As economies feel the impacts of climate change, calls for measures that will put a price on emissions from the burning of fossil fuels are heightened now more than ever.
The Department of Finance is studying carbon pricing instruments and the need to identify an optimal mix not only to generate additional revenues, but also address environmental concerns.
Apart from addressing climate change, a carbon tax is also seen to encourage the adoption of clean energy and generate revenues that could fund green initiatives.
Global efforts to slap taxes on carbon remain small. Many countries, the Philippines included, have yet to ride on the carbon tax.
The possibility of a carbon tax being implemented in the Philippines has potential, but only if the measure is market-driven and appropriate for the needs of a country still heavily reliant on fossil fuels, according to country director for the Philippines of the Asian Development Bank, Pavit Ramachandran.
“I think there is potential, but it needs to be looked at much more closely and studied further,” Ramachandran said. “Carbon taxation or if it’s carbon pricing, whatever is the right solution, it has to be market-driven. It has to be just, inclusive, and appropriate for the Philippine context,” he said.
While there are supporters, there is also opposition to a carbon tax in the Philippines, where power rates are already among the costliest in the region.
For now, only developed countries like Finland, Sweden, Norway, Canada, UK, and Singapore have made strides in imposing carbon taxes.
For a carbon tax to be successful, it has to achieve certain goals, the most obvious being revenue generation and addressing environmental concerns. However, there is also the issue of the sectors being taxed, and the question of whether the additional tax will impact their already difficult lives, especially if the taxes are simply passed on to the consumers.
A carbon tax can be a useful tool in nation building and protecting the environment, but not all tools are always useful, as its usage always depends on the situation. Deploying one in the Philippines, just because developed countries also have it, could be akin to our aspiration for a sovereign wealth fund, which is another nice thing that we cannot afford yet.
Those considering adding a carbon tax to the list of concerns of Filipinos have to seriously look at the facts and the context, and quantitatively and comprehensively justify it as a necessary and useful tool, if it is going to be deployed in the country.*
