Context
The Philippines is pursuing a green economy transition, supported by policies on renewable energy, sustainable agriculture, waste management, and low-carbon development. Under its current Nationally Determined Contribution (NDC), the country commits to reducing greenhouse gas (GHG) emissions by 990 MtCO2e (75% below business-as-usual) between 2020 and 2030. It also supports a long-term reduction of 10% in overall energy demand by 2040. Around 59% of the targeted reductions are expected from the energy sector. The commercial and industrial (C&I) sectors account for 33% of final energy consumption, with cooling systems (air conditioning and refrigeration) among the largest shares. Despite high electricity prices and favourable policies, the pipeline of energy efficiency (EE) projects from C&I remains limited, and investment promotion is not fully aligned with scalable models such as energy- (or cooling-) as-a-service.
Goals and approach to transformational change
The project aims to support decarbonisation of cooling-intensive C&I facilities by expanding both demand and supply for energy services and innovative business models. The project tackles behavioural, structural, technical, and financial barriers that currently limit EE investment. It enables 283 cooling-intensive C&I facilities to reduce GHG emissions through energy efficiency and renewable energy solutions, including modern cooling systems using natural refrigerants. By strengthening the ESCO market and improving access to finance for facility owners and ESCOs, the project increases the number of bankable EE projects and accelerates adoption of performance-based service models. A strengthened regulatory and investment framework further reduces transaction costs and support sustained market transformation in the cooling and EE sector.
Components and support mechanisms
The Financial Cooperation (FC) component improves access to debt financing for cooling-focused EE investments. Concessional loans of EUR 13 million are provided through the Development Bank of the Philippines (DBP) for bankable EE projects. A EUR 3 million credit guarantee facility at PhilGuarantee reduces lending risks and enable more flexible requirements (e.g., reduced equity contributions). Repayable grants of EUR 2 million finances around 430 investment-grade audits (IGAs) for C&I facilities, generating a stronger project pipeline. The project mobilises EUR 10 million of public and EUR 3.2 million of private funds respectively.
The Technical Cooperation (TC) component strengthens technical capacity among C&I facilities and ESCOs through awareness campaigns and capacity building on benefits and returns of EE projects. Matchmaking events connect C&I owners, ESCOs, and financial institutions to increase market activity. In total, around 1,350 people benefit from awareness-raising, training, EE+ project support, and matchmaking.
Long-term impact
The project targets at least 71,752 tCO2e in direct emission reductions during implementation. Over the lifetime of supported technologies, reductions of up to 648,286 tCO2e are expected, in addition to 199,350 tCO2e of indirect emission reductions. Estimated cost-efficiency is approximately 50 EUR/tCO2e.