Philippines Urged to Boost Green Investment Amid Climate Push

The Philippines must accelerate its climate transition through systems-level reforms and increased green financing to stay on track with its 2030 climate goals, according to the latest Southeast Asia’s Green Economy 2025 Report published by Bain & Company, Temasek, GenZero, Google, and Standard Chartered.

The report introduced a “systems-based approach” that could enable Southeast Asia (SEA) to close 50% of its emissions gap, create 900,000 new jobs, and boost GDP by USD 120 billion, equivalent to a 2% rise by 2030.

For the Philippines, however, the path remains uneven.

In 2024, private green investments in the country dropped by 12% to USD 1.28 billion or approximately PHP 72 billion, down from USD 1.46 billion in 2023.

This accounts for 16% of total green investments across the six major SEA economies (SEA-6: Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam).

The country performed moderately across multiple decarbonization metrics.

While infrastructure and technology progress improved—marked by enhanced grid connectivity and electric vehicle (EV) charging stations—investment and policy accelerators still lagged behind peers.

“With just five years to 2030, our window for action to avoid the worst effects of climate change is rapidly closing,” said Franziska Zimmermann, Managing Director of Sustainability at Temasek.

“We need to increase the momentum and focus on pragmatic solutions with near-term impact,” she added.

The Philippine government’s Clean Energy Finance and Investment Roadmap (CEFIR) and the National Renewable Energy Program (NREP) aim to provide direction for capital mobilization and energy transition.

The Department of Energy targets 35% renewable energy (RE) share in the energy mix by 2040 and a 75% greenhouse gas (GHG) reduction by 2030, albeit without a national net-zero commitment.

Despite these goals, the share of RE in the country’s electricity mix stood at only 22% in 2024.

Moreover, while all publicly listed companies are now mandated to disclose climate-related risks, the Philippines has yet to implement a carbon tax.

“Our current policies still fall short of creating strong market incentives,” said Dale Hardcastle, co-director of Bain & Company’s Global Sustainability Innovation Center.

He warned that without systemic solutions and stronger financing models, “we risk delaying the benefits of green growth.”

One of the major issues identified in the report is the fragmentation in the bioeconomy—such as palm oil and rice—which contributes roughly 30% of the country’s emissions.

Smallholder farmers, outdated supply chains, unclear land ownership, and weak carbon pricing systems hinder progress in this space.

Enhancing value through nature-based solutions (e.g., reforestation), improving agricultural yields, and regulatory streamlining are listed as top-priority interventions.

In transport, low EV penetration remains a bottleneck.

Battery electric vehicles (BEVs) made up only 0.4% of total four-wheeler sales in 2024.

The report calls for a dual strategy: increasing domestic EV demand while scaling production to retain regional competitiveness and meet emission goals.

To support energy grid modernization, cross-border power trading, and renewable integration, regional collaboration is essential.

In 2024, the Philippines helped unify major Southeast Asian electricity grids, a step seen as critical to enabling flexible and clean power distribution across borders.

However, national investments into grid modernization remain below the scale needed, highlighting a USD 50 billion annual funding gap across SEA to implement these solutions by 2030.

Green industrial clusters—zones that co-locate manufacturing and renewable infrastructure—are proposed as a fast-track way to attract investment and reduce emissions.

The report further outlined three enablers to unlock systems-level gains: green finance, carbon markets, and artificial intelligence (AI).

Mike Samson, CEO and Head of Client Coverage at Standard Chartered, said: “The sustainable economy is not just an environmental imperative; it is also our biggest opportunity to drive inclusive and sustainable growth.”

In the financial sector, blended finance models such as Pentagreen Capital are gaining traction.

Pentagreen is financing an USD 80 million initiative to roll out utility-scale solar and battery storage in the Philippines and Indonesia.

Locally, the Asian Development Bank also extended a USD 30 million loan to fund 35 public-private infrastructure projects in the country.

These efforts signal a rising but still insufficient level of capital dedicated to climate transition.

Anshari Rahman, Director of Policy and Analytics at GenZero, noted: “Southeast Asia’s carbon markets are gaining momentum, but we can do more to unlock their full climate and economic potential.”

He emphasized the importance of building high-integrity carbon credits and compliance systems to attract long-term investment.

The Philippines has begun aligning with these market trends but lacks a formal carbon trading framework.

Meanwhile, the region’s AI-related energy consumption is rising, as data centers expand at a compound annual growth rate of 19% through 2030.

While these facilities contribute to emissions, smart applications of AI could cut emissions in agriculture, energy, and transport by 3–5%.

Spencer Low, APAC Head of Regional Sustainability at Google, explained: “We need to responsibly manage the environmental footprint of AI and data centers while identifying scalable AI applications that help reduce emissions.”

Google has pledged investments in renewable energy, including geothermal and offshore wind projects in the Asia-Pacific region.

Despite macroeconomic headwinds such as inflation and geopolitical uncertainty, foreign direct investment into the SEA-6 green economy more than tripled in 2024.

Foreign investments from outside APAC rose by 200%, while APAC investors doubled their contributions, helping compensate for a 40% drop in domestic Philippine green investment.

Analysts say this underscores the need for the Philippines to create stronger domestic financing pipelines, including public-private partnerships, to sustain momentum.

According to the report, if successfully implemented, these systems-based solutions could help the Philippines reduce its emissions by up to 50% of the projected gap in 2030, increase energy security, and improve long-term resilience.

The study concludes that “green growth is no longer just a climate agenda—it is a national development strategy.”

It recommends that the country scale climate finance mechanisms, support carbon market development, and leverage AI and regional cooperation to accelerate its green transition.

As the climate clock ticks toward 2030, the Philippines is being called to take bolder, coordinated steps.

Stakeholders agree: the tools exist, the frameworks are forming—what remains is the political will and investment to implement them at scale.