Carbon market in PH? Climate agency says further talks needed

Metro Manila, Philippines - Formalizing a carbon market in the country needs further discussions with stakeholders, especially on issues of risks, the Climate Change Commission (CCC) said.

CCC Executive Director Robert Borje said the Marcos administration has been studying carbon trading “intently,” but said the system must be responsive to the “peculiar circumstances” in the country.

“Carbon market is very complicated and requires a certain robustness of governance,” Borje said in a panel discussion during the 2nd State of Climate Change Forum in Makati on Monday, March 24.

The CCC vice chairperson said the government needs to discuss the risks with stakeholders, and that it “needs a lot of investment, technical and financial” if businesses want to make money out of it.

“If we don't study it very well with the best available science, with the data that we have, we may just be jumping on a bandwagon or a train that’s headed off a cliff,” he said, adding that collaboration with the private sector on policy creation must be strengthened.

“The bare minimum that we need to explain to our people, for our businesses is what is the risk involved here and can the risk be mitigated and if so by what type of technology, what type of policy, in that regard, I think we have to go slow, steady and sure when it comes to this particular policy,” he also said.

The United Nations Environment Programme defines carbon markets as “carbon pricing mechanisms enabling governments and non-state actors to trade greenhouse gas emission credits” — which could help in meeting climate targets and actions.

But Borje cited differences of the Philippines from other countries including a fully deregulated energy industry, business sector, and geography.

He underscored the importance of transparency and accountability in setting up a carbon trading mechanism.

He also suggested that when carbon credits are being traded, it could be funding for projects towards adaptation and integration.

“Although often it’s very easy to just copy and paste or use a template from another state, and again, New Zealand has been successful in that regard in their own circumstances, but that doesn’t mean that we should be able to, we should follow what they did,” the CCC vice chairperson said.

The Department of Finance and Department of Environment and Natural Resources (DENR) is leading the talks on the matter, Borje said.

During the panel discussion, New Zealand Climate Change Ambassador Stuart Horne said his country has put in place since 2008 an emissions trading scheme, which incentivizes businesses and industries to “do better on emissions.”

New Zealand is committing to have net zero carbon emissions by 2050, aiming to reduce the country’s greenhouse gas emissions and implement policies to absorb carbon dioxide from the atmosphere.

The Philippines has no net-zero goal yet but it targets to achieve 35% renewable energy by 2030 and over 70% by 2050. The country also aims to cut greenhouse gas emissions by 75 percent by 2030.

In January 2024, Finance Secretary Ralph Recto called for the study of carbon pricing instruments, specifically identifying the development of a carbon tax and emissions trading system.

The House of Representatives in February this year approved on second reading a bill seeking to establish a carbon emission pricing framework.

The Department of Environment and Natural Resources recently launched a reforestation program that targets five million trees by 2028. The agency said this could contribute to the sequestration of 3.5 million tons of carbon by 2038.