The Department of Finance (DOF) is still considering slapping carbon tax as long as it won’t hike energy prices and instead facilitate the entry of green or environmentally sustainable investments.
In a March 21 statement, the agency said it is working with the Washington-based multilateral lender World Bank on the government’s pricing strategies for carbon emission domestically.
Carbon taxation, a type of carbon pricing instrument (CPI), appears to be one of the government’s options. It is a direct fee imposed on the carbon content of fossil fuels or on greenhouse gas emissions.
In drafting the carbon policy, the DOF said that its technical working group “carefully” takes into account “its potential socio-economic impacts to ensure that the policy will be non-inflationary, conducive for investment, and well-suited for the country.”
“It is our priority to work in close coordination with other key government agencies to prepare the necessary institutional arrangements, infrastructure, registry, and robust monitoring, reporting, and verification measures,” said DOF Undersecretary Maria Luwalhati Dorotan-Tiuseco.
By doing so, the DOF aims to show both local and international markets that the Philippines produces reliable and high-quality carbon credits, Tiuseco said.
Last year, Finance Secretary Ralph G. Recto said CPIs are “powerful fiscal tools,” which allow the government to consider social and external costs of carbon emissions.
Other than encouraging behavioral change among Filipinos, he had also noted the importance of promoting research and development for low-carbon technologies.
Recto had further said that to identify the most suitable carbon pricing model for the economy, it is crucial to carry out thorough stakeholder engagement, research, and policy review.
This approach, he had said, would help the government effectively combat climate change while promoting balanced and sustainable economic growth.
Tiuseco said the government is also revising its Sustainable Finance Framework to expand the types of green projects that can be funded through bond proceeds. This update, she said, will align with new sustainability standards and introduce more innovative financing structures.
About $7 billion (over ₱400 billion) in revenues could be earned by the Philippine government by 2030 if it implements a carbon pricing scheme, a report by the Washington-based International Monetary Fund (IMF) said last year.
To date, the country still has no carbon pricing policy, but the government has been exploring the implementation of carbon tax and a carbon credit system during the past Duterte administration and the current Marcos administration.
However, this move has also been receiving pushback from the energy sector, as imposing a carbon tax might add to the already high electricity prices in the country.