Long-delayed carbon trading regulations needed in the Philippines, say experts

The Philippines is set to join the global carbon trading market, with the Department of Energy (DOE) expected to release carbon trading rules in mid-September. This move comes as the country looks to unlock financing through transition credits, which arise from the emissions reduced through a coal plant's early retirement and replacement with cleaner energy sources.

The new carbon trading rules in the Philippines will only be applicable to energy transition plans, not for nature-based carbon removals. The Department of Environment and Natural Resources (DENR) is responsible for developing carbon credit rules for the agriculture and forestry sectors, but specific rules for nature-based carbon removals have yet to be released.

Wilson John Barbon, country executive director of Conservation International Philippines, believes that moves to finalise carbon trading rules are not premature, as the Philippines is already lagging behind its Southeast Asian neighbours. Thailand has already signed a carbon trading deal with Singapore under Article 6 of the Paris Agreement, while Malaysia has a voluntary carbon credit trading platform, and Indonesia has established a compliance-based carbon market.

Tom van der Meulen, managing director of Control Union Philippines, stresses the importance of having standards in place to make carbon projects auditable and comparable. He also warns that projects may have to restart their transactions due to new guidelines. SGV's Rose Josol, on the other hand, emphasizes the importance of balancing carbon credit rules to avoid alienating stakeholders, especially communities.

Josol also highlights that there are multiple carbon projects already registered in the country despite a lack of rules governing their trade. She, however, warns that these projects may have to restart their transactions due to new guidelines.

The government of the Philippines is committed to global pacts like the Convention on Biological Diversity and has policies that ensure carbon projects are equitable, transparent, and benefit communities and nature. Forest carbon projects in the Philippines require the free, prior, and informed consent of Indigenous People (IP) living in the area.

It's important to note that the current carbon crediting system in the Philippines is not perfect but it provides financial solutions to nature-based projects. The rules will need to address the risk of impermanence, where carbon stored or avoided by a project may be released back into the atmosphere.

A public consultation on a draft policy for attracting clean energy investments was held by the DOE last month, indicating the government's commitment to sustainable development. The Philippines, like many countries, is striving to balance economic growth with the need to combat climate change and protect its natural resources.