DUBAI, UAE – The Export and Investment Fund of Denmark (EIFO) is keen on extending soft loans to the array of energy efficiency projects being carried out in the Philippines, according to Danish Ambassador to the Philippines Franz-Michael S. Mellbin.

In an interview on the sidelines of the COP28 Climate Change Summit, he disclosed that the Danish export facility “made a presentation to a number of industrialists in the Philippines, so we do have soft loan facilities that can come in to help.”

Among the energy efficiency projects being eyed by Danish firms are: retrofit of buildings or water pumps and systems; as well as components of operations of manufacturing facilities and other projects being pursued by energy service companies (ESCOs).

The urgent need to double energy efficiency improvements is one of the central goals being pushed at the COP28 summit so the world can get back on track to the 1.5 degrees Celsius temperature rise limit envisioned under the Paris Agreement.

Manifestly, the adoption of energy efficient technologies and solutions can reduce carbon emissions and will likewise minimize resource depletion or can outstrip investment for additional power capacities – and on the whole, it could substantially mitigate the adverse impact of climate change risks.

The ambassador indicated “one of the mechanisms that we believe has a great future in the Philippines is that people can get loans to do energy savings; and then repay the loans through their savings - so the capital outlay will be minimum, maybe it’s not zero, but it will be minimum – that can then be filled up with some soft loans; and then you simply use the savings to pay back the loans.”

He specified “the soft loans will be coming from Denmark – that’s why we have EIFO in the Philippines to present this – to showcase how it can be done and they can also work together with the commercial banks; and we will try to set it up as easy, accessible facility and it will allow companies to draw from that.”

Mellbin qualified many large Danish companies – the likes of Danfoss and Grundfos – are among those that are already undertaking energy efficiency projects in the Philippines.

He said “these companies that are ESCOs are willing also to invest capital outlay – of course, they want a return on that, but savings can be part of that. And for the savings, the payback time is only 3-4 years, so that’s a very short period of time.”

The envoy noted these propounded soft loans are seen “much more attractive for Filipino building owners – of which many are the large industrial corporations.”

He expounded “it’s not difficult to make business case for energy efficiency - and especially in the Philippines, there’s just countless opportunities for energy savings here – and you can actually maximize a lot of that.”

Also, at this time when liquidity has high premium for construction to opt for energy efficient buildings, loans with more favorable repayment terms could be the game-changer in advancing energy efficiency projects as economically feasible ventures.

Nevertheless, Mellbin reckoned that beyond concerns on the financing realm, there are other structural problems yet to be addressed squarely so the Philippines can ramp up the rollout of energy efficient technologies and solutions – these include cost impact on consumers; as well as the need for firmer regulations on institutionalizing construction of energy efficient buildings.

“One structural problem here: like who is left with the bill? At the end of the day, it’s the users – not those who are constructing the buildings who are left to pay the bills. So, this is an imperfection – as a building owner, it’s cheaper for you, but it’s much more expensive for the user. These things create inefficiencies, but we will be happy to work closely with the Philippine government to help on this,” the Danish ambassador stressed.

Further, Mellbin emphasized the Philippine government also needs stricter implementation of the Building Code, with him noting that “there’s need for more clarity on regulation in the Philippines, and one of the challenges – even if they want to do energy savings is: it’s very complicated because there are different rules at different levels, down to the LGU (local government unit) level – and that creates a lot of inefficiencies and uncertainties; and lack of enforcement.”