Implementation of carbon pricing is one of the ways many countries control carbon emissions. However, according to the latest report from the Philippine Congress think tank, emphasizing carbon reduction too much may sacrifice social and economic prosperity. The report also indicates that the Philippines has relatively lower carbon emissions, suggesting that imposing a carbon tax may not be necessary.
The Congressional Policy and Budget Research Department (CPBRD) of the Philippine House of Representatives, in a report titled "Smoke and Mirrors: The Hidden Costs of Carbon Taxation," provides a detailed explanation of why carbon tax may not be applicable in the Philippines. It particularly highlights that "the Philippines produces relatively little carbon dioxide — whether it is compared to developed countries or its ASEAN neighbors. This, in turn, puts into question the supposed necessity and urgency of instituting a carbon tax in the Philippines."
CPBRD cites data from the European Union's Emissions Database for Global Atmospheric Research (EDGAR), stating that Indonesia, with a population of approximately 270 million, emitted 602 million metric tons of carbon in 2021, resulting in a per capita carbon emission of 2.2 tons, significantly higher than the Philippines' 1.3 tons in the same year.
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Mariveles Coal Fired Power Plant in Philippines. (Photo: Wikimedia Commons)
It also said that Solar and wind resources account for a tiny fraction of electricity supply — despite billions spent in subsidies and the Philippine economy is still “wholly incapable of efficiently and painlessly transitioning to a low-carbon trajectory,” given its heavily reliance on fossil fuels and slow transition to renewables.
CPBRD is also concerned about the "the aggressive expansion of renewable assets also demands the conversion of agricultural land into solar and/or wind farms, further aggravating existing agricultural productivity woes.” The report warned that if a carbon tax is imposed, “energy-poor” like the Philippines may find it challenging to develop its industries.
Quoting the report, Philippine media outlet Business World mentioned that if carbon taxes are not imposed on power and transportation, the government could lose revenue of 236.7 billion pesos (about 4.2 billion USD), accounting for about 1.1% of the country's GDP.
The International Monetary Fund (IMF) has previously recommended the Philippines to implement carbon pricing, estimating that the economic cost of carbon tax implementation would be 0.2% of GDP. However, half of this cost could be offset by environmental-related benefits, and it could help the Philippine government increase its revenue by $7 billion within seven years.
