Philippines’ Second Energy Transition DPL

The World Bank is close to approving the Second Energy Transition and Climate Resilience Development Policy Loan (SETCR-DPL2) for the Philippines, an $800 million operation and the second in a two-part programmatic series. 

Building on the First Energy Transition and Climate Resilience DPL approved in March 2025, SETCR-DPL2 aims to deepen policy and institutional reforms across three pillars: scaling up clean energy technologies, increasing the security, flexibility, and competition of electricity markets, and improving water management across uses. The loan is structured around a set of Prior Actions and a corresponding set of results targets. 

Despite limited public information on the impact and progress of the first DPL, Bank Information Center and Philippine Movement for Climate Justice (PMCJ) are concerned that the World Bank has scheduled this second DPL, SETCR-DPL2, for Board approval without adequate prior consultation with civil society or affected communities. The originally scheduled Board date of 26 January 2026 was first postponed to 17 April 2026, and was recently postponed again to 23 June 2026. This postponement must now provide a renewed opportunity for engagement with stakeholders.

BIC and PMCJ have identified the following concerns:

• Lack of transparency and consultation. It is concerning that the World Bank has already tabled SECR-DPL2 for approval, even though neither the Bank nor affected stakeholders in the Philippines have published or fully assessed the impacts and progress reports of SETCR-DPL1. Stakeholders also criticized SETCR-DPL1 for its lack of meaningful consultations with stakeholders, and a last-day addition of $200 million to the project that The Bank only published on its website after approval. As such, advancing SECR-DPL2 to Board approval without meaningful prior engagement with civil society organizations and affected communities risks overlooking just transition considerations, undermining community acceptance of renewable energy projects, and weakening progress toward accelerating renewable energy adoption. 
• Renewable energy targets are inadequate and incomplete. The project objective of raising renewable energy from 30% to 42% of total installed capacity by 2027 falls significantly short of what is required for the Philippines to align with a 1.5°C pathway. Moreover, waste-to-energy (WTE) should not be considered toward clean energy targets. PMCJ has raised concerns that the Green Energy Auction Program could procure energy from WTE incineration facilities — technologies that carry significant air pollution and community health risks. Local communities have mounted significant resistance to WTE projects, with at least one such project being withdrawn amidst public opposition recently. 
• Community rights risk being ignored amidst offshore wind expansion. SETCR-DPL2 sets a target of contracting 1,000 MW of offshore wind through competitive auctions — an ambition that will require accessing coastal and marine areas that fishing communities and Indigenous Peoples currently use, and that hold high biodiversity value. The Program Information Document acknowledges that reforms “may generate localized environmental risks, particularly from infrastructure development,” and points to the Philippines’ Environmental Impact Statement System as the primary safeguard. But strategic environmental impact assessments that account for cumulative risks to ecosystems are a necessary, but insufficient protection: fishing communities and Indigenous Peoples whose livelihoods and territories are affected by offshore wind siting deserve free, prior, and informed consultation well before project sites are selected or contracted, not only at the permitting stage.
• Just transition dimensions are absent. Neither SETCR-DPL1 nor SETCR-DPL2 explicitly addresses the impact of the energy transition on workers and communities in the coal and fossil fuel sectors. The Philippines has a significant coal workforce and coal-dependent local economies. A program at this scale should include provisions for just transition support, retraining, and community economic diversification. 

As SETCR-DPL2 moves toward Board approval, BIC and our civil society partners in the Philippines are calling on the World Bank to commit to the following:

1. Promote information transparency and convene consultations immediately. The World Bank must urgently disclose the full Program Document of the SETCR-DPL2, noting that only an Appraisal Program Document has been available since September 2025. The World Bank and the Philippine government should organize structured, in-person consultations with civil society organizations and affected communities — including climate justice groups, fishing and coastal communities, Indigenous Peoples, consumer advocates, and labor organizations representing fossil fuel workers — at the outset of implementation. These consultations will improve the operation’s outcomes. The program’s implementation should incorporate stakeholder input, which must be documented throughout. As part of these consultations, the World Bank must discuss the impacts and progress of SETCR-DPL1 and explain how those results informed the prior actions for SECTR-DPL2. 
2. Strengthen protections for communities affected by renewable energy projects. Before the Bank identifies, contracts, or auctions any offshore wind sites under SETCR-DPL2, it must demonstrate compliance with free, prior, and informed consent to include the participation and rights of affected coastal and fishing communities and Indigenous Peoples. The Bank must also strengthen just transition provisions to support workers in coal and coal-dependent sectors, and recommend that the Government formulate a remedial action framework for fossil fuel-affected communities to address the harms caused by decades of coal plant operation. 
3. Align with climate commitments and raise clean energy ambition. The World Bank should revisit the renewable energy targets and push for higher deployment of renewables, while confirming that waste-to-energy projects do not count as clean energy. 

The Bank cannot afford to repeat the failings of the first loan in this series. The Bank must conduct genuine CSO and community consultations before commencing implementation of prior actions under SETCR-DPL2, address feedback from CSOs, and uphold strict compliance with its Paris Alignment commitments.