FISCAL incentives are proposed to be given to manufacturing companies going into energy efficient (EE) measures in their businesses.
Climate Incentives for Manufacturing (Clima) came out last year and its EE guidelines are targeted to be approved this year for nationwide implementation.
Department of Trade and Industry (DTI)–Board of Investments (BOI) resource-based industries director Nestor Arcansalin said the project mainly focuses on manufacturing including that of cement, iron and steel, pulp and paper, and chemicals, given that under these industries the energy consumption is intense.
He said the objectives of Clima include support of “thrusts in EE, in climate resilient and low-emission growth, as well as in the climate change commitments of the Philippine government.”
Arcansalin also said part of the Clima objectives is to create an environment that secures participation of businesses and financial sectors in implementing energy efficiency and conservation.
“We thought of giving fiscal incentives that are targeted, time-bound, and performance-based. These incentive include income tax holiday and duty free importation of capital equipment…This does not need to legislation. This does not need to pass through Congress before you can give this incentive because we are already mandated under EO 226 to prepare the investment incentive plan. Whatever we put in that plan that are declared as priority economic activity, will be entitled to incentives,” said Arcansalin.
Fiscal incentives include income tax holiday and duty exemption on imported capital equipment. The granted income tax holiday will be limited to the cost of the installed capital equipment. This will also be proportionate to the actual energy savings. Arcansalin said the higher the energy savings that the equipment will have, the higher incentive the business would receive.
As an example presented by Arcansalin, a 15 to 20 percent project boundary energy savings and a 5 to 10 percent facility level energy savings can get 30 percent of cost of installed EE equipment as income tax holiday.
However, if the project boundary energy savings go beyond 25 percent and the facility level energy savings more than 15 percent or about 1 million kwh per year energy savings, the business is given 50 percent of cost of installed EE equipment as income tax holiday.
The scope of Clima EE projects include the acquisition of new, more energy-efficient technologies in order to replace the old less-efficient equipment and systems. The EE performance is endorsed by the Department of Energy or supported by a performance guarantee by a DOE-accredited Energy Service Company.