Domestic lenders funneled record amounts of capital into coal-fired power infrastructure last year, exploiting a key policy loophole despite the state-mandated ban on new coal developments, according to a report by an energy think tank.

Fourteen domestic commercial banks actively financed fossil fuel projects, pushing total coal funding to its highest level since 2019, the Center for Energy, Ecology, and Development (CREED) stated in its annual scorecard.

Nine of these financial institutions channeled a combined ₱59.8 billion into coal ventures.

While the government instituted a strict moratorium on new coal-fired power applications in 2020, financial institutions have sustained the industry by redirecting capital toward existing portfolios. Every transaction logged last year was structured exclusively to refinance previous loans rather than to fund new generation capacities, the civic group noted.

The bulk of the refinancing was deployed to expand and upgrade the 600-megawatt Mariveles power plant facility in Bataan province, managed by San Miguel Global Power Holdings Corp. The remainder of the capital supported independent coal companies operating across industrial hubs in Bataan, Quezon, Davao, and Cebu.

This capital influx comes as the Department of Energy (DOE) evaluates the necessity of the six-year-old moratorium.

Energy officials confirmed they are reviewing whether to permit new coal developments to shield the country from an ongoing domestic power deficit and volatile global fuel markets. The agency indicated that grid stability and energy security remain paramount, especially given recurrent red and yellow alerts on the Luzon and Visayas grids.

The persistent domestic appetite for coal contradicts broader international credit trends. Michael Ricafort, chief economist at Rizal Commercial Banking Corp., noted that global institutional lenders have systematically frozen coal financing lines since before the pandemic.

International development organizations, such as the Asian Development Bank, have shifted resources toward funding the early retirement or transition of thermal plants into solar and wind facilities.

Ricafort added that global compliance depends heavily on geographic security. While European countries successfully displaced coal generation with solar power following supply shocks from the Russia-Ukraine conflict, developing nations must address local supply deficiencies on a case-by-case basis.

Similar geopolitical tensions in the Middle East are expected to drive localized shifts toward self-reliant energy grids, though developing economies remain temporarily tethered to conventional thermal power to avoid blackouts.