By Jonathan L. Mayuga - August 8,
2019
WHILE some watch the clock on the
wall tick down to a crucial environmental forum in December, local officials
are eyeing the traffic light from Malacañang to change to green.
All over the world, environmental
and climate justice advocates are gearing up for the next Conference of Parties
(COP) to be held in Santiago, Chile, from December 2 to 13.
Yet, according to a spokesman of the
Department of Environment and Natural Resources (DENR), there’s still no formal
communication from President Duterte about the Santiago Climate Conference.
Nonetheless, DENR Undersecretary
Benny D. Antiporda said they are preparing in case Duterte greenlights a
Philippine participation for a crucial conference for the planet.
The Santiago Climate Conference is
the last chance for United Nations (UN) member-countries to resolve issues to
put in place a market mechanism for the operationalization of the 2015 Paris
Agreement starting next year.
The Paris Agreement is an
international treaty within the UN Framework Convention on Climate Change
(UNFCCC), which was signed by official representatives of 197 countries in
1992. The Paris Agreement seeks to stem the increase in global average
temperature below 2 degrees Celsius to 1.5 degrees Celsius.
The Philippines, one of the
signatories to the UNFCCC, had initially submitted an ambitious target of
reducing carbon emission by 70 percent between 2020 and 2030 under its Intended
National Determined Contribution (INDC). It is currently working on the final
stages of drafting a more realistic National Determined Contribution (NDC)
target for submission to the UNFCCC Secretariat.
These initiatives were bolstered by
Duterte himself. During his recent State of the Nation Address (Sona), the
President ordered the Department of Energy to cut carbon emission by hastening
to enlarge the share of renewable energy in the country’s power mix.
Just
icing
DUTERTE’S order is just the latest
in several initiatives the Philippine government has undertaken to cut carbon
emission.
One of these initiatives is the
Clean Development Mechanism (CDM) under the Kyoto Protocol. The 1997 Kyoto
Protocol is an international agreement linked to the UNFCCC, which commits its
parties by setting internationally binding emission reduction targets.
Defined in Article 12 of the
Protocol, the CDM allows a country with an emission-reduction or
emission-limitation commitment under the Kyoto Protocol (Annex B Party) to
implement an emission-reduction project in developing countries. Such projects
can earn saleable certified emission reduction (CER) credits, each equivalent
to 1 ton of carbon dioxide (CO2), which can be counted toward
meeting Kyoto targets.
It was through the CDM that the
Philippines was able to facilitate funding for various climate-change
mitigation projects.
Unfortunately, the ongoing carbon
credit program was short-lived, said Albert A. Magalang, chief of the Climate
Change Division (CCD) at the DENR-Environmental Management Bureau.
The CCD is in charge of the DENR
function as the Secretariat of the Designated National Authority for CDM under
the Kyoto Protocol.
Magalang said the promise of
sustainable benefits is the primary reason the Philippines availed itself of
the CDM.
“The social, economic and
environmental benefits are overwhelming,” he added. “And the money companies
may get from selling carbon credits is just icing on the cake,” Magalang said.
“Under the program, companies offered community-based programs and assistance.
There are also green jobs.”
Opposing
CDM
HOWEVER, nonprofit group Focus on
the Global South is challenging the gains of the CDM in the Philippines. The
FGS is asking if the CDM met the objectives it was poised to achieve.
Gerry C. Arances of the Center for
Energy, Ecology and Development (CEED), said carbon credits mechanisms like the
CDM have been widely criticized by climate justice advocates like those
belonging to the FGS. These groups, Arances said, see the CDM as an offsetting
mechanism that big transnational companies use, especially in developed
countries, to say that they have reduced GHG emissions when, in fact, they have
not. He added that in many cases, these firms have increased their emissions
through their main operations.
“The mechanism is virtually dead as
most countries that have caused this climate crisis, mainly the developed
countries, have already abandoned the Kyoto Protocol,” Arances said. “It is now
basically replaced by the Paris Agreement, which basically replaced the
top-down approach in mitigation or reduction of global GHG [greenhouse gas] to
the voluntary approach espoused by the Paris Agreement.”
Arances added that this “only shows
the continued avoidance [by] the likes of the United States and many European
countries of their responsibilities.”
Thus, he added, “more and more
citizens across the globe have been suing their governments.”
Not
maximized
UNDER the Kyoto Protocol, developed
countries are committed to reducing carbon emissions and one way to do it is by
buying carbon credits from developing countries through financial and technical
assistance for projects that can earn carbon credits through certified
emissions-reduction units.
Under the program, developed
countries will assist developing ones to implement climate-change mitigation
projects. For projects that are potential greenhouse-gas emitters, the target
is to reduce or avoid such emission, according to Magalang.
Arances believes the Philippines was
not able to maximize the benefits of the CDM.
“Before, it was working, when there
was a demand for carbon credits,” he said. “Now, there seems to be an
oversupply of carbon credit.”
Asked where all the carbon credits
came from, he said, in a mix of English and Filipino that, “I can only surmise
that developed countries have gone green already.”
An
expensive move
AS early as June 2004, an enabling
policy for the country’s adherence to the carbon market mechanism was already
put in place by virtue of Executive Order 320.
EO 320 signed by then-President
Gloria Macapagal-Arroyo on June 25, 2004, designated the DENR as the National
Authority for the Clean Development Mechanism.
Subsequently, the implementing rules
and regulations was put in place on August 31, 2005, with DENR Administrative
Order 2005-17 signed by then Environment Secretary Michael T. Defensor.
However, the first project enrolled
under the program started only in 2012, or eight years after EO 320.
“It’s because of the long gestation
period,” Magalang explained. “The process was too tedious and under a
multilateral system, where funding goes through the UN, the bureaucratic setup
discouraged private companies from availing themselves of the CDM.”
On top of that, he said coming up
with a project designed to avoid carbon emission is expensive “every step of
the way:” from development, documentation and registration.
“This is contentious for countries
with no capacity,” Magalang said. “In the case of the Philippines, developed
countries have put up a consortium and implemented or developed project
proposals and facilities.”
Ten
projects
NEVERTHELESS, Magalang said the
Philippines was able to catch up with the DENR’s intensive promotion of the
CDM.
“As early as 2010, we’ve started
project development,” he said. He noted that the documentation alone is very
tedious, and this the reason other countries are not availing themselves of the
CDM.
The “Kyoto Protocol and Carbon
Market and Non-Market Mechanism-Clean Development Mechanism,” a document
obtained by the BusinessMirror, revealed the Philippines is not lagging behind.
The document revealed that as of May,
the Philippines ranked 12th in terms of the number of CDM projects registered
globally, having listed 72 project activities out of 3,180.
Topping countries with the most
number of CDMs is China, whose number of CDM projects and activities accounts
for almost half of the total 3,180 projects. China is followed by India,
Brazil, Vietnam, Mexico, Indonesia, Thailand, Malaysia, Chile and South Korea.
Most of the Philippine CDM projects
registered are on renewable energy projects, expected to generate total estimated
average annual CER units of 3,480,997 tons of carbon dioxide equivalent.
Ten of these project activities were
issued a total of 3,095,100 carbon credits or CERs.
Hoping
for changes
ACCORDING to Magalang, there’s now a
shortage in the demand for carbon credits. Added to this is the fact that the
Paris Agreement came up.
Under the Paris Agreement,
negotiations are ongoing to put in place a new climate regime, including a
market mechanism—for its operationalization starting the year 2020.
“We have 70 projects. That was the
time when there was a demand. But after a while, the Paris Agreement came up,”
Magalang said. “Hence, there are expected changes because of the need for a new
carbon regime.”
CER units are sold per tons. Before,
it was $35 per ton. Then it went down to $25 to $20; now it is below a dollar.
It’s so cheap that companies will not invest or even enroll in the program
anymore, according to Magalang.
He added that the demand for carbon
credits went down when the European Union, the biggest buyer of carbon credits
in the early years, suddenly stopped buying.
“Maybe [the] EU has acquired enough
carbon credits,” he added. “Some EU member-countries are also claiming to have
shifted to renewable energy.”
A new
house
WHEN the demand for carbon credit
went down, so did the price of the CER units, according to Magalang. Because of
that, the purchase or the percentage or commission of the Philippines in the
sale also went down.
If it were up to Magalang alone, the
pitch for the next COP in Santiago, Chile should be to put in place a carbon
market mechanism that will ensure sustainable benefits to developing countries
like the Philippines.
“Under the Paris Agreement, we want
the negotiation to transfer the CDM under the Kyoto Protocol to a new house,” he
said.
The Santiago Climate Conference is
also an opportunity to address the many concerns raised against the CDM under
the Kyoto Protocol.
“The multilateral process is very
complicated. It’s tedious: the project proposals and documents,” Magalang said.
“When you are dealing with multilateral countries, the UNFCCC secretariat, the
bureaucracy is multilayer.”
New
deals
ACCORDING to Magalang, since the CDM
is unable to sustain the desired CER units, the Philippines entered into a
partnership with the Government of Japan for the implementation of low-carbon
growth.
The Memorandum of Cooperation
between Japan and the Philippines on Low Carbon Growth Partnership was signed
on January 12, 2017, by Environment Secretary Regina Paz L. Lopez for the
Philippine side and Ambassador Extraordinary and Plenipotentiary of Japan to
the Republic of the Philippines Kazuhide Ishikawa for the Japanese side.
Currently, the Philippines is
working with Japan through the MOA for the implementation of the Joint
Crediting Mechanism (JCM), a bilateral system where the Philippines deals
directly with only one country.
The JCM was born out of the
Framework for Various Agreements (FVA), one of three new mechanisms and
approaches to addressing climate change under the Doha Amendment to the Kyoto
Protocol adopted in Doha, Qatar, at COP 18 on December 8, 2012. Under the
amendment, 31 Annex I Parties agreed to new commitments for the second
commitment period to the Kyoto Protocol from January 2013 to December 31, 2020.
More
studies
JAPAN’S Intended Nationally
Determined Contribution (INDC) submitted in July 2015 targets a reduction of 26
percent by 2030 with the base year of 2013.
While JCM is not included as a basis
for the calculation of Japan’s emission-reduction target, it intends to count
as Japan’s reduction, the emission reductions and removals acquired by Japan
under the scheme.
The JCM is currently a nontradable
credit-type mechanism. The possibilities of extending JCM to a traceable credit-type
mechanism may be discussed between the parties—Japan and the host parties—in
this case, the Philippines.
So far, 16 host countries have
signed bilateral documents with Japan on the JCM.
According to Magalang, JCM is less
complicated and is encouraging, based on the two-year experience of the
Philippines so far.
“We now have 10 projects. The focus
is more on renewable energy,” he said. The focus on RE projects under the JCM,
he said, is fitting as the Philippines has a big potential in renewable energy.
Under the JCM, he said the project
cost is lower and will benefit the renewable-energy sector and will boost the
anti-coal campaign. However, in terms of investment, it is a 50-50 deal between
Japan and host countries.
“We started two years ago. But it is
still in the gestation period. The beauty of this is: we are in the process of
identifying technology,” he said. “There are feasibility studies going on.”
A
slew of projects
IN a document titled “Progress
Report for All Selected JCM Model Projects,” the projects are in various
stages, with four having been completed in 2017, 2018 and 2019—mostly renewable
energy that harnesses the power of the sun.
The “Introduction of 1.53-MW Rooftop
Solar Power System in Auto Parts Factories” project by Tokyo Century Corp.,
Enomoto Philippines Manufacturing Inc. and Aikawa Philippines Inc. was started
in June 2017 and was completed in December of the same year in terms of design
and manufacturing. The installation and commissioning were completed in April
and May 2018, respectively.
Last year, the “Installation of the
1.2-MW Rooftop Solar Power System to the Cold Storage for Power Supply” project
by Tokyo Century Corp., Transnational Uyeno Solar Corp. was completed.
Another project, the “Introduction
of 1-MW Rooftop Solar Power System in Vehicle Assembly Factory” by Toyota Motor
Corp. and Toyota Motor Philippines Corp., initiated in June 2017, was completed
in January 2019.
Yearning
for mitigation
THERE are two main reasons the CDM
or carbon market mechanisms espoused under the Kyoto Protocol are facing
rejection by environmental groups and green climate advocates.
Advocates said the CDM, on one hand,
does not prevent the development of coal projects but, on the other hand, it
promotes waste-to-energy (WTE) projects that make use of waste incineration
technology.
According to Arances, in the event
they get to attend the Santiago Climate Conference, the pitch would go beyond
opposing carbon market issues, but will focus on the bigger picture.
“Mostly, we will go for the bigger
picture when it comes to COP: How to meet the 1.5 degrees given that the
ambition is too low,” Arances said.
He added that whether as a part of
the official Philippine delegation or as mere observers, environmental and
climate-justice advocates from CEED will focus on mitigation before and after
the Paris Agreement.
Undermined
by impact
ARANCES said that under the CDM,
there are two compelling issues that revolve on the renewable energy push: the
call for distributed renewable energy and the push for non-WTE renewable-energy
projects like wind or solar.
He cautioned that there are WTE
projects that ride on the CDM scheme.
“But again, CDMs or the same type of
mechanisms shouldn’t be used to offset from the developed countries’ end like
Japan,” he said. “Japan, domestically and internationally, is still pushing for
coal.”
Arances said policy-makers should
look at it “holistically” because, in the end, access to funding for these
projects will be undermined by the worsening impacts of climate change because
of our failure to prevent the climate crisis.
“We have a very slim window and we
are there,” he said. “It’s climate emergency.”
Given
the opportunity
ON top of the social, economic and
environmental benefits that are not usually factored in or accounted for, in
terms of monetary gains, the DENR is hoping for a better deal.
This is the reason why, given the
opportunity to attend the climate talks and join the Philippine delegation to
the Santiago Climate Conference, he said the DENR will be very vocal about the
push for a market mechanism deal.
“Because we are a negotiator, we can
play a major role in the negotiations. Market mechanisms will be discussed,”
Magalang said.
He added that if the President
allows it, the DENR will negotiate for a favorable market mechanism in the next
meeting.
“The market for carbon credit should
not be lost because it triggers climate-change mitigation.”
Also, under the JCM scheme, there
are other opportunities waiting.
“We can do with Russia, China and
Australia,” he said. “And we can sell carbon credits.”
Apprised
of situation
HOWEVER, Magalang said the trading
of carbon credits under the JCM should first be resolved for the Philippines,
or Philippine companies specifically are to gain from it financially.
“There’s no trading, yet. It depends
on the December meeting because the modalities, procedure and guidelines, under
the Kyoto Protocol will have to be put in place,” he added. “Being a
negotiation under Article 6, Market Mechanism will be discussed with the DENR as
negotiator.”
According to Magalang, DENR
Secretary Roy A. Cimatu has been apprised of the situation by DENR
Undersecretary Jonas R. Leones, the DENR’s undersecretary for policy, planning
and international affairs, and a leading negotiator for the Philippine
delegation in climate talks.
“The challenge now is how to
harmonize with the new climate regime under the Paris Agreement. Hopefully, the
complications will be avoided because it is merely transferring house—from
Kyoto to Paris,” Magalang said.
“For the Philippines, bilateral or
country-to-country negotiations for carbon trading is faster and a better
option for the Philippines.”
According to Magalang, there’s a
need to capacitate the various development projects of the government to access
the CDM or JCM. He believes the private sector, as well as the local government
units (LGUs) would also benefit from the undertaking.
In some of the ongoing CDM projects,
he noted that LGUs get a 20-percent to 30-percent share from the sale of the
CER units.
“The DENR is willing to provide
technical training for private companies and LGUs to capacitate them,” he said.
On that note, Magalang said the
Philippines is ready and negotiators are raring to sit in the climate
negotiating table once more.
But for now, the DENR waits for the
green light coming from Malacañang.
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