Green financing obstacles and opportunities for Philippine small and medium enterprises
Green practices are easier implemented with public awareness of the climate change issues, cost and benefits of green practices, and changes that can be implemented at home and in business that create energy efficiency. SMEs need more awareness of the benefits of green practices, sources of financing, and the requirements.
✍️ How to write this paper — guide & tools ▾
Green Financing in the Philippines
Our traditional sources of energy are decreasing rapidly causing a demand and importance for green energy. The aim of green energy is to reduce the pollution problems that are being suffered. Investments in green energy are becoming increasingly more popular and more profitable.
Investments in green energy
The current situation for the Philippines is:
The Philippines are facing problems of pollution, higher health hazards, increased unemployment and poverty because of climate change.
The Philippine government has enacted legislation to address the issues, but fail to be consistent in the supervising and implementation of the regulations.
There are obstacles with the green practices that include public awareness, training for bank employees in green practices and costs, and SMEs having available information regarding the benefits of going green and obtaining financing to go green.
There are information gaps about renewable energy and energy efficient technologies, their achievements, capabilities, and economic benefits that cause obstacles for green financing (Piso, 2012).
SMEs are not informed about investment and financing opportunities.
Machine suppliers are reluctant to recommend green machinery because repair of old machines is more profitable.
Investment costs are high and profitability of the investment is views as waiting for prices to go down.
They lack awareness of the long-term savings from the energy efficient equipment and the renewable energy projects that includes financial, operational, and environmental.
SMEs lack the ability to prepare loan proposals due to the lack of appropriate technological information.
The capabilities and overall benefits are not promoted in the public.
Financing programs are too complicated and/or too expensive because of bank requirements being complicated, time consuming, and costly to comply.
SMEs do not have the capacity to adhere to the regulations without the assistance of a loan.
For banks, green financing involves additional work, mainly paperwork; they have no incentive to do.
The staff is not familiar with green technologies; therefore, they are not price sensitive to the costs of the green practices.
It is impossible to predict the impact on business.
Loan monitoring may include items staff is not familiar with, such as power generation, fuel consumption, fuel heating valve, CO2 emission factor, etc.
Credit worthiness of the investor has to meet the bank's high requirements.
Green energy is very profitable in the Philippines and growing. An investor may invest in any of the following.
Wind power
Solar power
Hydropower
Biogas
Solar Power
In the Philippines, solar energy has accounted for less than 15% of total domestic production. Solar power is a large contributor to renewable energy in the Philippines.
Wind Power
Philippines' wind power is a large contributor to renewable energy resources. Growing competition allows for foreign investment through M&A and JVs.
Indictors of financial assessment
A sensitivity analysis can be helpful to assess the financial uncertainty by identifying the costs associated with the project, such as capital investment, costs, prices, etc., as well as considering changes in those costs.
More indicators would be:
Static total investment
Annual O&M cost
Cost associated with electricity generations
Feed tariff
Conclusion
Renewable energy investments in the Philippines are growing and are profitable. There are many banks that have opportunities as well as other business. Investors have the opportunity to invest in the global environment. Before investing, it is wise to analyze the overall market and proposed project for more details. It is also wise to analyze the competitive environment of the project as well as the feasibility of the proposed project.
Bibliography admin. (2010, Apr 5). Green Energy is Cool, But Where Are The Greenbucks? Retrieved from Green Energy Philippines: http://www.greenenergy.com.ph/green-energy-is-cool-but-where-are-the-greenbucks/
Piso, D. (2012, May). Green Financing in the Philippines. Retrieved from Private Sector Promotion (SMEDSEP) Program: http://www..../Green_Financing_in_Philippines.pdf
Create your account
Always verify citation format against your institution’s current style guide requirements.