Philippines’ Finance Secretary Benjamin E. Diokno took center stage at the 2023 United Nations Climate Change Conference (COP28) in Dubai, championing the nation’s fiscal and economic strategies to combat climate change.
In a fireside chat organized by the World Bank Group (WBG) on December 1, Diokno engaged in discussions focusing on three pivotal issues: explicit carbon pricing, fossil fuel subsidy reform, and reducing fiscal risks while supporting climate adaptation.
Recognizing the urgency for climate-smart investments, Diokno revealed the Philippines’ commitment to sustainable practices, citing game-changing reforms to attract investments. The Sustainable Finance Framework, launched in 2022, outlines the nation’s approach to raising Green, Social, or Sustainability Bonds to support international sustainability commitments.
Diokno emphasized the collaborative efforts through the Inter-Agency Task Force on Sustainable Finance (ITSF), also known as “Green Force,” involving the Department of Finance (DOF), Bangko Sentral ng Pilipinas (BSP), and other financial regulatory agencies. They are developing Sustainable Finance Taxonomy Guidelines (SFTG) to direct private sector investments toward climate change adaptation and mitigation initiatives.
To combat pollution, Diokno advocated for the passage of the excise tax on single-use plastics (SUP) bill, proposing a PHP 100.00 per kilogram excise tax on SUPs beginning January 1, 2026.
Addressing concerns about the mining sector’s environmental impact, Diokno outlined plans to rationalize mining taxes to capture a fair share of revenues without stifling investments. With the Philippines being a major exporter of nickel, the new mining fiscal regime is set to be implemented early next year.
To pursue decarbonization, the Philippines is exploring the establishment of an emission trading system (ETS) or carbon tax. Preliminary studies suggest these measures align with the country’s Nationally Determined Contribution (NDC) under the Paris Agreement. Discussions are underway for a technical assistance agreement with the World Bank and the United Nations office for project services on carbon pricing instruments.
Diokno highlighted ongoing efforts under various acts, including the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, Energy Efficiency and Conservation Act, Renewable Energy Act, and the Philippine Green Jobs Act.
Ensuring a smooth transition, the Finance Chief stressed the implementation of targeted cash transfer programs to assist vulnerable sectors. Despite calls to suspend value-added tax (VAT) and excise taxes on fuel, the DOF retained fuel taxes while proposing increased subsidies for vulnerable sectors like agriculture and transport.
Secretary Diokno’s active participation extends to the opening of the Philippine Pavilion, showcasing the country’s climate action initiatives. The Philippine delegation, present at COP28 until December 12, aims to advocate for the nation’s climate needs and contribute to achieving the Philippines’ NDC targets.