Senator Loren Legarda supported the push for countries to implement carbon pricing policies in order to meet the goal of limiting global warming to 2 degrees Celsius, which the Philippines, along with the Climate Vulnerable Forum (CVF), further brought down to 1.5 degrees Celsius, in the Paris Agreement.

Legarda made the statement during the Third High Level Assembly (HLA) 2018— “Advancing Climate Action Through Carbon Pricing: Challenges, Opportunities, and Solutions” organized by the Carbon Pricing Leadership Coalition (CPLC), one of the events during the Spring Meetings of the International Monetary Fund (IMF) and the World Bank Group in Washington, D.C. 

Addressing Finance and Environment Ministers of other governments, fellow legislators, Chief Executive Officers (CEOs) of major multinational companies, and heads of international and regional organizations, Legarda expressed that the benefits and opportunities that carbon pricing would provide must be communicated well, especially for the millions of Filipino fisherfolk and farmers. 

“Even though the Philippines emits so little carbon in the atmosphere—at 0.33% compared to other countries—we are committed in this low carbon development pathway. Carbon pricing policies will certainly be effective in achieving our mitigation goals, but new taxation is almost always passed on to the consumers,” Legarda said. 

“It will be a massive challenge for us to convey to our farmers and fisherfolk who comprise the agriculture sector—a sector that registers high intensity of carbon—what carbon pricing really is. How do we ensure their participation in this carbon pricing initiative considering that the price of their commodities will be affected?” she added.

Legarda also shared that when further tax on coal was introduced under the Tax Reform for Acceleration and Inclusion (TRAIN) Law, it was met with stiff opposition from both houses of Congress.

She said that tax on coal, which used to be only Php10 or 20 US cents per metric ton, was eventually increased to Php50, Php100, and Php150 per metric ton for the next three years. 

“It is still very low especially if we consider the harmful effects of coal in our health and our environment. However, to break the wall of dirty energy that could not be penetrated for decades is already a victory,” Legarda said. 

Mr. John Roome, Senior Director of the Climate Change Group of the World Bank Group, also commended the Philippines for its leadership in the Vulnerable Twenty (V20), an alliance of Finance Ministers created by the Climate Vulnerable Forum (CVF), as well as the establishment of the Climate Action Peer Exchange (CAPE), which is a platform among Finance Ministers to share experiences on how climate change is taken into consideration into their budgeting and fiscal policies. 

Furthermore, Atty. Christine Lagarde, Managing Director of the International Monetary Fund (IMF), provided the following policy recommendations in pursuing carbon pricing initiatives:

 First, undertake analytical work on the emissions prices consistent with countries’ mitigation roles and the resulting impact on the economy on the fiscal balances and vulnerable groups, as well as trade-offs with other instruments. 

Second, emphasize the opportunities carbon pricing provides. If done properly, 1 to 2% of our GDP can be used to fund priority programs.

Third, think about complementary measures to make carbon pricing more effective, such as infrastructure investment for renewable and electric vehicles, and to mimic some of the effects of carbon pricing, while containing impact on households and industries. 

And fourth, consider reinforcing the Paris Agreement process through carbon price floor arrangements, particularly among the large emitters. 

For Legarda, governments must go beyond the macro approach and make people understand the importance of carbon pricing and mandating taxation, not just on coal but all fossil fuels, and how its way forward would actually redound to better economic practices, sustainability, and incomes. 

“Apart from talking about fiscal reforms, we should convey that pursuing the low carbon pathway would actually mean more jobs, less vulnerability, less risks, and more income. By our discussions, fossil fuel is already a thing of the past. It is important that we now explain to our people that the low carbon pathway is sustainable and profitable,” Legarda concluded.