Philippines
Philippines
February 25, 2024

Navigating Electrification: The Philippines' Journey Towards Sustainable Fleet Management

Embracing Challenges and Opportunities in the Shift to Electric Mobility

Navigating Electrification: The Philippines' Journey Towards Sustainable Fleet Management
Philippines
February 25, 2024
Navigating Electrification: The Philippines' Journey Towards Sustainable Fleet Management
Embracing Challenges and Opportunities in the Shift to Electric Mobility
Summary

The Philippines is navigating the complexities of sustainable fleet management and vehicle electrification amidst infrastructural and economic challenges. The government's proactive stance, coupled with the Electric Vehicle Industry Development Act, aims to catalyze the shift towards electric mobility. Despite the high electricity emission factor, the transition to HEVs serves as a critical step in reducing CO2 emissions and fostering a greener transportation sector. As the country progresses in developing its EV infrastructure and enhancing the share of renewable energy, the journey towards a sustainable transportation future becomes increasingly viable. The Philippine experience underscores the importance of adaptive strategies, government support, and technological advancements in overcoming barriers to electrification.

Country General Overview

Introduction

The Philippines, a dynamic archipelago in Southeast Asia, faces unique challenges in corporate fleet management due to its geographical complexity and economic landscape. With a growing economy and an increasing need for transportation solutions, the country's corporate sector is keenly focused on optimizing fleet operations. Efficient fleet management is crucial for improving operational efficiencies, reducing costs, and ensuring sustainability in the face of environmental concerns.

Geographic and Infrastructure

Spanning over 7,000 islands, the Philippines' geography significantly impacts transportation and logistics. The country's total road network extends to approximately 216,387 kilometers, with varied conditions ranging from well-paved highways in urban areas to less developed rural roads. Major cities experience heavy traffic congestion, particularly Metro Manila, challenging fleet operations with delays and increased fuel consumption. The geographical diversity requires adaptable fleet management strategies to ensure timely and efficient transportation across different terrains and regions.

Economic

The Philippines' economy, with a GDP of approximately $402 billion in 2022 and a population nearing 113 million, is characterized by its rapid growth and increasing urbanization. The transportation and logistics sector is vital, supporting economic activities across the archipelago. With around 120 motor vehicles per 1000 people, the reliance on road transport for both passenger and cargo movement is significant. This density underscores the importance of efficient fleet management in reducing operational costs and enhancing service delivery in the corporate sector.

Environmental Considerations

Environmental sustainability is a pressing concern in the Philippines, reflected in its Environmental Performance Index (EPI) 2022 ranking of 158 out of 180 countries, with a score of 28.9. These figures highlight the environmental challenges the country faces, including air and water pollution, deforestation, and waste management. For corporate fleet management, this necessitates adopting practices that minimize environmental impact, such as incorporating fuel-efficient vehicles, optimizing route planning, and adhering to emissions regulations. Emphasizing sustainability can not only help mitigate environmental degradation but also align corporate operations with global environmental standards and local regulations.

Sustainable Fleet Management

Scopes Data - Electrification Recommendation Rank Icon

Electrification Recommendation Rank

Philippines
's Category

Rank G : Difficult Environment for EVs

These countries are challenging environments for EV adoption due to economic difficulties and underdeveloped infrastructure. Here, transitioning to HEVs is the first choice for reducing CO2 emissions.

Same Category Countries

Argentina, Egypt, India, Kazakhstan, Philippines, Russia, Saudi Arabia, South Africa

Info:

The Electrification Recommendation is derived from two aspects: each country's EV Readiness assessment (based on factors such as Electric Vehicle market share, environmental consciousness, GDP, etc.), and the Electricity Emission Factor (EF). Even if a country has a low Electricity EF, enabling CO2e emissions reduction through transitioning to BEVs, the adoption of BEVs could be challenging if the country lacks adequate infrastructure or faces financial constraints.

Since every company operates in a unique environment, this recommendation might not apply in all cases. However, it can be useful for setting a general direction.

Scopes Data - CO2e From Electricity Icon

Electricity EF Category

Philippines
's Electricity EF

0.672

CO2e kg/kWh

Ref:

The IFI Dataset of Default Grid Factors v.3.0 in 2021

Philippines
's Category

Rank 3 : High Emission Countries (0.50 - 0.75 kg/kWh)

Info:

Countries with high Electricity EF have less benefit for electrification

  • Rank 1: 0.00 – 0.25 kg/kWh (About 0 – 38 CO2e g/km)
  • Rank 2: 0.25 – 0.50 kg/kWh (About 38 – 76 CO2e g/km)
  • Rank 3: 0.50 – 0.75 kg/kWh (About 76 – 113 CO2e g/km)
  • Rank 4: 0.75 – 1.00 kg/kWh (About 113 – 151 CO2e g/km)
  • Rank 5: More than1.00 kg/kWh (About more than 151 CO2e g/km)
Scopes Data - EV Readiness Icon

EV Readiness Category

Philippines
's Category

Rank 6 : Very Challenging Environment for EV Adoption

Market Share information
Scopes Data - BEV Icon
2022 BEV

0

%

2023 BEV

0

%

Scopes Data - HEV Icon
2022 HEV

0

%

2023 HEV

0

%

Scopes Data - Non-ICE Icon
2022 Non-ICE

0

%

2023 Non-ICE

0

%

HEV: Only Full Hybrid Vehicles (Does not include
Mild Hybrid Vehicles)

Non-ICE: Total of BEV (Battery Electric Vehicles), PHEV (Plug-in Hybrid Electric Vehicles), HEV (Hybrid Electric Vehicles), and MHEV (Mild Hybrid Electric Vehicles)

2022 EPI Results
Rank

158

/180

Score

28.9

2022 EPI Results : Environmental Performance Index(EPI) provides a quantitative basis for comparing, analyzing, and understanding environmental performance for 180 countries.

Ref:Wolf, M. J., Emerson, J. W., Esty, D. C., de Sherbinin, A., Wendling, Z. A., et al. (2022). 2022 Environmental Performance Index. New Haven, CT: Yale Center for Environmental Law & Policy. epi.yale.edu

Introduction to Sustainable Fleet Management and Electrification Efforts

The Philippines is embarking on a journey towards sustainable fleet management and the electrification of vehicles, aiming to transition corporate fleets to more environmentally friendly options. This initiative is crucial in a country where traditional vehicles dominate the roads, contributing significantly to carbon emissions. The government's introduction of the Electric Vehicle Industry Development Act (EVIDA) and supportive policies underlines a commitment to fostering a cleaner, more sustainable transportation future. Despite the challenges posed by high electricity emission factors and infrastructure readiness, the Philippines is making strides towards electrification, with an emphasis on hybrid electric vehicles (HEVs) as a transitional solution towards fully electric vehicles (BEVs).

Current Vehicle Landscape: Preferences and Powertrain Segments

The Philippine vehicle market is predominantly dominated by Internal Combustion Engine (ICE) vehicles, reflecting a preference for traditional powertrains across various segments. Popular models include the Nissan Almera and Honda City in the C-Segment, alongside utility vehicles like the Toyota Avanza and Mitsubishi Xpander. The market also shows a strong inclination towards pickups, such as the Ford Ranger and Toyota Hilux, underscoring the demand for versatile and durable vehicles suited to the country's diverse terrain and infrastructure conditions. Despite the overwhelming presence of ICE vehicles, there's a burgeoning interest in electric mobility, albeit from a low base, indicating a gradual shift in consumer preferences towards more sustainable vehicle options. The current landscape presents a mix of challenges and opportunities for the transition towards electrification, reflecting the early stages of EV adoption in the Philippines.

Philippines

Grid.js Table

HEV: Only Full Hybrid Vehicles (Does not include
Mild Hybrid Vehicles)

Non-ICE: Total of BEV (Battery Electric Vehicles), PHEV (Plug-in Hybrid Electric Vehicles), HEV (Hybrid Electric Vehicles), and MHEV (Mild Hybrid Electric Vehicles)

Electric Vehicle Market Overview and Trends

The EV market in the Philippines is in its infancy but poised for growth, driven by government support and increasing environmental awareness. While EVs currently account for a minuscule share of total vehicle sales, legislative measures such as the removal of tariffs on imported EVs and parts, alongside tax breaks and infrastructure investment, aim to make electric mobility more accessible. The market showcases a variety of EVs, from compact cars to luxury SUVs and electric motorcycles, indicating a growing interest in cleaner, more efficient transportation options. Despite the nascent state of the market, the Philippine government's ambitious targets for EV adoption by 2030 and initiatives to bolster local manufacturing and charging infrastructure underscore a strategic push towards electrification. This emerging trend towards electric mobility reflects a broader shift in the transportation sector, aligning with global efforts to decarbonize and enhance sustainability.

Energy Context: Electricity Emission Factors and Implications for Electrification

The Philippines faces a significant challenge in its electrification journey due to its high electricity emission factor of 0.672 kg CO2e/kWh, primarily due to the reliance on fossil fuels for power generation. This context limits the immediate environmental benefits of transitioning to EVs, as the reduction in CO2e emissions through electrification is tempered by the carbon-intensive power grid. However, efforts to increase the share of renewable energy in the country's electricity mix could enhance the environmental advantages of EV adoption. The current energy scenario underscores the importance of a holistic approach to electrification, combining vehicle adoption with enhancements in the power sector to maximize the potential for CO2e emission reductions.

Challenges and Opportunities in EV Adoption

The Philippines' journey towards EV adoption is fraught with challenges, including underdeveloped infrastructure, high electricity emission factors, and economic barriers. The EV market's growth is hindered by the lack of a widespread charging network and the high cost of electric vehicles, making it difficult for EVs to compete with traditional ICE vehicles. However, the government's supportive policies, such as EVIDA and the push for a nationwide charging infrastructure, offer significant opportunities to accelerate EV adoption. These initiatives, coupled with the removal of tariffs on imported EVs and parts, aim to lower the barriers to electric mobility. Additionally, increasing environmental awareness and the global trend towards electrification provide a conducive environment for the EV market's expansion. Addressing these challenges through strategic investments in infrastructure and incentivizing EV purchases can pave the way for a more sustainable transportation future in the Philippines.

Additional Insights: Shaping the Future of Transportation

The Philippines stands at a pivotal moment in shaping the future of its transportation sector, with electrification at the heart of sustainable mobility efforts. Despite the challenging environment for EV adoption, characterized by infrastructural and economic hurdles, the country's initiatives to promote electric mobility signify a determined step towards environmental sustainability. The commitment to decarbonizing the transport sector, enhancing energy security, and reducing reliance on imported fuels reflects a broader aspiration to align with global sustainability objectives. As the EV landscape in the Philippines evolves, the collaborative efforts between the government, industry stakeholders, and consumers will be crucial in overcoming challenges and realizing the vision of a cleaner, more efficient transportation system.

Country Case Study

The "Base Fleet" percentage is set according to the sales ratio of each powertrain in Philippines for the year 2023. (For countries where sales ratios cannot be obtained, it is assumed all are ICE vehicles.) The "Recommended Fleet" is designed to be realistic (based on a rank determined by the Electricity Emission Factor Category and EV Readiness Category, deciding a practical range) and efficient in reducing CO2e emissions. It is not expected that the entire fleet will switch to this mix at once but rather after one or two renewal cycles over about 4 to 8 years, considering the usual fleet renewal period is around 4 years. This is viewed as a recommendation for the fleet composition in 4 to 8 years.

The calculation of CO2e emissions is based on a fleet of 100 vehicles traveling an average of 30,000 km per year. Therefore, if your company's fleet size in Philippines is 1,000 vehicles, multiplying the results by 10 will give you an approximate value. For fuel, it is assumed all vehicles use petrol (2345.02 CO2e g/L), and for electricity, the average emission factor of Philippines is used. For PHEVs, it is calculated assuming 50% electricity usage and 50% fuel usage.

Analysis of Fleet Transition from Current State to Sustainable Future

This refers to the average CO2e emissions per kilometer calculated based on the actual energy (Fuel and Electricity) used. It also takes into account the size of the vehicles used in Philippines's fleet.

Scopes Data - ICE Icon

ICE

(CO2e g/km)

Scopes Data - HEV Icon

HEV

(CO2e g/km)

Scopes Data - PHEV Icon

PHEV

(CO2e g/km)

Scopes Data - BEV Icon

BEV

(CO2e g/km)

ICE

HEV

PHEV

BEV

The current corporate fleet in the Philippines predominantly comprises ICE vehicles. Transitioning towards a sustainable future involves significantly reducing the reliance on ICE vehicles, from 100% to just 12%, and increasing the adoption of HEVs to 88%, with PHEVs and BEVs currently remaining at 0% due to infrastructural and economic barriers. This transition acknowledges the limitations posed by the current energy grid's high CO2 emission factor and the nascent state of EV infrastructure in the country.

The recommended transition leverages HEVs as a bridge technology, offering immediate reductions in CO2 emissions while preparing the groundwork for future electrification. This approach aligns with the Philippine government's supportive stance towards EVs, illustrated by legislative measures aimed at making EVs more accessible and building the requisite charging infrastructure.

Analysis of CO2 Emission Reductions Through Fleet Transition

CO2e From Fuel  (Scope 1)

CO2e From Electricity (Scope 2)

Base Fleet Mix Case
Reasonable Recommended Fleet Mix Case

The shift from a fleet dominated by ICE vehicles to one significantly comprised of HEVs represents a strategic move towards reducing CO2 emissions in the Philippines. Initially, the fleet's total CO2 emissions from ICE vehicles stood at 422 tons. The recommended transition to a fleet with a substantial HEV component would see these emissions drop to 51 tons for ICE vehicles, with HEVs contributing 279 tons, based on their operational efficiency and reduced fuel consumption.

This transition strategy effectively capitalizes on the immediate benefits of HEVs in reducing CO2 emissions within the context of the Philippines' high electricity emission factor and the current limitations in EV adoption. It represents a pragmatic approach to fleet sustainability, reducing emissions while acknowledging the infrastructural development needed for a more extensive adoption of electrified vehicles.

Comparative Analysis of CO2e Emissions Across Fleet Scenarios

CO2e From Fuel  (Scope 1)

CO2e From Electricity (Scope 2)

Comparing various fleet scenarios highlights the potential impact of transitioning towards more sustainable vehicles in the Philippines. The base fleet mix, heavily reliant on ICE vehicles, results in 422 tons of CO2e emissions. Transitioning to a recommended fleet mix with a majority of HEVs reduces total CO2e emissions to 330 tons, showcasing the effectiveness of this strategy given the country's current energy and infrastructural context.

Alternative scenarios, such as an all-ICE fleet, would maintain high CO2e emissions, while an all-HEV fleet scenario further reduces emissions to 317 tons, underscoring the potential of HEVs in the current Philippine context. An all-BEV fleet, assuming a gradual improvement in the electricity grid's emission factor through increased renewable energy integration, could significantly lower CO2e emissions but remains a long-term goal.

The transition strategy for the Philippines reflects a realistic approach to reducing CO2 emissions from corporate fleets, balancing immediate achievable reductions with the long-term vision of electrification. It underscores the importance of government initiatives, infrastructure development, and the gradual adoption of cleaner vehicle technologies as pivotal elements in the journey towards a sustainable transportation future in the Philippines.

https://scopesdata.com/sustainability-country-information/philippines-2023

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