Lack Of Net-Zero Strategy May Shut Philippines Out Of Global Climate Finance
- May 21, 2026
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The Philippines risks missing out on billions of dollars in international green financing unless it establishes a clear long-term low-emission development strategy (LT-LEDS) and adopts a formal net-zero target, according to a joint report by Bain & Co. and Standard Chartered.
In the “Southeast Asia’s Green Economy Report 2026: The New Calculus,” the global consulting firm and international bank said the country remains unlikely to meet its climate commitments under current conditions, citing weak long-term policy signals and insufficient investment deployment.
The report said Southeast Asia could attract as much as $540 billion in green investments by 2030, but only around $315 billion is likely to materialize because of infrastructure bottlenecks, financing constraints, and competing economic priorities. This leaves as much as $225 billion in potential investments at risk across the region, including in the Philippines.
Need For A Clearer Long-Term Policy
Bain & Co. and Standard Chartered said the Philippines has yet to publish an LT-LEDS framework, a voluntary roadmap under the Paris Agreement that outlines how countries plan to transition toward net-zero emissions over the long term.
Net zero refers to reducing greenhouse gas emissions to near zero while offsetting remaining emissions through carbon removal or similar measures.
“Publish LT-LEDS with a net-zero target to unlock DFI and institutional capital currently flowing to peers with clearer long-term frameworks,” the report said, referring to development finance institutions.
The report noted that green capital expenditure in the Philippines in 2025 reached only about 40 to 45 percent of the investment required to achieve the country’s 2030 decarbonization goals. While the Philippines has committed under its nationally determined contribution to reduce greenhouse gas emissions by 75 percent by 2030, it has yet to formally declare a net-zero target.
The government had earlier estimated that at least $72 billion in financing would be needed to support the country’s emissions reduction efforts and climate adaptation programs.
Renewable Transition Challenges
At the core of the country’s climate strategy is the planned expansion of renewable energy capacity in a power sector still heavily dependent on coal.
Coal currently accounts for more than 60 percent of the country’s power mix, while renewable energy contributes only about 25 percent, according to the report.
Bain & Co. and Standard Chartered said one of the most urgent investment priorities is strengthening the Luzon inter-island transmission and distribution backbone to support renewable energy integration and rising electricity demand from energy-intensive industries such as data centers.
“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,” the report said.
The study added that additional investments in power infrastructure, transmission networks and electric vehicle-related capital expenditure could unlock another $80 billion in green investments across Southeast Asia by 2030, representing a 25-percent increase over current projections.
Commercially Viable Sectors
The report also showed that investors are increasingly favoring sectors with proven demand and clearer commercial returns.
Between 2021 and 2025, around 80 percent of Southeast Asia’s estimated $40 billion in annual green investments flowed into two sectors: power generation and the electric vehicle value chain.
“Capital is flowing where commercial demand, energy security, and policy that delivers infrastructure come together and stalling where any of the three is missing, even where targets remain ambitious,” said Dale Hardcastle, partner at Bain & Co.
Despite the financing gap, the Philippines was cited for having relatively favorable fiscal and regulatory incentives for clean energy investments. These include value-added tax zero-rating for renewable energy projects and lower import tariffs for electric vehicles.
The report also urged the Philippines to accelerate fleet electrification programs to boost domestic demand for EVs and encourage more investments in vehicle assembly operations.
“ASEAN’s green economy is real and scaled, with expectations that it could be worth $430 billion by 2030, but the system is struggling to absorb the investment,” said Patrick Lee, chief executive officer for Singapore, ASEAN and South Asia at Standard Chartered.
Meanwhile, Chow Wan Thonh, head of Coverage for Singapore and ASEAN at Standard Chartered, said unlocking the region’s green economy potential would require governments and investors to align policies, infrastructure development, and financing strategies more quickly.
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