LOCAL GOVERNMENTS SHOULD INVITE INVESTORS IN RENEWABLE ENERGY

Local governments should try enticing the private sector to invest in renewable energy projects. This is a way of addressing climate change through the reduction of carbon emissions. Incentives are being offered to investors and developers of "green" energy. Here in the Philippines, the passsage of R.A. 9513 (Renewable Energy Act)and its implementing rules and regulations is a breakthrough in pursuing this concern. Under the law, the following are the fiscal and non-fiscal incentives for investors in renewable energy:

Ø Seven-year income tax holidays for Renewable Energy (RE) developers;
Ø Exemption from VAT and duty-free importation of equipment and machinery;
Ø Reduction of corporate income tax after the expiry of the income tax holiday to 10 percent of net income;
Ø Zero percent VAT rate for the sale of power from RE
Ø Duty-free importation of equipment;
Ø Tax credit on domestic capital equipment and services;
Ø Special realty tax rates, income tax holidays, net operating loss carry-over, accelerated depreciation and exemption from the universal charge and wheeling charges;
Ø Exemption from all taxes of the proceeds from the sale of carbon credits;
Ø Assurance to investors in wind, solar, ocean, run-of-river hydropower and biomass in electricity generated from these clean sources through feed-in tariffs.

The institutionalization of a renewable portfolio standard requiring the country’s electric utilities to obtain a certain portion of their electricity from clean, home grown renewable energy sources is being sought in this new law.

Local governments can offer a Build-Operate-Transfer (BOT) scheme to prospective investors.