A player in the carbon market
The Philippines has just taken a significant step toward achieving its ambitions to be a major player in the international carbon market.
This, after President Marcos issued Executive Order No. 127 that calls for the formulation of a national carbon market framework, which will establish clear guidelines for the country’s participation in these platforms where carbon credits are bought and sold.
A carbon credit is defined as a permit or certificate representing the removal, reduction, or avoidance of 1 metric ton of carbon dioxide–or its equivalent in other greenhouse gases such as methane produced by agricultural activities–from the atmosphere, thus helping stall global warming that leads to extreme weather events such as more frequent and stronger typhoons and extended droughts.
These credits can be earned through projects such as protecting forests, practicing sustainable farming, waste management, planting trees, and shifting to renewable energy, providing an extra incentive for local communities and institutions such as civic organizations and private companies to invest and implement these long-term projects.
Two birds with one stone
Buyers, on the other hand, include countries that want to fulfill emission reduction targets under international conventions such as the Paris Agreement, local companies that want to voluntarily reduce their impact on the environment, and local and foreign airlines that use these credits to offset their carbon emissions.
Executive Secretary Ralph Recto stressed that with this policy framework in place, the Philippines would be “hitting two birds with one stone.”
The local environment will be protected while communities, farmers, businesses, and other groups that help reduce pollution or absorb harmful greenhouses gases could earn additional income from the investments in climate-friendly projects.
“The President wants our people to earn additional income while taking care of the environment. The benefits are not limited to cleaner air and a greener environment. These efforts can also generate jobs, businesses, and new opportunities for communities,” Recto stressed.
Sounds well and good on principle, but the harder task ahead for lead agency Department of Environment and Natural Resources (DENR) is to translate the EO into clear and implementable rules and guidelines that conform with local laws and international standards. Not all projects that seek to protect the environment should be automatically qualified.
Part of the solution
Then it must see to it that the projected benefits of qualified projects are real, measured, and independently verified to come up with the equivalent high-integrity carbon credits.
The DENR must also ensure that these projects will not lead to more harm than good such as if they trample on the rights of indigenous peoples or farmers’ groups, or if the participating companies end up with most of the financial benefits, leaving just a trickle for those who are actually implementing the projects on the ground.
The DENR will also establish a Philippine National Carbon Registry to monitor carbon credits and prevent irregularities such as double counting, as credits must only be used once in keeping with the commitment to reduce emissions and not just game the system to keep on pumping out harmful greenhouse gases.
These principles have to be top of mind of the DENR as it meets the 30-day deadline to submit the proposed framework to the interagency committee headed by the Climate Change Commission with the Department of Finance as vice chair for its review and approval.
As Constance See Sin Yuan, Singapore’s ambassador to the Philippines, emphasized, carbon credits can be an important part of the solution to the climate crisis, but only if they are designed and governed with integrity.
‘Greenwashing’
“Poorly managed, they can be dismissed as ‘greenwashing.’ Done well, they can unlock resources for protecting forests and coastal areas, expanding renewable energy, or accelerating the retirement of coal plants. In short, credits can move capital into climate action that would not otherwise occur,” See said.
Fortunately, the Philippines is not starting from scratch as the country has already made progress in strengthening its climate policy framework and developing its carbon market, with the facilitation of carbon credit collaboration between the Philippines and Singapore in 2025 among the most recent endeavors.
The learnings from previous and ongoing collaborations plus current developments in the dynamic carbon credit trading market should provide more than enough basis for the DENR to formulate a comprehensive framework.
It is too soon to tell if the framework will work as advertised given the complex details that have to be ironed out. But at the very least, it is a laudable step in the right direction and the government will have to muster the grit and determination to see its benefits through.
