Philippine Chamber of Commerce and Industry (PCCI) is calling on Congress to undertake a thorough review of the carbon tax and carbon trading system proposed in the Low Carbon bill and their potential, unintended consequence of financially impacting businesses.

House Bill (HB) 7705, currently the subject of Technical Working Group meetings by the House Committee on Climate Change, seeks to promote a low carbon economy by establishing an emission trading system and implementation mechanism to achieve national climate targets.

The bill is looking to impose an annual reduction targets and caps on greenhouse gas (GHG) emissions on industries that are seen to “materially contribute to GHC emissions as determined by government.” These include energy, transportation, building construction and operations companies, IPPC industrial processes and product use sectors such as cement, steel, glass manufacturing and refrigerant producers and users, enterprises contributing significant biological and effluent waste emissions and enterprises with agricultural value chains with potential impact to deforestation and/or fugitive emissions from fertilizer use, methane emissions from biomass wastes, and enteric fermentation.

Among the bill’s provisions is the establishment of a carbon trading system to compensate for GHG emissions.

In a position paper submitted at the recent TWG meeting on HB 7705, PCCI requested Congress to work with industry stakeholders to study, simulate, and conduct impact tests with economic modeling and cost-benefit analysis to ensure that bill, once enacted into law, will be fairly implemented and will not unduly increase cost for business and consumers.

“There should be a comprehensive collected data on the actual cross-industry sector to avoid (1) unfair competition among key players within an industry sector, (2) increase in inflation rates, (3) additional “pass-on costs” to consumers associated with cap-and-trade implementation, (4) generating multiple forms of ‘stranded costs’ and, (5) increasing production costs for industries,” Edgardo G. Lacson, director of the PCCI’s Environment and Climate Change Committee.

Citing transport and livestock agriculture, which are both major contributors to greenhouse gas emissions but are critical to livelihood and industrial competitiveness, PCCI said the bill needs to clarify how the policy will be equally and fairly applied to the aforementioned industries.

In the case of the energy-power sector, which is considered a major carbon generator, PCCI pointed out that the sector has been subjected to long and well-studied process that has resulted to several legislations and regulations to reduce their use and hence carbon-emission. These include the moratorium on new coal-fired power plants and the adoption of the Renewable Energy Act, the Energy Efficiency Act and the Biofuels Act, among others.

“These legislations encourage the use of green energy and, in the case of the Energy Efficiency Act, impose penalties for violations,” George Barcelon, PCCI Chairman and Director for Energy and Power explained

PCCI further called on the bill’s proponents to benchmark against what similarly-situated neighboring countries in the ASEAN and Asian regions are doing to reduce their carbon footprints but still staying competitive in their cost of doing business and attracting foreign direct investments.

“Our country has gaps in the technology, expertise, experience, framework, and infrastructure to implement either carbon tax or carbon trading for a Low Carbon Economy. These components will have to be established and we may also adapt, if applicable, global best practices,” Barcelon said.

“We need an exhaustive and comprehensive discussion and analysis to determine the most appropriate system that will benefit us. We do recognize the urgency of passing the bill on Low Carbon Economy as our country is the biggest victim of climate change as we experience severe typhoons that have devastated our economy. On the other hand, we need to be extra careful that our proposed solution will not bring greater harm to our country,” PCCI President Enunina Mangio added as she stressed the importance of weighing in on the economic and perhaps even the social impact of such a move.