Some US$25 million from Japanese financial institutions is to be channeled through the Philippines’ BDO Unibank, the country’s largest lender, specifically to support green projects. The scheme is intended to capitalise on a greenhouse gas emissions-reduction target which the previous administration presented to the 2015 United Nations Climate Change Conference in Paris last December.
The funding from the Japanese side is being managed by the Japan Bank for International Cooperation (JBIC) which has set up a credit line of up to US$50 million for the scheme. It is seeking out projects that can be funded in US dollars.
Sectors that will be eligible for the facility include renewable energy – wind and solar farms, and geothermal plants – and construction, in the areas of efficiency-improved buildings and infrastructure. Energy and construction companies in the Philippines are presently involved in building and expanding their sustainability credentials.
As a signatory of the UN Framework Convention on Climate Change, the Philippines was required to submit its Intended Nationally Determined Contributions (INDCs) – a statement of its goal for lessening carbon-dioxide emissions.
The Philippines set a target of 70% by 2030 which looks extremely ambitious: other Southeast Asian convention members were more modest with their INDCs – Indonesia, 29%; Malaysia, 45%; Singapore, 36%; Thailand, 20%. But it also added a rider which linked the target’s achievement to the amount of overseas aid that it receives.
This, then, looks like the hook which the JBIC has latched onto. The bank promotes sustainable development and before funding a project, it requires that environmental impact assessment studies are carried out.
At the same time, it will also provide greater Philippine market access for Japanese environmental technologies and cement JBIC’s relationship with BDO: the two banks signed a memorandum of understanding in 2013 to support the entry of small- and medium-sized Japanese businesses to the Philippines.
Certainly, the JBIC has plenty of clout. Wholly owned by Japan’s Ministry of Finance, it is a makeover of the former Japan Export-Import Bank and the government’s Overseas Economic Cooperation Fund. Its brief is to promote the overseas development and securing of resources which are important to Japan, and maintain and improve international competitiveness of Japanese industries. With headquarters in Toyo it has 21 offices spread across 18 countries. Its Southeast Asian presence includes offices in Manila, Bangkok, Hanoi, Jakarta and Singapore.
Environmentally driven though it is, however, JBIC has not always met its own high standards in the projects which it has been involved as a funder – and not least in the Philippines.
The most glaring example is the Coral Bay Nickel Processing Plant project at Rio Tuba, Bataraza on Palawan Island – 90% owned by a number of Japanese companies. JBIC was in at the ground floor, providing the investment loan for the first smelter, designed to produce and export mixed nickel-cobalt sulphide to Japan for 20 years. Operations began in 2005.
But very early on, social and environmental problems appeared. There was an impact on the island’s indigenous people – they had not been consulted; stone was taken from sacred burial sites – new harbour construction caused damage to the coral reefs; leakages of hazardous waste were discovered; health hazards such as skin disease appeared.
Adverse environmental impacts were also found at a second JBIC-funded Philippine nickel mine – this one at Barangay Taganito in the town of Claver, Surigao del Norte in northeastern Mindanao. Levels of hexavalent chromium – a highly toxic carcinogen that can cause liver damage and skin diseases – were discovered in two rivers close to the site.
And the San Roque Multi-purpose Dam, for which JBIC loans financed much of the US$1.9 billion project cost, was heavily criticised for the treatment of displaced inhabitants – failing to provide the promised resettlement site for 160 families – as well as fears of environmental impacts such as soil erosion, silting of rivers, disruption of fisheries, a reduction in water quality and an increase in water-borne diseases.
President Rodrigo Duterte has already said that he will not be tied to any UN climate-change agreement that disadvantages his country.