KARMEN RIVERA

Finance 12
GREEN INVESTMENT

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“As MERALCO hikes power rates a new Angara eyes lower power rates through green energy
investments”

“As power rates continue to spike, renewable energy (RE) should take up a greater share in the
country's energy generation mix.”

"Ending the regime of high power rates can help the Philippines attract foreign investors, who have
cited the country's high power cost as a major disincentive to investments."

“50% of the allocation for missionary electrification shall be utilized to subsidize renewable energy
development which shall include but not limited to research, exploration, promotion, and utilization
of RE systems and technologies”

-Senator Edgardo J. Angara

Senator Angara who authored RP's RE law, proposed to subsidize the renewable energy development
through amending one of the provisions in the Electric Power Industry Reform Act or otherwise known
as the EPIRA law.

ELECTRIC POWER INDUSTRY REFORM ACT of 2001 (R.A. 9136) is designed to bring down
electricity rates and to improve the delivery of power supply to end-users by encouraging greater
competition and efficiency in the electricity industry. The essence of these reforms is giving
stakeholders a CHOICE.

• Consumer Empowerment.
• Higher Efficiency.
• Open Access.
• Industry Accountability.
• Competition in Generation and Supply.
• Electricity Tariff Unbundling.

Two major reforms are embodied in RA 9136, namely:

• the restructuring of the electricity supply industry

• Privatization of the National Power Corporation (NPC)

These two reforms are aimed at encouraging greater competition and at attracting more private-sector
investments in the power industry. A more competitive power industry will in turn result in lower power
rates and a more efficient delivery of electricity supply to end-users.

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What is Green Investment?

Green investment are traditional investment vehicles (such as stocks, exchange-traded funds and
mutual funds) in which the underlying business(es) are somehow involved in operations aimed at
improving the environment. This can range from companies that are developing alternative energy
technology to companies that have the best environmental practices. They are called “green” because
they are offered by financial institutions (i.e. banks) which lend the money raised from such investments
to environmentally friendly businesses. In other words, if you put your money in green investments, you
may rest assured that it will be used with the environment in mind.

Type of green investment

Green Stocks - As an environmental investor, you probably want to invest in genuine green stocks,

Green bonds - are usually issued to raise capital for solving a specific local or global environmental
problem, and are usually backed by governmental institutions.

Green fund (also called green mutual fund) is an instrument for making collective investments in these
environmentally active companies which introduce new green technologies.

Green Savings Accounts are the safest types of green investment you will find on the market: they
offer the lowest levels of risk with the lowest rates of return.

Green Money Market Accounts

Green Certificates of Deposit or time deposits are green investment instruments which are issued by
banks for predetermined periods of time (maturity dates) with fixed interest rates.

Agriculture / Organic Foods - Organic farming requires a lot less energy than conventional farming,
uses natural inputs and processes for growing crops, and avoids the use of artificial fertilizers and
pesticides and genetically modified organisms.

Water Technologies - Waste water (sewage water) contains vast amounts of energy that may
potentially be recovered by wastewater treatment plants and re-used either by plants themselves or
elsewhere.

Green Cars are the vehicles that use renewable sources of energy or consume significantly less gasoline
/ diesel than traditional oil-powered cars.

Green Building

Reforestation

Waste Management or Recycling

Renewable energy – solar energy, wind energy, biofuels, geothermal energy, hydro electric power.

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Factors to be considered in acquiring green investment

Global warming is probably the biggest challenge that humanity is facing right now. We can also think
of it as being part of air pollution.

Environmental pollution is “the contamination of the physical and biological components of the
earth/atmosphere system to such an extent that normal environmental processes are adversely affected”.

Climate Change - The Philippines has experienced temperature spikes brought about by climate
change. It has been observed that warming is experienced most in the northern and southern regions of
the country, while Metro Manila has warmed less than most parts. Hot days and hot nights have become
more frequent. Extreme weather events have also occurred more frequently since 1980. These include
deadly and damaging typhoons, floods, landslides, severe El Niño and La Niña events, drought, and
forest fires. Adversely affected sectors include agriculture, fresh water, coastal and marine resources and
health.

Water crisis - The Philippines water crisis is real. After several weeks, the Manila Public works
department confirmed that there is a water crisis in the Maynilad services areas covering the west zone
of the metropolis. The situation could take a turn for the worse and may leave residents with only 6hours
of services in a day.
• Lowest level in history and would take several typhoons to replenish Angat dam. If the water
level falls further to 120masl, the dam will no longer be able to supply Metro Manila
• Despite the critical level of water, local government units have yet to draft a comprehensive plan
to ensure availability of water in their areas. For now, response to the water crisis range from
denial to a wait and see attitude.

The World Bank said the Philippines should invest $2 billion a year until 2025 to foster a sustainable
power sector, minus the carbon emissions of conventional power plants. Renewable energy (RE)
technologies are more expensive and more intermittent than their fossil fuel-based counterparts. RE
projects also require longer gestation periods compared with “dirtier” power plants.

As I’ve read on the internet, the International Finance Corp., the lending branch of the World Bank,
plans to invest more than $300 million in the Philippines power sector this year, particularly in
renewable energy projects. They said that with its agricultural geography and its economy, the
Philippines is well-situated for wind (particularly in the Ilocos region, thus Bongbong’s wind farms),
solar (no explanation needed), geothermal (we are in the Pacific ring of fire and the second largest
geothermal energy producer in the world) and hydroelectric power (Ma. Cristina Falls is a prime
example), as well as power from biomass.

Global Green, one of the foreign investors, has three biomass power projects in the Philippines, with an
aggregate capacity of 70megawatts and expected to be on-line by 2012 at the earliest. The company will
sink in about $192 million to build plants in the provinces of Nueva Ecija, Iloilo and Bukidnon.

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Asea one is investing about $180 million in the next three years to build biomass power facilities in
central Philippine provinces of Aklan, Negros Occidental, Iloilo, and Cebu. The projects will generate
an additional 72mw capacity in the Cebu-Negros-Panay grid.

The development of renewable energy in the Philippines is not just a means to mitigate the impact of
climate change but can also solve the pressing problem of energy security. This is especially crucial now
as the El Nino is causing widespread blackouts in Mindanao. The drought spell reduced water levels,
cutting supply in southern Philippines, where more than half of its energy requirement is sourced from
hydropower dams.

The Institute for Climate and Sustainable Cities (ICSC) has taken the first steps on the ground by
modifying the Philippines’ iconic jeepney.

o The E-jeepney emits no smoke and no noise.

o It runs on electricity, and powering it up costs at least Php 200 less than at the pump for
a full day’s route, a significant daily savings in a country where a third of the population
lives on less than a dollar a day.
o With E-Jeepneys, you don’t need to gas up. All you have to do is plug in for a few hours
and you’re ready to go. And there lies the rub. No matter how clean and green these cars
are, its energy source has to be clean and green as well before we can put Mother
Nature’s stamp of approval. They’re already running for free at certain schedules in
Makati and Puerto Princesa.
o The E-Jeepney is part of what could soon be a “green loop.” It’s a cycle where
renewable sources produce clean energy that will in turn power green technology.

Green Investment - Conclusion

Green investment is a constantly evolving area.

Eager green investors will have many opportunities to put their money both in national and international
companies.

But some pundits are already issuing warnings that environmental investing may be similar to the
dotcom bubble we experienced at the start of the 21st century.

Our opinion is that while of course it is inevitable for certain individual companies to lose value and
even go bankrupt, the demand for new green technologies (and especially renewable sources of energy)
is strong, and the need to fight pollution and global warming is now clearer than ever.

So the green investment is certainly here to stay.

- http://www.tropical-rainforest-animals.com/green-investment-types.html