Despite the Philippine government's ambitious commitment to mitigate and adapt to climate change, public expenditures to do so have been lacking, according to the Asian Development Bank (ADB).
"Climate finance remains insufficient to combat the increasing impacts of climate change. An estimated investment of $72 billion is needed between 2020 and 2030 to meet the mitigation goals of the NDC, and adaptation costs are not yet estimated," the ADB said in a report published in November, referring to the Philippines' nationally determined contribution.
The country's NDC targets to slash greenhouse gas (GHG) emissions by three-fourths six years from now.
The ADB noted that the Philippines' GHG emissions are "relatively low" or equivalent to only 2.25 tons of carbon dioxide equivalent (tCO2e) per capita in 2022, compared to the global average of 6.21 tCO2e.
"But emissions have more than tripled since the 1990s, driven by economic growth, rapid urbanization, and increasing demand for energy and other resources," it said.
While the Philippines is regarded as an "early mover" in climate policy formulation, which started through the Climate Change Act of 2009 under Republic Act (RA) No. 9729, the ADB lamented that "the scale and speed of climate action does not yet match the challenge of delivering the NDC and NAP" or the National Adaptation Plan 2023-2050.
In particular, the ADB blamed "weak planning, financing, and institutional links for climate action."
"In 2023, national budget financing for mitigation activities was only about 12 percent of the required annual amount, even though the share of budget financing allocated to climate change adaptation and mitigation had risen from six to seven percent during 2017 to 2021, to 8.8 percent" last year, it noted.
It does not help that NDC commitments "are mainly conditional on external financing and support that have not yet been mobilized," the lender pointed out.
For the ADB, "while bilateral and multilateral sources have contributed to the financing of railways and urban mass transit systems, similar support is needed for other adaptation and mitigation needs."
"Public finance must be better leveraged to mobilize private investments, but the lack of a robust project pipeline and limited capacity in governments to design and implement climate-focused projects hamper efforts," it added.
This is why the ADB's board of directors last week extended a fresh $500-million loan to the Philippines, as a follow-through to the earlier $250-million Climate Change Action Program (CCAP) green-lit in 2022—the first-ever climate action policy-based financing in the Asia-Pacific region.
The newest ADB loan aims to strengthen financing, institutional linkages as well as planning for both national and local climate actions.
Specifically, this loan will help secure the targeted minimum of $4-billion climate-related development finance commitments coming from bilateral as well as multilateral sources for Philippine programs and projects by 2027, more than the $2.4-billion annual average from 2018 to 2021.
The loan program shall likewise "promote greater private-sector climate investment through regulatory incentives offered by BSP [the Bangko Sentral ng Pilipinas] to private lenders, effectively allowing access to cheaper capital for green projects and reducing their risk profile," the ADB said.