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Environment dep’t agrees PHL not ready for carbon tax

THE Environment department has concurred with the Department of Energy’s (DoE) position that the Philippines is not ready to implement a carbon tax, noting the need to establish an emissions data reporting system.

“We maintain our position that the imposition of carbon tax would not be an acceptable form of carbon pricing initiative in the Philippines. We agree with DoE’s stand on this matter,” DENR (Department of Environment and Natural Resources) Climate Change Division Chief Albert A. Magalang told BusinessWorld by e-mail Wednesday.

Mr. Magalang said that the Philippines has yet to conduct a study on the social implications of a carbon tax, and to establish a company or facility-level emissions data reporting system.

The DENR’s Climate Change Service first outlined its position two years ago to Camarines Sur 2nd District Representative Luis Raymund F. Villafuerte, Jr. during hearings on a House bill which sought to impose a climate tax on residential users equivalent to P1 per 1 kilogram of carbon emissions.

“A comprehensive study is needed to look at social and economic implications of implementing a policy on carbon tax imposition as a means of instituting carbon pricing,” Mr. Magalang said.

He added that a greenhouse gas emissions data reporting system is a “prerequisite” to implementing carbon taxes.

“Currently, companies have no mandatory obligations to report their emissions to the government. Although emissions have been incorporated in the sustainability reporting by the Securities and Exchange Commission… this is voluntary and applicable only to publicly-listed companies,” Mr. Magalang said.

The DoE said last week that the Philippines is still “building capacity” in terms of generating electricity and measuring emissions, and noted that carbon taxes could hinder the country’s economic competitiveness.

The Center for Energy, Ecology, and Development’s Executive Director Gerry C. Arances said that imposing high carbon taxes, particularly on coal, “can strengthen the country’s capacity to shift to clean energy systems.”

“By disincentivizing fossil fuel companies that for so long have enjoyed revenue-sharing schemes lopsided in their favor, the Philippines will be painting renewables as a much more beneficial sector to invest in. By aligning with the ‘polluter pays principle,’ a carbon tax would also be a step forward in internalizing costs of coal and other fossil fuels often dismissed as externalities, including pollution, health impacts, and high electricity prices,” Mr. Arances told BusinessWorld by e-mail over the weekend.

He said that they were “disappointed that the DoE has failed to recognize these.”

“We urge Secretary (Alfonso G.) Cusi to rethink his statement and understand that it is not by continued dependence on fossil fuels that we can have energy security, but by maximizing the availability of abundant indigenous renewable energy sources in the Philippines,” Mr. Arances said.

He added that the imposition of the carbon tax must be coupled with other reforms in the power sector that will protect consumer welfare.

Mr. Magalang said that if a carbon tax will be imposed as a means of carbon pricing, the policy must be designed to allow the country to transition to “low emission energy sources and avoid the passing of companies’ economic burden to consumers.” — Angelica Y. Yang

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