Philippines Studies Nationwide Coal Closures as Jobs, Power Bills and Clean Energy Funding Come Into Focus

A coal exit study with nationwide stakes

The Philippines is weighing the closure of all its coal mines and potentially some coal power plants, a sweeping proposal in a country where coal supplies 62.5 percent of electricity generation. The Department of Energy is working with the United Nations Office for Project Services on an impact study covering jobs, host communities, electricity prices and the security of the power supply.

As of September 8, 2025, the proposal remains exploratory. The government has made no decision to order a nationwide shutdown. Officials say the study will examine all coal mines and all plants burning coal, allowing them to assess possible closures before recommending policy options.

Renewable energy contributes 22.2 percent of Philippine electricity generation. The government wants that share to reach 35 percent by 2030 and 50 percent by 2040, with coal falling toward one fifth of the power mix by 2040. Reaching the first renewable target would require an increase of 12.8 percentage points from the current share.

Michael Sinocruz, the Department of Energy's director for energy policy and planning, said the assessment would measure potential job losses, the effects on local economies and the money needed to support affected families and businesses. The department intends to engage coal companies after completing the study and could then recommend measures to the national government.

A moratorium announced in 2020 already blocks new greenfield coal power projects, meaning plants developed as new projects. Existing plants and committed units can still operate. The proposed assessment goes further by considering how the country could wind down assets already supporting electricity production and local employment.

The central challenge is practical: replacement power must arrive in time, while workers and communities need a funded route toward new livelihoods. Closing a mine and retiring a power plant also affect different parts of the economy, making the order and timing of any action crucial.

What the government plans to examine

The Department of Energy's assessment will ask how closures would change electricity costs and reliability, what happens to miners and plant operators, and how supporting businesses would be affected. It will also estimate the funding required for retraining, new livelihoods and social services in host communities.

Officials want to identify alternatives that can be delivered quickly enough to keep electricity available at reasonable prices. Once the analysis is complete, discussions with operators and mining companies would help shape realistic options and a timeline that protects jobs and energy security.

The findings could inform policies, incentives and technical standards. Officials have indicated that formal work could begin in 2026, following internal approvals with the United Nations partner. No nationwide closure date has been set.

The policy milestones and proposed next steps span several years:

• 2020: The government announced a moratorium on new greenfield coal power projects, while allowing existing and committed units to operate.
• 2023: More than 53,000 power outages were recorded, and more than two million Philippine households still lacked electricity access.
• 2024: Domestic coal production reached 16.772 million metric tons, with 8.402 million tons exported.
• 2026: Formal work on the proposed impact study could begin after internal approvals.
• 2030: The government targets 35 percent renewable electricity, while proposed retirement projects seek to bring selected coal closures forward to this year.
• 2040: The renewable target rises to 50 percent, with coal's share falling toward one fifth.

Workers and towns need more than a closure date

Coal mines and power plants support employees, contractors and nearby businesses. Sinocruz said the study would examine those wider economic effects alongside direct job losses, including how much funding families and local enterprises would need to absorb the disruption.

The government's focus on a just transition means planning for people affected by the move to cleaner energy. For workers, that includes severance, retraining and routes into jobs in renewable energy, construction, grid operations and other sectors. Job placement services and pension support are also among the protections identified as necessary.

Host communities would need support for local enterprises and infrastructure, as well as education, health services and other public services. The study is intended to estimate those costs and propose financing options involving public funds, private investment and emerging climate finance tools.

Semirara Island in Antique province is the hub of Philippine coal mining. A shutdown there would affect employment and local revenues, making community planning a central part of the national debate. Local development funds and employment programs are among the options the assessment is expected to consider.

Semirara Mining and Power Corporation, the country's largest coal producer, says it supports a clean energy transition. It also argues that coal remains essential for reliable and affordable baseload supply, the electricity available to meet continuing demand throughout the day and night.

Why power bills and reliability are central

Coal plants provide electricity around the clock. Replacing their output requires careful coordination between new generation, electricity storage and the grid that moves power to consumers. Economists who support a rapid transition still caution against abrupt closures before replacements are built and tested.

Economist Michael Ricafort warned that sudden shutdowns could cause job losses and higher electricity prices. He also said the move could accelerate investment in solar, wind, hydro and geothermal projects.

Market analyst Bienvenido Oplas Jr. warned that winding down coal assets too quickly could increase inflation and make electricity less reliable if replacement capacity is not ready. Higher power costs can reach beyond household bills because businesses also pay for electricity when producing goods and delivering services.

Energy Undersecretary Rowena Cristina Guevara has outlined an approach involving stricter performance rules, a framework for voluntary retirement and attention to the dirtiest, least efficient units first. She has also pointed to frequent outages as a problem affecting households and industry.

Guevara described voluntary closure and new uses for existing facilities as part of the government's transition strategy:

"Voluntary retirement and repurposing (of coal plants) is part of our energy transition," Guevara said.

The proposal therefore brings together two tasks: reducing dependence on coal and improving the reliability of electricity service. A measured retirement schedule, aligned with renewable generation and storage projects, would be needed to maintain grid stability.

Closing mines and closing plants affect different markets

Most coal burned by Philippine power plants is imported, primarily from Indonesia. Much locally mined coal goes to cement production or is exported. Mining closures would therefore have immediate consequences for industrial users, export earnings and mining jobs, while power plant closures would directly change the supply of electricity.

An analysis citing government data put domestic coal at about 10.5 percent of annual coal consumption in recent years. It also gave domestic production of 16.772 million metric tons in 2024 and exports of 8.402 million tons. The export figure is approximately half of that year's production, showing the scale of the sector's connection to overseas markets.

Power reliability would depend heavily on the pace at which plants using imported coal are retired and replaced with clean generation and storage. The effects of mine closures would also reach industries outside electricity production, including cement makers.

Some analysts suggest directing remaining domestic coal toward newer plants that burn it more cleanly as an interim measure. They argue that this could reduce dependence on imports and exposure to price shocks caused by export restrictions abroad.

Others favor sending investment directly into renewable energy, storage and grid upgrades to speed the end of coal generation. The Department of Energy's study is expected to examine these choices and their trade offs, including whether mines and power plants need different retirement timelines and financial arrangements.

The cost of retiring plants early

Many coal plants in the Philippines and elsewhere in Southeast Asia were built within the past decade. Their investors expected them to operate for decades, earning revenue to repay borrowing and recover construction costs.

Early retirement can leave debt unpaid and assets unable to earn the income anticipated when they were built. Funding a closure may therefore involve paying down debt and covering stranded assets, investments that lose their expected earning capacity, while also financing renewable generation, transmission lines and storage.

The Asian Development Bank is advising the Philippine government on coal retirement through its Energy Transition Mechanism. The mechanism is designed to buy down and refinance coal assets, shorten their operating lives and attract capital for renewable energy.

Transition credits offer another possible funding route. Under this approach, plant owners receive money for closing earlier than planned. The resulting reductions in emissions are checked and sold as credits, with part of the proceeds supporting affected workers and replacement clean electricity.

Verra, a carbon credit registry, has launched a methodology for crediting early coal retirement paired with new clean power. A methodology sets the rules for calculating and verifying the emission reductions a project can claim. Supporters say this could make projects financially possible when other funding is insufficient.

The financing question reaches beyond compensation for owners. Replacement electricity and community support need funding too, so a retirement agreement has to connect the cost of ending coal generation with the cost of what comes next.

Philippine projects test the financing model

ACEN, a major Philippine power company, completed the world's first market based Energy Transition Mechanism deal to accelerate retirement of its South Luzon Thermal Energy Corporation plant. The company is now seeking to sell transition credits to bring closure forward from 2040 to 2030.

The proposed acceleration would remove ten years from the planned operating timeline. ACEN says the arrangement must protect roughly 200 plant workers and finance replacement generation.

ACEN also says it needs a bilateral agreement between the Philippines and Singapore under Article 6 of the Paris Agreement, together with sufficient demand from credit buyers at a viable price. Article 6 provides a framework for countries to cooperate on climate action, including arrangements involving emission reductions. Those conditions are needed before ACEN can lock in the credits.

Singapore's Monetary Authority has convened a coalition to scale transition credits. A project backed by Keppel, GenZero and Mitsubishi aims to retire a coal plant with a capacity of 246 megawatts in Batangas by 2030 and replace it with renewable energy and battery storage.

The partners estimate the cost at more than US$1 billion and project up to 19 million tons of avoided carbon dioxide emissions. The plan ties the retirement of coal generation to the construction of replacement supply, with batteries helping balance electricity availability.

Amazon, Meta, Netflix, Mastercard and PepsiCo have joined the broader Kinetic Coalition, which seeks to channel billions of dollars into clean energy in emerging economies by paying for early coal retirement. Corporate demand for credits could help fund closures, provided buyers and projects agree on workable prices and terms.

What transition credits must deliver

Joseph Curtin, managing director for power and climate at The Rockefeller Foundation, which helped develop the Verra methodology, said the approach could accelerate practical benefits for communities:

"We are closer than ever to unlocking new benefits to people with credits that will help communities transition to clean, affordable energy," Curtin said.

Verra's methodology requires a just transition plan and renewable replacement for retired coal capacity. Those requirements link the claimed climate benefit to worker and community protections and the continued provision of electricity.

Mandy Rambharos, Verra's chief executive, described the methodology's intended protection for people affected by closures:

"The methodology empowers energy providers to make that shift in a way that does not leave workers or communities behind and does not inadvertently exacerbate energy poverty," Rambharos said.

Critics warn that the market is young and needs safeguards against weak baselines or projects claiming excessive credit for emission reductions. A baseline is an estimate of the emissions that would have occurred without the project. If that estimate is too high, the project could receive more credits than its actual climate benefit warrants.

Policy advisers at E3G and analysts at Ember have cautioned against weak assumptions about what would have happened anyway. They also urge care over allowing biomass as a replacement fuel. These concerns form part of the choices facing the Department of Energy as it considers credits alongside public financing and private capital.

The grid must be ready for replacement power

The targets of 35 percent renewable electricity by 2030 and 50 percent by 2040 require more than new generating facilities. Faster permitting, expanded transmission and large amounts of storage are needed so the grid can take in more solar and wind electricity, whose output varies with weather and time of day.

The Philippines' geography as an archipelago makes transmission projects complex. Electricity must reach the places where it is needed, and new renewable projects need connections capable of carrying their output. Storage can help balance supply and demand, while flexible demand programs can reduce pressure on the grid by adjusting electricity use.

More than 53,000 outages were recorded in 2023. More than two million Philippine households also lacked electricity access that year. Those figures make reliable service, affordability and wider access concrete tests for any coal retirement plan.

Households and businesses will need to manage costs while replacement generation and grid infrastructure are built. The proposed stricter coal performance standards and voluntary retirement framework would focus first on inefficient or unreliable units, linking retirement choices to existing service problems.

Several practical protections run through the plans already being discussed:

• Worker support through severance, retraining, job placement and pension assistance.
• Community funding for small businesses, education, health services and infrastructure.
• Renewable generation, transmission and storage ready in time for coal closures.
• Financing through Energy Transition Mechanism tools, transition credits, loans and grants.
• Rules to prioritize the worst polluting plants, verify emission reductions and prevent retirement costs being passed to consumers in ways that punish them.

Regional momentum meets national decisions

Governments and lenders across Asia are testing ways to retire relatively young coal fleets without placing excessive pressure on public budgets. Singapore is positioning itself as a center for transition credits and green finance, while the Asian Development Bank is advising on retirement deals across Southeast Asia.

Corporate buyers are pooling demand through alliances, with credits intended to fund measurable emission cuts in emerging markets. Philippine pilots could show whether this demand can support early closures together with replacement power and protection for workers.

Some global programs funding just energy transitions have faced delays and changes in political support. Philippine officials say their decisions will be based on the study, with energy security and livelihoods as central constraints.

The projects in Batangas and involving ACEN's South Luzon plant could become templates for larger agreements if they deliver clean replacement electricity and protect workers. Difficulties in those pilots would give policymakers reasons to adjust their approach before nationwide action. For now, the next government step is the proposed assessment and the consultations intended to follow it.

The Bottom Line

• The Department of Energy and the United Nations Office for Project Services are preparing to study closures across all Philippine coal mines and power plants. No nationwide shutdown decision has been made.
• Coal supplies 62.5 percent of electricity generation and renewables 22.2 percent. Renewable targets are 35 percent by 2030 and 50 percent by 2040.
• Formal study work could begin in 2026 after approvals, with company consultations planned after completion.
• Mine closures would affect jobs, exports and industrial users. Power plant closures require replacement electricity and storage to protect supply.
• ACEN seeks to move its South Luzon plant's retirement from 2040 to 2030 while protecting roughly 200 workers.
• A project backed by Keppel, GenZero and Mitsubishi aims to retire a plant of 246 megawatts in Batangas by 2030, at an estimated cost exceeding US$1 billion.
• Financing tools, verified emission reductions, worker protection and grid readiness are central to the proposed transition.