pubdetail.asp?publicid=222
143
Meanwhile in a move to promote bamboo, the government implemented national standards for engineered
bamboo. For more details see Annex 7.16 c: “Govt. to implement national standards for engineered bamboo”
144
Read more: First Full Bamboo School in Philippines Built in Camarines Sur | Inhabitat - Green Design Will
Save the World http://inhabitat.com/first-full-bamboo-school-in-philippines-stands-up-to-tough-stormwinds/
145
The commodity bamboo is not supported under DBP’s SEED High Value Crops Financing Program and would
also not fit into the SEED Organic Agriculture Financing Program.

86
Pottery requires energy for the burning process. In many instances energy consumption and
air pollution can be reduced by improving insulation and a more efficient burner. Renewable
or organic waste could replace fossil fuels. Furniture producers could save money and the
environment when their processes are geared to minimize waste and when they find use for
their wooden waste, shaving and sawdust. Glasshouses with forced air flow (ventilators)
could replace other accelerated methods of drying wood (drying in an oven).

Leather tanning effluent treatment is costly and has no financial return. Nevertheless,
finance is available as long as the entrepreneur is creditworthy, the enterprise profitable, and
the investment in pollution control measures will not push the IRR / FRR below the bank’s
guideline.

The entrepreneurs could improve income when they succeed in selling their goods to buyers
who request specifically green products.

4.1.4 Financing green supply and value chains

Adherence to the strictest standards of safety and environmental responsibility are
engendering the trust and confidence of large corporate clients like Nestle, Coca-Cola, San
Miguel Corporation and Clark International Airport. Large local and international buyers
undertake tremendous efforts to green their supply chains. Suppliers may need loans to
green their production so that they can continue their business. For some of them it may be
a question of life or death.

Box 43 Supply Chain versus Value Chain

A supply chain consists of series of activities in which a product or a material is just transferred
from its origin to the final point. Supply chains are concerned with procurement and logistics, for
instance the just-in-time deliveries to reduce stock (and working capital). Transport with new fuel
efficient trucks is greening a supply chain.
In the value chain, in addition to transport, values are added to the product, for instance by
processing, packaging, etc. Processing with solar heat (instead of burning oil or gas) and using
recyclable or environment friendly containers are examples for greening the value chain. An
environmentalist prefers the greener product and pays a higher price (attributing a higher value to the
product) - irrespective of the (sometimes even lower) production costs.
In most cases, the transport of a product increases its value. Therefore, most supply chains are
also value chains. The differentiation is an academic exercise when the question is: Is the final
product greener than similar or even same products?
The here presented concept of supply and value chain is a simple one, easy to comprehend and
therefore at times not unanimously accepted among scholars.

Source: http://wiki.answers.com/Q/What_is_the_Difference_between_value_chain_and_supply_chain#ixzz1ZGtPFmtL

4.1.4.1 Supply Chain

The supply chain is the network of manufacturers, wholesalers, distributors, and retailers,
who turn raw materials into finished goods and services and deliver them to consumers.146

146
www.dictionary.bnet.com

87
Table 22 Supply Chain and Successful Supply Chains – necessary conditions

Supply Chain Successful Supply Chains - necessary conditions

raw material 1 sufficient demand or market pull
processing 2 limited market leakage; leakages occur when there are no
production, reformation additional incentives (such as better prices or more stable
supply, wholesale markets) to produce sustainably or suppliers may not
retail respond to demands from customers to improve the
usage sustainability of their operations
end-of-life (return, recycle) 3 adequate supply chain organization
transport (crosscutting) 4 ability to demonstrate sustainable performance.
This list of conditions should not be considered exhaustive.

4.1.4.2 Supply / value chain financing

“Value chain finance is a comprehensive and holistic approach.” (see Miller, C)

Financing a supply / value chain concerns several aspects. For banks, value chains are
entry points to enlarge their clientele either upwards (financing suppliers) or downwards
(financing buyers) of customers with a good standing. In most cases, the bank would
continue financing these clients also if they would stop business relations with one another.
Account officers assess the enterprises independently from one another. Banks will be more
inclined to finance SMEs when a large enterprise acts as anchor firm and supports suppliers
or buyers with a credit guarantee.

The following are common value chain finance methods that rely on the supplier – buyer
business relationship
buyers prefinance suppliers with down payments or advance payments
suppliers agree on term payments
suppliers provide goods as consignment
suppliers or buyers invest in buyers or suppliers (equity contribution for control and
securing input and green standards or market access)
banks or other financial institutions finance suppliers of goods and services based on
purchase order contracts
banks or other financial institutions finance suppliers (or buyers) based on
guarantees from buyers (or suppliers).

Aside from the goods that buyers or suppliers exchange, they may also finance other efforts
of companies in their value chain, for instance, advertisements, training or research and
development.

All these models function independent from whether it is a common, conventional supplier –
buyer relationship, whether it involves green products or whether it is even a green supply
chain. Banks are advised to observe very carefully that the collapse of one part in this chain

See also: 15 Green Supply Chain Studies You Should Know About http://greeneconomypost.com/green-
supply-chain-studies-7580.htm

88
does not result in a subsequent collapse of the supplier or provider (very high dependence
on too few sources, providers, suppliers or buyers).

4.1.4.3 Green supply / value chain finance

In its most formal sense, sustainable (green) supply chain management (SSCM) 147
encompasses the process whereby end product manufacturers develop and enforce
sustainability standards (like the Supplier Codes of Conduct) that their suppliers (and their
suppliers’ suppliers) must meet.

Thus, financing green value chains is a riskier business. All participants in this chain must
always comply. It will have repercussions all along the value chain, when a farmer does not
follow the standards for organic production. The final product is spoiled - despite green
processing and green packaging - and the reputation of all participants in the green value
chain is damaged. The question is also, if air freight products can be regarded as Green.

Special loan programs exist for financing value chains (for example, see Chapter 4.1.4.4) as
well as financing green products and green production. However, due to limited funds and
few access points these programs do not play a relevant role in enterprise financing. A
specific model for a green value chain finance program in the Philippines could not be
identified. The necessity for such a financing model beyond enterprises prefinancing inputs,
marketing, or stock of goods (working capital loan), could not be established. The particular
financing facilities for green producers (special loan programs, technical assistance, CDM
financing etc) concern the individual enterprises, independent from their participation in a
green value chain.148

Setting up a green value chain is ambitious. For example, the Cradle-to-Cradle (C2C)
certification for sustainable production, includes in its assessment for the highest grade,
Platinum, only the energy source of suppliers (50 percent renewable) (see Annex 15).149

4.1.4.4 Food Supply Chain Program

A model for financing a supply chain is the Food Supply Chain Program based on a tripartite
agreement by DOA, DOF and LBP. The program aims at increasing farmers’ income by
providing financial and technical support along the value added chain of commodity or
industry. It combines technical assistance to farmers and SMEs from anchor firms buying the
produce, and financial support from LBP (see Annex 14: Landbank Releases 1.97 billion
PHP for Food Supply Program). The DA Agricultural Credit Policy Council provides loans in
the framework of the Agri-Fishery MF Program (AFMP). The maximum individual loan
amount is 50 000 PHP; for Value Chain Financing it is 100 000 PHP. Financing an organic
food value chain would be GF.

147 http://www.rbapmabs.org/home/index.php/partners/chemonics-international-inc; see also: Sustainability: How

Green Is My Value Chain? http://www.strategy-business.com/article/li00048?gko=42bf7
148
See also: COMO, Green value chain approach, concept note, 2010
149
Labels and consumer demand
In addition to facilitating implementation of SSCM by making it easier to determine whether products come from
sustainable suppliers, Green label programs can play a role in helping raise public awareness of sustainability
issues and the value of sustainably produced goods, increase the visibility of sustainable products, and help
SMEs to market themselves as green producers. To have this impact, labels must be widely recognized by the
general public and meet the other criteria of transparency and independence. (SWITCH-Asia | Engaging the
Supply Chain to Promote Sustainable Consumption and Production)

89
4.1.4.5 Sustainable Consumption and Production (SCP) supply chains
ADFIAP (see Chapter 3.5.4) undertakes efforts to convince bigger companies to engage in
Sustainable Consumption and Production (SCP) supply chain that they finance SMEs. It
joined a consortium composed of seven international organizations supporting the project
SMART Cebu under the European Union’s (EU) SWITCH Program on sustainable
consumption and production (SCP). The German Federal Ministry for Economic Cooperation
and Development BMZ is cofinancing this project.

The key challenge for the SWITCH Asia Program is to replicate successful approaches and
methodologies, which can speed up the implementation of SCP on the road to sustainable
development.

4.2 Renewable Energy (RE) and Energy Efficiency (EE) Projects

RE / EE projects provide financial and operational benefits for the investor and
environmental benefits for the society.150 Typically, the projects are characterized by high
investment cost and low running cost. Therefore, the interest rate plays a significant role for
investment decisions. Annex 17 presents model calculations.

• Financial benefits
- reduced operating costs (up to 20 percent – 30 percent)
- higher margins
- improved cash flows
- additional or alternative source of revenues (CDM, sale of energy).

• Operational benefits
- improved management of building or plant facilities (for example less frequent
replacement of bulbs)
- improved reliability of new equipment (less maintenance and repair)
- improved quality and productivity of machines and labor.

• Environmental benefits
- lower energy consumption (overall reduced danger of burnouts, electricity cuts,
higher reliability of access to electricity)
- lower GHG emission levels and pollutants (improving image as green
enterprise).

RE promotion gains attention from few well known symbols such as hydro and geothermal
power stations, collectors for solar heat and PV electricity generation, windmills that can be
seen from a distance, huge fields for biofuel production.

In contrast, EE is everywhere. Almost every product can be produced and made to be more
efficient: valves and ventilators, electric motors and combustion engines, washing machines
and refrigerators, boilers, lamps, TV sets and notebooks, cars, ships, airplanes. Almost
every single building can be made to use less energy for cooling or heating. However, there
are no characteristic EE symbols in the Philippines.

150
Compare also: http://www.uneptie.org/energy/activities/islp/

90
Table 23 Differences between Alternative Energy and Renewable Energy
151
Some experts differentiate between the terms alternative energy and renewable energy :
Traditional energy: fossil fuels like oil, natural gas and coal
Alternative energy is an umbrella term that refers to any source of usable energy intended to
replace fuel sources without the undesired consequences of the replaced
fuels like solar, wind, geothermal, hydropower, nuclear power.
Renewable energy comes from natural resources such as sunlight, wind, rain, tides, and
geothermal heat, which are renewable (can be replenished naturally),
alternative energy renewed by the natural processes of the earth .

At the same time, human power is replaced by other sources of power, mostly electric
power. Cars have power steering, power windows, even small cameras cannot be operated
anymore without electric power. Small tools like drills or saws are driven by electric motors,
also toothbrush. All these products have the potential to be produce in a more energy
efficient manner. However they have also the tendency to be used by more and more people
thus increasing the demand for electricity.

4.2.1 Relevance of RE / EE projects for industries and commercial sectors

Below are two tables indicating the industries in which RE / EE potentials can be realized
and which particular fields should be investigated, where to search for RE / EE potentials.152
The tables can be used as a kind of checklist to identify the equipment and to compare the
energy consumption with those of the latest models.

Table 24 RE / EE Opportunities 1: Industrial Sector

Sub-sectors Lighting HVAC CDA BMS VSD HEM Steam Biogas Biomass
Agro-Industrial √ √ √ √ √ √ √ √ √
Beverage/Bottling/Brewery √ √ √ √ √ √ √ √ √
Cement √ √ √ √ √ √ √ √
Ceramic/Tile Mfg/Glass √ √ √ √ √ √ √ √ √
Food/Processed Meat √ √ √ √ √ √ √ √ √
Personal Care √ √ √ √ √ √ √
Pharmaceuticals √ √ √ √ √
Pulp& Paper √ √ √ √ √ √ √ √ √
Semiconductors/Electronics √ √ √ √ √ √

HVAC – Heating / Ventilation / Air conditioning CDA - Compressed dry air BMS - Building management system –
VSD - Variable speed drive HEM - High efficiency motor Biogas - agricultural and industrial waste Biomass -
agricultural residues

151
http://www.electricityforum.com/alternative-energy/index.html
152
Source: Biason, Nanete A, BPI, Sustainable Energy Finance

91
Table 25 RE / EE Opportunities 2: Commercial Sector

Particulars Lighting HVAC BMS VSD HEM Steam

Hospital √ √ √ √ √ √
Hotel √ √ √ √ √ √
Malls √ √ √ √ √
Office Building √ √ √ √ √
Schools, universities √ √ √ √

HVAC – Heating / Ventilation / Air conditioning, BMS - Building management system, VSD - Variable speed
drive, HEM - High efficiency motor

4.2.2 Viability of RE / EE investments

The Philippines has highest electric rates in Asia”.153 With average retail rate of electricity of
0.181 USD per kilowatt / hour in the Philippines, it has eased out Japan at the top. The price
was based on an October 2010 survey. One year later, the common tariff for private end
users is 11 PHP / kWh or about 0.25 USD / kWh. As such, EE presents the best opportunity
to reduce GHG emissions, because the ratio savings potential measured against investment
cost is high.
Generally, EE investments can be implemented more quickly than energy supply
(RE) additions.
They are attractive because of a relatively short payback period and
Reduction in energy end use has a multiplier effect on the supply chain.

EE investments are typically 1/3 - 2/3 of the cost of centralized generating plants, and
represent virtually permanent energy savings, often without (additional) running costs.

Respondent mentioned repeatedly that local investors prioritize investments with a short
payback period over those with a higher IRR. “They are happy with three years, they accept
four years and are scared if it is five years.” Perhaps, this results from the entirely
unpredictable natural environment with typhoons, volcano eruptions, floods and other natural
disasters. EE projects allow faster loan repayments and shorter payback periods.

Table 26 Opportunities for RE / EE Microinvestments

Object Investment amount PHP

lighting: 200 PHP x number of bulbs
energy efficient stove 1000 PHP – 2000 PHP
solar home systems 5000 PHP - 500 000 PHP
refrigerators 10 000 PHP - 50 000 PHP
solar water heaters 15 000 PHP - 50 000 PHP
air conditioners, chillers 15 000 PHP - > 1 million PHP

153
reported by the Manila Electric Company (Meralco) to the power and energy committee of the Philippine
Chamber of Commerce and Industry (PCCI) http://www.sunstar.com.ph/davao/business/philippines-has-
highest-electric-rates-asia

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Table 27 Investment Opportunities in RE Projects

Size Power Investment (indication)

pico hydro less than 1 kW up to 250 000 PHP
micro hydro 1 kW – 100 kW 250 000 PHP – 20 million PHP
mini hydro 101 kW – 10 MW 20 million PHP – 1500 million PHP
solar PV collector: per Wp 150 PHP - 600 PHP
up to 1 MWp (1 ha) up to 200 million PHP
wind energy per MW about 100 million PHP

Commonly, latest equipment that uses less energy or produces more energy is more
expensive than equipment that uses old, less efficient technologies. The progress in
technology does not always go hand-in-hand with increasing investment costs. One of the
most remarkable advances happened in the production costs of solar panels. They dropped
about 50 percent during the last four years. Producers expect prices to drop further. But
despite a projected feed-in-tariff of about 17 PHP / kWh payback periods are still longer than
the maximum five to six years many investors expect. For more data on solar PV systems
see Chapter 4.3.1.2 and Annex 18.

4.3 Selected Investment Opportunities

For more details on financial benefits, please see also Annex 17 and Annex 18.

4.3.1 Solar Power

Compared to other forms of RE, meaningful investments that benefit from solar power can
be realized with less than 20 000 PHP (440 USD).

4.3.2 Water heaters

Solar power is collected through panels, which are exposed to sunshine. For heat generation
(hot water), the liquid flows through a piping system built into the collector. More efficient
glass tube collectors heat a metal inside the tube, which transfers at one end the heat to the
water tank. The systems are black so that minimum reflection / highest heat collection is
achieved. Several companies advertise their solar water heater systems for housing, hotels,
and hospitals daily in newspapers without referring to the term green. Vendors provide
finance in form of a six month installment loan to private parties, sometimes at zero interest.
Hospitals and hotels would probably finance this equipment with a common commercial
working capital loan or, when renovating the premises, with a medium term loan. It is
common knowledge that the IRR (or FRR) is regularly higher than the banks’ interest rate for
short term loans (< 9 percent per year). Bank financing is based on collateral, namely the
house where the solar units are set up.

4.3.3 Solar photovoltaic (PV) electricity generation

Solar PV electricity generation from panels or solar modules that are exposed to light has
several market segments, and consequently different finance opportunities. The table does

93
not reflect all segments, like lighting for a convenience shop in a poor off grid community
(commercial and basic needs purpose).

Table 28 Solar PV Electricity Generation

Purpose Finance
A Commercial
1 for shops (marketing / sales) at night special programs, SEF, CLEECP
Investors: large enterprises, communities, could become
an alternative for private investors looking for a long term
investment alternative to bonds
2 electricity power at place of work (for general small business loan, working capital loan
instance at places not being
connected to grid)
3 reducing the business electricity bill,
bridging power cuts (through panels
on rooftop)
B Consumptive
1 reducing the private electricity bill personal loan, (part of) housing loan, repayment from
income (salary etc)
2 basic needs (off-grid rural lighting, donors, government subsidy
pro poor initiatives)
3 for leisure and convenience (like private expenditure, personal or consumptive loan
cordless lighting, sailing boats)

Investments in solar power generation are three or more times higher compared to
alternatives such as fuel driven generator sets. Often, buyers opted for low power generation
(low solar panel efficiency), small batteries using liquids, and conventional lamps with low
wattage (5 W to 10 W). The overall result was poor in view of a substantial investment. Solar
PV units could not penetrate the rural offgrid market; financing was risky (for analyses see
Annex 18 cd: “Solar PV Financing: Risk Analysis”). Without support from government
schemes, NGOs or CSR programs in acquiring solar equipment, people were less
enthusiastic. A sizeable market has still to develop.

Table 29 Development of Book Values and Depreciation (capital) Costs of PV Panels

Year 1 2 3 4 5 6 7
Investment Year 1 1000 900 800 700 600 500 400
Book value 100 100 100 100 100 100 100
Capital costs
Investment Year 2 750 675 600 525 450 375
Book value 75 75 75 75 75 75
Capital costs
Investment Year 3 600 540 480 420 360
Book value 60 60 60 60 60
Capital costs

The book value of older PV systems remains always higher than the book value of newer
systems. The capital costs of PV systems that determine the decision for investments,
decrease, when the investment is delayed.

94
Recent tremendous drops in prices for panels, 25 percent in one year154, irritate investors,
because further price drops may render investments less profitable in the future. The value
of new PV systems drops faster than the book value of a panel that is depreciated over a fair
ten years (expected commercial lifetime > 20 years).

In future, more GF for PV systems will be available. ADB plans to support solar energy in the
Philippines with 400 million USD (please see Annex 7 ADB loan…).

4.3.3.1 Philippines Solar Power Alliance

Local solar power producers are preparing to install facilities that can generate some 300
MW over the next three years, buoyed largely by the abundance of resources and in
anticipation for feed-in tariffs as well as rapidly decreasing investment costs. This is against
a formerly projected additional capacity of just 30 MW until 2020.

According to the newly organized Philippine Solar Power Alliance (PSPA), it will aggressively
pursue the establishment of solar plants in the country due “to the high sun irradiation” of the
Philippines. “[The] solar plants, as well as the presence of the world’s largest solar panel
manufacturer, SunPower Philippines, in Laguna Technopark, Sta Rosa, will make the
Philippines a solar hub in Southeast Asia,” the group added in a report it submitted to the
government.

Cagayan Electric Power and Light Co. Inc., which owns and operates the only 1 MW solar
plant in Cagayan de Oro, Ms Capellan said, is part of Intensity Inc, which installed the
biggest number of solar home systems (SHS) in offgrid Mindanao, a program funded by
USAID.

Box 44 Sunpower Philippines

History
In 2008, SunPower signed an agreement with PG&E to build the world’s largest – 250 MW –
photovoltaic (PV) power plant, set to begin energy delivery in 2010. Florida Power and Light Co also
contracted with us to provide 25 MW of electricity in 2009, and another 10 MW by the end of 2010.
We continue to provide high-energy solar systems for the world’s business and technology leaders,
governmental agencies, retailers and other entities, along with the highest-efficiency solar panels for
our international residential customers. And, in addition to our U S bases of operation, SunPower
maintains offices in Canada, Germany, Italy, Spain, Switzerland as well as Singapore, Korea, and
Australia. What’s next? At SunPower we’re always striving to improve our technologies and drive
solar power innovation, all with the goal of changing the way the world is powered. After all, there’s
always something new under the sun.

Product and Services

Our panels produce the most power, which helps you save roof space and, more importantly,
electricity costs. In fact, our panels are the most powerful on the planet, outperforming our closest
competitors by about 50 percent.

154
“Recent price reductions from Tier 2 Asian manufacturers will place enormous pressure on others to follow
suit,” said Craig Stevens, President of Solarbuzz. “Even with significant cutbacks in production and shipments,
Q4’11 factory-gate module prices are still projected to fall 25 percent Y/Y.”

95
4.3.4 Air Conditioners, Chillers
Replacing old chillers is beneficial for the investor and the environment
EE improvements of more than 50 percent during the past two decades translate to:
electricity saving of more than 30 percent, directly going to the bottom line
reduction of CO2 production (1 kWh electricity = about 600 gram CO2)
replacing hazardous ozone depleting substances (ODS) used in old chillers.

Improved technologies continue increasing the efficiency of chillers further (see box). The
still slow replacement of old chillers in the Philippines is based on various factors, perhaps
most of all unawareness of facility managers and potential investors. For more details and
calculations, see Annex 17 Case studies d, e, f.

Box 45 Solar Assisted Air Conditioning Units

“The latest company to have availed of the Sedna Aire installation is the Makati Medical Center,”
155
Cordova says. “It is the first hospital in the country to use solar assisted air conditioning units.”
Ycasiano admits that Sedna Aire solar absorption air conditioning system is more expensive than
the regular air conditioning system. “But if you’re using your air con for 10 hours a day, you can save
using this.”
This solar assisted air conditioner is the only one of its kind that can give you returns of
investment (ROI), according to Ycasiano. “That’s why we call it investment. And how fast you can get
your ROI really depends on how heavy you’re using air conditioner.”
“Payback for 22 hour users of air conditioner is less than a year,” he says.

4.3.5 Lighting
Today's high performance fluorescent T8 lamp and (electronic) ballast combinations can
improve system performance by 70 percent to 81 percent over the still common T12 energy
saver lamp and magnetic ballast combination.156 Compact fluorescent lamps (CFL) save
about 70 percent of the energy compared to incandescent light bulbs. However, all
fluorescent lamps contain mercury, which is released when the lamps break. They are a
threat for the environment; they pose a danger even in landfills. Hence, the right disposal of
fluorescent lamps is also a concern.

LED lights promise to have a life cycle of more than 20 000 hours and even more energy
savings. They are commercially used for large advertisement panels, also during daytime.
While these panels use less energy at night compared to halogen lamps used to lighten
advertisement at night, these TV flatscreen like panels require electricity also during
daytime. Long life energy savings lamps do not only save costs for lighting
A prolonged bulb replacing cycle saves costs for facility maintenance.
Lower temperatures emitted by low energy bulbs reduce power demand for cooling
the air. Thus, total savings is much higher.

155
Inquirer Money / Features: Air conditioning for 22 hours a day, ROI in a year
http://business.inquirer.net/money/features/view_article.php?article_id=301494
156
T8 lamps have a 25 mm diameter. They are thinner than the T12 lamps (39 mm diameter).

96
4.3.6 Greening Transport
The Philippines introduced eco-friendly transport as a response to increasing air pollution, in
particular in Metro Manila. Whereas LPG driven taxis and CNG propelled buses (in Manila
since 2006) are common, e-tricycles and e-jeepneys are still extraordinary test cases.

The conversion of engines from gasoline to LPG costs about 100 000 PHP (2200 USD).
Reportedly, taxi drivers prefer renting LPG driven taxis, because the fuel is much cheaper.
Cars (or ownership documents) are suitable collateral but few banks are prepared to take
cars older than five years as collateral. For franchise operators, the investment decision has
to meet the profit bottom line. They invest in LPG fuel, when this results in higher occupancy
ratio and higher rents.

Loans for cars are rather widely available and financiers do not give preferential rates for
environment friendly vehicles. For example, loans for hybrid cars are not treated differently
or in a discriminative way.

The following are recent movements in Greening Transport

DENR eyes nationwide use of zero emission tricycles157
Jeepney may shift to new LPG engine, says group158
Green cars’ highlight 2010 CAMPI motorshow
Philippines Paves Way For Green Cars,159 lower commodity tax rate on completed
eco automobiles
Local firm Green Frog Zero Emissions Transport Corp. has expressed interest to buy
some 3000 electric buses in the next seven years.160

For more details on Greening Transport, efforts to reduce the vehicles’ damage and stress to
the environment, see Annex 16 a: and Annex 7 “ADB loan….”

4.3.7 Green Building

Green building, as the Philippine Green Building Council (PhilGBC) puts it, is the practice of
designing, constructing, operating or reusing buildings in an ecological and resource efficient
manner; focusing on the promotion and practice of sustainable site development,
improvement of indoor air quality, use of efficient energy, and improvement of water
management, and utilization of green materials, among others.

157
http://www.gmanews.tv/story/223878/nation/denr-eyes-nationwide-use-of-zero-emission-tricycles 19June2011
158
http://www.gmanews.tv/story/212976/jeepney-may-shift-to-new-lpg-engine-says-group, 14 Feb 2011
159
http://www.taxationinfonews.com/2011/05/philippines-paves-way-for-green-cars/, 24 May 2011
160
Firm eyes electric bus fleet - ICSC www.ejeepney.org/home/latest-news/firm-eyes-electric-bus-fleet; 20 May
2011

97
Box 46 Green Building

Many developers think that choosing green building materials and techniques will only add more costs
to their budget. PhilGBC chairman Christopher C dela Cruz informed about the need to explain to the
market players that it is a sound investment decision to look into the lifecycle costs rather simply
looking at upfront costs. Also it is good to note that there are already sustainability financing options
available in the Philippine market which effectively reduces the amount of money needed to building
green. The investors also need to understand that green buildings are better leveraged against
building development loans. “As more developers adopt the standard, it could come to a point where
expenses like insurance premium and financing can be negotiated to be lowered since green
buildings provide better living conditions and thus less risks to its inhabitants.” Banks are starting to
understand that green building may in effect future proof a developer’s investment. Future proofing as
a concept is understood as sound investment strategies that are well understood by financing
161
institutions.

Real estate consultant CB Richard Ellis, who has been tapped to market the units of the Green
property project, expressed confidence of its attractiveness among multinational and local companies
who have environment conservation as part of their responsibility. “In a world where cost
162
effectiveness is the rule, finding a sizable market for green buildings remains a challenge.”

In 2010, PHILGBC established the voluntary Building Ecologically Responsive Design for
Excellence (BERDE) Standards.163 By adhering to the standards, building owners can reap
savings through building materials and technology that promote EE, passive cooling, etc.
The investment would be on the construction methods and/or retrofitting of existing
buildings164 to introduce green buildings in the property sector and on the production of
building components, which contribute to EE in the building sector.

Finance for green buildings is available. However, no bank or other finance institution
promotes financing for green buildings with preferential loans. Lower interest rates,
extended maturity and other softer terms are a matter of negotiating power rather than a
lower investment risk rating.

4.3.8 Agriculture
The following presents two of several opportunities for SMEs to produce green energy (RE),
the biodigester, and burning rice husks.

Biodigesters are compulsory green investments for piggeries. They are introduced as
pollution control devices. The methane gas is a GHG that is 23 times more harmful to the
environment than carbon dioxide. Biodigesters are a fine example for profitable pollution

161
http://www.philgbc.org/newsroom/philgbc-in-the-news/71-green-building-revolution-in-the-philippines; Architect
Christopher Cruz de la Cruz, Chairman of PhilGBC talks to Southeast Asia Building editor about the efforts and
challenges of promoting green building practices in the Philippines. 01 January 2010
162
Putting the ‘E’ in real estate --- the ‘BERDE’ way, 18 November 2010, http://www.cbre.com.ph/news-
center.aspx?Id=24;
Local real estate, construction firms urged to build more green buildings; by Marianne V Go and Donnabelle L
Gatdula (The Philippine Star), Updated 26 June 2011
163
Philippines Green Building Council, Unit G-4B, The Net One Center, 26th Street cor 3rd Avenue, Crescent
Park West Bonifacio Global City, Taguig City, Metro Manila
164
Real estate giant Ayala Land, Inc is pioneering BERDE in retrofitting existing buildings.
http://www.cbre.com.ph/news-center.aspx?Id=24

98
control. A biodigester converts organic waste into both fertilizer and a renewable source of
energy.

Table 30 Biodigester

Biodigester are pollution control devices Permitting requirements for biodigesters

preventing emissions and / or discharges
beyond allowable limits (for compliance
with Clean Air Act or Clean Water Act).
Required as ECC condition of the main
project such as piggery.
• Environmental Compliance Certificate (PD 1586)
• Permit to Operate (RA 8749)
• Discharge Permit (RA 9275)
• Hazardous Waste Generator Registration
• Pollution Control Officer Accreditation

Around 20 percent of the seeds of the rice plant is husk. Traditionally, farmers burn the rice
husks after harvesting, causing air pollution and potential for starting wildfires. There is now
available technology where rice husks are burned in special ovens that produce electricity
for rice mills and villagers. Small scale applications between 10 - 200 kW usually use a rice
husk gasifier coupled with a modified internal combustion engine that drives a generator
(investment cost up to 350 000 USD).165 Positive side effects are reliable electricity supply
and local use and sale of excess electricity, which, in the absence of feed-in tariffs, is still
low. However, the cost of the burning material (fuel alternative) is low and it contributes to
solving logistic and environmental problems (reducing rice husk hills), effects which are
sometimes difficult to factor into a profitability analysis. The ash, in weight 20 percent of the
husk, has still a market value.166

Cogeneration in sugar factories solves also the waste problem in a profitable way.

4.3.9 Organic Farming (Agriculture)

Traditionally, people associate agriculture and forestry with the color green. Green or
organic farming reverts past developments of using more chemicals and machinery for the
production of farm products (foodstuffs).

A minority of farmers engages in organic farming and, certainly, several farmers require
loans, maybe not for inputs but for paying increased farm labor and household expenditures
until sale of harvest. Commonly, these loans are not registered as green loans. The switch
to organic farming is said to result initially in production reduction, which higher prices only
balance after two to three years. For more than three years now, DBP has been offering a
program for financing organic agriculture.

165
Electric Power Generation from Rice Husk, Dr Engr Khursheed-Ul-Islam, Sr Advisor
German Development Cooperation (GTZ); http://www.lged-
rein.org/archive_file/POWER%20FROM%20RICE%20HUSK%20FINAL.pdf
166
http://www.knowledgebank.irri.org/rkb/index.php/rice-milling/byproducts-and-their-utilization/rice-husk

99
Table 31 SEED Organic Agriculture

Priority organic rice, muscovado sugar and organic vegetables / processed organic vegetables
projects (pickles, chunks, etc.)
Eligible individuals, partnerships, corporations or cooperatives duly registered with the
Borrowers Department of Trade and Industry / Securities and Exchange Commission or
Cooperative Development Authority who own titled land or with tenurial arrangement
on land suitable for planting to organic crops.
Terms repayment based on the project cash flow or payback period as determined by DBP
but not to exceed five years inclusive of three years grace period

Local programs support organic farming incentives with finance. For example, LA TRINIDAD
Organic Practitioners (La Top) Multipurpose Cooperative operates several outlets for organic
products located at the Baguio Convention Center. La Top has also been a recipient of
various financial and technical assistances from the Philippine Australian Community
Assistance Program (PACAP) and Foundation for a Sustainable Society through the Jaime
V Ongpin Foundation, Inc (JVOFI). A bank loan to La Top would perhaps be categorized as
a loan to agriculture, which has a higher priority ranking than environment. Some banks may
put such loan under the trade category.167

4.3.10 Various Green Investment Opportunities

The following is a collection of other samples for local technologies that Philippine industries
can potentially use to address their environmental impacts.

Table 32 Green Investment Opportunities

Technology Uses / Applications

1 rapid Multimedia filtration system wastewater treatment, drinking water treatment
2 bio /chemical wastewater treatment system wastewater treatment
3 biodegradable plastics environment friendly packaging
4 industrial shredder volume reduction
5 solid waste / compost bins industrial receptacles / containers

Source: http://www.pbe.org.ph/etrs.htm

BPI exposed three green investments as examples for green EE finance168

A corrugated box manufacturer availed of a 60 million PHP loan for the upgrade and
installation of new equipment, resulting in energy savings of up to 11 million PHP.
A farm constructed a 750 million PHP post harvest facility for corn, improving
productivity by at least 10 percent and reducing carbon emissions.
Another client, Corfarm, was featured in IFC’s 2009 Annual Report for its 50 million
PHP biogas / methane capture and electricity production facility that resulted in
energy savings of about 80 percent.

167
http://blog.agriculture.ph/category/organic-farming/page/5
168
http://business.inquirer.net/money/topstories/view/20110208-319194/BPI_funds_energy_efficiency_projects

100
5 Conclusion
Increasing fossil fuel consumption and environmental hazard are the problems, but many
SMEs have not yet realized this, while others do not know how to take action. Though, most
SMEs respond to the challenge, when they invest in new equipment or processes. By the
nature of competition among machinery and equipment suppliers, new technologies and
processes are superior to older ones. They achieve the same output with reduced inputs,
meaning with less impact on the environment.

The implementation of new processes or new equipment requires finance. For investments,
entrepreneurs look for long term loans, for which the interest rate plays a dominant role.
Before investing, the question of access to a suitable finance product needs to be resolved
first. However, a number of green investments with high returns do not depend on bank
loans, such as replacing conventional bulbs with CFL or acquiring a new air conditioner.

With regard to its SEF program, IFC presents some conclusions and lessons learned
banks are not capable to process RE / EE loan requests
developers of small projects lack relationship with banks; growth is too slow
the regulatory framework has still to be developed
investors and consumers have not the information to make right choices.

Box 47 Conclusion by Others (IFC)

1 Lack of availability of suitable financing and capability of local FIs to process sustainable
energy deals: prior to IFC’s SEF, there were no FIs that were formally targeting sustainable
energy projects. Most lack expertise and suitable financial products in originating, assessing
and financing SE projects.
2 Commercial strength of projects developers: many project developers, particularly of the small
and medium scale RE projects, do not display the necessary financial and commercial acumen
to scale up their business. They lack the relationships with the banking sector to structure more
sophisticated and bankable projects.
3 Lack of implementing rules and regulation for sustainable energy projects: several laws have
been enacted but the regulatory and policy frameworks are not yet in place.
4 Steep learning curve for end users of energy efficient and small scale RE equipment: Most
consumers are aware of the problem and are starting to research different investment options,
but support is needed to help them make the right choice and to commit to invest.

Source:
http://www.climateinvestmentfunds.org/cif/sites/climateinvestmentfunds.org/files/Phils%20CTF%20RSF%20SEF
%20Proposal%2026Jan11%20to%20CIF%20AU_PID.pdf

5.1 Information Gaps

Information gaps prevent increased GF for SMEs. SMEs are insufficiently or not at all
informed about
how environment influences their businesses and how their businesses influence the
environment
measures to mitigate these influences
the economic impact of these measures on their and the society’s welfare
how and where to access finance for the implementation of changes.

101
Banks
few banks reflect on environment and climate change
even less banks find it necessary or recognize the potential of offering green
products
banks are not familiar and informed about how to identify and how to assess RE / EE
investments.

Equipment suppliers
It is questionable when equipment suppliers stress that their goods protect the
environment. On the other hand SMEs just want lower operating costs.

5.2 Banks and Finance

Finance for green investments is sufficiently available. The banking system has no lack of
funds or liquidity. However, the availability of long term funds for financing enterprises and
their projects is limited and therefore more expensive than short term funds. The interest
rate, if fixed until maturity, is initially higher than the flexible interest rate. It is speculative to
predict for the entire loan repayment period whether it is less expensive to select the flexible
or the fixed rate. Long term funds from bilateral or multilateral financial institutions are a
source of inexpensive long term funds, although they cost more than short term domestic
funds. In return for these preferential interest rates, these financiers request financing
specific investments, for instance green investments.

It is common business for banks to finance green investments. Loan officers are just not
aware of it. They do not see the environmental dimension in the investments that they
finance. In most cases, banks process loan applications below a certain threshold
automatically as nonprogram loans in branches. This is one reason why green loan
programs do not normally reach micro and small enterprises. The banks focus on a few
large enterprises assuming that they absorb the funds faster than many small borrowers.

Banks neither finance projects nor deny loans because they are green. Several green
investments - pollution control for example - do not increase the enterprise’s revenues.
These investments are a burden. They do not increase income nor reduce costs. They
cause deteriorating indicators in the credit analyses. Bottom line, SMEs obtain loans when
projections show the profitability of the business or IRR / FRR and the repayment capacity.

When assessing the role of banks one might keep the following in mind
Generally, banks do not assess environmental impacts of projects. They rely on the
necessary official permits. They do not verify these nor the underlying environmental
standards that apply. Therefore, banks finance projects that are detrimental to the
environment, such as cement works. Environmentalists demand that responsible
banks apply their own stricter standards.
Straight commercial loans are often more profitable for banks than special credit
programs that may limit their income margin or impose extensive reporting
requirements.
Special credit lines burden bank account officers with additional work for which they
are not compensated.

102
 The survey found special green loan products offered by banks operating nationwide
only with
o BPI, BDO, Metrobank: SEF
o DBP: SEED programs and others
o LBP: CLEECP and others
BPI, DBP and LBP assist SMEs to benefit from carbon rights (CDM / CER) and other
advantages available for environmentally conscious investments.
The program loans and its practice address predominantly those approximately 10
000 SMEs, which could shoulder a loan of 5 million PHP or higher.169 Though, if
banks standardize processes and train account officers respectively, they could offer
program loans also to enterprises that require a much lower amount, for example, by
introducing a program for replacing air conditioners or replacing engines of buses
and taxis.
Banks wait for the official announcement of feed-in tariffs to release finance
earmarked for related RE investments, with few, if any, SMEs participating.
No information is available whether one or more of the 595 rural banks introduced a
particular GF scheme. Reportedly, four banks supported financing government and
GEF subsidized solar PV equipment in the framework of the Rural Power Project
(RPP) cooperation with Shell and World Bank (see also Annex 18 b).

The issue of limited access to finance for SMEs arises, often because of insufficient
bankable collateral and also because of other loan assessment factors (5C and others). This
is an entirely independent topic. For example, a loan to a person or enterprise with
questionable creditworthiness cannot be justified with its green purpose.

5.3 Private Sector

Microentrepreneurs
Microentrepreneurs are prepared to pay a much higher price for electricity than the
price charged by electricity companies (for example, for light used by food vendors
and food stalls at night). Meanwhile, in several instances, solar power can substitute
the access to the grid. No or only a short term loan is necessary for the vehicle
engine conversion from fuel to gas.
Energy services to the poor develop to become a profitable business with a bigger
role for for-profit principles and enterprises: prices for equipment (for PV systems, or
windmills) dropped while incomes and energy costs (fuel, electricity) increased.

Small, medium entrepreneurs

present value of money is high; a payback period for investments should not exceed
four years
cost reductions from green investments must be obvious in order to encourage
SMEs go beyond legal obligations
SMEs do not feel responsible for keeping the environment clean; investments with
low direct financial returns have to provide other benefits, such as good public
relations, satisfaction, or enhanced reputation

169
Maximum total assets (outside land) of small enterprises: 15 million PHP (according to Magna Carta) .

103
 despite their profitability, green investments are not considered when higher
operational costs can be charged to or are the burden of others, such as tenants of a
building with outdated chillers; in this case, green investments do not materialize
investments in increasing sales have a much higher priority than investments in
saving energy or other resources or environment protection
providers of RE / EE equipment do not actively promote or inform about the
profitability of their products. Exceptions apply, as a recent newspaper advertisement
of air condition producer Carrier shows
entrepreneurs have no information about EE consultancy or they regard investment
in (or cost for) EE consultancy as wasted money.

Consumers and MSEs

Consumers and MSEs reduce energy consumption and invest in EE tools
o when information and promotion convinces them (for example, CFLs are
meanwhile common)
o when electricity bills are shocking or prices for fuel increase suddenly and
steeply. However, over time they get used to consume and pay more.
EE progress is countered by new and more energy consuming appliances.

Box 48 Beneficiaries of Environmental Credit Lines

The direct beneficiaries of environmental credit lines, in particular those of programs supported by
bilateral and multinational financial institutions (banks and funds), are mainly few hundred large
medium or large enterprises. The average loan amount is estimated to exceed 50 million PHP. Also,
loans with lower amounts address large enterprises. The loans for financing chiller replacement
benefit companies with assets at least 25 times higher than the loan amount: Chillers constitute only a
small percentage of the buildings’ value. Their impact on the environment does not get appropriate
attention.

5.4 Government
Government incentives can influence investment decisions. The announcement of binding
feed-in tariffs will trigger enormous investments in RE. Investors wait for the government to
announce the feed-in tariffs so that investments in 830 MW RE amounting to about 2.5
billion USD or 110 billion PHP170 can be realized.

Regulations and promotion are not always streamlined. For instance, a rural bank faced loan
repayment problem, because the buyers of 4 stroke motorcycles returned their vehicles after
the government revoked the decision to ban less environment friendly 2 stroke motorcycles.

One must not forget that, in general, companies do not behave morally. Even if the
management would want, the competition does not allow it. The morals and ethics must be
enforced through legislation. It must be cheaper to behave morally.

170
830 MW x 3 million USD / MW (estimated average investment volume) x 44 PHP / 1 USD

104
5.5 Nongovernment Organizations (NGOs)
Most NGOs rely on financial support from donors. Donations and contracts come irregularly.
NGOs are engaged in project activities with strict time, locality and severe funds limits. Their
assistance is transitional. NGOs promote the cause, namely environment, and are unable,
miss or even avoid promoting the economic benefit. Donors and beneficiaries are not as
much interested in financial return on investments as investors. Stakeholders understand
and support the development and social benefit. Financial institutions decide on other criteria
when deciding on loans. Few NGO representatives can explain the profitability of the
proposed green investments.

105
6 Recommendations
GF is the end of a process, which starts with awareness about environment and
sustainability and activities that endangers them. Experts invent measures, processes and
products to reduce the negative impacts of industries. They cost money. Therefore, when it
concerns greening the industries, it starts with identification of how (much) energy is
produced and used as well as where pollution occurs. The second step is the identification of
technologies to enhance sustainable energy production, reduce its consumption and prevent
pollution. The third step is the compilation of related costs. Only thereafter the question of
financing arises.

The recommendations below are more general in nature as the study did not assess the
capacities and willingness of the institutions that would be responsible to follow up on them.
Investment in environment is highly political in nature. It may also be that several
recommendations were already realized but not made public to a broader audience and not
made known to the consultants.

Investment in environment is of a highly political nature as some question the causality of

CO2 emission and global warming. In contrast, there seems to be the common
understanding that environment protection reduces competitiveness. Whereas the former is
hard to prove, there are numerous examples where environment protection and improved
competitiveness are going well hand in hand.

6.1 Improved Information for SMEs

Identification of responsible institution
If GOP wants SMEs to increase their efforts in reducing their negative impact on the
environment beyond legislation and regulation as well as creating a more sustainable
environment, it is proposed to determine first the institution(s) that shall be responsible for
informing entrepreneurs about a) green investment opportunities and b) general sources of
finance available for this purpose and GF opportunities in particular. Second, GOP has to
provide the(se) institution(s) with the necessary means, namely qualified personnel and a
budget to undertake this task. It is proposed to investigate if, for example, NERBAC could
take over this mandate.

This institution has to decide about how to inform entrepreneurs and other stakeholders. It
has to develop related information campaigns using printed matters (articles in publications,
which entrepreneurs read), films for fairs and television, website presentation in internet,
interviews on radio stations, in short: a media mix exposing the progress in technology and
its financial returns, for example by presenting model calculations. The overriding message
should be: green is profitable.

It is proposed to develop information campaigns using printed matter as well as other media
such as films for fairs, internet and television, and interviews on radio stations that expose
the progress in technology and the profitability of green investments.

106
Compendium on RE / EE equipment and savings
It is proposed to publish a compendium on RE/EE equipment that is used by a wide array of
sectors and industries as well as provide basic data and “on the back of the envelope” model
calculations for investment and savings. The publications would provide information about
high yielding green investments and those that can be paid off through additional income or
savings. It could include fact sheets about success stories, ready to replicate with full
references for further inquiries and contacts.

Compendium of GF providers
Information gaps block the demand for green loans. DTI has published a compendium of
loans offered for SMEs. It is proposed to issue a version that takes into account only special
environmental facilities and explains their competitive advantage compared to common
loans. For SMEs, it would be important to indicate the lowest loan amount and eligibility
criteria including collateral requirements. The booklet (How to finance green investments - A
Guide for SMEs) would also inform the reader about alternative sources of credit, such as
from suppliers, NGO, etc and about how to select the right financial institution. One of the
chapters would cover the issue on how to make an energy proposal. ECCP developed
already a respective form. The booklet could be financed by contributions from participating
and advertising banks. Banks advertising in this booklet would prepare themselves for the
demand from investors and investors would know to which institution they could send their
application. This booklet could be prepared by or in cooperation with bank associations and
distributed in participating banks.

Box 49 Complete Information

For example: refitting car engines

Petrol stations announce low gas prices, workshops about conversion of engines, banks about loans,
scattered bits and pieces of information. It is proposed to distribute leaflets at petrol stations that
inform car owners about converting the car or truck engines to use LNG / LPG covering technology,
advantages, disadvantages, costs, back-on-the envelop calculation on savings, naming local banks
financing the conversion, bank requirements, workshops. This leaflet has to provide all necessary
information. If it is incomplete it is almost useless. Few consumers search for missing information.

For example: boilers for food processing

choices (models, fuels), investment and operating cost comparison, clean production standards,
safety standards, effluent and air pollution control, air and lighting, source, suppliers and service
providers, financing banks

Use related information distribution channels

Information on EE measures could come with the electricity bill, also for those EE measures
that do not relate to electricity. Likewise, leaflets or brochures on energy savings can be
distributed at gas stations. These brochures might be paid by those banks that offer loans for
financing the respective measures, the equipment manufacturers or the oil companies. It is a
matter of coordinating such an incentive. Information has to be complete, ready to use, with
a help desk (at least a phone number, website or email address) for further questions.

Enhancing environment awareness

Below is a list of measures to enhance environment awareness of entrepreneurs. By nature,
SMEs will take up actions and implement the most profitable and beneficial proposals and
suggestions to reduce direct and indirect pollution and aim at sustainable and clean
production. Several of these measures are probably more efficient and effective in

107
cooperation with other government agencies, associations and supported by the private
sector and its associations: banks, electricity companies, vendors of RE / EE equipment, etc.
These measures encompass the following
capacity building for staff of National Economic Regional Business Advisory Centers
(NERBAC) attached to DTI (at least 80 offices nationwide in 2012 - 14); these offices
will be in contact with enterprises that shall reduce their environmental footprint
RE / EE presentations at trade fairs (inviting manufacturers of RE / EE equipment,
associations, consultants, banks offering environment related products)
energy conservation campaigns with walkthroughs; energy savings is “My most
profitable savings account”
information for SMEs might also cover the following topics
o environment and the law
o how to work more efficiently with less inputs (resources)
o how to reduce power / electricity cost (for example through sensor regulated
switches, applying less heat / chill, small power efficient tools and equipment)
o how to collect information (for example through web based research)
o education and training support to SMEs on sustainable production practices
o sustainable product certification schemes (labeling, how to read and use yellow
(EE) labels on appliances and equipment).

In view of the fact that resource and EE can be improved almost everywhere, it is
recommended to define priority sectors or industries to address them first.

PSP’s creative sector enterprises should be checked on EE potentials based on checklists

as presented above (Chapter 4.2.1).

Enhancing the role of walkthroughs

Walkthroughs (preliminary energy audits) identify RE / EE investment and savings
opportunities. Entrepreneurs are averse to call a consultant because they worry that the
advice is not worth the cost. Therefore, SMART, SEF supporting banks and the CLEECP
scheme offer free walkthroughs.

Commonly, walkthroughs assess technical issues. It is proposed to also include preliminary

assessments on estimated investment volume and savings volume in financial terms.
Cooperation with banks to standardize the reporting format, at least for most frequent
investments, is recommended. The walkthrough report could become a decisive document
for the loan proposal.

Forms for preliminary self-assessment will be provided (number and type of lighting, air
conditioning, heating, machines, other equipment, working hours, electricity consumption
etc) and demonstrated how to fill them in. These data will help to prepare and accelerate
walkthroughs.171

The most expensive part in these walkthroughs is the travel time and travel cost for the
expert. Most of them are based in Manila. It is proposed to arrange bundling walkthroughs
according to location.

171
ENPAP representative: “A do-it-yourself assessment tool, a simple toolkit can be useful.”

108
6.2 Strengthening the Role of Financial Institutions
Information
Banks trigger loans and subsequent green investments. It is necessary to prepare them with
information about
sectors, industries and investment opportunities
how environment protection works (self-liquidating loans)
how to assess loan applications for sustainability and environment
rough cost and income estimates for green investments – indicating the dimensions
financial and other benefits for borrower and lender
threats of noncompliance with environment regulations.

It is proposed to develop a small compendium for loan / account officers with basic
information (fact sheets) as guidelines for loan assessment; cooperating together with bank
associations which will be responsible for its distribution. It is proposed to limit this booklet
for investments with highest savings potential and highest frequency (focus). For the
identification and provision of data, cooperation with the Energy Efficiency Practitioners
Association (ENPAP) is suggested.

Training
This booklet or compendium should become part of the training material and training
modules about assessing RE / EE green investments for loan / account officers.

Awards
Regional award winning competitions for banks or bank branches for green loans separately
for unibanks, rural banks and other banks and according to loan amount or enterprise
categories (micro, small, medium) shall honor bank staff172 (compare also Annex 12
“MacroBank….”). In this process, it is expected to identify innovative approaches to GF (best
practices) for replication. Here, bank associations could be suitable partners for cooperation.

Other suggestions to enhance the role of GF

Further recommendations to enhance lending include
banks establish environment committees or subcommittees as part of the risk
management committee
Green Lending might become a separate category for banks’ monthly reporting to
BSP (Central Bank) along with other priority sectors (solving the conflict of reporting
when an environmental loan is simultaneously a loan to agriculture, also a priority
sector
banks employ engineers and persons with natural science background who can
access the environment impact of green loans and who may assist in processing
access to carbon rights
participating banks join in promoting green investments and green loans, ideally with
support of DENR or other relevant government agencies

172
At national level a similar contest is already established. In recognition of the important role of the MFI and
their loan officers in the success of financing EE or other environmental measures the MFIs and the loan
officers serving the winners each receive cash incentives worth 10 000 PHP.

109
 energy conservation program / campaign with DOE and the private sector
(manufacturers and vendors of equipment) thus endorsing together that environment
protection goes hand-in-hand with reduced expenditures.

Banks are advised to formulate strategies for a design of specific policies for different
sectors according to environmental sensitivity (A-B-C classification of investments).

SMALL BUSINESS CORPORATION (Annex 24)

It is proposed to explore, if SBC could develop an attractive green wholesale lending

product from which subborrowers that is also attractive for borrowers. This could be a
possibility to implement a broad based and SME accessible GF initiative in rural banks and
cooperatives.

6.3 Enhanced Role of the Government

The government can act as facilitator and / or impose legislation and regulations. It is
proposed to work through the relevant associations.
The government can play a stronger role, a role that goes beyond acting as facilitator and
coordinator of measures and various events for sensitizing SMEs, banks and provider of
information. The government may, among others
impose mandatory energy audits or walkthroughs, for instance once in five years,
depending on the size and type of industry
legislate and supervise the phase out of inefficient and polluting equipment and
machinery, also with accompanying sanctions
introduce more rating systems (similar to yellow labeling), for example for buildings;
those with an inferior EE might become candidates for a higher property tax
subsidize interest for loan financed investment in RE / EE and other resource saving
measures (source: budget allocation DOE or DENR); a two percent interest discount
or refund would certainly create a considerable number and volume of green loans;
loans, presently not recognized as green, would be recognized as financing
sustainability; most of all, it would enhance awareness for the environment
allow a tax break or accelerated depreciation of green investments, which would
benefit also those not requiring a loan.

110
ANNEXES
Annex 1 Frequently Asked Questions about SE, EE, RE (FAQ from BPI) ... Error! Bookmark not defined.
Annex 2 Private Sector Promotion - SME Development for Sustainable Employment
(PSP – SMEDSEP) Program .............................................................. Error! Bookmark not defined.
Annex 3 Green Finance Association ............................................................... Error! Bookmark not defined.
Annex 4 Excerpts from Republic Act 9178 (BMBE’s Act) ............................. Error! Bookmark not defined.
Annex 5 Incentives for Renewable Energy Developers ................................ Error! Bookmark not defined.
Annex 6 Cool Earth Partnership ...................................................................... Error! Bookmark not defined.
Annex 7 ADB loan and climate justice ............................................................ Error! Bookmark not defined.
Annex 8 Loan application for SMEs ................................................................ Error! Bookmark not defined.
Annex 9 LBP’s Carbon Finance Support Facility (CFSF) .............................. Error! Bookmark not defined.
Annex 10 Green Financing and the gender dimension ................................... Error! Bookmark not defined.
Annex 11 Citibank: Investing for a green future .............................................. Error! Bookmark not defined.
Annex 12 Macro Bank: Microentrepreneur of the Year Special Award .......... Error! Bookmark not defined.
Annex 13 Philippines Business for the Environment: PBE links ................... Error! Bookmark not defined.
Annex 14 Landbank Releases 1.97 billion PHP for Food Supply Program .... Error! Bookmark not defined.
Annex 15 Certification and Supply Chain: Cradle to Cradle (C2C) ................ Error! Bookmark not defined.
Annex 16 Green Investment Opportunities ...................................................... Error! Bookmark not defined.
Annex 16.1 Greening Transport ......................................................................... Error! Bookmark not defined.
Annex 16.2 Green Boracay....................................................................... Error! Bookmark not defined.
Annex 16.3 Government to implement national standards for engineered bamboo Error! Bookmark not
defined.
Annex 16.4 Feed-in Tariffs for RE ............................................................ Error! Bookmark not defined.
Annex 17 Case Studies and Model Calculations ............................................. Error! Bookmark not defined.
Annex 17.2 Steam System Improvement and Cogeneration .................... Error! Bookmark not defined.
Annex 17.3 Steam Leak Repair ................................................................ Error! Bookmark not defined.
Annex 17.3 Replacement of Lighting ........................................................ Error! Bookmark not defined.
Annex 17.4 Replacement of Air Conditioner for Office / Home ................. Error! Bookmark not defined.
Annex 17.5 Replacement of Air Conditioner / Chiller ................................ Error! Bookmark not defined.
Annex 17.6 Replacement Central Air Conditioner / Chiller for Large Buildings ........ Error! Bookmark not
defined.
Annex 17.7 Biogas from Piggeries ............................................................ Error! Bookmark not defined.
Annex 17.8 New Equipment for Pulp and Paper ....................................... Error! Bookmark not defined.
Annex 17.9 New Post Harvest Facility ...................................................... Error! Bookmark not defined.
Annex 18 Solar PV Systems and Projects ........................................................ Error! Bookmark not defined.
Annex 18.1 Production.............................................................................. Error! Bookmark not defined.
Annex 18.2 Market .................................................................................... Error! Bookmark not defined.
Annex 18.3 SHS Projects ......................................................................... Error! Bookmark not defined.
Annex 18.4 Cagayan Electric Power and Light Company, Inc [CEPALCO] ............. Error! Bookmark not
defined.
Annex 18.5 Model calculation solar PV equipment ................................... Error! Bookmark not defined.
Annex 18.6 Solar PV Financing: Risk Analysis ......................................... Error! Bookmark not defined.
Annex 18.7 Experience from other countries: Indian Solar Loan Programme ......... Error! Bookmark not
defined.
Annex 18.8 SHS India - Financing Support (UNEP) ................................. Error! Bookmark not defined.
Annex 18.9 Small Scale Sustainable Infrastructure Development Fund (S³IDF), India . Error! Bookmark
not defined.
Annex 19 ECCP activities................................................................................... Error! Bookmark not defined.
Annex 20 DBP: Environment Management System (EMS).............................. Error! Bookmark not defined.
Annex 20.1 Environmental Assessment and Review Procedures for Subprojects .. Error! Bookmark not
defined.
Annex 21 Landbank, Credit Line for Energy Efficiency and Climate Protection (CLEECP) .............. Error!
Bookmark not defined.
Annex 22 RobinsonsBank Microfinance Program ........................................... Error! Bookmark not defined.
Annex 23 Sulong SME Loan programs or schemes ........................................ Error! Bookmark not defined.
Annex 24 Small Business Corporation (SB Corp) ........................................... Error! Bookmark not defined.
Annex 25 Foundation for a Sustainable Society, Inc (FSSI) ........................... Error! Bookmark not defined.
Annex 26 Department of Agriculture, Credit Policy Council........................... Error! Bookmark not defined.
Annex 27 People’s Credit and Finance Corporation (PCFC) .......................... Error! Bookmark not defined.
Annex 28 Department of Science and Technology (DOST): Set-Up ............... Error! Bookmark not defined.
Annex 29 Can microfinance address environmental issues? ........................ Error! Bookmark not defined.
Annex 30 CDM in the Philippines ...................................................................... Error! Bookmark not defined.
Annex 30.1 Introduction to CDM mechanism ............................................ Error! Bookmark not defined.
Annex 30.2 Programs of Activities (PoA) .................................................. Error! Bookmark not defined.
Annex 31 Discussions on the Definition of GF ................................................ Error! Bookmark not defined.
Annex 32 Banks in the Philippines and their green profile ............................. Error! Bookmark not defined.

111
Annex 33 BPI and its concern about the environment .................................... Error! Bookmark not defined.
Annex 34 Small Business (Guarantee and Finance) Corporation (SB Corp) Error! Bookmark not defined.
Annex 35 Leading microfinance institutions.................................................... Error! Bookmark not defined.

Annex 1 Frequently Asked Questions about SE, EE, RE (FAQ from

BPI)

What is Sustainable Energy (SE)?

Sustainable Energy is about using energy wisely and more efficiently (Energy Efficiency) and
using energy generated from renewable energy sources (Renewable Energy).

What are the benefits of doing Sustainable Energy Projects?

Financial: reduced operating costs (up to 20 - 30 percent), improved cash flow and
•
higher margins.
Operational: improved management of facilities, improved equipment reliability and
•
availability, and improved productivity and product quality
Environmental: lower greenhouse gas and other pollutant emissions (and lower
•
pollution mitigation costs) and lower energy consumption.

What is Energy Efficiency (EE)?

EE refers to the amount of energy consumed per unit (or peso value) of production. EE
increases when either energy inputs are reduced for a given level of service, or there are
increased or enhanced services for a given amount of energy inputs. An entity could improve
its EE by making capital investments in new and more efficient equipment; and / or through
better monitoring, maintenance and verification of energy flows in existing equipment.

What is Renewable Energy (RE)?

RE is energy derived from resources that could be regenerated (biomass) or cannot be
depleted (sun, wind, water). Types of RE resources include moving water (hydro, tidal and
wave power), thermal gradients in ocean water, biomass (bagasse, rice husk, wood wastes,
etc), geothermal energy, solar energy and wind energy. Municipal solid waste (MSW) is also
considered to be a RE resource.

Where can we find potential EE projects?

Again, there are many opportunities for improved EE in business. Below are some
examples:
• cooling and heating systems
• air compression systems
• building management systems
• electrical systems including lighting
• expansion involving purchase or upgrade to a more energy efficient equipment.

Where can we find potential RE Projects?

• biogas (agricultural, industrial, and municipal wastewater treatment plants)
• biomass (agricultural residues as alternative fuel, energy crops)
• geothermal energy.
• other renewables such as small hydro, solar and wind.

112
113
Annex 2 Private Sector Promotion - SME Development for Sustainable
Employment (PSP – SMEDSEP) Program

The PSP - SMEDEP support the Philippines in the structuring of a widespread, poverty reducing
economic development. At present unfavorable framework conditions prevent the private sector from
unfolding its full development potential (core problem). Excessive bureaucracy, blocking of reforms,
wrong incentives and market distortions resulting from interventionist regulations and promotion
policies, lack of capabilities and competence in planning and implementing political reforms as well as
support measures tailored to meet specific SME needs are adverse stumbling blocks together with an
underdeveloped market for commercial enterprise services and lack of active participation of the
organized private sector (chambers, federations) in the public - private dialogue.

The objective of the PSP development program reads: The frame conditions for the development of
the private sector in the Philippines and in particular in the Visayas are improved. For the
achievement of the objective there are three planned components

Component 1 is concerned with strategy development

Component 2 with the improvement of local and regional competitiveness
Component 3 with the improvement of sector competitiveness.

The Micro, Small and Medium Enterprises M(SMEs) are the target group. They employ 66 per cent of
the total workforce of the Philippines. At the core of the interventions is the enhancement of the
strategy development capabilities involving important actors from the government, private sector and
civil society as well as the provision of advisory services in the implementation and sustainable
institutionalization of successful promotion approaches.

Geographically the program is concentrated on selected cities and municipalities located in the
Visayas. It works with a diversified partner structure at the national and sub national level. The
German contribution covers promotion instruments of technical, organizational, process and strategy
advice through national and international long and short term consultants as well as advanced training
and study trips for technical and management personnel of the partners, to a small degree, also
equipment.

The development policy relevance of SMEDSEP stems from its objective and design which are in
accord with the Medium Term Philippine Development Plan. The significance of SMEDSEP derives
particularly from
a the strategic cooperation with the Department for Trade and Industry (DTI) as main partner, the
central government agency responsible for implementing the National SME Development Plan
and
b the active participation in the donor dialogue at the national level through which influence can be
gained on the Philippine Government's reform policy.

An intensive coordination takes place with other donor organizations in the context of a coordination
forum organized by the Philippine government (Philippine Development Forum PDF).

The overall duration of PSP - SMEDSEP is nine years and four months (September 2003 to
December 2012). The German Federal Ministry for Economic Cooperation and Development (BMZ)
has commissioned the government owned German International Cooperation (GIZ) to implement the
German contribution to PSP - SMEDSEP. The present and last commission from BMZ to GIZ for
Phase 3 covers the period from January 2010 to December 2012.

114
Annex 3 Green Finance Association
At the UNIDO / UNEP / UN ESCAP / ILO conference on green industry in Asia, held in
Manila, the Philippines in 2009, Victor Gao proposed the formation of an International GF
Association in support of green industry and green economy in general.173

“One thing urgently important is GF as one missing link between knowing and doing in the
transition to green industry. All green industrial propositions cost money, and many green
industry business models are more often than not untested or unconventional. Traditional
finance may find it difficult or commercially unattractive to finance these green industrial
propositions. Therefore, despite all the eloquent public statements and pronouncements, it
will be difficult, if not impossible, to transition to green industry without GF.

GF may cover all the financial services related to the promotion and development of green
industries and green economies in general, including government financial policy support,
banking services, insurance, guarantees, venture capital, private equity, capital markets,
CDM trading, or cap and trade as U S President Barack Obama calls it, etc. GF is an
important lubricant in the transition to green industry.

Therefore, it will be important for various international organizations, nongovernment entities,

various banking and financial institutions and governments in various countries to support
the formation, at the global level, of an International GF Association, aimed at promoting the
growth of GF in support of green industry and green economy in general.

Members and supporters of such an international association may include bankers,

financiers, guarantee companies, insurance companies, venture capital firms, private equity
firms, CDM traders, various non-governmental organizations, government policy makers in
the relevant sectors, relevant international organizations, as well as the recipients of GF,
such as all the participants and stakeholders involved in building and promoting green
industry and green economy in general.

At the national levels, we need the formation of the various national GF Associations. The
formation of the GF associations, both at the global level as well as at the national level, will
make a great contribution to the transition to resource efficient and low carbon industries, for
example green industry and green economy in general.

The International GF Association and the various national GF associations will compare
notes and share lessons and experiences, exchange ideas, set up benchmarks, guidelines
and good practices, provide training, disseminate information and publish news, handbooks,
manuals and yearbooks to promote GF in support of green industry and green economy in
general.

That is GF. I would say that one missing link between knowing and doing in the transition to
green industry is GF. All green industrial propositions cost money, and many green industry
business models are more often than not untested or unconventional. Therefore, traditional
finance may find it difficult or commercially unattractive to finance these green industrial
propositions. Therefore, despite of all the eloquent public statements and pronouncements, it
will be difficult, if not impossible, to transit to green industry without GF.174

173
http://edition.cnn.com/2009/BUSINESS/10/06/opinion.gao.economy/
174
Gao, Victor Zhikai, Director, China National Association of International Studies, Speech at the International
Conference on Green Industry in Asia, Green Industry for a Low-Carbon Future “GF for Green Industry and
Green Economy,” 10 September 2009, PICC, Manila, the Philippines (slightly shortened)

115
Annex 4 Excerpts from Republic Act 9178 (BMBE’s Act)

REPUBLIC ACT NO. 9178

November13, 2002

AN ACT TO PROMOTE THE ESTABLISHMENT OF BARANGAY MICRO BUSINESS

ENTERPRISES (BMBEs), PROVIDING INCENTIVES AND BENEFITS THEREFOR, AND FOR
OTHER PURPOSES.

shall be known as the "Barangay Micro Business Enterprises (BMBEs) Act of 2002." BMBE Law

Section 9. Credit Delivery upon the approval of this Act, the Land Bank of the Philippines (LBP),
the Development Bank of the Philippines (DBP), the Small Business Guarantee and Finance
Corporation (SBGFC), and the People's Credit and Finance Corporation (PCFC) shall set up a special
credit window that will service the financing needs of BMBEs registered under this Act consistent with
the Banko Sentral ng Pilipinas (BSP) policies; rules and regulations. The Government Service
Insurance System (GSIS) and Social Security System (SSS) shall likewise set up a special credit
window that will serve the financing needs of their respective members who wish to establish a
BMBE. The concerned financial institutions (FIs) encouraged to wholesale the funds to accredited
private financial institutions including community-based organizations such as credit, cooperatives,
non-government organizations (NGOs) and people's organizations, which will in turn, directly provide
credit support to BMBEs.
All loans from whatever sources granted to BMBEs under this Act shall be considered as part of
alternative compliance to Presidential Decree No. 717, otherwise known as the Agri-Agra Law, or to
Republic Act No. 6977, known as the Magna Carta for Small and Medium Enterprises, as amended.
For purposes of compliance with presidential Decree no. 717 and Republic Act No. 6977, as
amended, loans granted to BMBEs under this Act shall be computed at twice the amount of the face
value of the loans.
To minimize the risks in lending to the BMBEs, the SBGFC and the Quedan and Rural Credit
Guarantee Corporation (QUEDANCOR) under the Department of Agriculture, in case of agribusiness
activities, shall set up a special guarantee window to provide the necessary credit guarantee to
BMBEs under their respective guarantee programs.
The LBP, DBP. PCFC, SBGFC, SSS, GSIS, and QUEDANCOR shall annually report to the
appropriate Committee of Both Houses of Congress on the status of the implementation of this
provision.
The BSP shall formulate the rules for the implementation of this provision and shall likewise
establish incentive programs to encourage and improve credit delivery to the BMBEs.

Section 10. Technology Transfer, Production and Management Training, and marketing
Assistance A BMBE Development Fund shall be set up with an endowment of Three Hundred Million
pesos (300 000 000.00 PHP) from the Philippine Amusement and Gaming Corporation (PAGCOR)
and shall be administered by the SMED Council.
The Department of Trade and Industry (DTI), the Department of Science and Technology
(DOST), the university of the Philippines Institute for Small Scale Industries (UP ISSI), Cooperative
Development Authority (CDA), Technical Education and Skills Development Authority (TESDA), and
Technology and Livelihood Resource Center (TLRC) may avail of the said Fund for technology
transfer, production and management training and marketing assistance to BMBEs.
The DTI, in coordination with the private sector and non-government organization (NGOs), shall
explore the possibilities of linking or matching-up BMBEs with small, medium and large enterprises
and likewise establish incentives therefore.
The DTI, on behalf of the DOST, UP ISSI, CDA. TESDA and TLRC shall be required to furnish
the appropriate Committees of both Houses of Congress a yearly report on the development and
accomplishments of their projects and programs in relation to technology transfer, production and
management training and marketing assistance extended to BMBEs.

116
Annex 5 Incentives for Renewable Energy Developers

1 Nonfiscal

 renewable portfolio standards: mandatory utilization of RE generation system in

ongrid systems
 feed in tariff: fixed tariff for at least 15 years
 green energy option: end users can choose RE resources as source of energy
 net metering: RE generating facility can offset electric energy from the DU
 renewable energy market: to be used for RPS compliance
 transmission and distribution system: Include RE based power facilities
 intermittent RE resources: priority dispatch
 offgrid electrification: DUs and / or QTPs shall source a minimum percentage of
annual generation from RE

2 Fiscal

 government share: one percent of gross income, geothermal resources 1.5 percent,
biomass exempted
 duty free importation: ten year exemption from tariff duties
 tax credit on domestic capital equipment and services
• income tax holiday (ITH): seven year tax holiday at the start of commercial
operation
• corporate tax rate: 0 percent of net taxable income after ITH
• net operating loss carry over: three year losses carried over 7 years
• accelerated depreciation: depreciation rate not exceeding twice the normal
 zero percent value added tax rate
• 0 percent on sale of fuel or power generated from RE sources
• special realty tax rate on equipment and machinery
• not to exceed 1.5 percent of original cost
 cash incentive for missionary electrification: 50 percent of the universal charge due
 exemption from universal charge: generator’s own consumption
 free distribution in offgrid areas
 payment of transmission charges: average p. kWh rate of all other electricity
transmitted through the grid
 tax exemption on carbon credits: exemption for the sale of CER

117
Annex 6 Cool Earth Partnership
Starting 2011, Japan will provide funds amounting approximately to 10 billion USD (1.250
billion JPY) in aggregate over the next five years. Assistance will be provided to developing
countries that are making efforts to reduce GHGs emissions and achieve economic growth
in a compatible way, on the basis of policy consultations between Japan and those
countries. The assistance is planned to come through capital contribution and guarantee by
JBIC.175

Cool Earth Partnership

1 Assistance for adaptation to climate change and improved access to clean energy: up to 2 billion
USD (250 billion JPY)

a) Grant aid, technical assistance and aid through international organizations will be provided to
address the needs in developing countries. A new scheme of grant aid, Program Grant Aid for
Environment and Climate Change, will be created as a component of this package.

b) In the context of improved access to clean energy, feasibility study on rural electrification projects
with geothermal energy and cobenefit projects that address climate change will be conducted.

2 Assistance for mitigation of climate change: up to 8 billion USD (1 trillion JPY)

a) Climate Change Japanese ODA Loan with preferential interest will be created to provide loans
amounting to 500 billion JPY for the purpose of implementing programs to address global warming in
developing countries.

b) Through capital contribution and guarantee by JBIC (JBIC Asia and Environment Facility), trade
and investment insurance by NEXI, and government support (projects to be implemented through
NEDO), together with private funds, up to 500 billion JPY will be provided for projects to reduce GHGs
emission in developing countries. In this context Asian Clean Energy Fund (at ADB) will also be
utilized to promote energy conservation in the Asian - Pacific region.

175
http://www.mofa.go.jp/policy/economy/wef/2008/mechanism.html

118
Annex 7 ADB loan and climate justice
MANILA, 2 Dec 2010 - An executive of a “green” NGO fighting for “climate justice” for Filipinos said
the 1 billion USD loan extended by ADB to fund programs aimed at improving the Philippines’ ability
to cope with climate change “is unacceptable.”
"It is unclear whether reports about ADB's USD1 billion offer for climate change should be a cause
for celebration or worry for the Philippines. Loans are unacceptable as climate adaptation financing,”
said Renato Redentor “Red” Constantino, executive director of the Institute for Climate and
Sustainable Cities (ICSC). “ADB’s role in mitigation funding is also currently controversial.”
Citing as example ADB’s funding activity to support electric vehicle expansion in the Philippines
(“myopic” and “shortsighted”) will eventually “distort” the market for electric vehicles, he said its recent
offer of a 1 billion USD loan is also fraught with problems. "If it is anything like its recent lending
operations, we can expect more problems.” The ADB has recently extended funding support to the
expansion of the electric vehicle in the country. But instead of stimulating long term business
development, ADB intends to just give away one e-tricycle to local government units (LGUs).
Also, the financing is not accompanied by any vehicle replacement plan or capacity building
program that allows LGUs to shift steadily towards sustainable transport.
“Worse, it appears that the ADB is favoring one contractor, who will build hundreds of e-tricycles
based on a single design that the ADB intends to impose, thereby distorting the market and
marginalizing local manufacturers. There is something deeply wrong going on here,” he said. Instead
of dictating its terms, ADB should “ensure that its funding is based on needs identified by the
Philippine government.”
“Climate finance should not be supply-driven. It is neither charity nor aid but compensation,
considering the nature of climate change and the responsibility of rich countries to alleviate the
impacts that are falling disproportionately on vulnerable developing countries,” Constantino stressed.
The Philippines, which accounts for only 0.27 percent of the world’s total greenhouse emissions,
has been identified as one of the countries that face the highest risk of natural disasters resulting from
climate change due to its location and archipelagic structure.
McCauley, ADB’s principal climate change specialist, said that the ADB will start releasing the
1 billion USD loan to the Philippines in three tranches starting next year. The first tranche, worth
about 400 million USD, will form part of ADB’s three year country assistance strategy (CAS) for
the Philippines. This will be used in the promotion of the use of solar energy, he said.
Aside from extending loans from its own fund, the ADB is also facilitating the extension of
climate change-related credit from rich countries to developing nations. Developed countries have
been contributing to an overall fund intended to finance initiatives that would help developing and
least-developed states cope with climate change.
But the CSC, led by Constantino, and several green legislators from both Houses of Congress, are
fighting tooth and nail for Filipinos to get payment from developed and rich countries for the impact
caused by climate change in the country.
He said compensation is the heart of climate justice. “This is also all the more reason why we
are calling for the early passage of the People's Survival Fund (PSF) bill authored by Senate
President Juan Ponce Enrile. If we are able to mobilize our own resources, the Philippines is able to
strengthen its negotiating position in leveraging the right kind of funds, in the right scale and from the
right institutions abroad, to respond to the climate crisis,” he added. (Bong D Fabe)

119
Annex 8 Loan application for SMEs
From LBP’s website FAQ

What are the requirements that borrowers need to comply with to avail of loans to Small and
Medium Entrepreneurs?

CHECKLIST OF REQUIREMENTS

FOR LOAN APPLICATION FOR SOLE PROPRIETORSHIP

Loan / Letter of Application
Biodata of proprietor / partners with recent photo

FOR CORPORATION / PARTNERS

Certified Articles of Incorporation and By-Laws and its certificate of filing with SEC
List of officers and directors, including their biodata with recent photo
List of stockholders and their respective shareholdings
Board Resolution/Stockholders’ Resolution authorizing to avail of financial assistance
from LANDBANK and indicating its duly designated / authorized signatories.

GENERAL REQUIREMENTS
Audited Financial Statements (BIR filed and inhouse) for the last three years
*prepared by auditors accredited by SEC (*for borrowers with total asset size of 15
million PHP and above only)
Latest Interim Financial Statement
Project Feasibility Study (if possible)
Businessperson Plan (should include information on the purpose of the loan being
applied for and the repayment plan)
Brief history of the company / resume of operations
Company’s Organizational Structure
List of existing machines / equipment (acquisition cost and date)
Photocopy of BOI / DTI registration
Product lines and percentage share in gross revenue
List of suppliers (address, telephone number/s and contact person/s)
List of buyers (address, telephone number/s and contact person/s)
List of company’s competitors
Photocopy of SSS registration
Photocopy of Membership Certificate from the General Banking Act of the Phils.
(GBAP) if applicable
Subcontracting Agreement (if subcontractor)
Business / Mayor’s Permit (current year)
Projected Financial Performance for the entire term of loan
Photographs / picture of project
Building plan, bill of materials and estimated cost (for building)
Offered Real Estate Collateral / Documents (2 copies each)
o - Photocopy of title/s to be mortgaged
o - Location plan duly certified by a geodetic engineer
o - Tax Declaration for both lot and improvements thereon
o - Certificate of non-delinquency in real estate tax payments from previous
year up to
o current year / Latest Real Estate Tax Receipt

Source: https://www.landbank.com/loanapplicationfaq.pdf

120
Annex 9 LBP’s Carbon Finance Support Facility (CFSF)
Objectives of the CFSF
to promote climate change mitigating activities in the business operations of the
bank’s clients
to provide financial assistance to CDM eligible projects
to assist clients in every step of the CDM project cycle and
to bring down or pass on upfront CDM transactions costs.

As a Project Funder / Arranger

finance underlying projects under existing lending programs or special program funds
age financing of CDM transaction costs

Assistance to Project Owner / Carbon Seller

Assist in packaging the project or bundle small scale project to become CDM viable by
providing any of the following services
arrange the preassessment / due diligence activities, preparation of CDM project
design document;
make small scale projects financially/economically viable to undergo CDM thru
programmatic approach
identify potential Certified Emission Reduction (CER) buyers
facilitate DNA (DENR) endorsement of the CDM project application;
arrange validation / verification with Designated Operational Entity (DOE) or the Third
Party Auditor and
assist in the Emission Reduction Purchase Agreement (ERPA) negotiation.

Assistance to Carbon Buyers or Traders

provide assistance for the development of Project Idea Note (PIN)
conduct due diligence activities for potential CDM projects
act as coordinating entity for CDM Program of Activities (PoA) project.

World Bank and KfW are among the institutions interested to buy CER in the Philippines. For
more details please see Annex 30.

121
Annex 10 Green Financing and the gender dimension
Investing in women is one of the most effective ways to advance sustainable development
and fight climate change devastation.176 Taking an in depth look at the Philippines, Women’s
Environment and Development Organization (WEDO) explores the gender dimensions of
climate finance at the national level in its latest publication Gender and Climate Change
Finance: A Case Study from the Philippines. For documents please see: Athena Peralta,
Gender and Climate Change Finance, Women's Environment and Development
Organization, www.wedo.org.

176
http://www.wedo.org/prototype/wp-content/uploads/genderandclimatechangefinance.pdf
http://www.wedo.org/themes/sustainable-development-themes/climatechange/new-climate-change-case-
study

122
Annex 11 Citibank: Investing for a green future
“Citibank Philippines inspires Citigold clients to take part in saving the environment”

Citibank Philippines is actively sharing its advocacy for a greener future by encouraging
clients of Citigold, its wealth management service in the country, to take part and do their
share in saving the environment.

In its recent Economic Outlook Briefing that filled the ballroom of the Sofitel Phil Plaza,
Citibank formally launched its Great Arctic Eco Tour promotion where clients could win a trip
for two to the Arctic Circle and experience either the famed Aurora Borealis or the Northern
Lights, or witness the interesting wildlife.

Apart from raising awareness for the promotion, Citibank also offered clients and guests the
opportunity to learn about other ecofriendly tours, as well as provided information on how
they can lessen their carbon footprint and live a greener lifestyle.

“As a global leader in financial services, we are leveraging our position to make a positive
difference in the world. We recognize that we have a responsibility not only to our clients and
to our employees, but also to the environment. Citi has long been active on environmental
issues, as evidenced by our ongoing efforts around the world. This recent campaign reflects
Citi’s deep commitment to this cause, helping clients not only to grow their wealth with sound
investments, but also inspire them to do what they can for the environment,” related Agustin
Davalos, Retail Banking Director for Citibank Phils.

Citigold partners that set up informational and lifestyle booths at the affair included World
Wide Fund for Nature Philippines, Philips, Origins, R O X, Rajah Travel Corp and Guam
Visitors Bureau – each highlighting different ways for Citigold clients to help preserve the
environment.
Clients were treated to complimentary facial treatments and gift packs by Origins, a
well-known cosmetic company that uses organic materials.
Philips in turn advised guests on how they can conserve energy simply by switching
to energy-saving bulbs.
R O X and Rajah Tours shared information on how to enjoy the outdoors through
environment-friendly and energy-efficient outdoor gear and equipment, and to
appreciate the beauty of nature through ecotourism destinations.

Citibank also used the occasion to give clients the latest views on local and global markets,
so they can grow and preserve their greens.

To expound on the subject of environment awareness, Citibank invited Susan Roxas, head
of marketing and corporate relations of World Wide Fund for Nature-Philippines, who
discussed how business and industry can integrate social, ecological, and economic
sustainability in their core businesses.

All guests went home with specially designed Citigold Go Green bags and Philips energy
saving bulbs.

For one evening, Citigold clients were encouraged to bank on green, inspiring them to grow
their money while helping make the world a better place by taking care of the environment.

Source: Citibank Newsroom, 9 September 2008 177

177
http://www.citibank.com.ph/global_docs/newsroom/nr0909_citigold_project_green.htm

123
Annex 12 Macro Bank: Microentrepreneur of the Year Special Award
This year’s annual ceremony marks the 8th run of this prestigious award sponsored by
Citibank and Microfinance Council of the Philippines Inc (MCPI), and supported by the
Bangko Sentral ng Pilipinas (BSP). The nationwide search was open to all microfinance
organizations representing the rural banking sector, credit cooperatives and microfinance
NGOs, but only ten awardees were selected from the various nominations to represent the
“New Heroes of Today,” as BSP Governor Amando Tentangco called them in his keynote
speech. All awardees received a cash prize and a trophy. The account officer and branch
managing the account of the awardees also received cash prizes and plaques.

Mang Ismael, client of Macro Bank, was awarded the 2010 Citi Microentrepreneur of the
Year Special Award for Green and Sustainable Enterprises. He converted his junkshop
into a can recycling plant.

Annex 13 Philippines Business for the Environment: PBE links

PBE maintains network links with other entities as listed below

Name of Project / Organization Description Website

Environmental Management Programme
for Industry Competitiveness (EPIC)
Business and Environment Portal
World Business Council for Sustainable
Development
Environmental Management Bureau
(EMB) – DENR
Department of Science and Technology - maintains environmental technologies that is
Industrial Technology Development
Institute (DOST-ITDI)
contains database of environmental service www.epic.org.ph
providers and other environmental information
online business and environment web portal www.oneEnvironment.com
maintained by the Development Bank of the
Philippines (DBP), hosting a network of various
environmental information & service providers
a coalition of 165 international companies united www.wbcsd.org
by a shared commitment to sustainable
development via economic growth, ecological
balance and social progress
contains list of industry related environmental www.emb.gov.ph
legislations, recognized treaters / transporters of
hazardous waste
www.dost.gov.ph
applicable to the Philippine setting

Philippine Business for the Environment

2nd Floor, DAP Bldg., San Miguel Ave., Pasig City
Tel: (632)635-3670, 635-2650 to 51
Email: pbe@info.com.ph

124
Annex 14 Landbank Releases 1.97 billion PHP for Food Supply
Program

11 June 2011. The Land Bank of the Philippines (Landbank) has released 1.97 billion PHP
for the Food Supply Chain Program, now in full gear after its launch last October.178

The program, aimed at increasing farmers’ income by providing financial and technical
support along the value added chain of commodity or industry, has so far drawn 35 anchor
firms and 195 cooperative and SME (small and medium enterprises) producers.

The anchor firms - 21 from Luzon, four from the Visayas, and 10 from Mindanao - will buy
the produce of the cooperatives and SMEs and provide technical assistance to improve
production efficiency.

Landbank President and CEO Gilda E. Pico said at least 7 billion PHP would be released
this year in support of the program. “Landbank has been taking proactive efforts in
encouraging more participants to join the program,” she said. “We are confident that with
more key market players on the board, [the program] will go a long way in fulfilling its
objective of benefiting the small farmers and fisherfolk, coops, and SME producers whom we
are committed to help.”

50 billion PHP Food Supply Chain Deal Signed

MANILA, Philippines179 - 4 October 2012 - The Department of Agriculture (DA), Department

of Finance (DoF), and the Land Bank of the Philippines (Landbank) on Monday launched a
50 billion PHP food supply chain program to support the government’s campaign for food
sufficiency and higher productivity.
Agriculture Secretary Proceso J Alcala, Finance Secretary and Landbank Chairman Cesar V
Purisima and Landbank President and Chief Executive Officer (CEO) Gilda E Pico signed
the memorandum of understanding (MoU) for the program at the Landbank Plaza.
Landbank has made available 50 billion PHP to support the financial needs of various
enterprises engaged in crop, livestock and fishery production.
The Fund can be tapped for working capital and the acquisition of processing equipment and
other fixed assets.
With these facilities, Landbank and its partners believe farmers and fishermen, along with
animal breeders, can raise their yield and improve efficiency.
As conceived, the food supply chain program aims to raise farm incomes since the fund may
be used to improve value added, with farmers improving the quality of their products.
Under the program, key players in the food system, from producers, processors,
consolidators and other players may avail themselves of funds from the program.
The fund may also be used to strengthen farmers’ organizations and enable them to match
the requirements of anchor firms.

178
http://philippinesfreepress.com.ph/2011/06/13/landbank-releases-p1-97-b-for-food-supply-program/
179
By Marvyn N Benaning, 4 October 2010,

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Among the projects that will enjoy initial funding are integrated corn production and hog
fattening, integrated broiler production and processing, banana production and export, oil
palm production and palm oil refining and vegetable production.
For integrated corn production and hog fattening, the initial anchor processors and
cooperatives involved are Biotech Farms, Inc, Marcela Farms, Inc Sorosoro Development
Coop, Limcoma Multipurpose Coop and Catmon Multipurpose Coop.
A total of 550 million PHP will be invested in corn production and contract growing for hogs
for the benefit of more than 3000 corn farmers and 8000 contract growers.
Anakciano, Inc will be the anchor firm for integrated broiler production, with 242.5 million
PHP in the pipeline for broiler and corn production, which will involve 1000 contract growers.
For banana production and export, a total of 940 million PHP will be earmarked, with Sagrex
Food Corp and Fermon Corp as anchor firms and exporters.
Agumil Phils, Inc will serve as processor for oil palm production and palm oil refining.
No less than 1.5 billion PHP is needed by more than 6000 oil palm growers.
AgriNurture Phils., Inc, will be the main player in vegetable production for both the local and
foreign markets. Vegetable production requires 20 million PHP.
For fish production, only 45 million PHP is required for local and overseas markets. Sta Cruz
Seafoods, General Tuna Corp / Century Pacific Group and APAMI are seen as possible
anchor firms for the venture.

Annex 15 Certification and Supply Chain: Cradle to Cradle (C2C)

Cradle to Cradle® Certification is a multiattribute ecolabel that assesses a product’s safety
to humans and the environment and design for future life cycles. The program provides
guidelines to help businesses implement the Cradle to Cradle framework, which focuses on
using safe materials that can be disassembled and recycled as technical nutrients or
composted as biological nutrients. Unlike single attribute ecolabels, MBDC’s certification
program takes a comprehensive approach to evaluating the design of a product and the
practices employed in manufacturing the product. The materials and manufacturing practices
of each product are assessed in five categories: material health, material reutilization,
renewable energy use, water stewardship and social responsibility.

MBDC developed four C2C grades: Basic, Silver, Gold and Platinum. Only the Platinum
grade refers to suppliers. 50 percent of their energy has to come from renewable
resources.180

180
McDonough Braungart Design Chemistry (MBDC) is a global sustainability consulting and product certification
firm founded in 1995 by world renowned architect William McDonough and chemist Dr Michael Braungart.
MBDC consults clients on leaving a positive footprint on the planet (instead of reducing a negative footprint) by
implementing the Cradle to Cradle® Framework. http://www.mbdc.com/detail.aspx?linkid=2&sublink=8

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Annex 16 Green Investment Opportunities
Annex 16.1 Greening Transport

DENR eyes nationwide use of zero emission tricycles181

The government bared its plan to further reduce pollutants in Metro Manila air to the standard level,
and one of them is to make all tricycles nationwide zero emission vehicles.

Secretary Ramon Paje of the DENR said his department wants to reduce the level of total suspended
particles (TSP) in Metro Manila air by popularizing the use of electric tricycles and jeepneys in the
country’s capital region. “The ultimate aim is for our country’s five million tricycles, of which 2.8 million
are in Metro Manila, to become zero emission vehicles," he said.

He added that he expects other agencies such as the DOE and the ADB to help in DENR’s effort to
convert these vehicles ran through fossil fuels to electric ones. Paje also urged LGUs to encourage
public utility vehicles to retrofit their engines to enable the use of alternative fuels, such as CNG and
LPG.

Jeepney may shift to new LPG engine, says group

The Philippine jeepney, a basic mode of transportation in the country and the largest market for diesel
fuel, may likely shift to LPG after a study launched Monday, called Love the Air, Save the Planet, is
182
completed.

Gates Ambient Hi-Technology Systems Inc, a supplier of LPG kits, is spearheading the study that will
look into the economic viability, environmental soundness, health impact and social acceptability of a
jeepney that runs on a new Euro 3 rated, LPG fuel engine from Japan.

Cielo Fregil, Gates Ambient’s managing director, said in a statement the study will be done in
collaboration with the Philippine Automotive Depot Inc, Miriam ESI, Citizens Organization Concerned
with Advocating Philippine Environmental Sustainability (COCAP), Partnership for Clean Air (PCA),
and Clean Air Initiatives Asia. The shift would be something like the shift done by Philippine taxi
operators, she said.

Diesel is now selling at 41.50 PHP per liter, compared with LPG at 28 PHP a liter, according to Gates
Ambient’s managing director. In mileage terms, an LPG engine runs longer by an estimated 6 - 7
kilometers, compared with 4 - 5 km of a diesel engine, according to Gates Ambient. (Remark: the
author does not explain that the weight and the energy content of one liter diesel is higher than that of
LPG).

Green cars’ highlight 2010 CAMPI motorshow

Most of the new green cars are actually models that have hybrid motors or variable gas-and-electric
183
engines which are supposed to run 100 kilometers with 3.3 liters of fuel.

181
http://www.gmanews.tv/story/223878/nation/denr-eyes-nationwide-use-of-zero-emission-tricycles, 19 June
2011
182
http://www.gmanews.tv/story/212976/jeepney-may-shift-to-new-lpg-engine-says-group,
14 Feb 2011
183
http://loqal.ph/business-and-finance/2010/08/23/green-cars-highlight-2010-campi-motorshow/

127
Annex 16.2 Green Boracay

Boracay, one of the most popular tourist destinations in the Philippines owing to its fine
white sand beaches that seem to stretch ages, promised to go a little bit greener as different
stakeholders on the island signed a manifesto in support of making the island a little bit more
climate friendly.184

This project titled Save the Climate, Save Boracay has been a Greenpeace Southeast
Asia initiative with the help of the municipality of Malay, Department of Tourism, the
Department of Environment and Natural Resources, Boracay Foundation Inc, Boracay
Chamber of Commerce and Industry and Mother Earth Foundation.

The five point manifesto signed by all stakeholders requires them to

1 adapt EE measures and promote the use of RE for the island, most especially when
constructing or expanding establishments
2 regular energy audits, skill shares and workshops to ensure the continuation and
replication of best practices in energy and water conservation
3 ecological waste management
4 to promote the island as a climate friendly destination by giving EE workshops to
tourists and visitors
5 To campaign for the approval of the Philippine Renewable Energy bill which the
stakeholders see as vital to the continuing viability of the country’s tourism industry.
In a resort, the following measures reduced the electric bill by 21 percent
1 lighting which was classified to be on all the time was changed to the Phillips Energy
Saving Bulbs (11 & 18 watts). Mostly because the energy saving bulbs are expensive
2 refrigerators which were broken were replaced. Letting them run means their
compressors would be running at 100 percent all the time
3 refrigerators were powered down after 12 AM when the last staff leaves from work
then turned back on at 7 AM. Exception to this rule were refrigerators with ice cream
and similar meltable products in them
4 on lean days, power on only the refrigerators you need based on the predicted
consumable beverages and food
5 thermostat of air-conditioners were set to 25oC cooling and not lower. As soon as the
guest leaves the room, the air conditioners thermostat was checked and moved back
to 25oC if the guests changed it.
Other features of offering Green Holidays could include
CO2 compensation
local organic food, no meat from cloven hoofed animals or ruminants (reducing
methane emission)
local building material
renewable building material, also bamboo construction and furniture
solar powered: water heaters, tricycles, boats, electric appliances
low flow plumbing fixtures (saving water)
spa

184
http://www.alternat1ve.com/biofuel/2008/06/20/boracay-goes-green-and-promotes-re/#more-651

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Annex 16.3 Government to implement national standards for engineered bamboo

MANILA, 22 June 2011 (PIA) -- All products made from engineered bamboo will soon have
standardized quality once the Department of Trade and Industry (DTI), through its Bureau of
Product Standards (BPS), completes its development of a national standards for everything
made of this resilient and sustainable material.

BPS invited technical experts from the Forest Products Research and Development Institute
(FPRDI) and the Cottage Industry Technology Center (CITC) in order to ensure the
development of a relevant and realistic Philippine National Standards for bamboo products.

Engineered bamboo products refer to wood substitute engineered bamboo. It is one of the
priority projects of the government that is intended to alleviate poverty on the pilot areas by
generating jobs through entrepreneurship. The project is piloted in Cordillera Administrative
Region (CAR) and Region 3. In its implementation, the project adopts the scheme of public –
private partnership. Other key public stakeholders of the project are the Department of
Education (DepEd), the Department of Environment and Natural Resources (DENR), the
Department of Agriculture (DA), and the Department of Science and Technology (DOST).

Key stakeholders from the private sectors are the microentrepreneurs who operate semi
processing plants for bamboo slats and owners of furniture manufacturing shops which
assemble semi processed bamboo slats into engineered bamboo. The project adopts the
industry clustering strategy using value chain as a tool for industry development where
institutional market like DepEd is tapped. Currently, desks made of engineered bamboo are
used to replace the dilapidated desks of public elementary schools in some pilot areas.

Annex 16.4 Feed-in Tariffs for RE

A month after announcing that they had decided on the Feed-In Tariff Rates (FIT) for the
Renewable Energy sector, the National Renewable Energy Board (NREB) announced that
they have submitted already for approval the FIT rates. As more light gets shed into the
matter with this recent announcement, it turns out that the recommended FIT is actually
graded depending on the type of RE investment.

The following are the recommended FIT rates based on the type of RE project: solar power
(17.95 PHP / kWh), ocean power (17.65 PHP / kWh), wind power (10.37 PHP / kWh),
biomass (7 PHP / kWh) and hydro (6.15 PHP / kWh).

For the installation targets approved by NREB, there will be a total of 830 MW worth of RE to
be developed. The appropriation of each sector are: hydro (250 MW), biomass (250 MW),
wind (220 MW), solar (100 MW) and ocean (10 MW).

Also mentioned in the announcement was an additional universal levy (FIT allowance) of
12.57 PHP / kWh, which will be charged to all power consumers connected to the grid if the
RE developers are able to meet their installation targets and if the 4.50 PHP / kWh average

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generation cost will not increase over the span of three years due to an increase in fuel
prices. If approved by the ERC, then the FIT allowance will be implemented by 2014.185

Annex 17 Case Studies and Model Calculations

Annex 17.2 Steam System Improvement and Cogeneration

In the early 1980s, USAID implemented a 4.27 million USD, six year Technology Transfer for
Energy Management (TTEM) project.186 It helped 17 participating companies save 1.9 million
USD with a 2.4 million USD development fund. Seven enterprises invested less than
100 000 USD for steam system improvement, cogeneration (waste heat recovery), or
introduction of high efficiency electric motors. In all cases, payback periods were less than
four years.187

Annex 17.3 Steam Leak Repair

From: Energy Efficiency Guide for Industry in Asia

This case study was prepared as part of the project “Greenhouse Gas Emission Reduction
from Industry in Asia and the Pacific” (GERIAP).188
Activity: Steam leak survey
Result: Leak repair and replacement of worn out gaskets

Financial benefits
Investment: 100 USD (one hundred)
Annual operating costs: not determined
Annual cost savings: 3198 USD
Payback period: 18 days

Environmental benefits
515 liters of diesel oil
Annual GHG emission reduction: 18 tons CO2
Annual water saved: 73.4m3 (9.8 kg / hr X 7488 hr)

Frequently, entrepreneurs are not aware about the cost of steam, air pressure and water
leaks.

185
http://www.alternat1ve.com/biofuel/2011/05/17/feedin-tariff-rates-for-re-filed-for-approval-by-nreb/#more-1227
186
http://www.usaid.gov/pubs/usaid_eval/pdf_docs/pnaby206.pdf
187
http://www.usaid.gov/pubs/usaid_eval/pdf_docs/pnaby206.pdf
188
http://www.energyefficencyasia.org

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Annex 17.3 Replacement of Lighting

Replacing old tube type fluorescent bulbs with new electronic bulbs saves about 40 percent
energy. Hourly savings per bulb are negligent, but already when hundreds of lights are
switched on for a considerable time, investment pays off within a short period of time. This
calculation considers savings in energy for air conditioning as the new bulbs produce less
heat.

Old: Tube type 8, 36 W, magnetic ballast

New: Tube type 8, 28 W, electronic
Investment: 4 110 000 PHP for 3820 pieces
Investment/piece: 1076 PHP (about USD 24 USD)
Savings/year: 4 050 000 PHP (16 W per hour per tube)
Savings/piece: 1080 PHP
Savings/hour: 0.12 PHP (8760 hours per year)
Payback period: 1.0 year

Annex 17.4 Replacement of Air Conditioner for Office / Home

Comparison old / new air conditioner

Model year Unit 2000 2011
Consumption W/h 854 445
Consumption kW/h 0.854 0.445
Savings kW/h 0.409
Running time h/day 8
Savings per day kWh 3.279
Savings per year kWh 1197
Electricity tariff PHP / kWh 11.0
Savings PHP / year 13.167
Price of new AC PHP 16 000 – 21 000

Carrier (www.carrier.com.ph) advertisement, The Philippine STAR, 18 May 2011, p4

Financing: Model 1 HP, manual, suggested retail price 17 595 PHP

Retailer A offers 6 months installment loan with credit card, 0 percent interest, discount
Wholesaler B offers 10 percent discount, no credit
Bank loan 36 months, 18 percent per year
installment: 20,000 PHP / 36 months = 555.55 PHP / month
interest (first month): 20 000 PHP * 18% / 12 = 300.00 PHP / month (maximum)
Total installment: = 855.55 PHP per month
Savings per month: 13.167 PHP / 12 PHP = 1097.00 PHP per month

Electricity savings in about 14 to 18 months finances the new AC, which has more features
and provides cleaner air. From environment point of view the problem is that old ACs, when
still in running condition, will not disappear from the market. They are traded as second hand
equipment.

131
Annex 17.5 Replacement of Air Conditioner / Chiller

Formerly, when energy costs were regarded as low current expenses, air conditioners or
chillers were over rated and not regulated by sensors (thermostats). Efficiency ratios were
about 1 kW per ton refrigerant (TR), the unit for comparing heat reduction. Today, a ratio
below 0.65 is standard and the technology allows meanwhile to approach 0.4 kW / TR.

The savings and the economy of replacing chillers increase with: over-dimension, age,
inefficiency of the old unit, and increasing electricity prices (the samples below are based on
2008 prices of around 7.5 PHP / kWh whereas the price in 2011 is above 10 PHP / kWh.

Model calculations for chiller replacement (source: BPI website)

No Existing Replacement Investment Electricity Payback
Capacity Efficiency Capacity Efficiency PHP Inv./TR savings pa period
TR kW/TR TR kW/TR million PHP PHP million Years
1 2 x 630 0.93 2 x 600 0.65 44.8 37 333 21.4 2.1
+ 2 x 275 0.96 = 1200 (830 USD)
+ 19 x 30 1.14
= 2380
2 494 1.49 2 x 250 0.65 38.7 77 400 21.2 1.8
= 500 (1720 USD)
3 3 x 418 0.85 1 x 900 0.50 40.4 44 900 7.9 5.1
= 1254 (1000 USD)

1 Mall: operates from 10am to 9pm, 11 hrs / day, 52 weeks / year

2 Hospital: operates from 24 hrs / day, 52 weeks/year, replacing window type AC
3 Office building: operates from Monday to Friday; 10 hours / day; 50 weeks / year

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Annex 17.6 Replacement Central Air Conditioner / Chiller for Large Buildings

Example, operation 3000 hours per year

Chiller Old New

Capacity 300 TR 270 TR
Capacity use 75% 83%
Efficiency 0.95 kW/TR 0.60 kW/TR
Consumption/hour 300*75%*0.95= 270*83%*0.6=
213.75 kWh 134.64 kWh
Consumption/year 641 250 kWh 404 838 kWh
Savings, annually 236 412 kWh
Saving at 10.00 PHP / kWh 2 364 120 PHP
Estimated investment 8 505 000 PHP

Investment: 700 USD / TR * 270 = 189 000 USD or 8 505 000 PHP
(exchange rate: 45 PHP / USD)
Return (savings) on investment: 2 364 120 PHP / 8 505 000 PHP = 27.8 percent
Payback period: 8 505 000 / 2 364 120 = 3.6 years

Remarks
The cost for chillers is about 450 USD per TR, additional costs depend on individual
adjustments to the system and costs for replacing (sometimes walls or even parts of
buildings need to be altered). Total costs can exceed 1000 USD per TR.

Annex 17.7 Biogas from Piggeries

Project: Biogas / methane capture and electricity production facility for farm operations
Investment Cost: 50 million PHP for eight farms of 1000 sow level per farm
Energy savings from replacement of purchase from grid: 80 percent or 4.2 million PHP
Carbon credits possible:
1000 sow level = 10,000 heads = 18 000 t CO2 equivalent
18 000 t x 10 USD / t CO2 = 180 000 USD or 8 million PHP
DENR compliance

Annex 17.8 New Equipment for Pulp and Paper

Corrugated box manufacturing

Project: Equipment upgrade and installation of new production line
Investment Cost: 60 million PHP
Energy savings
- Energy: 4.5 million PHP = 54 percent
- Fuel (steam): 6.3 million PHP = 43 percent
Total savings: 10.8 million PHP, like 18 percent return on investment

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Annex 17.9 New Post Harvest Facility

Construction of a new post harvest facility

∙ Project: Drying (operating a kiln based drying facility), corn mill and
biomass using corn cobs to power operations of new plant
∙ Investment Cost: 750 million PHP
∙ Energy and other savings:
reduction in production loss to 5 percent from 15 percent
reduction in carbon emissions of 18 000 tons per year:
o 8000 tons from avoiding diesel
o 10 000 tons from avoiding methane from decomposing corn cobs

Annex 18 Solar PV Systems and Projects

Annex 18.1 Production

The Philippines are blessed with sunshine and Sunpower, the world’s biggest solar panel
manufacturer. The plant in Sta Rosa, Laguna, provides the country easy access to materials
needed to build large solar plants.189 Sunpower is a 20 million USD investment; maximum
collector output is 150 MW per year. GF included a 200 million USD loan guarantee, and a
six year tax holiday.190

Annex 18.2 Market

The following presents data on SHSs at the time of the survey (May 2011).

Smallest solar PV home systems (SHS) units start with a 1 Wp 5 V panel for 600 PHP
(retail)191 and prices decrease to 400 PHP / Wp for larger units (up to 50 Wp). A household
would need lighting (four LED: 560 PHP) a power pack (560 PHP for 12V / 1.3 Ah), adaptors
for mobile phone (60 PHP) and radio (260 PHP). Solar PV systems for mobile phone
charging are highly attractive as most households use mobile phones.

Suntransfer products (declared as Made in Germany) are offered at 4000 PHP (about 90
USD) for a 5 Wp panel including a gel type battery and a lamp rated 100 lm, which
compares with about 500 lm emitted by a 10 W CFL or a 40 W conventional incandescent
light bulb. It is sufficient for orientation at night, but not for reading, unless the light is
centered on a small area.

Since late 2010, solar home systems (SHS) and their various accessories are offered in the
shelves at MC Home Depot Inc, The Fort Taguig Global City, a leading hardware store.
Prices are competitive with those mentioned by NGOs (ApproTech Asia). The packages
contain manuals explaining the assembling of these units. The price of complete sets (PV
189
http://us.sunpowercorp.com/homes/products-services/solar-panels/
190
http://www.seia.org/galleries/pdf/Solar_manufacturing_tax_credit.pdf
Board of Investment (BOI) order 226 offers income tax holidays and other incentives for “preferred areas of
economic activity” specified by BOI in Investment Priorities Plan (IPP). Renewable energy production is
included in the list – BOI-registered enterprises are eligible for tax holidays of 6 years if they are new projects
with a pioneer status.
191
ToughStuff (http://www.toughstuffonline.com) developed a product line consisting out of four products: (1) a
solar panel, (2) an LED rechargeable lamp, (3) a rechargeable battery pack, (4) mobile phone and radio
connectors. One of the market channels includes internet sales for donors (“Buy One, Fund One”).

134
collector, inverter, battery, cables is around 15 USD / Wp (recommended for SHS units: 10
Wp – 30 Wp).

Meanwhile, CARD, a microcredit provider, sells about 300 SHS per month. These are small
SHS so that they require less alter sales service.

Annex 18.3 SHS Projects

a) AMORE

AMORE is a PV powered rural electrification project run by the US Agency for

International Development (USAID) in the Philippines (see PI 3 / 2003, p34). When
completed, it should electrify 160 barangays, which is the Philippine word for small village; a
barangay consists of about 30 households. To date, AMORE has electrified 10 barangays
on Tawi-Tawi and 25 barangays on the Basilan province of the Philippines. Since each
household receives a 300 W installation (using Shell modules), total installed capacity is
around 315 kW. The installations run lights, a radio or DC fan, says AMORE's Noemi
Bautista. About 1600 households (or just over 50 more barangays) will receive PV systems
by the end of September, she says. The entire AMORE project is worth 7.9 million USD,
says another source, who asked not to be named.

b) Rural Power Project

Empowering The Rural Communities With Shell Solar Home Systems was the slogan of
Shell Solar Philippines Corporation (Shell Solar), in partnership with the Department of
Energy (DOE) and seven microfinancing institutions (MFI). They initiated the commercial
distribution of solar photovoltaic (PV) systems in the country through the World Bank-funded
Rural Power Project dubbed as the Incubator Program. The project was launched with a
contract signing held on 1 March 2007 at the DOE Complex in Taguig, Metro Manila.

The Incubator Program aims to install around 1000 solar PV systems or 100 - 200 systems
per partner institution within a period of six months starting in April 2007. This pilot project is
designed to develop solar photovoltaic to grow into commercial scale.

The Rural Power Project is supported by the World Bank through the Global Environment
Facility and the DOE. It endeavors to implement decentralized electrification using solar PV
systems applied within selected partnerships in all parts of the country. The microenterprise
institutions partners were chosen for their capability to reach the remote barangays not
connected to the electric grid.

c) ToughStuff

ToughStuff (Ebène, Mauritius) promotes SHS in the Philippines with GF as funding in kind
from donors, who buy one unit and pay for two units (“Buy One Fund One Solar Light Kit”).192

192
Half the purchase price of every Solar Light Kit goes towards funding our Business in a Box programme. You
will be supporting a Solar Village Entrepreneur (SVE) to set up a business selling or renting ToughStuff products,
generating profit to improve his / her livelihood, and improving access to sustainable products in offgrid
communities. We provide vital training and assistance to run a profitable enterprise – the average ToughStuff
SVE earns around 450 USD – ensuring a sustainable and lasting route out of poverty.

135
Annex 18.4 Cagayan Electric Power and Light Company, Inc [CEPALCO]

CEPALCO’s 1MWp plant harvested a total of 4 169 100 kWh or an average of 1 389 700
kWh annually, which is 10 percent higher than the expected. Its construction cost close to
5.3 million USD. It uses 6500 solar panels on 2 hectares of land. It was partially funded by
the Global Environment Facility (GEF) which was facilitated by the World Bank through the
IFC.

Annex 18.5 Model calculation solar PV equipment

Benchmarks and viability of solar PV electricity production

The market for solar PV panels is characterized by recent steep price reductions for solar PV
panels measured by the benchmark USD / Wp. Wp is the capacity of the solar cell to
produce maximum (p = peak) 1 W. Ten cells would light up a 10 W bulb – in theory. The
actual power is lower due to haze, AC / DC conversion, battery and power line losses. Ten
hours sunshine may collect enough energy to operate the lamp for three to five hours. As a
benchmark a 1 Wp cell produces about 1.2 kWh electricity, a value of about 7 PHP or 0.17
USD per year. The price for PV cells is less than 1.50 USD / Wp today.

Total investment costs of a solar power station amount to about 4.00 USD / Wp. Assuming
a 20 year lifetime, annual depreciation is 4.00 USD / 20 years = 0.20 USD per year, about
0.03 USD per year more than the value of electricity gained.

Invest in solar panels?

Consider your own household’s power consumption. If it is big enough (your electricity bill
runs above 5000 PHP a month), then invest in solar panels. A minimum setup of a high
quality solar power system (complete with inverter and electrical wiring) that can generate
1300 watts of power enough to run a 150 to 200 watt refrigerator, about three 60watt electric
fans, a 150 to 200 watt LCD TV, a 150watt washing machine and a 600watt iron, could cost
a steep 700 000 PHP. A bit pricey, but that could guarantee an instant drop in electric bills, a
return on investment after nine years193 and ultimately, up to 40 years of worry free
operations. A smallest package of offgrid battery system - used for storing power that could
be used at night especially in farms and provinces - would cost about 20 000 PHP. A typical
offgrid battery system can power a TV set, electric fan and several lights and charge a cell
phone simultaneously.

The investment is profitable when

investment costs are 30 percent lower and
electricity tariffs are 25 percent higher
and cost of finance is 5 percent.

The profitability is far below investor grade, for which payback periods are less than six
years). Fiscal incentives apply.

193
http://business.inquirer.net/2149/14-points-to-ponder-for-a-solar-home

136
PV Investment viability
Investment: 540 PHP / Wp (12 USD / Wp), in 2011/12 probably about 30 percent lower
Electricity bill 500 PHP / month or 6000 PHP / year, in future increasing 2020 probably 25
percent higher
PHP PHP
Electricity bill per year: 12 x 5000 PHP (increase + 25% = 6250) = 60 000 75 000
Lost alternative income from interest:
5% pa x 700 000 PHP / 500 000 PHP = 35 000 25 000
Savings from solar home system 25 000 50 000
Depreciation (assumed lifetime 33.3 years) 3% 21 000 15 000
Cost for operation, insurance, replacing batteries, per year 10 000 10 000
Savings per year -6 000 25 000
Return on investment at 700 000 PHP / -6,000 PHP never
Return on investment at 500 000 PHP and electricity bill + 25% 20 years

The SHS as described above provides about 1300 Wp x 1.2 kWh / Wp = 1560 kWh per
year. The consumer, who pays 5000 PHP per month for electricity from the grid, obtains
about 5000 kWh per year (12 PHP / kWh). Consequently, for small scale electricity
generation, the investment in solar PV is not yet financially viable without subsidy unless
particular considerations (no investment in grid) change the fundamentals in the calculation.

Also, according to MBTI, microfinance association, SHSs are not a viable market. The
demand is not enough to establish a reliable after sales service, which is still required for
SHS in the 20 to 50 Wp class.

Annex 18.6 Solar PV Financing: Risk Analysis

In 2003, United Nations Environment Programme (UNEP) launched the Indian Solar Loan
Programme. Below is UNEP’s financing risk analysis.194

The key assumptions are that once the scheme is launched and awareness is built among
bankers and customers, the demand for solar financing will be met effectively by the
proposed credit mechanism and will translate into system installations and customers
served. Other assumptions are that consumers will be satisfied with the product; loan
defaults will be low and that the banks will be satisfied with the results of this new loan
product and will subsequently scaleup lending to the sector even after the small UNEP
incentive has been phased out.

The primary risks are that the number of loans processed will be slowed due to:

1 inadequate effort by the banks to promote the product: banking partners have been
chosen with care and both already have experience financing RE systems.
Furthermore, the strategy to work with two banks independently means that problems
with one bank will not endanger the overall programme.

2 lengthy procedures imposed by the banks on customers: One of the nonfinancial

areas that the banks have specifically asked for assistance with is in setting minimum
product standards and doing vendor qualification. A bank will never loan for a product
that they have not confirmed will operate effectively since equipment failure will often

194
http://www.uneptie.org/energy/activities/islp/risk.htm:

137
 lead to customer default. UNEP will standardize this process within the partner
banks, allowing bank managers to skip a number of loan review steps that can cause
significant delays.

3 high loan default rate: One benefit of providing an interest rate buy down is that the
entire risk of the loans remains with the banks, therefore they will be responsible for
minimizing defaults. This they can do, for example, by increasing downpayment
requirements.

4 product quality problems: UNEP will take a pragmatic approach to system

qualification, meaning that some basic standards will be set, particularly on product
guarantees, but the customers will be left some latitude in deciding the most
appropriate systems for their needs. Rather than over regulating on equipment
standards, UNEP will instead apply a vendor qualification process so that only the
most experienced vendors have access to the programme.

5 lack of awareness among bank loan managers: The programme will include bank
officer training and support for bank managers to organize village meetings to
introduce the product to rural customers.

6 lack of consumer interest in securing solar system financing: The scheme builds
upon an existing cash sales market, therefore there is little doubt that the market
exists, even if still small. The level of financing incentive provided will be reviewed
annually and modified, as required (for example reduced if the uptake is too strong;
increased if too weak).

Annex 18.7 Experience from other countries: Indian Solar Loan Programme

our years into the Indian Solar Loan program,195 the banks have financed 19 533 Solar
Home Systems and the subsidy has been fully phased out. Although the solar home
sector was pretty much a cash-only business in 2003, today over 50 percent of sales are
financed. The credit market has responded well to the impetus. Although Syndicate and
Canara Bank were the first major lenders to the sector, their market entry caused other
banks to take notice and by 2004 a number began to compete in this new credit market.
Although Syndicate and Canara are not thrilled by this competition, it is a sign of a maturing
credit market.

Although sustainable energy technologies have been in development for years, mainstream
financiers still too often consider them a niche technology, making the challenge of scaling
up financing to this sector a difficult one.

Achieving some critical mass in this sector will require investment, finance and insurance
products to create the liquidity necessary for vibrant primary and secondary markets in
sustainable energy. However, the market development and initial transaction costs of
creating new financial products for a niche sector are prohibitive, which leads most
players to wait on the sidelines instead of acting as first movers. This wait-and-see attitude
of traditionally risk averse financial institutions is compounded by an overall lack of

195
http://www.uneptie.org/energy/activities/islp/status.htm:,
http://www.uneptie.org/energy/activities/islp/support.htm

138
information, experience and tools needed to quantify, mitigate and hedge project and
product risks.
The aim of this effort is to help Canara Bank and Syndicate Bank develop lending portfolios
specifically targeted at financing solar home systems (SHS).
Canara Bank
Canara Bank is the second largest bank in India, Syndicate Bank another major Indian bank.
19 533 loans disbursed, 2076 bank branches participating, 5 solar vendors qualified Grameen banks
lead financing in rural areas.
New Loan Programmes planned for 2007 with Bank of Maharashtra and SEWA Bank

SHS India (2003)

Price for SHS (one to four 7 W bulbs): 7500 INR – 23 500 INR (150 USD – 470 USD) accredited
vendors, established market after selling 10 000 units
Loan terms: Minimum income of borrower: 2000 INR / month (40 USD)
85% loan, 15% equity
Interest: 12% (concessional) – 7% subsidy = 5% pa
Maturity: five years
Repayment: monthly, three free months

Annex 18.8 SHS India - Financing Support (UNEP)

Providing an interest rate buy down will allow partner banks to offer loans to customers at
concessional rates of interest, initially 7 percent below their prime lending rate currently
hovering around 12 percent. A corpus of USD 0.9 million will fund interest subsidies for loans
to buy approximately 18 000 SHS (50 USD per SHS). These subsidies will phase out over
time.

Various market incentives were considered during project design. Not being familiar with
solar PV technologies, bankers are not very price sensitive to system costs (like they do
not have a good feel for what a SHS should normally cost). UNEP providing a capital cost
subsidy for SHSs would therefore not have much impact on their motivation to lend for the
product. However they are enthusiastic about the possibility of offering preferential
banking terms to their customers and therefore subsidizing the financing cost of a system is
a more effective inducement for bank participation than subsidizing the capital cost of a
system. A third possibility would be to subsidize the risk of SHS credit portfolios through
the provision of partial loan guarantees. However, Canara and Syndicate banks are already
willing to carry 100 percent of the risk exposure. Therefore, in this case the guarantee form
of subsidy I not needed.

One of the most attractive features of an interest rate subsidy is that it doesn't distort the
market, either in terms of the capital cost (like the ticket price) that the customer associates
with a solar PV system, or the risk that a banker associates with a solar loan. Once SHS
financing becomes a mainstream financial product, an interest rate subsidy could cause
some distortion, however this will only happen once the intervention proposed in this project
is successful and no longer needed.

The interest rate buy down approach is complimentary to other solar PV programmes in
India such as PVMTI and Government of India (GOI) programmes. PVMTI financing has
been targeting the supply side, through vendor support to develop innovative new

139
products and services. The proposed UNEP approach seeks to strengthen the demand, or
customer, side by increasing access to credit for solar home system purchases.

By providing loans with an interest rate buy-down, the project will address the 'high upfront
cost' issue so typical of RE technologies. It is expected that the project will help increase
awareness and confidence in SHS technology, bring down the financing costs of the
technology in India, and widen the market. These features coupled with advances as a result
of the worldwide focus on PV technology in general and the widening of the market in India
in particular. Learning experience of vendors is expected to bring the costs down to levels
where the market can be sustained without further support.

Interest Rate Buy Down

196
The interest rate buy down has been used previously in the Indian sustainable energy sector,
particularly with solar water heating systems, although has only just recently been attempted for solar
PV financing by one vendor on a small scale. It is felt that such an incentive can address a number of
barriers without unduly distorting the market. It needs to be noted that the incentive will be a small
share of the total financing with the banks putting up most of the capital.
In terms of risk sharing, the banks will carry 100 percent of the exposure and therefore should be
motivated to maintain quality loan portfolios. Price distortion should also not be much of an issue
since the facility would be subsidizing financing cost, not the capital cost. It is difficult to distort a
market - in this case SHS financing - that does not yet exist.

Annex 18.9 Small Scale Sustainable Infrastructure Development Fund (S³IDF), India

Lessons from S³IDF

197
Local initiatives have provided important lessons such as
Microfinance can play a major role in developing markets for small low carbon energy systems
and devices, but the achievements have so far only been in market niches. The three critical
factors to be addressed to scale up the role of microfinance in low carbon energy are
o the management of transaction costs
o credit risk management and
o the availability of low cost, long term financial resources.
The perception is that both urban / peri urban and rural poor people cannot pay for low carbon
energy. Most poor people, however, pay for energy at levels that are quite significant,
considering their total incomes. Another belief is that low carbon energy delivery services are
more suited to not-for-profit organizations. However, providing energy services to the poor is a
profitable business with a bigger role for for-profit principles and enterprises.
The private sector needs to play a more active role in low carbon energy transition in developing
countries to increase the scale, and thereby the impact, of the transition. While increasingly there
is a business case for sustainable energy, public policy needs to regulate and provide incentive
for private action to move it from the realm of social responsibility into mainstream business.

196
http://www.uneptie.org/energy/activities/islp/pdf/DeccanHerald.pdf
197
http://www.tradeforum.org/news/fullstory.php/aid/1551/A_Bottom-up_Approach:_Low-
Carbon_Energy_Transition_In_Developing_Countries.html

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Annex 19 ECCP activities
The following reflects ECCP’s involvement in GF matters as presented on the website.

Energy Committee Meeting – with DOE USec Layug, 5 May 2011

Latest Trends in Renewable Energy & Energy Efficiency – 11 May 2011

We are inviting you to take part in a breakfast forum on the above topic

Speakers
- Atty Pete Maniego, Chairman of the National Renewable Energy Board
- Gilles David, Founder and President, ENERTIME, Paris, France, represented in the
Philippines by Novergy Inc
- Eric Graef, Regional Director, Cofely South East Asia Pte Ltd, Paris / Singapore / Bangkok
/ Manila
- Hubert d’Aboville, President and CEO, PAMATEC, Manila

Aside from giving an overview of the latest international and local trends in RE and EE, the
three seasoned speakers will present the products and services of their respective
companies, namely
The Organic Rankine Cycle technology for Waste Heat Recovery, Biomass and
Thermodynamic Solar Power (Enertime)
Energy Audit services and BOT schemes in Energy Systems, District Cooling, Co-
Generation (Cofely)
The Energy Avenger (EA), an Energy Saving Device that lowers power consumption
of High Intensity Discharge (HID) lamps (Pamatec / ISI - USA)

Meeting with the International Finance Corp. – 25 April 2011

We presented Arangkada to the IFC and outlined the following areas of cooperation:
Agri-Biz
PPP infrastructure – with major emphasis on energy; regarding regulatory /
government risks, they suggested to make use MIGA
EE / energy conservation / water footprint.

2nd Philippine Energy Efficiency Forum (PEEF) – Manila, – 19 July 2011

SMX Convention Center, One Day Forum and Exhibition

“Join us for the Philippines' pioneering event in Energy Efficiency!”

Now on its 2nd pivotal year, PEEF is an annual event organized by ECCP in cooperation
with industry associations, business organizations, government agencies, international
organizations and major industry players in the energy sector as well as major stakeholders
in Philippine business.

The theme of PEEF 2011 is “Synergizing Partnerships for an Energy Efficient and
Competitive Philippines.” A range of topics on public - private partnerships in EE, energy
management technologies and best practices, financing EE projects, and energy and water
conservation, will be discussed.

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Annex 20 DBP: Environment Management System (EMS)
198
The following presents an overview of DBP’s EMS as presented on DBP’s website

The DBP is committed to an Environmental Policy for supporting sustainable economic growth by
limiting the effects of their operations. The policy spells out the institution’s aim of continually
improving the environmental awareness of its employees through conduct of training and information
dissemination and limiting the environmental effects of subborrowers, through monitoring and
evaluation of their environmental performance. The policy commits DBP to actively promote
environmental management to its clients, customers, and business associates through advocacy. As
part of this commitment, the DBP conducts environmental training programs for staff and clients to
increase environmental awareness.

As part of DBP’s commitment to its policy, DBP obtained ISO 14001 EMS certification in 2001. It was
the first bank in the Philippines to do so. The ISO EMS focuses on reducing the direct impacts of the
institution’s operation such as consumption of electricity and other goods and the general effects of
projects that DBP finances through their lending program and facilities. DBP ensures that all lending
complies with Philippine government requirements. The internal arrangements depend on the type of
loan and source of funds.

Overall responsibility for the Project is with Programs Development (PD). ….

EMS staff responsible for ensuring compliance with the ADB Environmental Policy (2002), ADB
Environmental Assessment Guidelines (2003), the Revised Procedural Manual for Department of
Environmental and Natural Resources (DENR) Administrative Order No. 30 series of 2003 issued on
19 August 2007, and DOH waste management requirements must understand health sector specific
impacts and mitigating measures. DBP recently started lending in the health sector therefore EMS
staff have limited experience with health safeguards. Some capacity building is needed so DPB can
ensure compliance for the Category B subloans. Only 30 to 40 Category B loans are anticipated. PD
health unit should ensure compliance with environmental safeguards of Category B investments and
PD health unit staff should be trained in the characteristics and requirements of Category B eligible
investments. Some additional staff must be appointed to support compliance as the PD health unit
comprises three staff including the unit head. Most subloans will be Category C. The account officer
(AO) responsible for Category C projects will not require training. They will be able to ensure
compliance with ADB and Environment Management Bureau (EMB) requirements by following a
checklist of investments requiring an EMB Certificate of Non Coverage (CNC) and a list of documents
to be submitted by the subloan borrower during appraisal and implementation.

The environmental performance monitoring requirements, procedures, and responsibilities will be

detailed in the DBP Operating Procedures and Guidelines (OPG). These will include the
responsibilities, and authorities, and reporting chain from the PD, PD health unit, and the retail, local
government, and financial institutions units. For each type of subloan investment, the OPG will
provide reporting templates for each stage of the subloan cycle, sample documentation, lists of
documentation to be submitted by the borrower, and references to appropriate EMB, DOH, and ADB
regulations and guidelines. The OPG will specify the AO compliance certificate on process for
Category C subloans and steps required if the AO is unable to certify compliance and the PD health
unit certification process for the PD health unit to certify Category B subloan compliance or for
accessing external technical support as needed. The OPG will contain the format and contents of the
six month environmental compliance reports to ADB and the quarterly compliance reports from the
partner microfinance institutions and rural banks to the AO.

198
http://www.dbp.ph/UserFiles/Supplementary%20Appendix%20D.pdf

142
Annex 20.1 Environmental Assessment and Review Procedures for Subprojects

This section mainly provides for the current environmental assessment procedure in the
Philippines, the procedure and responsibility of different relevant agencies in undertaking
and participating in environmental assessment of subprojects, and the information
requirement for

The Project eligible investments are Category B or C. Environmental impacts are associated
with construction or rehabilitation of health facilities and include dust emission, elevated
noise levels, erosion and siltation. Mitigating measures are a part of standard civil works
contracts. Operational impacts of health facilities are addressed through the Health Care
Waste Management Plan required by the DOH. Subloan agreements will require adherence
to the appropriate DOH waste management guidelines for (1) liquid and solid waste for
hospitals, (2) disposal sharps for clinics, (3) disposal of placenta for birthing and midwife
clinics, and (4) disposal of out-of-date drugs for pharmacies.

The EMB under the DENR implements environmental laws. Project Category B sub loans
will require an EMB Environmental Compliance Certificate based on an Initial Environmental
Examination (IEE) or IEE checklist. Category C subloans may require an EMB CNC based
on a Project Description Report (PDR). Indicative EMB and ADB classification and
documentation requirements are in Table SAD.2: Indicative Project Subprojects and
Environmental Categorization Investment DENR Required Documents and ADB Category
and Required Documents for Category B and C investments.

EMB adheres to the Revised Procedural Manual for DENR Administrative Order No. 30
series of 2003 issued on 19 August 2007 which provides a step-by-step detailed application
for environmental approval and issuance of an ECC, including all necessary forms and the
outline for the IEE and IEE checklist. ADB environmental safeguard guidelines specify the
IEE content and are equivalent to EMB IEE and IEE checklist requirements. The EMB and
ADB environmental criteria for selection of subprojects are similar. Subprojects will be
excluded that are in or near ecologically sensitive areas and the core zone or the buffer zone
of designated wildlife sanctuaries, national parks, and other protected areas or involve
rehabilitation or construction of incinerator facilities.

ADB requires a public consultation during IEE preparation. EMB suggests public
consultation and provides the format in the Revised Procedural Manual. To comply with ADB
requirements, the OPG will stipulate that a public consultation must be held out in
accordance with the EMB recommended procedure during IEE preparation of all Category B
projects.

In practice, EMB sometimes issues ECCs based on IEE and IEE checklists with incomplete
information on impacts, mitigation measures and environmental management plans. A
limited number of EMB regional staff is responsible for wide range of projects and any
individual reviewer may not be completely familiar with the health sector. To ensure IEE or
IEE checklist meets ADB requirements, DOH, and EMB requirements, the OPG will require
the PD health unit to review and verify the IEE or IEE checklist meets ADB standards before
submission to EMB.

143
DBP through the PD will be responsible for certifying compliance with ADB Environmental
Policy (2002), ADB Environmental Assessment Guidelines (2003), the Revised Procedural
Manual for DENR Administrative Order No. 30 series of 2003 issued on 19 August 2007,
and DOH waste management requirements. This includes ensuring and appropriate
environmental categorization that the borrower documentation meets ADB and EMB
standards, public consultations are held during the preparation of an IEE or IEE checklist,
appropriate certifications and approvals are secured, monitoring sub loan implementation to
ensure ECC and DOH requirements are complied. The PD health unit will be responsible for
ensuring all Category B subloans environmental safeguards are complied. The Retail and
Local Governments Units will be responsible for ensuring environmental requirements for all
Category C subloans are complied with including the DOH healthcare waste management
requirements. The Financial Institutions Unit will be responsible for verifying the participating
retail banks and microfinance institutions have ensured the subborrowers have obtained
EMB documents and comply with waste management as required.

The PD will report to ADB every six months on subloans approved during the period,
subloan applications currently being processed and potential issues, status of subprojects
currently being implemented and environmental performance of subprojects that are in
operation. The report will include the PDs certification that all EMB and ADB environmental
requirements are being met.

There will be no free limit. However, ADB will review and approve the first two proposed
IEEs submitted prior to DBP approval. Once DBP demonstrates its capacity to meet ADB
standards, ADB will no longer review the IEEs prior to approval. ADB will reserve the right to
review IEEs periodically, to ensure quality standards are maintained.

The proposed procedures to be specified in the OPG for the Project conform to the ADB
environmental safeguards requirements. Capacity building is required to ensure the PD
health unit staff has the necessary knowledge to review and assess Category B IEEs and
compliance during implementation.

Staff resources are already in place. A coasted capacity building plan is provided.

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Annex 21 Landbank, Credit Line for Energy Efficiency and Climate
Protection (CLEECP)
OBJECTIVE: To significantly reduce the direct consumption of primary energy (such as diesel, coal
and gas) and direct greenhouse gas emissions.

ELIGIBLE BORROWERS
private sector and entities (sole proprietorship, partnership, corporation of at least 70 percent
Filipino owned, cooperatives and associations)
local government units (LGUs)
national government agencies (NGAs)
Government Owned and Controlled Corporations (GOCCs)

ELIGIBLE PROJECT*
All types of investments directly reducing primary energy (such as diesel, coal and gas) consumption
and / or direct greenhouse gas emissions, such as
Replacement or retrofitting or energy efficient modernization of CFC, HFC and HCFC chillers
Replacement or energy efficient modernization of machinery and equipment powered by
primary energy resources like diesel, coal, gas) such as
o public transport systems (like bus, jeepney, taxicabs, tricycles)
o car or truck fleets
o ferries
o manufacturing systems
Replacement of diesel generators or kerosene lamps by solar panels, mini hydros or other RE
facilities
Installation or energy efficient modernization of biomass cogeneration facilities such as
cogeneration from:
o sugar bagasse
o rice husk
o coconut husk
o methane from piggeries or poultries or food and beverage processing industries

SUBLOAN AMOUNT: up to maximum loan of 200 million PHP

LOAN TENOR
minimum of two years
maximum of ten years
with grace period of maximum of two years

Projects should comply with applicable Philippine laws and regulations governing
environmental protection.

INTEREST RATE TO BORROWERS: fixed interest rate

COLLATERAL
For private sector and entities (sole proprietorship, partnership, corporation of at least 70 percent
Filipino owned, cooperatives and associations) as borrowers, loans shall be secured by the object of
financing and any or a combination of the following
Real Estate Mortgage, Chattel Mortgage, Holdout on deposits, Assignment of Receivables and /
or inventories
JSS of principal stockholders / officers, guarantee cover, other securities acceptable to the bank.
For cooperatives, LGU, national government agencies / Government Owned and Controlled
Corporations as borrowers: see Landbank website

INSURANCE: All insurance collaterals shall be subject to insurance coverage in accordance with
LBP’s Credit Policy.

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Annex 22 RobinsonsBank Microfinance Program

The following reflects a standard microfinance program of RobinsonsBank, a smaller

commercial bank.199 These loans are also used for financing Green investments.

SUPERLoan ng Bayan is RobinsonsBank’s Microfinance program designed to especially

assist small-to-medium scale entrepreneurs (SMEs) in generating funds for their businesses.

Low interest rate: fixed three percent monthly interest vs other lending facilities’ 10
percent
Flexible loanable amount: apply for a first and repeat loan based on good credit history!
Easy loan term: weekly or daily
Pro saving policy: open a RobinsonsBank Savings Account for contractual savings to
increase your asset base in expanding your business!

Eligible are entrepreneurs with / who are

• daily or weekly business income
• established businesses of not less than three (3) years
• necessary business permits
• residents of their identified address of not less than three (3) years
• 21 - 65 years of age and of good health upon loan application

Eligible applicants may apply for a SUPERLoan ng Bayan loan by

• undergoing necessary client orientation
• accomplishing SUPERLoan ng Bayan application form
• submitting to a credit investigation

SUPERLoan ng Bayan application requirements

1 two (2) valid IDs
2 business permit (Barangay or Mayor’s permit)
3 utility bills (water, electric, telephone, cable, suppliers)
4 two (2) recent 2x2 photos
5 stall rights / Lease Agreement / Certification of Stall Ownership (if any)
6 DTI / BFAD certification (if any)
7 savings passbook (if any)
8 loan card (if any)

According to its website, for loans under this scheme, conventional bankable collateral is not
necessary.

199
For more details please see: http://www.robinsonsbank.com.ph/

146
Annex 23 Sulong SME Loan programs or schemes
SMEs use the Sulong loan program also for financing green investments.

What is SME Unified Lending Opportunities for National Growth (SULONG) Program?
SULONG program200 is the brand name for the financing initiatives under the plan. Under
SULONG, government financial institutions (GFIs) have allocated funds to be lent out to
SMEs. This will be achieved through the Standardized Unified Lending Program by GFIs for
SMEs and Standardized Accreditation Program by GFIs for rural and thrift banks.

Are collateral required? If so, what assets are acceptable?

The program will not decline a loan only on the basis of inadequate collateral. However, the
borrower must be willing to mortgage any available business and personal collateral,
including assets to be acquired from the loan, to secure the borrowing.

The following are acceptable collateral: postdated checks, registered / unregistered real
estate mortgage (REM) / chattel mortgage (CHM), or the assignment of life insurance. In
addition, corporate guarantee and assignment of lease rights may be considered for
franchisees.

Aside from the interest rate, what fees must be paid?

A one time application and evaluation fee of 2000 PHP for every 1 million PHP, a front end
fee of 1 percent of approved loan, and a commitment fee of 0.125 percent of the unavailed
balance for long term loans.

How can SMEs avail the funds being allocated by the government under SULONG?
Micro, small, and medium enterprises (SMEs) can approach any of the following government
financial institutions (GFIs)
Development Bank of the Philippines (DBP)
Land Bank of the Philippines (LBP)
National Livelihood Support Fund (NLSF)
Small Business (SB) Corporation
Philippine Export-Import Credit Agency (PhilEXIM)
Quedan and Rural Credit Guarantee Corporation (QUEDANCOR)

How long does it take to process the loan?

This will depend on the government financial institution (GFI). For example, Small Business
(SB) Corporation can process the loan within two weeks after receipt of complete
documents.

What is the interest rate for loans under this program?

The participating government financial institutions (GFIs) will charge the same rate for the
program based on a regular review. In its program launch, the interest rate for loan releases
until 30 June 2003 shall be 9 percent for short term loans, 11.25 percent for medium term
loans of up to three years, and 12.75 percent for loans over three to five years.

200
http://www.dti.gov.ph/dti/index.php?p=135&c=44

147
Source: https://www.landbank.com/rates.asp#commercial

What is the maximum financing?

For short term loans, the program can fund up to 70 percent of the value of the letter of
credit (LC) / Purchase Order (PO) - export packing - or 70 percent of working capital
requirement - temporary working capital - maximum of 5 million PHP; for long-term loans, 80
percent of the incremental project cost, maximum of 5 million PHP.

What is the repayment term?

For short term loans, a maximum of one year; for long term loan, a maximum of five years,
inclusive of a maximum of one year grace period on principal monthly amortization

How long does it take to process the loan?

This will depend on the government financial institution (GFI). For example, Small Business
(SB) Corp can process the loan within two weeks after receipt of complete documents.

What type of loans may be funded?

For short term loans, an entrepreneur may tap the program either for export financing
(export packing credit) or a credit line for temporary working capital.

For long term loans, small and medium enterprises (SMEs) may apply for loans for
permanent working capital, or to purchase equipment, a lot, or to construct a building /
warehouse.

Who qualifies to borrow under SULONG?

Enterprises in all industries except trading of imported goods, liquor, cigarettes, and
extractive industries and those that are at least 60 percent Filipino owned, whose assets are
valued at not more than 100 million PHP, excluding the value of the land, or subject to
ownership rules as defined under existing Philippine laws for specific industries.

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Annex 24 Small Business Corporation (SB Corp)
What are the programs and services of the SB Corp for SMEs?

I Guarantees Program
This facility was designed to encourage financial institutions to lend to SMEs by providing
guarantee cover up to a maximum of 85 percent on loans of qualified entrepreneurs. The
guarantee primarily works as a collateral substitute or as a collateral supplement.

SME GEAR (Guarantee for Gearing up Enterprises without collateral) is a credit guarantee
facility for viable micro, small, and medium (SMEs) who do not have hard collateral to secure
their loans with accredited financial institutions (AFI). SME GEAR is intended for borrowers
who at their present stage of operations are not yet able to offer collateral security for their
loan.

SME GROW (Guarantee for Growing Enterprises with partial collateral) is a credit guarantee
facility for viable SMEs that can partially provide hard collateral to secure loans with AFI.
SME GROW is intended to assist a borrower in its business expansion by way of the
increased financing that can be granted by the AFI in view of the guarantee cover on the
unsecured portion of the loan.

SME GAIN (Guarantee for Gainful Enterprises with available collateral) is a credit guarantee
facility for viable SMEs that have available hard collateral to partially or fully secure loans
with AFI. SME GAIN is intended to assist mezzanine enterprises access loans from AFIs
who need the guarantee cover to address temporary risk considerations such as insufficient
credit track record of the borrower, nature of industry involved or fluctuations in the collateral
market, among others.

II Lending Programs

A. Wholesale Lending Programs

SME Funding Access for Short term (FAST) Loans is a wholesale funding via rediscounting
of
SME loans of accredited financial institutions.

SME Funding for Investment in Regional Markets (FIRM) is a wholesale medium term
project funding channeled through accredited financial institutions as conduits to SMEs.

B. Retail Lending Programs

SME Financing Reach for Exporters through Network Development (FRIEND) is a direct
lending to exporters with Letters of Credit, who are endorsed by their industry associations.

SME Financing for Receivables of Suppliers’ Transactions (FIRST) is a direct lending to

suppliers of domestic firms with proven track record and management stability, where the
object of credit is the supplier’s sales invoice for goods / services delivered;

SME Financing for Organizationally Competent and Excellent Franchise Businesses

(FORCE) is a medium term direct lending to franchisees of homegrown franchise firms that

149
are members of industry associations. It is intended for the start-up or expansion of
franchises.

SME Financing for Variable Business Expansions (FLEXIBLE), which was formerly called
SME GUIDE, is a direct lending facility for domestic enterprises to sustain, expand or
improve their business operations.

SME Financing for Enterprising and Able Startups with Innovative Business Lines
(FEASIBLE) is a direct lending facility for startup domestic entrepreneurs.

Microfinance Facilities
MICRO-LEAD (Large Micro Finance-oriented Institutions)
MICRO-LEAD (Medium Micro Finance-oriented Institutions)
MICRO-LOCAL (SME oriented Rural Banks)
MICRO-LEAP (Community Cooperatives)
MICRO-LEAP (Lower Qualification Conduits)

The above facilities comprise the recently redesigned SME FEEL, a microfinancing facility of
SB Corp. These were differentiated based on the category / size and nature of operation of
the conduit. Here, large, focused and well established microfinance institutions will be
allowed higher loan limits, but will have to pass through more stringent eligibility criteria.

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Annex 25 Foundation for a Sustainable Society, Inc (FSSI)
FSSI provides green loans as wholesaler.

Objectives
assist community finance institutions (CFI)set up windows of financing schemes for
the entrepreneurial poor and microenterprises entering and participating in eco
enterprise ventures.
create CFI models that are community oriented, economically viable and integrate
ecological concerns in their operation
increase participation of the entrepreneurial poor and microenterprises in the
Sustainable Waste Management Sector, Coco Coir Subsectors and other Eco
Enterprises through microfinance

Eligible borrowers: NGO, People’s Organizations (POs)

primary cooperatives
rural banks and cooperative banks
Loan amount: min 500 000 PHP max 5 million PHP for first time borrowers
Interest rate: discount 1 percent – 5 percent, according to EEI (Eco Enterprise Index):
Security: Real Estate Mortgage, Deed and Assignment of Receivables or Deposit,
Joint and Several Suretyship (JSS) Agreement
Maturity: max three years
For more details, log on to: http://www.fssi.com.ph

Annex 26 Department of Agriculture, Credit Policy Council

DA Agricultural Credit Policy Council, provides loans in the framework of the Agri-Fishery MF
Program (AFMP). The maximum individual loan amount is 50 000 PHP; for Value Chain
Financing it is 100 000 PHP.

Annex 27 People’s Credit and Finance Corporation (PCFC)

Micro Energy Credit Program

PCFC is directly under the administrative supervision of the Land Bank of the Philippines
(LBP). The LBP president chairs the PCFC Board.201 It is located at 2F, Acelerando Building,
395 Sen. Gil J Puyat Avenue, Makati City.

The PCFC’s Program Objectives are:

Supporting reforms and priority investments
- to improve the quality of life in rural areas
- through the provision of adequate, affordable and reliable energy services
- specifically the small scale RE solar home system / solar lanterns.

The program is operationalized in partnership with viable MFI, PCFC – accredited partners.
Terms for refinancing are: 85 percent of loan amount, maturity five years, quarterly
amortization; interest 11 percent - 12 percent plus 1 percent service fee

MFI borrowers (unenergized households); according to MFI, maximum loan: 150 000 PHP.

Finance acquisition of small scale RE solar home system / solar lanterns

201
www.pcfc.gov.ph
http://www.bwtp.org/arcm/Philippines/II_Organisations/Donor_Investors/documents/PeoplesCreditandFinanceCor
poration.pdf

151
Annex 28 Department of Science and Technology (DOST): Set-Up

Department of Science and Technology (DOST), Bicutan, Taguig, Metro Manila handles the
Small Enterprise Technology Upgrading Program (SET-UP).

Set-Up promotes technological innovations to improve operations and thus boost

productivity and competitiveness. The program enables firms to address their technical
problems and improve productivity through better product quality, HRD, cost minimization
and waste management.

Set-Up infuses new/advanced technologies to improve operations of SMEs. The dominant

industry sectors are: food processing, furniture; gifts, decors, handicrafts.202

Strategies / Interventions of Set-Up

There are five major strategies by which the program hopes to attain its objectives.

Strategy 1: Provision of Technology

technology needs assessment, sourcing and installation of technology
seed fund for technology acquisition through venture financing programs and GIA
funds
human resource development (trainings, etc)
productivity consultancy and advisory services (e.g. MPEX, STEVPP, etc)

Strategy 2: Product Standards and Testing

assist DTI - BPS in the development of product standards
product testing and enhancement of DOST testing and calibration laboratories

Strategy 3: Packaging and Labeling

development of functional package designs and identification of alternative
packaging materials using local resources
development of appropriate labels for priority products especially ethnic food
products

Strategy 4: Database Management and Information System

list of available technologies
list of S&T experts
directory of testing laboratories and available testing services
networking with other relevant databases

Strategy 5: Linkaging and Networking

raw material sourcing
marketing
financing
equipment design and fabrication

What benefits can SMEs get from SET-UP?

address current technological problems
get free technical advice from the consultants

202
http://dost.gov.ph; http://webgis.dost.gov.ph/visayas/rm_management.php?r=06

152
 avail of technical training courses for workers / employees
acquire new equipment to mechanize and / or improve production line through
interest free venture financing assistance (subject to availability of funds)
linkage with financial institutions
standardize and improve the quality of products.

Who may apply?

any company or individual firm that is based in the Philippines and wholly owned by
Filipino citizens.
any micro, small and medium scale business firm (SME) that can be classified under the
identified priority sectors.
individual firm that is willing to apply technology improvements in their existing
operations

How to participate in the program

Send a letter of interest to avail of the SET-UP assistance together with the requirements to
the DOST Regional Director’s Office where the company is based.

Identification of current problems, improvements and potential technological interventions

needed.

If the project found viable, the DOST Regional Office endorses it to the National Program
Management Office for evaluation and final approval.

Set-Up Project Proposal Format / Contents

Project Title : must already be able to reflect the goal of the project
Proponent : Company Name, Contact Person - position,
Address, Telephone / Fax (No., email)
Project Cost : total project cost including counterpart of the
proponent
Amount Requested: DOST counterpart or amount requested from DOST
Objective/s : purpose / target accomplishment of the project
Background
a company profile (other information - ownership, registration, type of
business, capitalization, year established, processes, business
activity, no. of employees / skills / expertise, etc)
b organizational structure
c production site area / location
d products
e cost of production
f product selling price
g production volume
h production capacity of the plant/shop
i source of raw material

Marketing Aspect
a market situation (status of the market / demand for products
b current market outlets for the products (local / export)
c competitors
d existing problems (if any)
e market plans / strategies

153
Technological Aspect
a production processes
b existing equipment
c production capability
d technical constraints on production line
e personnel skills that are handicapped without the technology
f proposed technology and skills upgrading intervention
g equipment specifications (rated capacity, power supply, dimensions,
drawings)
h cost of equipment
i list of equipment fabricators (if any)
j importance of additional equipment and personnel's training
k DOST intervention / schedule of activities
l expected output / Impact results (measured results)
1 contribution to the production line / process
2 additional volume of products
3 percentage decrease in rejects
4 percentage increase in productivity
5 percentage increase in sales
6 number of clients added
7 improved quality / appearance of the products
8 others (please specify)

Waste Management / Disposal

a volume of waste generated monthly
b kinds of wastes (plastics, paper, metals, chemicals, pollutants, etc)
c how they are disposed

Technological Aspect
a financial capacity
b financial constraints
c cash flow / financial statement
d proposed project budget / capital outlay (line item budget)
e proposed repayment scheme / mode of payment
f proposed technology and skills upgrading intervention

154
Annex 29 Can microfinance address environmental issues?
Katherine Knotts [K.Knotts@ids.ac.uk], 07 June 2011

SPM NETWORK TO FACILITATE DAY-LONG ONLINE “E-VENT” TO ADDRESS KEY

ISSUES AROUND SPM AND THE ENVIRONMENT (14 JUNE 2011)

Following up on recent discussions around ‘green’ microfinance on the SPM Network,

Triodos Facet and Imp-Act will facilitate a day long SPM “E-vent” to bring the discussion to
the next level – and find an answer to the questions ‘Can microfinance address
environmental issues, and if so, how can SPM help MFIs do so in a practical way?’

Context

Urban MFI clients and their families, living in crowded and polluted neighborhoods, often
lack access to clean drinking water and healthy food - while in rural areas heavy storms,
draughts, erosion and floods affect the lives of the poor. Since poverty is linked to
environmental degradation it is becoming increasingly clear that the impacts of
environmental problems such as climate change, pollution, poor waste management must
be part of the long term approach to economic development. Otherwise, we risk destroying
natural resources that are essential for continued economic growth, as well as endangering
public health and safety.

How microfinance fits in

While increasing numbers of practitioners recognize the link between poverty and
environmental degradation there’s no accepted approach to assess an MFI’s role or address
its impact on the environment. ‘Social responsibility to the environment’ is part of the MiX
social performance indicators, and a number of investors ask questions about environmental
policies and practices, but a clear and proactive industrywide approach towards environment
is still lacking. Given this, how do we define the role of microfinance, and can we use the
existing SPM approach towards a professional environmental management?

Progress to date by hivos & triodos-facet

Recently, some MFIs have started to look into their triple bottom line, meaning the economic,
social and environmental elements in their products and services. Triodos Facet has, in
close cooperation with Hivos and Triodos Investment Management, contacted some clients
in their Hivos Triodos Fund portfolio. They report their performance to the MiX, or produce
an annual report that describes their activities. On the SPM Network, we have seen recent
examples, of Farz Foundation’s support for green agriculture, and Prizma's assessment of
clients' impact on the environment, including air, water, soil and nature. Other examples of
how MFIs include an environmental focus in their activities can be found on their websites
and annual reports, such as Vision Banco in Paraguay, XacBank in Mongolia, and
Kompanion in Kyrgyzstan. So, we see a lot of interesting examples of good practice
emerging from the field, but the question remains: how can we take it to the next level?

155
Annex 30 CDM in the Philippines

Annex 30.1 Introduction to CDM mechanism

Enterprises that reduce GHG emission are in principle eligible to obtain a reward for their
effort. An investor in a hydropower unit produces electricity without generating CO 2. On
average, in the Philippines, the production of one Kwh is accompanied by the production of
0.6 kg CO2 resulting from burning oil or coal in power plants. The hydropower unit runs 5000
hours a year and produces 1 000 000 Kwh electricity per year (for about 1000 rural
households), which is sold at 5 PHP / Kwh (revenue: 5 million PHP per year). The electricity
production avoided 1 000 000 Kwh x 0.6 kg CO2, such as 600 000 kg or 600 t. The
entrepreneur could obtain 600 certificates for 600 t CO2. The sales value of one certificate is
about 10 USD / t. The electricity producer obtains about 600 certificates x 10 USD per
certificate X 45 PHP / 1 USD = 270 000 PHP in addition to the 5 million PHP sales revenue
for the electricity.

Unfortunately, the system involves costs for application and membership (about 30 000 USD
once) and annual supervision and verification (about 15 000 USD). The annual costs exceed
in many cases already the income. LBP and DBP offer to become a member of a group of
CO2 savers so that the annual costs can be shared among group members. However, the
services of the bank can cost 50 percent of the revenues from the sale of certificates.

CDM participation costs

One time: 100k – 220k USD
Annually: 22k – 75k USD
drafting the PoA documents, validation of the project
drafting an additional CPA - DD
costs of inclusion, per CPA
monitoring report of emission reductions
verification of the emission reductions

The CDM Project Design Document for small scale activities (CDM-SSC-PDD, here for
Envirofit Tricycle -Taxi Retrofit Program for Vigan, Tugegarao and Puerto Princesa, is
presented in the internet.203

Annex 30.2 Programs of Activities (PoA)

SMEs invest in green equipment and contribute to GHG reduction. Most of them cannot
benefit from funds that award environment protection, because the registration and annual
costs are too high. PoA are a recent facility under the CDM of the Kyoto Protocol, the world’s
main carbon credit scheme.

PoA bundle large numbers of emission reducing activities to a scale that they can earn
carbon credits the value of which can make a difference for the program.

203
http://cdm.unfccc.int/filestorage/H/K/9/HK9V413TN8I76UQYDJO2BML0PCG5WZ/SSC%20New%20Methodol
ogy%20PDD.pdf?t=b0p8bHhiMXhsfDAb7Cje7mB3-B_kEYsa8xo3

156
Table A.III.1 PoA projects
Country Program C/Joint Type
of Project
Activities Activity
India 8 8 CDM
Germany 7 9 JI; (Joint
Implementation)
China 6 6 CDM
Indonesia 3 3 CDM
Philippines 3 3 CDM

204
Source: The Handbook of Programmes of Activities, April 2011

PoA (Programme of activities)

An umbrella structure including a number of CPAs or JPAs can be registered as a single
project under the CDM or JI. During the lifetime of a PoA, the number of CPAs or JPAs
included in the PoA can increase (without limitation).

JI (Joint Implementation)
Similar to the CDM, JI is a project based trading mechanism under the Kyoto Protocol which
allows a country with an emission reduction or limitation commitment under the Kyoto
Protocol (Annex B country) to earn emission reduction units (ERUs) from an emission-
reduction or emission removal project in a developed (Annex I) country.

CER price per ton CO2

6.00 – 7.50 Euro for high quality post 2012 vintages
7.50 – 9.00 Euro for medium risk forwards
9-10 Euro for low risk forwards
10.50 – 11.00 Euro for registered projects
11.10 Euro Bluenext spot price

Source: DSCM Highlights Newsletter July 2011

http://www.gtz.de/de/dokumente/en-climate-cdm-highlights-97.pdf

204
The handbook of Programmes of Activities, Practical Guidance to Successful Implementation, April 2011,
Climate Focus, Sarphatikade 13, 1017 WV Amsterdam, The Netherlands; www.climatefocus.com

157
Annex 31 Discussions on the Definition of GF
The term GF appeared already more than 25 years ago in connection with green forests.205
It became a more popular term in the years following the Kyoto Protocol (1992).206 GF is not
new to the Philippines. Below are some projects and loan programs with environmental
reference executed by DBP more than a decade ago. These loans were also accessible to
SMEs that can absorb at least 1 million PHP (22 500 USD) loans.

Early GF facilities in the Philippines

Year Name Sponsors
1985-1990 Technology Transfer for Energy Management (TTEM) USAID
1992-1996 Industrial Environmental Management Project (IEMP) DENR / USAID
1996 Industrial Pollution Control Loan Program I (IPCLP) KfW
1999-2005 Integrated Program on Cleaner Production Technologies (IPCT) DOST
2000 Industrial Pollution Control Loan Program II KfW

GF is repeatedly named as a vital lubricant in the battle against climate change. Some say
about GF that it is the one missing link between knowing and doing in the transition to green
industry.

GIZ defines GF as “concepts and instruments to incorporate the financial sector in the
process towards a low carbon economy and in the context of adaptation to climate
change.”207 This definition goes beyond lending and includes insurance models, such as
insurance against the influence of adverse weather conditions that are attributed to climate
change (harvest or crop insurance). It does, however, not include measures addressing land
degradation and pollution.

HSM, an international management consultant, explains that GF exists for both consumers
and producers, with the primary driver being lenders and venture capital investors.208 HSM’s
Glossary explains: “GF is any market based investing or lending program that factors
environmental impact into risk assessment, or utilizes environmental incentives to drive
business decisions.”

More practically, GF concerns investments in fixed assets and working capital that contribute
to reduce impact on sustainability, such as
human made emissions negatively impacting the environment
the use of nonrenewable resources (resource efficiency)
fossil energy consumption
o by energy efficiency measures (EE)
o by replacement with renewable energy (RE)209

205
SBC Linguan, GF and Accounting, 1 April 1983, Journal of Southwest University for Nationalities (Natural
Science Edition). Forestry Science and Technology Information en.cnki.com.cn/Article_en/CJFDTOTAL-
TRXB198304010.htm
206
GF - Problems and Solutions Concerning Alternative Environmental Debt Exchanges, 18 Vermont Law
Review 313 (1994).
207
Schaefer, Jakob, GIZ Headquarters, Innovative Approaches for Sustainable Economic Development: GF; ppt
presentation (GIZ Headquarters is in Eschborn / Germany.)
208
http://us.hsmglobal.com/notas/58017-what-is-green-finance
209
Whether financing additional production of energy is green, even if it is renewable energy, is questioned, at
least as long as there is still the alternative of reducing consumption.

158
Frequently, investments and their financing are considered green, just because emissions
are reduced or fewer resources are consumed compared to alternatives. These investments
are regarded green irrespective of whether they are
a) forced
by government regulations
by public pressure, such as the neighborhood or demand from buyers

b) voluntary, not bound by emission reduction targets or imposed from outside

for economic reasons, such as higher returns
for other reasons, such as individual motivation or investor responsibility.

Sustainability of economic growth means taking account of the absorptive and regenerative
capacities of ecosystems and the climate.210 Thus financing junk yards and scavengers
(recycling) is GF. The well-known 3R (reduce, reuse, recycle, and some more R such as
redesign, retrofit) offer also opportunities for GF as well as anything that is considered
cleaner production.211

There is perhaps an inflationary use of the word green

as it appears in many combinations Green Manufacturing Green Products
Green Production Logistics Green Building Green Foundry
Green Jobs (promoted by ILO) Greening SMEs Green Food
Green Supply Chain Model Green Equipment Green Sand
Green Package Design Green Construction Green Sale

GF refers mostly to investments. Green working capital is less popular, but it appears in
connection with loans financing Green Value Chains or organic farming.

GF in a narrow sense is lending, which is based on measurable and verified environmental

criteria for the planned use of funds. Commonly, the planned use of funds is just following
laws and regulations. Sometimes, the bank supports the government as an additional
supervising institution. It is in the very interest of the bank to do so, when violations could
result in the closure of the enterprise and jeopardize loan repayment.

The components of GF in its wider sense include

- sustainable banking
- RE and EE financing
- new standards in policy and regulation (investment and financing, credits)
- risk mitigation (insurance covering increasingly unpredictable weather and severe
weather conditions, savings).

GF for Greening the industries means reducing air pollution, reducing water pollution and
reducing consumption of limited (nonrenewable) resources. Sometimes these objectives
exclude each other to a certain extent. For example, limited resources are used for the
construction and manufacturing of devices that reduce pollution, such as platinum for
catalytic converters. Regularly, experts have different positions on which of the alternatives
endangers sustainability more.

210
Green Economy, BMZ Information Brochure 2 | 2011e,
http://www.bmz.de/en/publications/topics/business/BMZ_Information_Brochure_02_2011.pdf
211
http://www.adfiap.org/news/adfiap-land-bank-sequa-germany-eccp-hold-roundtable-on-sme-green-finance

159
Annex 32 Banks in the Philippines and their green profile
Largest local Universal Banks, profile and characteristics
212
(Order based on Total Assets in billion PHP: as of March 2011 )

Order, bank
Term found in
name
website?
Assets: billion
Characteristics Green
PHP
Environment -
Branches:
Sustainability
number
1. BDO Banco de The Bank was named the best in the Philippines in these G no
Oro Unibank categories: Best SME Bank by Hong Kong based E no
A: 965.1 PHP investment magazine The Asset.
S no
B: 752 IFC investment and introduction of SEF 2010
Premier Unibank and among the foremost financial G no
institutions in the Philippines E no
Metrobank Foundation, Inc in 1979, putting emphasis on S yes: “Corporate
2. METROBANK both business success and community contribution. The Governance … is the
Metropolitan Foundation has since become one of the largest and most cornerstone of our …
Bank & Trust Co. respected charitable organizations in Asia. sustainability.”
A: 955.8 PHP “We provide low-cost funding to small-, medium- and large-
B: 730 scale enterprises to finance certain projects that fall within
the Government’s priority list.”
Engaged IFC as its advisor on lending to electric
cooperatives and rural power distributors 2008.
Sustainable Energy Program (SEF) not exposed on its G yes (GHG)
3. BPI Bank of website, green or environment not mentioned in mission E: yes
the Philippine statement.
S: yes
Islands Annual Sustainability Report:
based on the Global
A: 751.8 PHP “Save paper. Save trees. Save the environment. Reporting Initiative
B: 809 It’s time to choose the greener option.” (GRI) Sustainability
Reporting Guidelines
LANDBANK is by far the largest formal credit institution in No query facility
the rural areas. As government financial institution it strikes found.
a balance in fulfilling its social mandate of promoting Home page exposes:
countryside development while remaining financially viable.
Jatropha Financing
4. LANDBANK This dual function makes LANDBANK unique. The profits
Program,
Land Bank of the derived from its commercial banking operations are used to
Philippines finance developmental programs and initiatives: expansion Carbon Finance
A: 605.2 PHP of its loan portfolio in favor of its priority sectors: the farmers Support Facility,
B: 338 and fisherfolk, SMEs, livelihood loans and agribusiness, Credit Line For
agri-infrastructure and other agri- and environment-related Energy Efficiency and
213
projects, socialized housing, schools and hospitals. Climate Protection
(CLEECP)

On its homepage, RCBC does not offer any Green or G no

5. RCBC Rizal Sustainable product. It does not even mention loans. E no
Commercial
Micro Finance portfolio “PITAKA”: 33 million PHP, average S no
Banking Corp.
loan disbursement 44 000 PHP
A: 311.2 PHP No query facility
B: >340 IFC recently agreed to purchase an equity stake in RCBC. found
Microfinance Focus 10 March 2011

212
http://www.workingpinoy.com/2011/01/list-of-banks-in-philippines-universal-banks-commercial-banks/
213
https://www.landbank.com/about.asp

160
Order, bank
Term found in
name
website?
Assets: billion
Characteristics Green
PHP
Environment -
Branches:
Sustainability
number
Small Business Loan Program G no
6. PNB Philippine
to finance business expenditures or expansion E no
National Bank
A: 306.2 PHP minimum of 1.0 million PHP up to 10 million PHP S no
B: 338 loanable amount No query facility
found
7. DBP State owned DBP is the premier government financial G yes (GHG)
Development institution dedicated to supporting the national E yes
Bank of the government’s key development programs. “As the country's
S yes
Philippines premier bank for development, safeguard of the
214 Publishing
A: 297.4 PHP environment is a top priority.”
Sustainability Report
B: 78
2008
In strategic business, the bank is a recognized leader and G no
premier provider of corporate cash management & B2B E no
215
solutions to leading local and multinational companies. S no
Its other strengths are in treasury services & capital
8. UNION BANK No query facility
markets, Internet banking, consumer finance and
Union Bank of found
the Philippines distribution network. Union Bank is among the industry's
A: 244.9 PHP best in key performance measures: absolute profit, cost-to-
B: 180 income ratio, return on equity, return on assets, revenue /
expense ratios, market capitalization, and earnings per
share. Today multiple channels are available for transaction
and information access: 111 branches nationwide, 94
ATMs (as of June 2004, not updated for years!?)
The bank’s mission statement: G no
“We will be a leading provider of quality services E no
9. CHINABANK consistently delivered to institutions, entrepreneurs, and S no
China Banking individuals here and abroad, to meet their financial needs
Corp. and exceed their rising expectations.
A: 235.2 PHP We will maintain the highest ethical standards, sense of
B: 243 responsibility, and fairness with respect to our customers,
employees, shareholders, and the communities we serve.”

10. CITIBANK The country's largest foreign bank G yes

Citibank NA Best Consumer Internet Bank 2004 - 2010 E yes
A: 202.6 PHP On its website Citibank offers only personal loans. S yes
B: 35

The SME Bank, Even the smallest business can light up the G yes
Thrift Bank: country’s future. E yes
Plantersbank
Privately owned thrift bank; informative SME Magazine S yes
The Planters
online, website design by SME.com.ph;
Development Query refers to
www.plantersbank.com.ph
Bank publications about
A: 50 PHP The Annual Report does not disclose financial figures. environment in its
B: 19 SME magazine, no
216
green loan

214
http://www.ecodesk.com/sustainability/development-bank-of-the-philippines/
215
http://www.unionbankph.com/index.php?option=com_content&view=article&id=780&Itemid=316
216
SME Issue 2/2009 is about Ecopreneurs and the business of going green, available in archive

161
Annex 33 BPI and its concern about the environment
With climate change becoming more apparent, it is BPI’s “desire to help slow down, if not
stop climate change, by exploring ways on how we can reduce our environmental footprint,
as well as develop products aimed at natural resource preservation and conservation.”

BPI: Promoting a sense of community and care for the environment

2009 Activity
January Launched of Solid Waste management (SWM) Program
February Donate-your-old tarp campaign
March BPI Earth Hour
April Earth Day Celebration accompanied by environmental forum and a light exchange
activity (2 incandescent bulbs in exchange of 1 free CFL in BPI Head Office)
May Recyclable Fair
June I Love Earth Photo Contest
August Recyclable Fair
September Personal Carbon Footprint Calculation Activity
October Environmental Forum
November Earth Friendly Bazaar
December Earth Friendly Parol Making Contest

Source: BPI Sustainability Report 2009

CSR environmental / other community projects account for 1.29 million PHP (about 4
percent) of the CSR budget to increase environmental preservation awareness. It was used
for two projects
 Creating urban farmer consciousness, 70 BPI employees participated in transforming
the BPI Head Office’s unused rooftop helipad into a garden.
 35 of BPI’s Cebu employees volunteered and planted 1000 mangrove propagules in
Cordova, Cebu.

BPI issued its first Sustainability Report for 2008 along the Global Reporting Initiatives (GRI)
Sustainability Reporting Guidelines, allegedly the first in the banking industry in the
Philippines. In October 2010, BPI published its second Sustainability Report.217

217
http://www.mybpimag.com/index.php?option=com_content&view=article&id=861:delta-air-
promo&catid=40:article&Itemid=1018

162
Annex 34 Small Business (Guarantee and Finance) Corporation (SB
Corp)

SBC is a nonbank financial institution. It envisions becoming the leader in small enterprise
development financing and small credit delivery systems nationwide.218 The Corporation has
focused on developing an appropriate mix of financing products that are responsive to the
needs of SMEs in the country.

Over the years, SBC has evolved its product line from generic credit and credit
enhancement facilities - catering to both nearly bankable SMEs and small banks in need of
liquidity support - to more evolved lines that focused the financing facilities to specific
products and / or sectors.

In total, SBC offers 16 credit and credit guarantee programs. The credit facilities are divided
between wholesale and retail lending, which targets banks engaged in SME lending, and
prebankable small to medium sized businesses. The credit guarantees services banks with
SME accounts that need additional collateral cover.

Green Lending is not a separate category in SBC’s activities.

SBC’s product lines

1 Retail Lending
Retail programs provide an alternative source of funding to SMEs for financing various activities.
Loans may be availed to finance letters of credit, confirmed purchase orders, receivables,
working capital, and asset acquisitions.

Direct lending is about 15 percent of total lending. The small retail lending window for SME
lending starts at 200 000 PHP, the average is 1 to 2 million PHP. SBC did not create a Green
window. Financing depends on viable and profitability enhancing investments.

Lending requirements are relaxed. For instance, normally banks require a three year profitability
record but SBC only one year. If the business is proven, insufficient collateral will not be an
obstacle for financing.

2 Wholesale Lending
Wholesale programs focus on the liquidity needs of banks by providing them access to short
term and medium term financing. The Corporation has partnered with banks, nongovernment
organizations, and cooperatives to extend its reach. SBC guarantees up to 80 percent.

3 Credit Guarantees
The guarantee programs are designed to augment the collateral cover of SMEs to encourage
banks to lend to small and medium sized enterprises with collateral deficiencies. SBC provides
about 30 to 50 guarantees annually, a sovereign cover without government backup.

218
http://portal.sbgfc.org.ph

163
Annex 35 Leading microfinance institutions

219
MIX Market, the #1 source for financial and social performance data on MFIs across the globe, lists
92 MFIs for the Philippines. These include a variety of banks (predominantly rural banks), NGOs and
other institutions. Six of them record a loan portfolio of more than 25 million USD. The others are
smaller.

Leading MFIs

Name of Year Gross loan Average per

institution portfolio debtor
million USD USD
st
1 Valley Bank 2009 55.8 1,055
PR Bank 2009 48.6 na
CARD NGO 2009 46.2 93
Green Bank 2009 37.1 558
TSPI 2010 34.1 121
CARD Bank 2009 31.0 136

CARD (Center for Agricultural and Rural Development) NGO, has most borrowers, namely 497 400.
Reportedly, CARD NGO sells 300 solar home systems (SHS) monthly.

219
http://www.mixmarket.org/mfi/country/Philippines

164
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GEF/UNDP/IMO Regional Programme on Partnerships in Environmental Management for the Seas of

East Asia (PEMSEA), An Overview of Public and Private Sector Capacities for Environmental
Infrastructure in the Philippines, 2005, http://beta.pemsea.org/sites/default/files/ms200501-ppp-
phi.pdf

GTZ Sector Project Innovative Approaches to Private Sector Development; Manila, 2010

Garcia, Edgardo F. (COO DBP), Environmental Leadership in Banking, presentation:

http://sdsap.org/data/T%20Edgardo%20Garcia%20DBP.pdf

Guyot, Emmanuel, PV Project Development and Project Finance Business Forum “Solar Access
2011”, presentation at EDSA Shangri-La Hotel, Manila, April 27, 2011

Hongo, Takashi (Head Environment Finance Engineering Department, JBIC), GF – Business

Opportunities and Role of Financial Institutions, presentation at GF Workshop in Manila with
ADFIAP, May 2011, DBP Head Office, Manila

Ivie L Sabellano Oscar E Sarmiento Jr in DBP, DEVELOPMENTAL THRUSTS; SME AND

ENTERPRISE DEVELOPMENT Micro, Small and Medium Enterprise, 2011

JFC/JBIC, J/MRV Guidelines 2010, @ www.jbic. …/2010/0730-01/10030_mrv_guideline_pdf

Leaño, Rhodora M (Director Bureau of SME Development, DTI), SME Development Plan 2011 -
2016, mimeo

Matisoff, Adina (lead author), Chan, Michelle The Green Evolution, Environmental Policies and
Practice in China’s Banking Sector, Friends of the Earth-US, 2008, BANKTrack

Miller, Calvin, Jones, Linda; Agricultural Value Chain Finance: Tools and Lessons, 2010, FAO,
Practical Action Publishing

165
Nakao, Tsuyoshi (ERM Environmental Resources Management Japan), Introduction of J-MRV
methodologies, mimeo

Pilarca, Rita, Accessing Markets through the Value Chain Approach (Reference Document, 2010),
Private Sector Promotion Program (PSP SMEDSEP, publisher)

Peralta, Octavio P. (Secretary General, ADFIAP), The Role of Development Finance Institutions in
Green Governance & Finance: The ADFIAP Experience, The Asia-Pacific Finance &
Development Forum, “Fiscal and Financial Policies for Low-carbon Economic Development”
presented at Asia-Pacific Finance & Development Forum, November 26, 2010, Shanghai, China

Rural Micro Enterprise Promotion Programme (RuMEPP), DTI (publisher) Engineered Bamboo – The
Industry, Technology & Other Information, 201025

Salayon, Anita P, DBP, Greening the Industries and the LGUs Financing Program, Presentation for
Discussion with GIZ, 2011, mimeo

Schaefer, Jakob, GIZ, Innovative Approaches for Sustainable Economic Development: GF, (2011),
internal ppt presentation

United Nations Environment Programme (UNEP), Energy Efficiency Guide for Industry in Asia, 2006,
http://www.energyefficiencyasia.org/wheredoustart/wheredoustart.html

Wei Zhao, Meeting the challenges with SCP solutions – Protecting the forests by working through the
supply chain, SWITCH-Asia Network Facility, UNEP / Wuppertal Institute collaborating Centre on
Sustainable Consumption and Production (CSCP),. Germany

Zhu Wenqin, “IFC Supports Major Breakthrough in China’s Green Banking,” SynTao, 31 October
2008, http://www.syntao.com/E_Page_Show.asp?Page_ID=10434

See also: ONE ALTERNATIVE ENERGY BLOG: http://www.alternat1ve.com/

Excerpts
Landbank and KfW Offer Green Financing for Small Businesses (see CLEECP)
BPI offers 5 billion PHP for Renewable and Energy Efficiency Projects
DBP offering loans for Renewable Energy Projects and energy conservation I partnership with
IFC
PNOC-AFC’s Jatropha Project in Quezon
Land Bank in deal with World Bank for Carbon Credit Purchase
800 million USD in funding available from ADB for Energy Efficiency projects under the Clean
Technology Fund for Asia of the Climate Investment Fund.
Perusing the Philippine Biofuels Bill of 2006 Part II… Incentives
Jatropha Curcas Seminar on 20 Oct 2006
Development Bank of The Philippines offers loans for Mini-Hydro Projects
DBP in joint RE projects with foreign firms
Oriental Energy has 4 mini hydro projects approved
Hedcor to build mini hydro power plants in Benguet and Davao worth 38 MW
800 million USD in funding available for Energy Efficiency projects
Foreign Investors keen on Renewable Energy investing
1.8MW Hydro Electric Power Plant to go up in Nueva Vizcaya
Asian Development Bank adds “environmental safeguards” to its projects

166
GTZ Office Manila
German Development Center
10F PDCP Bank Centre
V A Rufino St cor L P Leviste St
Salcedo Village, Makati City 1227, PHILIPPINES

Private Sector Promotion (SMEDSEP) Program

PSP Program Office, 7F New Solid Building
357 Sen Gil Puyat Avenue
Makati City 1226 PHILIPPINES
( +63 2 897 8199, 556 8732, 896 4319
* info@smedsep.ph
8 smedsep.ph

Private Sector Promotion (SMEDSEP) Program Cebu

GF LDM Building
Legaspi St cor M J Cuenco Ave
Cebu City 6000, PHILIPPINES
( +63 32 412 2256
6 +63 32 254 4958
* cebu@smedsep.ph