Carbon Pricing in the Philippines

Six proposed carbon pricing bills and one related carbon rights bill are currently before the Philippine House of Representatives under the 20th Congress. Carbon pricing puts a cost on greenhouse gas emissions, giving large emitters a financial incentive to pollute less and invest in cleaner technologies. This report examines HBs 2055, 2481, 3685, 3820, 6407, and 6890 as proposed carbon pricing frameworks, while discussing HB 1817 separately as a related carbon rights bill that addresses the legal status, ownership, transfer, and benefit sharing of carbon credits. The analysis draws on international experience, particularly the carbon pricing systems in Canada, the European Union, South Korea, China, Vietnam, and Indonesia, to identify lessons for Philippine legislative design. 

HBs 2055, 3685, and 3820 propose a hybrid scheme in which enterprises that exceed their emissions allowance can comply by investing in their own decarbonization, supporting projects outside their value chain, paying into a fund, or trading allowances, with a carbon price set by the Climate Change Commission. HBs 6407 and 6890 build on this approach by refining provisions on international credit markets, allowance allocation, financial institutions, and tax incentives. HB 2481 proposes a more conventional cap-and-trade system, where the government issues a fixed number of emissions allowances and lets companies buy and sell them, with a phased schedule for auctioning those allowances over time. HB 1817 takes a different approach: It does not propose to establish a carbon price, emissions cap, auctioning system, or compliance obligation for covered emitters. Instead, it addresses a related but foundational question: who owns carbon credits, how they may be transferred, and how benefits from carbon projects should be shared. This makes HB 1817 relevant to the broader carbon pricing discussion because any domestic compliance market, offset mechanism, or Article 6-linked system will need clear rules on carbon credit ownership, transferability, accounting, and safeguards. 

Drawing on experience from other jurisdictions, the report identifies several areas where legislative refinement could strengthen the proposed frameworks:

• narrowing initial sector coverage to high-emitting industries,
• clarifying how decarbonization plans inform allowance allocation,
• setting clear limits on offset use,
• designing carbon prices and auctioning schedules carefully,
• ensuring transparent revenue use to help build public support and strengthen accountability, and
• safeguarding the Philippines’ nationally determined contribution when engaging in international carbon markets under Article 6 of the Paris Agreement. 

The report also examines how carbon rights, benefit-sharing arrangements, financial institution participation, and tax incentives can be designed to support market integrity, fiscal integrity, and a just transition.