Buried Deep in Debt: No Fossil Fuel Phaseout and Decommission, No True Clean Energy Transition
- Media Communications
- Apr 10
- 4 min read
Funding clean energy efforts without pushing for the phaseout of dirty fuel is pointless and hypocritical.
On March 31, 2025, the World Bank (WB) approved a funding of USD 800 million for the Philippines' First Energy Transition and Climate Resilience (FETCR) Development Policy Loan (DPL) which seeks to support reforms to increase clean energy technologies, improve competition in the electricity markets, and strengthen institutions for water resource management. This is ironic in light of the WB's track record in DPL financing which shows a history of spending USD 14.8 billion to support fossil fuel projects since the Paris Agreement, according to a Big Shift Global 2022 report.
WB’s portfolio accounts for a total of 25% overall financing for DPLs between 2015 and 2021, which means one fourth of its total financing commitments influenced various institutional policies of borrowing countries. Financing with conditions packaged as prior actions allows the WB to support structural reforms which are justified as a means to achieve efficient and effective service delivery. As it appears, DPLs are now the old-new framework of the WB’s Structural Adjustment Programs (SAPs), with a long history of pushing failed privatization schemes in the Philippines.
In 2023, WB approved a total of USD 750 million for the First Sustainable Recovery (SR) DPL that supported prior actions to improve climate resilience and larger private sector involvement in the renewable energy infrastructure development. Prior actions under this financing caused the removal of the 40% foreign equity cap on exploration, development, utilization, and commercialization of natural resources, and the amendment of the Public Services Act that now allows 100% foreign ownership of public services.
This DPL reached project closure in December 2024 without meaningful consultations or progress in the prior actions whether by the Philippine government or the WB. Moreover, the DPLs’ nature as a non-earmarked financing makes it difficult to track where the funds are allocated, leaving it up to the borrower to decide where and how to use the funds.
Worse, the implementation reports and financing summary of the First SR DPL will only be reported by the fourth quarter of 2025, yet the Second SR DPL was already approved on June 2024 without taking into account the impacts of the loan in terms of boosting renewable energy investment in the Philippines and the climate resilience actions. This is the same path that the FETCR DPL charts as the WB and the Philippine government show a lack of interest to pursue active stakeholder participation in the discussion of prior actions and transparency over these financing arrangements.
Entering into agreements that will burden Filipinos with payment of a loan without involving them first in the negotiations is inherently flawed. This is evident in the prior actions that often favor market interests over the people’s needs. The structural and systematic inequalities that the country faces are vulnerable to external and economic shocks that largely come from the huge debt burden. Compounding the problem are the sidesteps on the climate targets that impede the country’s efforts towards just transition.
We have always stressed that promoting renewable energy (RE) while simultaneously funding dirty energy projects is not only illogical but harmful. WB’s front of helping countries by lending funds for alleged ‘sustainability’ programs can’t mask the damage that the fossil fuel projects they support have done to our people and the planet. For instance, one of the strategies mentioned in the First SR DPL is the improvement of the Public-Private Partnership (PPP) environment codified under the Philippine Development Plan. It explicitly states that one of the listed priorities for sustained government financing aimed at building market confidence and expanding PPPs is the development of the downstream natural gas industry. If so, what worse things can we expect with the energy transition DPL?
With dismay, we have noted that the reforms on the PPP environment have subjected multiple electric cooperatives in the Philippines to joint venture agreements where the cooperatives are now owned by big energy players who are also major fossil fuel financers. This contradicts the purpose of the DPL which is energy security and affordability.
With the non-transparent nature of DPLs and the WB’s vague exclusion policy on funding fossil fuel projects, it is in fact fueling the climate crisis rather than addressing it. Similarly, when the Philippine government signed the fossil gas bill into law, its lip service of developing RE technologies has become an outright lie.
The Philippine Movement for Climate Justice (PMCJ) sounds the alarm against these detours, distractions, and business-as-usual schemes in the form of duplicitous financing such as the DPL. We are now at the point of no return, and support to countries in the Global South to restore, recover, adapt, and mitigate catastrophic climate losses and damages must be unconditional and must not be tied to disadvantageous loan agreements.
PMCJ calls on the World Bank to walk their talk by heeding our longstanding call to end all forms of fossil fuel financing and commit to a full, just transition grounded on transparency, accountability, and the rights-based principles of climate justice.
There is no other way to save what’s left of our planet but to phase out dirty energy sources and switch to renewable energy. Let us continue to look at the facts from the ones who are truly by and for the marginalized, and the testimonies of fossil fuel-affected communities. As these offender banks and corporations push their two-faced schemes, we continue to fight for our rights and for a livable planet for the next generation. ###
FOR INQUIRIES:
Sheila Abarra
Senior Media and Communications Officer
Philippine Movement for Climate Justice
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