By Ashley Erika O. Jose, Reporter
CLIMATE SMART VENTURES Pte. Ltd. is optimistic that the Philippines can meet — and potentially exceed — its just energy transition goals through innovative financing mechanisms and stronger corporate commitments to sustainability.
“We were founded at the height of the pandemic, basically as a response to figure out ways to accelerate the shift from fossil fuels to renewables,” Climate Smart Ventures Founder and Managing Partner Lawrence Ang said in an interview with BusinessWorld.
Established in 2020, Climate Smart Ventures is a transition and transaction advisory firm assisting energy companies in Asia in decarbonizing their operations. It provides strategic guidance on financial mechanisms and transition pathways, including the development of environmental, social, and governance (ESG) policies and decarbonization roadmaps.
The firm currently operates in the Philippines, Vietnam, Singapore, Indonesia, and India.
“In emerging markets like Asia, coal is something you love to hate and hate to love. We realized that we need to do this in a just, managed, but also commercially viable way,” Mr. Ang said.
He said Climate Smart Ventures supports companies in designing business models that enable a transition from coal to renewable sources, while taking into account prevailing market conditions and regulatory structures.
“Particularly, how power purchase agreements are structured. You still have to find ways to work with that. Understanding increasing demand for power in these different jurisdictions and also understanding how financing can be used as a tool and other capital market solutions,” he said.
Some local energy firms are also exploring opportunities under a memorandum of understanding signed by the Philippines and Singapore in 2023, which seeks to jointly develop carbon credit mechanisms under Article 6 of the Paris Agreement.
The accord aims to help both countries meet their climate goals by promoting carbon markets and exchanging best practices.
The Paris Agreement commits signatories to limit the rise in global temperatures to well below 2°C from pre-industrial levels, with efforts to keep the increase below 1.5°C.
Transition credits are one example of financing mechanisms being considered. These instruments leverage carbon finance to accelerate the retirement of fossil-fuel assets and their replacement with clean energy, while promoting a just transition.
The Philippines aims to raise the share of renewable energy in its power generation mix to 35% by 2030 and to 50% by 2040. Fossil fuels continue to dominate the current energy mix.
“It is also worth recognizing that these power plant owners have ambitions to decarbonize,” Mr. Ang said. “The target is probably achievable and can even be surpassed with the right mechanism in place.”
“We help them execute a transaction that is feasible. We then come up with the correct financing structure and frameworks,” he added.
Mr. Ang said Philippine energy companies are showing greater willingness to adopt transition tools and shift to clean energy technologies.
“I think you’d be hard-pressed to find companies who aren’t committing to some kind of decarbonization. If you look at all the big companies in the Philippines, at least the big ones, the ones that are driving the power market, everyone is committed to some kind of a net-zero or a clean energy target,” he said.
He also cited the Philippines’ move to open the renewable energy sector to full foreign ownership as a major draw for global investors.
“This kind of policy openness is crucial to attracting capital and technology that will help the country meet its clean energy goals,” he said.
