The Renewable Energy Act of 2008 provides the legal and institutional framework necessary for harmonising policies on the development of renewable energy technologies. The Act aims to enable the Philippines to move rapidly towards its goal of being 60% energy self-sufficient by 2010 by developing and utilising resources such as solar, wind, hydropower, ocean and biomass energy.
The Renewable Energy law aims to accelerate the exploration and development of renewable energy resources as well as to increase the utilisation of renewable energy by institutionalising the development of national and local capabilities in the use of renewable energy systems, and promoting its efficient and cost-effective commercial application by providing fiscal and non-fiscal incentives.
The new law provides following incentives for the renewable energy sector:
- seven-year income tax holiday and tax exemptions for the carbon credits generated from renewable energy sources.
- 10% corporate income tax, as against the regular 30%, is also provided once the income tax holiday expires.
- 1.5% realty tax cap on original cost of equipment and facilities to produce renewable energy.
The law also prioritises the purchase, grid connection and transmission of electricity generated by companies from renewable energy sources and power generated from renewable energy sources will be value added tax-exempt.
It sets out specific measures that are to be elaborated, for example within 3 years the National Renewable Energy Board must formulate and promulgate rules for a renewable portfolio standards (RPS) obligation on all electricity suppliers.
The Act creates a policy framework for net metering.
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