Ph banks have yet to quit coal, but are already going into fossil gas - report

On May 4, energy advocacy and bank watchdog group Withdraw from Coal (WFC) published its latest Coal Divestment Bank Scorecard - a tool developed to to assess the financing activities of domestic banks, gauge their current divestment efforts in the coal industry, and evaluate their climate action policies.

On top of finding that Philippine banks have yet to truly quit coal despite several no-coal pronouncements, WFC flags as another cause of alarm the upsurge of domestic banks investing in another fossil fuel in the form of fossil gas - dubbed as the Philippines new preferred fuel and peddled as a cleaner alternative to coal. A total of 27 power plant projects and 9 liquefied natural gas (LNG) terminal projects are in the pipeline, including an LNG Import Facility in Ilijan, Batangas through Linseed Field Power Corporation financed by China Bank and Development Bank of the Philippines. This proposed facility is seen to have grave socio-economic and environmental impacts in Batangas, including the Verde Island Passage, considered to be the world’s center of the center of marine shorefish biodiversity. Security Bank also disclosed that it has “some exposure to natural gas and LNG” in its response letter to WFC.

“We call for banks to totally divest from coal and cease to invest in the equally climate-destructive energy source that is fossil gas. Opening up the country to gas projects is at odds with our climate targets. Allowing gas terminals into the country, including in biodiversity hotspots like our very own Tanon Strait or Verde Island Passage in Batangas, exposes us to decades of methane emissions and can cost us all remaining hope in the fight to meet Paris goals,” San Carlos Bishop Gerry Alminaza said, convenor of WFC.

Philippine banks have increasingly been the recipient of calls from their respective stakeholders to end their contribution to the continued dependence on coal, gas, and other fossil fuels - including through a Pastoral Statement on Ecology released by the CBCP earlier this year.

“In it, we commit to engage our banks and use our position as shareholders, clients, or stakeholders of financial institutions in and beyond the Philippines, but especially towards domestic banks, to demand for policies and plans to phase out their exposure to coal, fossil gas, and destructive energy in line with the 1.5°C ambition. [Dioceses and religious institutions also have a deadline to withdraw all our resources that are with these banks not later than 2025, and hold them accountable to their fiduciary duties and moral obligations as climate actors] should such engagement efforts fail to bear fruit,” explained Bishop Colin Bagaforo, National Director of Caritas Philippines.


Divesting from coal shouldn’t lead to financing fossil gas
The biggest financial institutions in the world are not only exiting from coal but also restricting lending for other fossil fuels and aligning their portfolios with the reduction goals of the Paris Agreement which signal that natural gas projects, or more appropriately referred to as fossil gas, projects, are terrible investments. In this context, a new line of query was opened to banks to specifically inquire about their exposure to fossil gas.
Fossil gas currently accounts for a meager 6% of the country’s total energy supply. However, planned new fossil gas and liquefied natural gas (LNG) capacity in the pipeline has been seeing a steep rise in recent years. Based on DOE, news, and company announcements, a total of 27 power plant projects and 9 LNG terminal projects are planned to be built in the country. The DOE’s Philippine Energy Plan 2018-2040 (PEP), in fact, envisions a “world-class, investment-driven, and efficient natural gas industry to make it the preferred fuel for end-use subsectors.”
In their response letter, Security Bank disclosed that they have “some exposure to natural gas and LNG” even as ”the bank recognizes that climate change is a global problem that will require global cooperation to address and that globally, there is an increasing acknowledgment of the important role that lenders, investors, and markets must play to shift investments away from fossil fuels and emissions-intensive industries.”
At least two other domestic banks have known exposure to gas projects. China Bank and DBP have reportedly granted a term loan facility worth Php 6 billion to Atlantic Gulf & Pacific Company (AG&P) which is investing a substantial Php 14.6 billion into an LNG Import Facility in Ilijan, Batangas through Linseed Field Power Corporation. The proposed facility will impact small-scale fishing and eco-tourism which are the primary sources of livelihood for residents in Batangas. It also has implications on marine biodiversity as the project will impact the Verde Island Passage (VIP) Marine Corridor located within the globally significant Coral Triangle, an area considered to be the center of the center of marine biodiversity in the world.
With coal developers starting to venture into fossil gas, it is crucial to guard how banks are funding said projects. Many have posited fossil gas as an alternative fuel source and a transition vehicle towards renewable energy. However, two of the first LNG terminal and LNG power plant targeted for commissioning this year expects to operate for 25-35 years, lifespans that will surely go beyond climate deadlines. And the fossil gas industry releases large amounts of methane—a greenhouse gas whose influence, if viewed over 10- to 20-year time scales, is at least as large as that of carbon dioxide according to the Intergovernmental Panel on Climate Change’s latest Sixth Assessment Report.