THE Philippines is “unlikely on track” to deliver its 2030 climate targets due to the absence of Long-Term Low Emission Development Strategies (LT-LEDS), according to “The Southeast Asia’s Green Economy Report 2026: The New Calculus,” the report published by Bain & Company and Standard Chartered.
LT-LEDS are voluntary frameworks used by Paris Agreement signatories to map out their transitions to net zero. They are also critical to unlock Development Finance Institution and institutional capital currently flowing to peers with clearer, more strategic, long-term plans.
The country’s green capital expenditure (capex) in 2025 reached only 40 to 45 percent of the level required to meet 2030 decarbonization targets. The shortfall puts the Philippines at risk of missing out on the climate and decarbonization funding that is flowing to other Southeast Asian markets with more defined roadmaps.
The Bain report estimates that Southeast Asia’s green economy has grown to $290 billion and is projected to reach $430 billion by 2030, expanding at 8 to 9 percent annually.
The report groups the Philippines with countries where progress “continues to lag, especially on the investment front.” By contrast, Vietnam, Thailand and Indonesia are moving faster on electric vehicle (EV) adoption and renewable energy (RE) deployment.
Along with Singapore, these three countries rank among the top 15 global EV markets by new car sales.
EV adoption in the region has outpaced forecasts, running 1.5 to 2 times ahead of projections. From 2021–2025, of the roughly $40 billion in annual green capex deployed across Southeast Asia, about 80 percent went to segments with clear commercial demand like mobility and green industrial zones: the EV value chain at $11 billion, and power and grid at $20 billion.
A conversion problem
However, during that same period, about 50 to 60 percent of RE projects in Vietnam, Thailand and Indonesia were canceled due to unclear power purchase agreements, permitting delays and grid connection rules. Nickel and battery investments saw cancellation rates of 40 to 50 percent. The report notes that underlying the cancellations is the lack of convergence in areas like commercial demand, infrastructure demand and policy clarity, eventually leading to a systemic conversion problem.
Another major bottleneck is the power grid. Investment in transmission and distribution fell 3 percent from 2015–2025, while energy demand grew about 5 percent per year. For the Philippines, the Luzon interisland transmission and distribution backbone is identified as the key area for investment to integrate more RE and support rising demand from data centers and industry.
When it comes to policy, the report highlights some positive signals for the Philippines. The country offers VAT zero rating for RE projects and reduced import tariffs for EVs. The report recommends the promotion of fleet electrification to build EV demand and attract assembly operations.
Despite the region’s potential, the report has identified its “conversion problem” or a growing gap between ambition and delivery. For example, more than 35 percent of announced green capex in the region’s power and EV value chains have not made it to deployment. “Of approximately $540 billion in green capex announced across SEA’s power and EV value chains between now and 2030, only around $315 billion is on a credible path to deployment under current conditions,” the report states.
The gap has occurred because unlike before, investment decisions are no longer driven by climate ambition alone; energy security, economic growth and the ability to deliver projects now carry equal weight. Bain & Company partner Dale Hardcastle says, “Capital is flowing where commercial demand, energy security and policy that delivers infrastructure come together — and stalling where any of the three is missing, even where targets remain ambitious.”
Closing the power, grid and EV deployment gap across the region could unlock an additional $80 billion in green capital expenditure by 2030, a 25-percent uplift on the baseline.