The House Committee on Climate Change, under the leadership of Congressman Edgar Chatto, has approved a groundbreaking bill that will set the Philippines on a clear path toward a low-carbon future.
The “Low Carbon Economy Investment Act of 2023,” which was passed with widespread support from key lawmakers including representatives Anna Veloso-Tuazon, Francisco “Kiko” Benitez, Steve Solon, Christian Tell Yap and Jocelyn Limkaichong, marks a significant step in the country’s fight against climate change.
The bill, presented by Congressman Jose Manuel “Joeman” Alba, the Chair of the Technical Working Group, mandates that large enterprises across various sectors develop decarbonisation plans aligned with the goal of limiting global temperature rise to below 2°C. These plans must include clear milestones and targets, ensuring that businesses progressively reduce their greenhouse gas (GHG) emissions over time.
“This legislation is a game-changer for the Philippines,” said Congressman Chatto. “It not only sets a clear policy direction for decarbonisation but also provides businesses with the tools and flexibility to achieve these goals in a way that supports economic growth. The bill encourages investments in low-carbon technologies that can deliver cost efficiencies for businesses while significantly reducing their environmental impact.”
One of the bill’s key features is the introduction of a carbon pricing framework. For any emissions that exceed the targets set in the sectoral decarbonisation pathways, companies will be required to allocate its own Decarbonisation Fund. This fund can then be used by covered enterprises to invest in viable low-carbon business models. Businesses have several options for using these funds, including:
- Investing in their own low-carbon projects that reduce emissions and generate savings.
- Pooling resources with other companies to jointly invest in low-carbon technologies, especially beneficial for smaller enterprises.
- Equity investments in dedicated low-carbon enterprises that specialise in sustainable solutions.
The bill’s flexibility is designed to empower businesses to choose the most effective and economically viable path to decarbonisation, whether through direct investments in their operations or by supporting broader industry-wide initiatives.
In addition to these mechanisms, the bill provides enabling measures to support investments in the low-carbon economy. This includes facilitating access to carbon markets and international climate finance, which can help de-risk investments and make them more profitable. By leveraging global resources and partnerships, the bill aims to ensure that the transition to a low-carbon economy is not only environmentally sustainable but also financially sound.
“This bill is not just about reducing emissions; it’s about creating new opportunities for growth and innovation,” said Cong. Alba. “By encouraging investments in sustainable technologies, the Philippines can lead the way in the global transition to a low-carbon economy. This is essential for our long-term economic resilience and for safeguarding our future against the devastating impacts of climate change.”
According to a recent report by Swiss Re Institute, the Philippines is at significant risk, potentially losing up to 3 per cent of its GDP by 2050 due to climate change impacts. This legislation aims to mitigate those risks by accelerating the country’s energy transition, reducing its dependency on volatile fossil fuels, and enhancing energy security—all while maintaining reliability in energy supply.
Various stakeholders, including industry associations, NGOs, and other groups, lauds the leadership of Philippine Congress for this policy measure and are calling for the bill to be prioritised in the legislative agenda. The Institute for Climate and Sustainable Cities, an international non-government group advancing fair climate policy has expressed strong support and lauds the valiant efforts of the members of the congress for setting the policy mandate needed for our low-carbon economy pathway.
The Cement Manufacturers’ Association of the Philippines (CeMAP) has expressed strong support for the bill. “We believe this legislation is vital for our industry to transition effectively to a low-carbon future,” said a CeMAP spokesperson. “As the government infrastructure is the biggest user of cement products, we call on them to prioritize the use of low-carbon cement. This will not only enable the industry to meet its decarbonisation targets but also stimulate further investment in sustainable practices.”
Representatives of the Carbon Forestry Industry group also shared that “Filipinos stand to lose the most from the impacts of climate change, and we cannot afford to miss out on the economic opportunities that the low-carbon transition presents. Making this a priority bill is essential if we are to safeguard our future and seize the opportunities that come with decarbonisation.”
The bill has also garnered widespread support from the representatives of various government agencies such as the Climate Change Commission, the Department of Energy, and the Department of Health. The DOH representative expressed full support of the bill and reiterated commitment to decarbonisation the health sector.
“This is a pivotal moment for the Philippines,” added Congressman Alba. “With this bill, we are not only setting ambitious climate targets but also providing a framework that makes it possible for the private sector to achieve them in a way that drives investment, innovation, and sustainable economic growth. This is a win-win for our environment and our economy.”
As the bill moves forward, it is expected to play a crucial role in the Philippines’ efforts to meet its international climate commitments and contribute to global solutions for climate change. The urgent passing of the “Low Carbon Economy Investment Act of 2023” at the same priority and pace of the passing of the Loss and Damage Fund Board Bill (House Bill No. 10722), will be a significant step towards a sustainable and resilient future for all Filipinos.
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