Geothermal power producer Energy Development Corp. warned over the weekend that removing the incentives currently enjoyed by the renewable energy industry will slow down investments in the sector.
EDC president Richard Tantoco said lifting the incentives under the Tax Reform for Attracting Better and High-quality Opportunities or Trabaho bill, the second tranche of the government’s tax reform program, would be a “misguided policy”.
“I think it’s a misguided policy to remove the incentives from renewable energy just as we need to transition into clean energy…If you remove the fiscal incentives, the impact on renewable energy is like you’re taxing it 10 times of coal which is what we need to begin to transition out of,” Tantoco said.
He said the Trabaho bill would create “uncertainty” on the entire renewable energy industry.
“It’s a major uncertainty because people are looking at their numbers and then they don’t know whether they’re gonna have 10 percent income tax or 30. They don’t know if they’re gonna be able to import without duties or with duties,” he said.
Tantoco said the proposed bill could limited the renewable energy growth in the country.
“Definitely today with the specter of the bill hanging over the industry’s head, we will see investments slow down,” he said.
EDC is the country’s biggest geothermal company. It also owns a 150-megawatt wind power project in Burgos, Ilocos Norte and is investing in solar projects around the country.
Tantoco said the non-fiscal incentives promoted by the Department of Energy such as the renewable portfolio standards would not be enough to compensate for the loss of the fiscal incentives.
“RPS is not very aggressive because when you think about it, utilities have to buy a certain percentage of renewable. But if they don’t, there’s no penalty. In other markets like Chile, there’s a very clear system that effectively prices hit. We’re taking small steps in the right direction…[but] I think they could go a lot quicker,” Tantoco said.
EDC chairman Federico Lopez said the Trabaho bill could change the industry’s landscape.
Lopez said some locators in the economic zones owned by the Lopez Group already put their expansion plans on hold.
“You know they always got this opportunity to go, put it up in Vietnam and other places which is what’s happening…RE also is the same thing. People probably will wait and see whether and if these incentives because the impact of incentives being taken out is huge,” he said.
“You have to realize that many of those companies are constantly looking at where to put their manufacturing, operations…When you have a possibility of a trade war that’s going on, many are looking at the possibility of moving their operations from China,” he said.
He said the Philippines, having a young and dynamic workforce, should be one of the beneficiaries of the trade war between US and China but “if we do this, they won’t come in.”
“We’re missing out on [on this opportunity]. To me that is a golden opportunity [lost] especially if we do that in the incentives. You can’t have a shotgun approach,” Lopez said.
