Philippine Environment Secretary Raphael Lotilla says the country needs USD 72 billion to meet its national emissions reduction targets. (Photo: DENR)
The Philippines is set to introduce carbon trading rules in September, initially targeting the energy industry in hopes of spurring low-carbon investment.
The Department of Environment and Natural Resources (DENR) estimates the country will need around USD 72 billion in climate finance, and is considering a full revision of its Nationally Determined Contribution (NDC) to align with the government’s decarbonization strategy.
Energy sector takes the lead in carbon trading
Energy Undersecretary Felix William B. Fuentebella said on Aug. 20 that the carbon market is scheduled to go live in September, immediately after the release of allocation, management, and oversight guidelines for the power sector.
Under the draft framework, eligible emission-reduction activities that can generate carbon credits include: early retirement of coal plants, renewable energy development, adoption of low-carbon technologies, use of alternative fuels or co-firing, deployment of electric vehicles, and biofuel blending. Credits may be traded across compliance markets—both international and domestic—as well as voluntary markets.
Fuentebella stressed that the Department of Energy (DOE) intends to set an example for other sectors to follow, though carbon credit prices have yet to be determined.
The Philippines has not set a specific year for achieving net zero. Its current NDC pledges a 75% reduction in greenhouse gas emissions by 2030, targeting five sectors: agriculture, waste, industry, transport, and energy.
The Philippines’ emission-reduction activities that can be converted into carbon credits also include the voluntary early retirement of coal-fired power plants. The image shows the Sual Power Station in the Philippines. (Photo: Wikimedia Commons)
Possible NDC update to align with energy transition
Article 6 of the Paris Agreement provides for carbon trading as a tool for meeting national climate targets, including the transfer of mitigation outcomes through bilateral or multilateral agreements. The Philippines and Singapore are in talks over such cooperation.
Private sector initiatives are already underway. Last year, Philippine power producer ACEN, Singapore’s GenZero, and Keppel signed an agreement to retire a Batangas coal plant 10 years earlier than planned, generating carbon credits in the process.
Carbon credits allow countries or companies to offset emissions, with the revenue channelled into climate action. At a GenZero-hosted forum on August 20, Environment Secretary Raphael Lotilla said the Philippines will need at least USD 72 billion to deliver on its NDC.
He underscored the importance of mobilizing public, private, and international financing to meet sectoral reduction targets, and added that the government is considering a comprehensive NDC revision. “Our commitments should align with the direction of our energy plan, focusing on renewable energy and energy efficiency,” Lotilla said.
Source: Business World, Inquirer, PhilStar, Argus Media
