Philippine bank RCBC to stop funding coal

Weeks after the Philippine government said it would no longer approve new coal power plants, Rizal Commercial Banking Corp became the first Filipino bank to declare it will stop funding new coal projects.

RCBC Plaza
The Rizal Commercial Banking Corporation Plaza houses the bank's offices in Makati City, Philippines,. RCBC is the first Filpino lender to make an open stand against coal. Image: RCBC Plaza

The Philippines’ eighth-largest commercial bank, Rizal Commercial Banking Corp (RCBC), will cease financing new coal-fired power stations, its president and chief executive announced on Thursday (10 December).

Speaking at a virtual forum, Eugene Acevedo said that the bank has not funded coal in the past two years.

“No more coal, but they will be existing in our balance sheets. They will be there for a while. It’s very difficult for the country to subsist on purely 100 per cent renewable (energy) so we will have a nice mix,” Acevedo said to a journalist who asked if the bank plans to wean itself off coal.

Acevedo added that although the bank’s future loans will be “100 per cent non-coal”, they may not only be for renewable energy. 

“To create a robust electric grid, there has to be a combination of renewables and a few power plants that are usually gas-fired. So we might have a combinaion of gas and a lot of renewables moving forward,” he said.

At the height of the pandemic lockdown, Filipino consumers saw a spike in electricity bills as they stayed home and used more electricity. Experts have said the country’s heavy reliance on imported fossil fuels is a main factor behind high prices.

RCBC is the first bank in the Philippines to publicly retreat from coal financing after the country’s energy chief Alfonso Cusi announced a moratorium on new coal in October.

It is the fifth major bank in Southeast Asia to drop coal, after Malaysia’s CIMB revealed its coal exit plan this week following pressure from green groups. Last year, Singaporean banks, UOB, DBS and OCBC announced policies to end coal financing.

Southeast Asia is the only region in the world where coal is gaining greater share in the energy mix and the Philippines, one of its key battlegrounds in the fight against climate change, has plans to increase coal in its power mix from the current 48 per cent to over 52 per cent by 2030. 

The Philippines’ energy department has said that coal will continue to dominate the energy sector despite experts stressing that the pollutive fuel does not make sense for the country. The country has 9.8 gigawatts (GW) of coal power currently installed and four GW of committed coal projects. 

In its sustainability report last year, RCBC highlighted that it has funded over US$800 million in environment-related programmes and social development projects, including a 132.5-megawatt (MW) solar farm in Negros Occidental, Philippines and a 330-MW solar power plant in Vietnam. The sum was the net proceeds of the bank’s issuance of green and sustainability bonds last year.

‘It is not yet finished’: Activists

Anti-coal activists lauded RCBC’s move, but urged it to completely phase out coal, the single largest producer of man-made greenhouse gas emissions globally.

Gerry Arances, executive director of sustainability think tank Center for Energy, Ecology, and Development, urged the bank to align its policies with the Paris Agreement, which aims to limit global temperature rise to less than two degrees Celsius by the end of the century. This could create a ripple effect among Philippine banks, he said.

Philippine Movement for Climate Justice (PMCJ) national coordinator Ian Rivera said RCBC’s decision would not have happened, if not for his group’s climate change complaint filed in 2017 against the World Bank-led International Finance Corporation (IFC) for coal funding. It accused the IFC of contributing to the climate crisis and environmental and social harm through its funding of 19 coal power plants across the Philippines, and companies that operate them through RCBC.

“It is not yet finished. While PMCJ’s complaint stipulated that RCBC declare a coal phaseout, it must also atone for the environmental and health impacts of the coal plants it has financed,” added Rivera.

Withdraw from Coal, a Philippines-based campaign spearheaded by the Catholic church and civil society urging local banks to divest from coal, has found that RCBC is the fourth-largest coal financier in the country.

It said RCBC has loaned or underwritten at least US$952 million to coal developers and power plants, including the Atimonan One Energy power plant in Quezon and San Miguel Corporation’s Limay coal plant, which local communities have opposed for their negative health and environmental effects.

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