PMI Targeted Support
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Program Overview
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The Philippines has taken a major step towards advancing carbon pricing by gaining progress in legislation for a domestic emissions trading scheme. In May 2025, the House of Representatives approved a bill to establish a national Emissions Trading Scheme (ETS) with offset provisions, creating a legal basis for carbon market implementation. This follows the full commercial operation of the Philippines Renewable Energy Market (REM) in December 2024, setting the stage for an integrated energy and carbon market approach.
Under the World Bank’s Partnership for Market Readiness (PMR, 2019–2020), analytical support was provided to assess options for introducing carbon pricing in the Philippines. PMR work evaluated various instruments and identified an intensity-based Emissions Trading Scheme as the most suitable approach for the national context.
Objectives & Activities
Under PMI, support was provided to:
- Design and assess the Philippines Emissions Trading Scheme (PETS): Offer technical support to analyze design options and operational pathways for PETS, including allowance allocation, market oversight, and integration with renewable energy systems
- Analyze the interactions between PETS and other carbon pricing instruments: Evaluate complementary tools such as carbon taxes and how they interface with existing fiscal and sectoral policies
- Stakeholder engagement and communications: Structure stakeholder consultations and outreach materials to build consensus and raise awareness among policymakers and affected sectors
The PMI JIT support informed the development of the national ETS legislation by providing analytical inputs and design recommendations used in the drafting process. The completed PMI JIT support was subsequently followed up by Japan Policy and Human Resources Development (PHRD)-funded activities to advance the detailed design and implementation readiness of the Philippines carbon market framework.