Four years ago, the Philippines first submitted to the United Nations its nationally determined contribution (NDC) to the Paris climate accord, aiming to curb emissions by 75 per cent.
Like other UN member states, the Southeast Asian nation is due to unveil new commitments on how to achieve this by early this year.
With a new bill passed last year which seeks to accurately measure the country’s natural resources, along with the approval of global carbon credit trade rules at COP29, nature-based solutions could move the needle on climate action in 2025.
And it is about time, as nature is intertwined to business, said Agnes de Jesus, chief sustainability officer of First Philippine Holdings Corp., whose subsidiaries include clean and renewable energy, and is one of the few Filipino firms that has adopted nature-related reporting.
De Jesus told Eco-Business: “Nature provides all entities, not only business, environmental services that are essential to its operations and existence – from raw materials like water, food, and wood, plus physical protection from climate risks like landslides, floods, and erosion. So it is logical to work on those to protect the business and assets with or without a [government] mandate.”
Eco-Business examines the sustainability trends that Philippine businesses need to pay attention to help the country work towards its decarbonsation goals.
1. Companies to start accounting for nature
A new law which will require the government to report its economic contribution of natural resources has thrust nature reporting into the spotlight.
Known as the Philippine Ecosystem and Natural Capital Accounting System, or PENCAS, the bill goes beyond reporting to mandate that the archipelago starts looking at measuring the depletion, degradation, and restoration of nature. De Jesus said environmental impact assessments then need to be aligned with findings from natural capital accounting, in order for companies to receive any.
“PENCAS can better guide corporates on the systematic reporting of their environmental impacts, and (as they take) measures for the protection or restoration of nature within their project worksites,” she said.
For now, nature reporting is not yet mandatory in the Philippines, though government agencies are encouraging corporates to start doing so In 2023, at a forum hosted by the Securities Exchange Commission, companies were advised to start reviewing the Taskforce on Nature-related Financial Disclosures (TFND) standard because investors were looking for TNFD alignment.
The National Economic and Development Authority (NEDA) is also leading efforts to get companies and civil society organisations to submit Sustainable Development Goals (SDGs)-aligned commitments on climate action, conservation of oceans and forests. These organisations are expected to be among the first to be asked to valuate their natural capital contributions, to add to national statistical records.
2. Blue carbon economy to take off
The operationalisation of Article 6 at the COP29 climate summit in Baku, Azerbaijan last November is likely to have ripple effects in the Philippines’ carbon markets space. Article 6.4, a section under the Paris Agreement which lays out the foundation for countries to trade carbon credits, was finalised amid questions on integrity and transparency rules.
During the conference, the Philippines delegation presented a roadmap on how it was going to tap carbon credits to unlock financing, such as through carbon dioxide captured by the oceans.
Before COP29, the Philippines had signed a memorandum of understanding with Singapore, signalling that the two countries will work towards a legally binding implementation agreement for cross-border carbon credit trading. The government has also been working with the World Economic Forum’s Blue Carbon Action Partnership to explore conservation projects.
Blue carbon offsets can potentially contribute to the country’s mitigation and adaptation goals through carbon sequestration, said Edgardo Tongson, WWF Philippines’ sustainable finance lead.
The country is investing millions in coastal restoration to help protect communities and infrastructure against future storms, said Tongson, although it will also have to tackle the accompanying risks of these projects such as high initial costs, as well as inadequate measurability and verifiability of the project benefits.
3. Will the green energy transition create jobs?
The Philippines stands to gain a maximum of 106,952 megawatts (MW) in renewable energy capacity addition and this could potentially create up to 1.18 million jobs, according to the Department of Energy (DOE).
Under the clean energy scenario, 106,952 MW of renewable energy capacity addition is expected by 2050. About 1.18 million jobs could be generated in the same period. Source: DOE
Michael Sinocruz, director of DOE’s energy and planning bureau said that the Philippines continues to rely heavily on fossil fuels and remains a global mining hotspot, and would require a just energy transition roadmap to be implemented.
“This roadmap is a vital component for the country’s sustainable development and in supporting its vision to achieve a low-carbon energy future. Renewable energy technologies providing clean energy will generate a significant number of green jobs for the Philippines,” Sinocruz told Eco-Business.
Civil society organisations have also been calling on national legislators to pass a Just Energy Transition Bill, which was drafted and filed in 2022. The bill includes next-steps on what the country needs to do to move from a fossil fuels-based consumption economy to rely more on clean energy sources, but has been pending with no updates on when it will pass.
4. Domestic EV battery plant to help curb supply chain issues
President Ferdinand Marcos, Jr (right) is presented with a miniature replica of the Tesla Cybertruck at the launch of the EV giant’s flagship Philippine store in Bonifacio Global City, Taguig. Image: Presidential Communications Office
The launch of the first factory for electric vehicle (EV) batteries in the Philippines last year signalled how the mode of transport is winning favour in a country that is one of the most pollution-choked in Southeast Asia. The Philippines’ transport sector is the country’s fourth most pollutive industry, after the energy, agriculture and waste sectors.
In January this year, American multinational EV maker Tesla opened its flagship Philippine store in Bonifacio Global City, Taguig. At the launch, Philippines president Ferdinand Marcos, Jr. called on Tesla executives to consider hosting its battery manufacturing and assembly facilities in the archipelago too. These new developments come on the heels of a 10 per cent bump in EV and hybrid vehicle purchases in the country.
For now, the Philippines still imports its batteries predominantly from Vietnam and Indonesia which have supply chains that are plagued by transparency issues, as well as allegations of labour abuses, environmental crime and encroachment on Indigenous lands.
The local sector’s efforts to localise EV parts manufacturing could help curb the Philippines’ reliance on EV battery manufacturers and supply chains responsible for such exploitation.
Although the Philippines sits on 4.5 per cent of the world’s untapped nickel reserves and is a leading producer of energy transition minerals – including cobalt and copper – the country still exports nearly 95 per cent of its rare earth ores to China as the local industry lacks the capacity to manufacture EV batteries here.
The current administration has rolled out a number of measures to propel the growth of the EV industry in the country – including removing excise taxes on battery electric vehicles under the Tax Reform for Acceleration and Inclusion, or TRAIN Act as well as duty-free imports of charging stations and priority registration for EV owners, among other incentives under the Electric Vehicle Industry Development Act, or EVIDA.
5. A focus on driving momentum for EPR despite stalled global plastics deal
Informal waste workers ride a pedicab to transport the bags of recyclables they’ve recovered from a neighbourhood in Bacolod City in the country’s Western Visayas region. Image: Brian Evans, CC BY-SA 3.0, via Flickr.
2025 marks the Philippines’ third year of implementing the Extended Producer Responsibility (EPR) Act. The Department of Environment and Natural Resources (DENR) earlier reported that large producers diverted some 124,986 tonnes of plastic from landfills in 2023 – successfully fulfilling the EPR Act’s first-year goal of recovering 20 per cent of the country’s plastic footprint.
This was accomplished even as countries failed to strike a global deal to tackle global plastic pollution last month in South Korea, after a small group of oil producers held out against the majority of negotiating states pushing for an ambitious treaty that restricted plastic production.
The fifth and final scheduled session of the Intergovernmental Negotiating Committee (INC-5) meeting to ink the Global Plastics Treaty in Busan has been adjourned, after a meeting last December ended without a treaty to curb global plastic pollution. A 2024 survey found that nine out of 10 Filipinos are in favour of a worldwide treaty to ban single-use plastic.
The Philippines’ EPR Act stipulates that enterprises have to meet a December 2025 deadline to recover at least 50 per cent of their plastic footprint. By 2028, this mandated plastic recovery rate needs to hit 80 per cent.
The industries will have to tackle persisting challenges such as inadequate recycling infrastructure, insufficient waste segregation and an overreliance on plastic sachets across Philippines’ cities. Filipino consumers generate enough sachets annually to bury Metropolitan Manila under a foot of plastic; recycling rates remain low with only 9 per cent of annual plastic waste produced. There are unresolved debates such as whether waste-to-energy technologies should be deployed, with some highlighting the potential negative consequences that these methods might create, such as air pollution.
6. Tug-and-pull on LNG as ‘transition fuel’
Aerial shot of San Miguel Corporation’s ongoing liquified natural gas (LNG) projects along the Verde Island Passage in Batangas, Philippines. Image: Basilio Sepe
President Marcos signed the Philippine Natural Gas Industry Development Act into law at the start of the year. His administration is seeking to position the country as Asia Pacific’s key hub for liquefied natural gas (LNG) trade, and wants to incentivise investments in the industry. Marcos has been explicitly touting LNG as a “transition fuel” vital to the Philippines’ energy security and shift to renewables.
Marcos greenlit the measure less than a month after the Philippine Competition Commission approved a massive 184.89-billion-pesos (US$3.3 billion) joint venture led by three of the country’s richest power tycoons – Ramon Ang, Manuel V Pangilinan and Sabin Aboitiz – to manage what could become the Philippines’ “most expansive” integrated LNG facility in Luzon’s Batangas province.
Environmental advocates – including Greenpeace campaigner Jefferson Chua – have criticised the law as a step backwards for the country’s climate and decarbonisation goals.
“Let us call a spade a spade. ‘Natural’ gas is a harmful fossil fuel that contributes to the climate crisis. To say otherwise is an act of greenwashing and disinformation,” said Chua.
A 2024 study by Cornell University found that the greenhouse gas footprint of LNG as a fuel source could be as much as 33 per cent greater than that of coal when processing and shipping are taken into account.
Gerry Arances of the Power for People Coalition slammed Marcos for reneging on his promise to lower electricity costs and promote renewable energy.
“With the law giving benefits to gas equal to renewable energy, it sets back investments in clean sources, delaying the transition to a fully sustainable grid for the Philippines,” said Arances. “Gas is one of the most expensive sources of electricity. This bill ensures continued dependence on expensive [power].”
The archipelago aims to raise the share of renewables in the country’s energy mix to 35 per cent by 2030 and to 50 per cent by 2040, according to the Philippine Energy Plan.
With much of the Philippines’ LNG expansion concentrated in coastal Batangas province, the marine biodiversity hotspot Verde Island Passage is also under threat. The corridor might see the development of more than a dozen fossil gas plants and up to seven LNG import terminals in the next few years.
“The president’s term coincides with the most crucial years for climate action. His actions will determine the future of one of the most vulnerable nations to climate disasters,” Greenpeace’s Chua said.
This story is part of Eco-Business’ Asia Outlook 2025 series, which tracks the key trends and developments across the region in the new year.
