House Ways & Means Committee invites PE2 to first deliberation on EE&C bill incentives

House Ways & Means Committee invites PE2 to first deliberation on EE&C bill incentives

HOUSE OF REPRESENTATIVES, 13 March 2018 – The Committee on Ways and Means of the House of Representatives invited Philippine Energy Efficiency Alliance (PE2) President Alexander Ablaza as a resource person to offer recommendations on Section 20 (Fiscal Incentives) of the unnumbered substitute bill on energy efficiency and conservation (EE&C).

The invitation was issued by Committee Service Director Mauricio R. Pulhin, on behalf of the Committee Chairman, Rep. Dakila Carlo E. Cua. The Committee on Ways and Means meeting earlier today was chaired by Deputy Speaker Sharon E. Garin. Former President Gloria Macapagal-Arroyo and Senior Vice-Chairman Joey Sarte Salceda were among the committee members that contributed actively to the deliberations.

PE2 officially submitted and manifested its position in a letter to the Committee dated 12 March 2018, which calls attention to the urgency of the EE&C bill and how the “TRAIN-friendly” fiscal incentive provisions in the said policy measure are critical to converting non-viable investments in EE&C technologies and services to commercial-grade projects. Articulated during the meeting, the position highlighted 3 points:

  1. Energy efficiency should be treated as the “first fuel” of the economy, being the cheapest, fastest and most untapped energy resource in our energy mix to slow down the rise in energy prices by deferring some 45,900 MW of energy infrastructure upgrades (power and non-power) through 2040. Shaving off up to 182 Mtoe in energy demand in the next 22 years can save our economy some PHP 36 trillion in energy purchases, grow GDP incrementally, create green jobs, increase tax revenues from energy savings, reduce dependence on imported fossil fuels, and contribute significantly to the regional energy intensity reduction targets of ASEAN and APEC, as well as our country’s obligations to the Paris climate agreement.
  2. PE2 believes that this EE&C bill deserves priority attention after its predecessor Batas Pambansa no. 73 lapsed in 1985, leaving the Philippines as possibly the only ASEAN country without a mandatory EE&C policy framework or fiscal incentives. While we understand that this bill has been repeatedly refiled since the 8th Congress, we are nonetheless encouraged by the growing public-private support for this legislation, that the House Committee on Energy has approved a Substitute Bill on 14 August 2017, and that the Senate Plenary has already approved on 3rd and final reading the counterpart bill (Senate Bill no. 1531) on 5 February 2018.
  3. For the Philippines to meet DOE’s 2040 annual savings target of 10,000 ktoe under its approved 2017-2040 EE&C Roadmap, an estimated PHP 12 trillion in investments will have to be made in EE&C technology deployment across end-use sectors. Almost two-thirds of this capital requirement will have to be financed from third-party sources such as energy service companies (ESCO), public-private partnerships (PPP), equity vehicles, and development or climate funds. Private sector capital investments will need to be made commercial-grade by increasing equity returns through “TRAIN-friendly” fiscal incentives provided under this pending EE&C bill. Otherwise, the bulk of the third-party capital flows will remain non-viable with unattractive after-tax project internal rates of return (IRR).

PE2 strongly recommended to the Committee to preserve the language in the subject bill on the granting of fiscal incentives to EE&C investments based on the provisions of E.O. 226, otherwise known as the Omnibus Investment Code of 1987, in spite of the removal of value-added tax related incentives from the sought fiscal package to conform with and support the TRAIN program of Government.

The Committee decided to defer its decision until after the bill authors led by Committee on Energy (COE) Chairman Lord Allan Jay Q. Velasco, and the Board of Investments would have provided their specific recommendations on fiscal incentives, and after the COE would have consolidated a ninth EE&C bill, authored by Rep. Luis Raymund F. Villafuerte, Jr., into the unnumbered substitute bill approved by COE and the Committee on Appropriations.

PE2 Member Services and Communications Manager Luigi Eusebio joined Ablaza in this meeting.

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