Recto calls for study of carbon pricing instruments, underscores need to identify optimal mix for PH

Finance Secretary Ralph G. Recto has called for the study of carbon pricing instruments and underscored the need to identify an optimal mix thereof, which will help the Philippines move towards a greener future.

“Carbon pricing instruments serve as a powerful fiscal tool, allowing us to incorporate the social and external costs associated with carbon emissions,” he said during the Technical Working Group Meeting for Preparing Carbon Pricing Instruments for the Philippines led by the Department of Finance (DOF) on January 16, 2024.

Due to its geography, the Philippines is highly vulnerable to the impacts of global warming despite contributing only 0.48 percent to global carbon emissions.

Despite its meager contribution, the country put forward an ambitious commitment of reducing greenhouse gas (GHG) emissions by 75 percent by 2030 under its Nationally Determined Contribution (NDC) to the Paris Agreement.

“This ambitious pledge underscores our firm resolve to become a world leader in confronting climate change head-on,” Secretary Recto said.

The Finance Secretary specifically identified the development of a carbon tax and emissions trading system (ETS) as crucial steps towards achieving a low-carbon economy.

According to him, these efforts will incentivize both industries and individuals to actively reduce their carbon footprints, while allowing the government to mobilize financial resources to boost fiscal space.

“There is increased momentum in the establishment of carbon pricing systems in the Asia-Pacific region. This presents an opportunity for the Philippines to not only keep the pace, but to lead with determination,” Secretary Recto said.

Identifying the optimal combination of pricing instruments for the country is crucial to ensuring the long-term success of carbon pricing towards achieving net-zero emissions, said Secretary Recto.

He thus emphasized the need for extending focus beyond mere transformations within industrial sectors, emphasizing research and development for low-carbon technologies, and incentivizing behavioral change.

He also identified the need for stakeholder engagement, extensive research, and scrutiny, both in policy and regulation, to determine