PHL losing out on funding for decarbonization due to lack of clear net-zero plan

THE PHILIPPINES is being locked out of international financing for climate and decarbonization projects because it lacks a clear framework for long-term low emission development strategies (LT-LEDS) and a net-zero target, according to a report by Bain & Co. and Standard Chartered.

In the Southeast Asia’s Green Economy Report 2026, the Philippines was assessed to beg unlikely on track to deliver its national climate targets, in the absence of LT-LEDS, which are voluntary plans created by signatories to the Paris Agreement to transition to net-zero.

Net zero refers to the reduction of greenhouse gas emissions to as close as zero while also offsetting any remaining greenhouse gases in the atmosphere.

“Publish LT-LEDS with a net-zero target to unlock DFI (development finance institutions) and institutional capital currently flowing to peers with clearer long-term frameworks,” the report concluded.

Bain & Co. and Standard Chartered also noted that the Philippine green capital expenditure in 2025 was only 40-45% of the required green investment to meet its 2030 decarbonization targets.

To better integrate renewable energy and support the growing needs of high-energy industries like data centers, the Luzon inter-island transmission and distribution backbone should be the focus, as this is where renewable energy integration constraints are most in need of investment.

Meanwhile, the report found that the Philippines shows promise in fiscal and regulatory incentives by having value-added tax zero rating for renewable energy projects and reduced import tariffs for electric vehicles.

The Philippines should promote fleet electrification to support demand for electric vehicles (EVs) and encourage investment in assembly operations, according to the report.

Bain & Co. and Standard Chartered said Southeast Asia stands to deliver approximately $540 billion in green investment through 2030, but a little over half could be realized due to system bottlenecks.

“Realizing the full potential of green capital deployment in Southeast Asia hinges on the development of a robust power grid, but grid investment has lagged demand growth,” they said.

Further investments in power, grid, and EV capex could unlock an additional $80 billion by 2030, a 25% increase over projections.

“The opportunity for Southeast Asia’s green economy is substantial, but capturing it requires synchronizing policy, infrastructure and finance at speed,” according to Chow Wan Thonh, head of Coverage, Singapore and ASEAN for Standard Chartered. — Sheldeen Joy Talavera