Why the Philippines is Southeast Asia Next Carbon Market Hotspot

Written By: Jonathan PHILLIP

Verified By: George KIONGSON

The Philippines is entering a new phase in its climate journey with the recent advancement of House Bill No. 11375, also known as the Low-Carbon Economy Investment Act. Approved at second reading by the House of Representatives in February 2025, the bill lays the foundation for a national carbon market, introducing a hybrid framework of emissions trading and carbon pricing mechanisms. For the country, this marks a strategic shift toward market-based decarbonization. For businesses and project developers, it signals a timely opportunity to engage in the fast-developing carbon ecosystem.

Building the Foundations: Legal and Institutional Progress

The Philippine carbon market is supported by a growing legal and institutional framework. The Department of Environment and Natural Resources (DENR), Climate Change Commission (CCC), and Department of Finance (DOF) are collaboratively steering efforts to operationalize the market—developing MRV systems, setting sectoral thresholds, and preparing a national registry. With House Bill 11375 in motion, carbon markets are transitioning from abstract policy goals to concrete instruments for national decarbonization and investment.

Regional Context: Where the Philippines Stands

Across Asia, carbon pricing initiatives are becoming more common. Singapore has increased its carbon tax to over SGD 25 per ton (USD 18), with plans to scale further. Indonesia is implementing a sectoral emissions trading system, while Vietnam is preparing to launch its national ETS in mid-2025. The Philippines is emerging as a credible participant in this regional shift, with a proposed carbon price trajectory aligned with IMF recommendations—starting at PHP 1,170 per ton CO₂e (USD 20), increasing to PHP 2,925 (USD 50) by 2030, and subject to periodic review. These developments not only bring regulatory clarity but also attract international attention to the Philippines as a market ready for environmental finance.

Why the Philippines is Well-Positioned for Carbon Project Development

The Philippines presents a uniquely strategic environment for developing high-quality carbon projects, supported by policy, land resources, and growing market demand.

• Clear Policy Direction and Regulatory Foundations: With the advancement of the Low Carbon Economy Investment Act and the planned establishment of a national carbon registry and emissions trading system, the Philippines is creating a transparent and structured foundation for carbon project development.

• Vast Investment-Ready Landscapes: According to the Department of Environment and Natural Resources (DENR), 1.2 million hectares of land suitable for climate mitigation initiatives such as reforestation, agroforestry, and other nature-based solutions. This scale of land availability opens the door to large, long-term sequestration projects with measurable climate benefits.

• Rising Demand for Carbon Credits: As House Bill no 11375 moves closer to enactment, businesses are expected to face compliance obligations that will drive demand for high-quality carbon credits. This creates a timely opportunity for developers to build project pipelines that can supply verified, market-aligned credits.

• Community Integration and Co-Benefits: The Philippines’ decentralized governance and strong civil society presence make it well-suited for projects with social co-benefits. This aligns with growing international demand for high-quality credits that support both emissions reduction and sustainable development goals.

Moving Forward: Voluntary Signals and Market Traction

Even before formal compliance obligations are introduced, the Philippines has shown early promise in the voluntary carbon market (VCM). Renewable energy, cookstove, reforestation, and waste methane projects have already been registered under global standards such as Verra and Gold Standard. High credit retirement rates in recent years indicate strong buyer confidence and demand.

As the national carbon market infrastructure matures, these early signals offer developers and corporates a window to engage, learn, and test mechanisms ahead of full-scale implementation. The growing VCM activity also builds readiness among local project developers, verifiers, and regulators.

Conclusion

The Philippines is taking a structured, forward-looking approach to carbon markets—backed by legislation, institutional coordination, and growing regional relevance. As both compliance and voluntary frameworks take shape, the country offers a rare combination of climate ambition, natural mitigation potential, and first-mover opportunities.

At Mt. Stonegate, we support this transition by offering market intelligence, regulatory insights, and hands-on support for carbon project development and corporate decarbonization strategies. From feasiblity study to project certifaction, our experience across Asia enables clients to navigate uncertainty, manage risk, and scale climate action with confidence.

References:

1.     House of Representatives of the Philippines. (2025). House Bill No. 11375: An Act Establishing the Low Carbon Economy Investment Framework. Approved on Second Reading, February 2025.

2.     Climate Change Commission (CCC). (2021). Nationally Determined Contribution (NDC) of the Philippines. Submitted to the UNFCCC.

3.     Department of Environment and Natural Resources (DENR). (2023). Investment-Ready Land Areas for Reforestation and Agroforestry.

4.     International Monetary Fund (IMF). (2022). Carbon Pricing for Developing Economies: Policy Design and Implementation