TWENTIETH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session
SENATE
166
jyi-7 A 9 36
S. No.
Introduced by Senator Loren Legarda
AN ACT
PROMOTING A LOW CARBON ECONOMY, ESTABLISHING FOR THIS 
PURPOSE AN EMISSIONS TRADING SYSTEM AND IMPLEMENTATION 
MECHANISM TO ACHIEVE NATIONAL CLIMATE TARGETS
EXPLANATORY NOTE
The climate crisis continues to deepen, with more severe and frequent extreme 
weather events, accelerated sea-level rise, and growing socio-economic vuinerabiiities 
observed giobally and in the Philippines. Scientific consensus affirms that human activity 
is the dominant cause of globai warming, primarily through greenhouse gas (GHG) 
emissions from fossil fuel combustion and deforestation.
As of 2024, the Intergovernmental Panel on Climate Change (IPCC) reports that 
globai surface temperature has aiready risen by 1.1°C above pre-industrial levels (1850- 
1900), with the rate of warming continuing to increase. Without deep, rapid, and 
sustained reductions in emissions, globai warming is likely to reach or exceed 1.5°C in the 
eariy 2030s—a threshold beyond which climate-reiated risks will escalate significantly for 
health, agriculture, ecosystems, and economies.1
In the Philippines, the Climate Action Tracker rates the country's climate policies 
and action as "Insufficient," meaning current measures are not aligned with the 1.5°C
1 Retrieved June 26, 2025 from: IPCC AR6 Synthesis Report, 2023 - 
Http<;;//www.ipcc.ch/report/ar6/svr/downloads/report/IPCC AR6 SYR LonqerReport.pdf
1


pathway. The country remains highly vulnerable to climate impacts, experiencing stronger 
typhoons, worsening droughts, and significant coastal risks.2
To fulfill its commitment under the Paris Agreement, the Philippines submitted its 
first Nationally Determined Contribution (NDC) in 2021, pledging a 75% reduction in GHG 
emissions from 2020 to 2030, of which only 2.71% is unconditional. This ambitious target 
underscores the need for strong institutional, financial, and policy support mechanisms to 
operationalize climate goals. As of 2024, efforts are underway to update and enhance the 
NDC to reflect more realistic mitigation pathways, particularly in energy and transport 
sectors.3
The transformation toward a low carbon and climate-resilient economy is a national 
imperative and an opportunity. This bill establishes a cap-and-trade mechanism, allowing 
entities that emit less than their allocated GHG cap to sell allowances, while those 
exceeding their caps may purchase additional allowances. Such a market-based system 
has been successfully implemented in countries like South Korea and the European Union, 
creating incentives for decarbonization, low carbon innovation, and efficient emission 
reduction.
This bill complements other key national frameworks such as the National Climate 
Change Action Plan (NCCAP), the National Climate Risk Management Framework 
(NCRMF), and the institutionalized Climate Change Expenditure Tagging (CCET). The 
emissions trading system (ETS) supports both market and non-market approaches under 
the United Nations Framework Convention on Climate Change (UNFCCC), providing 
financial flexibility for climate action while ensuring national emission limits are met.
The implementation of a nationally appropriate carbon pricing mechanism will not 
only contribute to achieving our NDC targets but also promote clean energy investments, 
climate-resilient infrastructure, and green jobs, especially among vulnerable communities.
In view of the foregoing, the passage of this measure is earnestly sought.
2 Retrieved June 26, 2025 from:Climate Action Tracker, Phiiippines, 2024, - 
https://ciimateactiontracker.org/countries/phiiippines/
3 Retrieved June 26, 2025 from: UNFCCC NDC Registry, Phiiippines - 
https://unfccc.int/sites/defauit/fiies/NDC/2022-06/Philippines%20-%20NDC.pdf


TWENTIETH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session
SENATE
S. No. 166
25 JUL-7 A 9:36
Introduced by Senator Loren B. Legarda
AN ACT
PROMOTING A LOW CARBON ECONOMY, ESTABLISHING FOR THIS 
PURPOSE AN EMISSIONS TRADING SYSTEM AND IMPLEMENTATION 
MECHANISM TO ACHIEVE NATIONAL CLIMATE TARGETS
Be It enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled:
1 
Sec. 1. Short Title. - This Act shall be known as the "Low Carbon Economy Act."
2 
Sec. 2. Declaration of Policy. - It is the policy of the State to promote sustainable
3 
development and adherence to the internationally agreed frameworks for mitigation
4 
of climate change and decreased vulnerability to its impacts. Towards this end, there
5 
is a need to maximize the contribution of the industrial and commercial sectors in
6 
reducing greenhouse gas emissions (GHG) and minimize the adverse effects of climate
7 
change through the establishment of a policy environment for technological
8 
development and transfer, capacity building, sustainable finance supporting just
9 
transition towards low carbon economy, including the configuration of a nationally-
10 
appropriate market-driven system of tradable GHG allowances, among other options,
11 
to optimize the country's carbon goal-based transformation. The participation of
12 
LGUs, academe, non-government stakeholders, especially champions in critical
13 
industries for just transition, banking, and financial institutions, civil society, and the
14 
development partners shall be ensured.
15 
State-of-the-art and emerging low carbon technologies suitable for the
16 
Philippine conditions, especially those that will increase the livelihoods and productivity
1


1 
of the sectors concerned, and support a just transition across all GHG-emitting socio-
2 
economic sectors with an emphasis on the energy and transport sector, including
3 
those that will impact to building resilience and investments at the most vulnerable
4 
communities, shall be supported under the means of implementation under the Paris
5 
Agreement. Bilateral and multilateral approaches shall be optimized in ensuring
6 
accelerated flow of support to the country under this Act.
7 
Sustainable mobilization of financial resources, technological innovation, and
8 
capacitation of both human resources and institutions, both government and non-
9 
government, shall be a primary support mechanism under this Act.
10 
Sec. 3. Definition of Terms. - For the purposes of this Act, the following terms are
11 
defined:
12 
a) "The Paris Agreement" shall refer to a legally binding international treaty
13 
on climate change adopted by 196 Parties at the 21st Session of the
14 
Conference of the Parties (COP 21) in Paris, on 12 December 2015 and
15 
entered into force on 4 November 2016, with a goal to limit global
16 
warming to well below 2, preferably to 1.5 degrees Celsius, compared
17 
to pre-industrial levels;
18 
b) "Low Emission Development Strategy (LEDS)" shall refer to a national,
19 
high-level, comprehensive, long-term strategy, developed by domestic
20 
stakeholders, which aims at decoupling economic growth and sociai
21 
development from GHG 
growth;
22 
c) "Low Carbon Technology" refers to equipment, infrastructure systems,
23 
processes, methods, innovations, practices, and associated knowledge
24 
that significantly reduce or eliminate GHG emissions compared to
25 
conventional technologies. This includes, but is not limited to, renewable
26 
energy systems, energy efficiency solutions, clean transport
27 
technologies, sustainable agriculture practices, waste-to-energy
28 
systems, carbon capture and storage, and nature-based solutions that
29 
contribute to achieving a iow carbon and climate-resiiient economy.
30 
Such technologies must be suitable to Philippine conditions and aligned
31 
with the country's NDC, just transition goals, and long-term climate
32 
strategies.;


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
31
32
d) "Sustainable Development" shall refer to development that meets the 
needs of the present without compromising the ability of future 
generations to meet their own needs;
e) "Just Transition" shall refer to maximizing the social and economic 
opportunities of climate action, while minimizing and carefully managing 
any social disruption, political and social risks - through effective social 
dialogue among all groups impacted, and respect for fundamental labor 
principles and rights;
f) "Common but Differentiated Responsibilities and Respective Capabilities 
(CBDRRC)" shall refer to the principle recognizing that each country vary 
in terms of contributions to global environmental degradation, and 
acknowledging that developed countries should bear primary 
responsibilities in the international pursuit of sustainable development, 
including the pressures put by their societies to the environment, their 
command on technologies and financial resources, and their contribution 
to the largest proportion of historical and current GHG emissions;
g) "Climate Justice" shall refer to the allocation of burdens and benefits 
among individuals, nations and generations;
h) "Net Zero Economy" shall refer to the means of cutting greenhouse gas 
emissions to as close to zero as possible, with any remaining emissions 
re-absorbed from the atmosphere, by oceans and forests for instance;
i) "Carbon Dioxide Equivalent" shall refer to the quantity of carbon dioxide 
that makes the same contribution to global warming as a given amount 
of greenhouse gas, taking into account the global warming potentials 
published by the Intergovernmental Panel on Climate Change;
j) "Greenhouse Gas (GHG)" shall refer to the following gases covered 
under the 2006 Intergovernmental Panel on Climate Change (IPCC) 
guidelines: carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, 
perfluorocarbons, sulfur hexafluoride, or any other anthropogenically- 
emitted gas that is estimated by the Philippine Greenhouse Gas 
Inventory Management and Reporting System (PGHGIMRS) agencies to 
contribute to global warming;


1 
k) "Covered Sector" shall refer to the industry and commercial sectors
2 
and/or, to sectors as may be determined appropriate by the oversight
3 
body;
4 
I) "Levels of GHG Inventory" shall refer to different ievels as prescribe by
5 
the DENR-EMB such as global, national, community, sectoral, entity,
6 
product, facility and projects; and
7 
m) "Sector/s" shall refer to the sectors prescribed under the IPCC
8 
guidelines used as basis for the Philippine Nationally Determined
9 
Contribution (NDC), including: agriculture, forestry and other land use,
10 
waste, industrial processes and 
product use (IPPU), energy, and
11 
transport.
12 
n) "Allowance" refers to a government-issued permit under the emissions
13 
trading system established by this Act, authorizing the holder to emit
14 
one (1) metric ton of carbon dioxide or its carbon dioxide equivalent
15 
(C02e) of greenhouse gases during a specified compliance period.
16 
Allowances may be allocated for free, auctioned, traded, or banked in
17 
accordance with the rules and regulations issued by the implementing
18 
agencies. Each allowance represents a unit of tradable emissions right
19 
under the cap-and-trade system.
20 
o) "Climate Reinvestment Fund" or CRF refers to a special account created
21 
under this Act, into which proceeds from the auction of emissions
22 
allowances, civil penalties for non-compliance, and other related
23 
revenues are deposited. The CRF shall be administered by the DENR in
24 
coordination with the CCC, and shall be used exclusively to finance
25 
programs, projects, and activities related to climate change mitigation,
26 
adaptation, just transition, technology deployment, and capacity
27 
building, as aligned with the Nationally Determined Contribution (NDC)
28 
and subject to transparent governance and audit mechanisms.
29
30 
ARTICLE II
31 
Philippine Greenhouse Gas Inventory Management and Reporting System
32 
(PGHGIMRS)


1 
Sec. 4. Institutionalization of the PGHGIMRS. - The PGHGIMRS under Executive
2 
Order (EO) No. 174, s. 2014 is hereby institutionalized, to facilitate the GHG inventory
3 
management and reporting system in relevant government agencies to enable the
4 
country to transition towards a climate-resilient pathway for sustainable development.
5 
Sec. 5. Implementing Agency. - The Climate Change Commission (CCC) shall
6 
be the overall lead in the implementation of the PGHGIMRS. It shall be responsible to:
7 
a) Provide direction and guidance in the accounting and reporting of GHG
8 
emissions from identified key source sectors in order to develop and
9 
maintain centralized, comprehensive, and integrated data on GHGs in all
10 
levels of inventory particularly community-level and entity-level;
11 
b) Develop a system for the archiving, reporting, monitoring, and
12 
evaluating GHG inventories in all key levels; and
13 
c) Provide and facilitate continuous capacity building initiatives in the
14 
conduct of GHG inventories to ensure the application of updated
15 
methodologies.
16 
GHG data analytics generated under this measure shall be a reference for the
17 
successive enhancement of the NDCs, especially in identifying policies and measures
18 
that could be pursued economy-wide, respecting sectoral challenges and opportunities
19 
for transformation, including human resources and cost or capital requirements
20 
appropriate for government and non-government and industry stakeholders.
21 
Sec. 6. Sectoral Agencies. - The following shall be the lead sectoral agencies
22 
for the GHG inventories:
23 
a. Department of Agriculture (DA) and the Philippine Statistics Authority
24 
(PSA) for the agriculture Sector;
25 
b. Department of Energy (DOE) for the energy sector;
26 
c. Department of Environment and Natural Resources (DENR) for the
27 
waste, industrial processes, and the forestry and other land-use sectors;
28 
and
29 
d. Department of Transportation (DOTr) for the transport sector.
30 
The Department of Science and Technology (DOST), Department of Health
31 
(DOH), Department of Public Works and Highways (DPWH), and Department of


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
31
32
Tourism (DOT) shall also be considered in ensuring close collaboration of the sectors 
concerned in informing transformative options under the NDC.
The CCC shall invite the concerned local government units (LGUs), academe, 
and private and public institutions to participate, complement, and assist in the 
implementation of the PGHGIMRS and this Act.
The PSA may assist other lead agencies in the conduct of the sectoral GHG 
inventories.
The Department of the Interior and Local Government (DILG), as an oversight 
agency for local governments, shall ensure the compliance of local governments 
through:
i. Issuance of guidelines for accounting community-scale GHG 
emissions, managing community-scale GHG inventories, and 
mainstreaming the results and findings thereof in the Comprehensive 
Development Plan (CDP) and subsequent programming processes, in 
coordination with the CCC;
Provision of continuous capacity building to local governments related 
to the foregoing;
Incorporation in the Seal of Good Local Government mechanism of the 
compliance of local governments; and 
Monitoring of the compliance of local governments
The DENR, Department of Trade and Industry (DTI), and Securities and 
Exchange Commission (SEC) shall serve as oversight agencies in ensuring the 
compliance of entities in the preparation and management of entity-level greenhouse 
gas inventories, the reporting of mitigation measures addressing the results and 
findings of the foregoing, and monitoring and reporting thereof through the issuance 
of relevant policies and guidelines, and continuous capacity building.
Sec. 7. Responsibilities of the Lead Agencies for National GHG Inventories. The 
lead agencies shall be responsible for the following:
a) Conduct, document, archive, and monitor sector-specific GHG 
inventories;
b) Report sector-specific GHG inventories/emissions to the CCC based on 
the agreed reporting scheme; and
II.
III.
IV.


1 
c) Perform such other functions as may be necessary for the
2 
implementation of this Act.
3 
Sec. 8. Reports. - The CCC shall submit to the President and to both Houses of
4 
Congress an annual report on the status of the implementation of the PGHGIMRS. The
5 
PGHGIMRS shall prepare a report or a technical annex to the Biennial Transparency
6 
Report on the National GHG Inventory of certain inventory year/s in accordance with
7 
the timeline identified during the inventory planning stage under the Section 2 of Rule
8 
II of the Adopted Implementing Rules and Regulations of the EO 174 s. 2014.
9 
Sec. 9. National GHG Inventory. - The PGHGIMRS shall endeavor to use the
10 
2019 Refinement of the 2006 IPCC Guidelines for National Greenhouse Gas
11 
Inventories, with consideration to the national circumstances of the country, including
12 
applicable flexibilities accorded to Non-Annex I Country Parties of the Paris
13 
Agreement, which includes the Philippines.
14
15 
ARTICLE III
16 
Nationally Determined Contribution (NDC)
17
18 
Sec. 10. Components of the Philippine NDC. - The NDC serves as the long-term,
19 
multi-decadal roadmap on GHG mitigation and climate-resilience of the Philippines,
20 
with a goal to achieve a balance between anthropogenic emissions by sources and
21 
removals by sinks of greenhouse gasses in the second half of this century, on the
22 
basis of equity, and in the context of sustainable development and efforts to eradicate
23 
poverty, in observance of the fundamental consideration of climate change adaptation
24 
as the core strategy of the Philippines on climate action.
25 
Pursuant to the Philippines' commitment under the Paris Agreement, the
26 
Government shall prepare, communicate and maintain successive NDCs. It shall
27 
communicate an NDC to the UNFCCC every five (5) years.
28 
The NDC shall include, but not be limited to, the following components:
29 
a) GHG emissions avoidance measures and mitigation potential;
30 
b) Mitigation co-benefits in adaptation, sustainable development, and
31 
poverty reduction;


1 
c) Means of implementation such as through finance, capacity building,
2 
technology transfer and development;
3 
d) Gaps and needs; and
4 
e) System for monitoring, evaluation, and reporting to enable participation
5 
of relevant stakeholders to address challenges and meet the objectives
6 
of inclusive just transition.
7 
It must endeavor to indicate the Philippines' strategic directions and measures
8 
to build resilience and balance the investments and opportunities for just transition,
9 
by leveraging on the capacity of local governance units to transform the socio-
10 
economic conditions of the people, up to the smallest units of governance, through
11 
the means of the implementation espoused under the Paris Agreement.
12 
Sec. 11. The NDC Steering Committee. - The CCC shall be the overall lead in
13 
the development, implementation, and monitoring and evaluation of the NDC, with
14 
the following agencies as members, to comprise the NDC Steering Committee:
15 
a) The Department of Economy, Planning, and Development (DEPDEV) -
16 
lead agency for the economy-wide GHG emissions modelling vis-a-vis
17 
gross domestic product (GDP) projections, integration in the Philippine
18 
Development Plan (PDP) that is spatially articulated through the National
19 
Spatial Strategy, and sectorally articulated through PDP chapters, and
20 
ensuring vertical coherence through Regional Development Plans and
21 
corresponding regional development strategies;
22 
b) Department of Agriculture (DA) - lead agency for the agriculture sector;
23 
c) Department of Energy (DOE) - lead agency for the energy sector;
24 
d) Department of Environment and Natural Resources (DENR) - lead
25 
agency for the waste, industrial processes and product use (IPPU) and
26 
forestry and other land use (FOLU), in coordination with Department of
27 
Human Settlements and Urban Development (DHSUD);
28 
e) Department of Transportation (DOTr) - lead agency for the transport
29 
sector;
30 
f) Department of Foreign Affairs (DFA) - lead agency to facilitate, along
31 
with the CCC, coordinating with the development partners viable,
32 
country-driven, needs-based 
technical assistance, as may be


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
31
32
recommended by agencies concerned, consistent with the PDP and 
other investment and resilience-related and the multi-decadal climate 
action planning and programming framework;
g) Department of Finance (DOF), to coordinate on matters concerning fiscal 
policies related to climate change and monitor and report measures on 
climate finance, including recommendations on matters related to 
receiving donations and/or grants by the CCC under RA 10174;
h) Department of Budget and Management (DBM), to ensure annual 
appropriations for implementation;
i) Department of Labor and Empioyment (DOLE), to ensure that the 
provisions of this Act are aligned with the Green Jobs Act;
j) Department of Science and Technology (DOST), to facilitate innovation 
options through technology development and transfer appropriate to the 
conditions of the subnational units and relevant stakeholders, linking 
said initiative towards enhancing human capital development in 
coordination with industries, higher education institutions, LGUs, among 
others;
k) Department of the Interior and Locai Government (DILG), to facilitate 
coordination with the various subnational governance units to ensure 
they contribute to the continuing enhancement and implementation of 
the NDCs, especially on informing transformative options for investment 
and resilience building purposes, consistent with local development 
opportunities and priorities, as may be incorporated in their respective 
CDPs, Annual Investment Plans (AIPs), and Local Climate Change Action 
Plan (LCCAPs);
l) Department of Health (DOH), to lead in the determination of low-carbon 
investments, efficient transformation of the health sector consistent with 
energy just transition and sustainable consumption and production, and 
health co-benefits measurement of climate mitigation in other sectors;
m) Department of Public Works and Highways (DPWH), to integrate the 
poiicies and measures under the Build-Build-Build Program, and ensure 
the mainstreaming of poiicies and regulations on infrastructure


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
31
32
component of the NDC for implementation industry-wide and by the 
LGUs, in coordination with the DILG;
n) Department of Tourism (DOT), to consider nature-based solutions in 
developing, promoting, and monitoring tourism enterprises consistent 
with whole of ecosystem approaches, creation of green jobs, and 
sustainable consumption and production that benefit the various LGUs, 
for inclusive and responsible, climate-aligned tourism sector;
o) Department of Human Settlements and Urban Development (DHSUD), 
to effectively and efficiently link local investment and transformation 
through the NDC alignment with the various local plans under its 
jurisdiction, to ensure integrated low carbon development and 
sustainable development options under the New Urban Agenda, 
especially the vulnerable communities;
p) The Department of Trade and Industry (DTE), together with the Board 
of Investments (BOI), to ensure investment opportunities of the local 
industries, especially the micro, small, and medium enterprises 
(MSMEs), are considered in the just transition mechanism under the 
NDC; and
q) The Education Sector, namely the Department of Education (DepEd) and 
Commission on Higher Education (CHED), to ensure the proper 
information, education, and communication (lEC), contribute to 
research deveiopment, extension, and innovation and assist in the 
implementation of this Act.
The Members of the CCC Advisory Board and the National Panel of Technical 
Experts (NPTE) under Republic Act No. 9729, as amended, and other government 
agencies and stakeholders in the areas of coastal resources, health, agriculture, water, 
forestry, biodiversity, environment, ecosystem, energy, education, tourism, trade, 
infrastructure, and settlement, among others, shall participate in the development and 
implementation of the NDC.
To ensure aiignment among deveiopment plans and climate change strategies, 
the DEPDEV and CCC shall be responsible for harmonizing and ensuring the 
complementation of NDC with national and local development planning instruments.
10


1 
The DEPDEV shall integrate the NDC into the Philippine Development Plan. The CCC
2 
and DILG shall assist LGUs in the integration of the NDC in the LCCAPs, Local
3 
Development Plans (LDPs), and Comprehensive Land Use Plans (CLUP).
4 
The NDC Steering Committee shall formulate the NDC policies and measures
5 
based on the best available science and in keeping with robust development and
6 
transformative aspirations of the country, consistent with national circumstances.
7 
The CCC, along with the nationai government agencies (NGAs) concerned, shall
8 
establish a local NDC Steering Committee to jumpstart and sustain local-based
9 
transformative strategies in alignment with the NDC, subject to the issuance of policy
10 
guidance following multi-sectoral consultation, especialiy with the Regional
11 
Development Councils (RDCs) under the supervision of the DEPDEV.
12 
Specifically, the RDCs shall be considered points of convergence for low carbon
13 
development at the regional or subnational levels that inform pathways for
14 
transformation, including optimization of investment options, as may be aligned with
15 
physical and socio-economic challenges due to climate change impacts.
16 
Parallel effort shall be the formation of local counterparts for scientific and
17 
technological advice to said Sub-National Steering Committees to be comprised of the
18 
members of the NPTE and field units of the DOST, subject to the issuance of policy
19 
guidance by the CCC and DOST, especially with regard to engaging the Higher
20 
Education Institutions (HEIs) /State Universities and Colleges (SUCs) through
21 
CHED.
22 
The CCC should formulate and implement robust communication and advocacy
23 
strategies, in coordination with reievant government and non-government
24 
stakeholders, across levels of governance, to ensure that the low carbon development
25 
directions are communicated effectiveiy to inspire convergence at the broadest scope
26 
possible, up to the smallest unit of governance.
27 
Sec. 12. Allocation of funds. - The aforementioned agencies shail aliocate from
28 
their annual appropriations adequate funds for the impiementation of their mandates,
29 
including training and capacity building, under this Act, subject to support under the
30 
mechanism of the means of implementation of the Paris Agreement.
31 
Sec. 13. Annual Report on the NDC Implementation. - The CCC and NDC
32 
Steering Committee shall submit to the President and to both Houses of Congress, not
11


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22 
23
later than 30 March of every year following the effectivity of this Act, a progress report 
on the implementation of the NDC, and recommend legislation, where applicable and 
necessary.
ARTICLE IV
Local Climate Change Action Plan (LCCAP) Quality Assessment Review
System
Sec. 14. LCCAP. - Pursuant to Section 14 of RA 9729, the LGUs are the frontline 
agencies in the formulation, planning, and implementation of LCCAPs in their 
respective areas consistent with the Local Government Code, the National Strategic 
Framework on Climate Change (NSFCC), and the National Climate Change Action Plan 
(NCCAP).
The LCCAP shall describe strategic policy measures of the LGUs to reduce/avoid 
greenhouse gas emission (mitigation actions) and increase the community's resilience 
(adaptation actions) to the negative impacts of climate change.
Further, the LCCAP shall indicate the transformative opportunities present in 
LGUs towards green or low emission technological capacity building innovations that 
will support long-term low emission industrial development, livelihoods, ecosystems 
and environment, and well-being of the people, especially those most exposed to 
climate hazards. The modification of baseline information consistent with the best 
available science shall be pursued to inform the investment planning and programming 
aligned with the multi-decadal climate considerations, especially the location of human
24 
settiements and vital infrastructure programs of the government, including those
25 
pursued through public-private partnerships (PPP) approach.
26 
The LGUs and HEIs concerned shall be supported in the development and
27 
review of the LCCAPs, as priority impacts under this Act are those attributed to holistic
28 
and inclusive mobilization of resources and opportunities of the LGUs, with
29 
concomitant connection to building resilience for sustainable development up to the
30 
smallest units of governance.
12


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
31
Sec. 15. Establishment of a LCCAP Quality Assessment Review System (QAR). 
- The CCC together with the DILG shall formulate and institutionalize the-LCCAP QAR 
and establish a means of implementation and institutionalization for both agencies.
The LCCAP QAR process would provide an opportunity to provide a feedback 
mechanism to LGUs to improve on their LCCAP ensuring its responsiveness to local 
hazards and risks, and be able to shift towards resilience, and socio-economic 
transformation through low carbon and sustainable pathways.
The CCC together with DILG, shall formulate and disseminate a mechanism or 
instrument of quality assurance, after due consultation with relevant stakeholders. 
Further, the CCC and DILG shall identify relevant NGAs, SUCs and HEIs, and other 
stakeholders, which shall conduct and implement the quality assurance mechanism 
that may be established.
Sec. 16. Local Government Accountability - Performance on LCCAPs, including 
verified emissions reporting, shall be integrated into the criteria of the Seal of Good 
Local Governance (SGLG). Access to climate finance and technical assistance may be 
linked to measurable progress on GHG reduction and climate resilience, as determined 
by the DILG, in coordination with the CCC.
ARTICLE V
Climate Change Expenditure Tagging (CCET)
Sec. 17. Institutionalization of the CCET as an audit too! to track climate change 
adaptation and mitigation projects and programs. - The CCET jointly administered by 
the CCC and the DBM pursuant to Joint Memorandum Circular 2015-01 at the national 
level, and with the DILG pursuant to Joint Memorandum Circular 2015-01 at the local 
level, is hereby institutionalized. All annual expenditure programs of the government 
related to low carbon development, including those designed to increase climate and 
disaster resilience, shall be tagged and reported to determine the allocative efficiency 
of domestic funds towards those ends. A mechanism for reporting allocation and 
expenditure shall be issued jointly by the CCC, DBM, the DILG, Office of Civil Defense 
(OCD), and other relevant agencies. The Commission on Audit (COA), subject to audit
13


rules and regulations, shall produce timely reports on findings of climate expenditure 
audit.
Such allocation and expenses tagged shall be part of the assessment for the 
country's low carbon needs that are aligned to the NDC. Any funding gaps should be 
addressed using the climate finance mechanisms under the Paris Agreement, as may 
be pursued bilaterally or multilaterally, in coordination with the CCC, DFA, DOF, 
DEPDEV, DBM and other agencies concerned.
The progress of the CCET, both at the national and local levels, shall be 
reported to the Office of the President, the Senate and the House of Representatives 
by the CCC in accordance with the reportorial requirement under RA 9729, as 
amended.
The continuing capacity building for CCET shall be pursued through convergent 
approaches of all the stakeholders, especially of the non-government stakeholders, to
14 
contribute to identifying critical climate programs and projects that need to be funded,
15 
including monitoring and evaluating institutional and support mechanisms under the 
CCET.
1
2
3
4
5
6
7
8 
9
10
11
12
13
16
17
18
19
20 
21 
22 
23
ARTICLE VI
National Integrated Climate Change Database and Information Exchange
System (NICCDIES)
Sec. 18. Institutionalization of the NICCDIES as a Primary platform on Climate 
Change Information. - Notwithstanding existing and related mandates of other
24 
agencies, the CCC shall issue guidelines to accelerate its utilization, including engaging
25 
agencies, academia, and the private sector to populate the data sets therein, and
26 
instituting a feedback mechanism to enhance content, access, and continuous
27 
improvement to support long-term, national driven, people and planet-centric climate
28 
governance in the country.
29
30 
ARTICLE VII
31 
Cap and Trade System
14


1 
Sec. 19. Emission Reduction Measures/Targets. - Emission avoidance/reduction
2 
measures shail be geared towards equitabie implementation of just transition using
3 
nationally-appropriate carbon market and non-market approaches. This shall be
4 
adopted upon the recommendation of the NDC Steering Committee, after careful
5 
study and consultation, to achieve maximum technologically-feasible and cost-
6 
effective avoidance/reduction strategies, programs, and projects to meet the carbon
7 
goal considered in this Act, with direct impact to low carbon industrial productivity and
8 
sustainable development.
9 
Annual emission avoidance/reduction targets, including the sector/s and levels
10 
to be covered, shall be set for each calendar year by the President, through the
11 
recommendation of the NDC Steering Committee, with supporting investment and
12 
social safeguards roadmap, and upon consultation through multi-stakeholder, whole
13 
of government, and whole of society approaches.
14 
Sec. 20. Sectorai Decarbonization Roadmaps. - Each covered sector shall
15 
develop and submit a five-year decarbonization roadmap that outlines sector-specific
16 
emission reduction targets, technology adoption pathways, and financing strategies
17 
aligned with the Philippines' NDC.
18 
These roadmaps shall be submitted to the CCC for review and consolidation,
19 
and shall serve as inputs to the setting of sectoral caps under this Act, the
20 
development of allowance allocation strategies, and the monitoring and reporting
21 
frameworks of the national government. The CCC shall ensure that the preparation
22 
and review of these roadmaps follow a participatory, science-based, and gender-
23 
responsive approach.
24 
Sec. 21. Cap on Greenhouse Gas Emissions. - To achieve the emission targets
25 
set pursuant to this Act, Caps on greenhouse gas emissions shall be applied to covered
26 
sectors based on criteria including: (a) total emissions volume, (b) cost-effectiveness
27 
of emissions reduction opportunities, and (c) potential co-benefits and social
28 
safeguards, as determined by the NDC Steering Committee.
29 
Sec. 22. Aiiowances. - The DENR, upon the recommendation of the NDC
30 
Steering Committee and further upon appropriate consultation, shall issue annually a
31 
quantity of GHG emissions allowances equivalent to the emissions allowed under the
32 
cap imposed for such year. Each allowance shall authorize the emission of one (1)
15


1 
metric ton of carbon dioxide equivalent (C02e), covering all greenhouse gases as
2 
defined under this Act.
3 
Sec. 23. Distribution of Aiiowances. - The allowance shall be distributed by the
4 
DENR to the covered sector by allocation.
5 
At least thirty percent (30%) of the total annual GHG emissions allowances
6 
shall be auctioned beginning in the third year of implementation of the emissions
7 
trading system. The percentage of auctioned allowances shall increase annually and
8 
shall reach one hundred percent (100%) auctioning by the tenth year.
9 
During the transition period, the remaining allowances may be allocated for
10 
free based on transparent benchmarking criteria, taking into account emissions
11 
intensity, best available technology, and sectoral competitiveness to ensure a just and
12 
equitable transition.
13 
All revenues generated from the auctioning of allowances shall be deposited
14 
into the Climate Reinvestment Fund, and shall be used exclusively for climate
15 
mitigation, adaptation, and just transition programs in accordance with this Act.
16 
Sec. 24. Carbon Trading System. - There shall be an established and
17 
interoperable central registry, trading and reporting system under the DENR, which
18 
allowances issued under this Act may be sold, exchanged, purchased, or traded by
19 
any person or entity, subject to policy guidelines to be issued upon due consultation.
20 
Notwithstanding the foregoing, non-market approaches consistent with just transition
21 
strategies needed to accelerate the attainment of low carbon economy, shall be
22 
pursued, subject to further review and consultation process, along with the
23 
mechanisms concerning carbon market activities in this Act.
24 
Sec. 25. Creation or Engagement of a Carbon Market Operator. — The DENR,
25 
shall serve as the primary technical and enforcement agency for the operational
26 
aspects of the emissions trading system. This shall include the administration of
27 
emissions allowances, oversight of carbon trading activities, enforcement of
28 
compliance obligations, and implementation of market integrity safeguards in
29 
accordance with this Act and its implementing rules and regulations.
30 
For the purpose of administering the registry, auction system, and trading
31 
platform under this Act, the DENR may either:
16


1 
(a) establish, pursuant to this Act, a dedicated office within the DENR that
2 
shall function as the Carbon Market Operator (CMO); or
3 
(b) engage the services of an independent Carbon Market Operator through
4 
concession agreement, public bidding, other procurement methods, or
5 
other means allowed by law, subject to applicable rules and standards
6 
on performance, transparency, and accountability.
7 
The CMO shall be responsible for designing, operating, and maintaining the
8 
central registry, trading platform, and auction system established under this Act, in
9 
accordance with policy guidelines and technical standards to be issued by the DENR.
10 
Should the services of an external CMO be engaged, it shall be subject to
11 
regulatory oversight by the DENR and the CCC, and shall comply with all requirements
12 
on data integrity, system security, market transparency, and fair access. A portion of
13 
the auction revenues, not exceeding a percentage jointly determined by the DENR
14 
and the DOF, may be allocated for the compensation of the CMO, provided that the
15 
majority of such revenues shall accrue to the Climate Reinvestment Fund.
16 
To promote transparency, integrity, and public accountability in the
17 
administration of the emissions trading system, the Carbon Market Operator shall
18 
develop and maintain a publicly accessible online portal that discloses information on
19 
allowance allocations, auction results, trading volumes and prices, and compliance
20 
status of covered entities. The DENR, in coordination with the CCC, shall ensure that
21 
the CMO's operations are subject to annual independent audits, the results of which
22 
shall be submitted to Congress and published on the portal. A multi-stakeholder
23 
oversight panel composed of representatives from government, industry, academe,
24 
and civil society shall be convened by the CCC to provide advisory input and monitor
25 
the integrity and equity of market operations. All personnel and entities involved in
26 
the CMO shall be required to disclose potential conflicts of interest and adhere to strict
27 
rules against insider trading and market manipulation, as provided in the implementing
28 
rules and regulations.
29 
Sec. 26. Consumer Protection in Market Operations. — In implementing the
30 
emissions trading system under this Act, the DENR, in coordination with the
31 
Department of Trade and Industry (DTI), the Department of Energy (DOE), and the
32 
Department of Social Welfare and Development (DSWD), shall ensure that cost pass-
17


1 
through to consumers, particularly low-income and vulnerable households, does not
2 
result in undue or unjust financial burden.
3 
To this end, appropriate social safeguards, transitional support measures, or
4 
sectoral interventions may be developed and integrated into market operations or the
5 
implementing rules and regulations, to protect consumer welfare during the transition
6 
to a low-carbon economy.
7
8 
ARTICLE VIII
9 
Transparency and Reporting
10
11 
Sec. 27. Submission of nationai reports to the UNFCCC - The Philippines, as a
12 
Non-Annex I Party to the UNFCCC, shall submit national reports mandated under the
13 
Convention and its Paris Agreement, especially the National Communications and
14 
Biennial Transparency Reports, in accordance with capacities and provision of timely
15 
and appropriate means of implementation. These reports shall incorporate those
16 
outputs and reports mentioned in the previous sections, as appropriate.
17 
Sec. 28. Roie of the CCC. - The CCC shall develop systems for transparency
18 
and reporting, including measurement, reporting, and verification, and enhance
19 
existing institutional arrangements to ensure continued and timely preparation of
20 
national reports, in coordination with relevant government agencies, observing whole-
21 
of-society and participatory processes.
22 
In the implementation of this Act, the CCC shall serve as the overall policy lead
23 
and integrator for climate transparency systems and climate governance, including
24 
the development of MRV standards and methodologies, the formulation and updating
25 
of the NDC, the conduct of national greenhouse gas inventories, and the coordination
26 
of climate monitoring and reporting frameworks across sectors. The CCC shall also
27 
lead in ensuring the alignment of national and local development plans with the
28 
objectives of this Act and the Paris Agreement.
29 
Sec. 29. Means of Impiementation for Transparency and Reporting. - The
30 
necessary means of implementation for transparency and reporting, especially
31 
provisions for hardware, software, and human resource requirements, shall be
18


1 
accessed and provided in accordance with resources made available to Parties to the
2 
UNFCCC and reasonable domestic resources.
3 
Sec. 30. MRV Enforcement and Oversight. - The DENR shall serve as the lead
4 
implementing agency for enforcing the Measurement, Reporting, and Verification
5 
(MRV) processes required under this Act. It shall coordinate with covered entities in
6 
receiving annual emissions reports, conducting third-party verification, and issuing
7 
compliance notices. The CCC shall provide oversight by developing the MRV standards
8 
and methodologies in line with UNFCCC guidance and IPCC protocols.
9 
The DENR shall accredit third-party verifiers based on technical competence,
10 
independence, and adherence to internationaily recognized standards for greenhouse
11 
gas validation and verification. The list of accredited verifiers shall be made publicly
12 
available and subject to regular performance reviews. The CCC and DENR shall jointly
13 
develop guidelines for accreditation, renewal, suspension, or revocation of verification
14 
authority, including mechanisms for complaints, conflict of interest declarations, and
15 
quality control audits.
16
17 
ARTICLE IX
18 
The Role of LGUs, DepEd, HEIs and SUCs in the implementation of this Act
19
20 
Sec. 31. Devolution of Roie to LGUs and IP Communities. - Pursuant to
21 
Executive Order No. 138 otherwise known as the Mandanas-Garcia Ruling which fully
22 
transfers the delivery of basic services to LGUs, LGUs should integrate climate change
23 
adaptation and mitigation measures in their local plans and programs.
24 
Sec. 32. Roie of DepEd, HEIs, and SUCs. - Pursuant to RA 9729, the DepEd
25 
shall integrate climate change into the primary and secondary education curricula
26 
and/or subjects, such as but not limited to, science, biology, sibika, history, including
27 
textbooks, primers, and other educational materials, basic climate change principles
28 
and concepts.
29 
HEIs and SUCs should integrate climate change as part of the curricula for all
30 
college courses in order to provide tertiary level students with sufficient grounding on
31 
said subject.
19


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
31
ARTICLE X
The Role of the Private Sector and Non-Government Stakeholders
Sec. 33. Role of the Private Sector, Non-Government Stakeholders, and 
Indigenous Cultural Communities. - To ensure inclusive and consultative nature of the 
processes and systems towards low carbon economy, just transition, multi­
stakeholder, whole of government and whole of society approaches to build 
consensus on nationally-appropriate just transition arrangements shall be considered.
In this regard, representatives of critical industries, groups of innovators, 
academics, civil society, people's organizations, financial institutions and 
intermediaries, and other related entities shall be enjoined to participate in the 
deliberations and decision-making activities under this Act, subject to appropriate 
guidelines to be formulated by the NDC Steering Committee, through the endorsement 
of the CCC.
Special consideration shall be given to the participation of Indigenous Cultural 
Communities and local communities located in or managing natural carbon sinks. 
Mechanisms for inclusive consultation, equitable benefit-sharing, and respect for 
customary governance structures shall be incorporated in the implementation of this 
Act and its implementing rules and regulations, in accordance with Republic Act No. 
8371.
ARTICLE XI
Polluters-Pays Principle for GHG Emissions
Sec. 34. Enforcement. - The DENR, in coordination with the agencies 
concerned, shall formulate immediately upon approval of this Act a system of 
enforcement and indemnification or appropriate sanctions consistent with the 
"polluters pay principle." The DENR shall establish the method of determining such 
market price, in coordination with the CCC, DOF, DTI/BOI, and DEPDEV.
Sec. 35. Monitoring. - The DENR shall ensure that greenhouse gas emissions 
and the use of allowances issued under this Act are accurately tracked, reported, and
20


1 
verified, aligned with the provisions of this Act, to ensure that the cap-and-trade
2 
system established under this Act is fully implemented.
3 
Sec. 36. Penalties. - Any covered entity that emits greenhouse gases in excess
4 
of its allowable emissions under this Act shall be liable to pay a civil penalty equivalent
5 
to twice the prevailing market price of one emissions allowance per metric ton of
6 
excess emissions.
7 
For the purposes of this section, the "market price" shall be determined based
8 
on the average clearing price of the most recent auctions conducted under this Act or
9 
such other pricing reference as may be set in the implementing rules and regulations,
10 
subject to periodic review by the DENR and DOF.
11 
Moreover, any person or entity engaged in market manipulation, insider
12 
trading, or fraudulent allowance transactions under the emissions trading system shall
13 
be subject to fines, imprisonment, or trading bans, pursuant to applicable penal laws,
14 
securities regulations, and the implementing rules and regulations of this Act.
15 
The DENR and DOF, in consultation with the CCC, may establish appropriate
16 
minimum or maximum penalty rates through the IRR to ensure equity, predictability,
17 
and market stability.
18 
If the excess emissions result from willful misrepresentation, fraudulent
19 
reporting, or deliberate non-compliance, the responsible entity shall be subject to
20 
additional administrative and criminal penalties under relevant laws, including possible
21 
suspension or revocation of permits or trading rights.
22 
All penalties collected under this section shall accrue to the Climate Reinvestment
23 
Fund.
24 
Sec. 37. Climate Reinvestment Fund. - There is an established fund to be known
25 
as the Climate Reinvestment Fund (CRF). The CRF shall consist of the amount of civil
26 
penalties assessed under Section 36 of this Act.
27 
The CRF shall be administered by the DENR, in coordination with the CCC and
28 
the DOF, and shall be used exclusively for programs and projects that:
29 
a. Implement renewable energy and energy efficiency solutions in off-grid
30 
and underserved areas, including solar microgrids, solar-powered water
31 
systems, and climate-smart agriculture applications;
21


1 
b. Deploy nature-based solutions such as reforestation, mangrove
2 
restoration, sustainable watershed management, and coastal ecosystem
3 
protection in areas with high climate vulnerability;
4 
c. Support just transition measures for displaced or transitioning workers
5 
and communities in carbon-intensive sectors, including skills retraining,
6 
green job placement programs, and small enterprise incubation;
7 
d. Rehabilitate and climate-proof critical infrastructure in disaster-prone
8 
and climate-impacted areas, including community evacuation centers,
9 
water supply systems, and resilient housing for low-income or displaced
10 
groups;
11 
e. Provide direct financial assistance to local communities and Indigenous
12 
Peoples (IPs) who are verified victims of climate-related disasters or
13 
slow-onset climate impacts, subject to reasonable criteria, monitoring
14 
plans, and performance-based evaluation under the IRR;
15 
f. Strengthen community-based early warning systems and localized
16 
climate risk information services, including 
hazard mapping,
17 
preparedness tools, and emergency response capability building;
18 
g. Support the development and deployment of national and local GHG
19 
emissions tracking systems, carbon accounting tools, and digital
20 
infrastructure for monitoring and verification; and
21 
Fund innovation, and pilot projects on low-emission technologies, climate-resilient
22 
livelihoods, and circular economy models aligned with the Philippines' NDC.
23 
At least ten percent (10%) of the Climate Reinvestment Fund shall be allocated
24 
annually for targeted social protection measures to address price shocks and livelihood
25 
disruptions experienced by low-income households as a result of emissions pricing or
26 
transition policies.
27 
The IRR shall include a mandatory, time-bound framework for mitigating
28 
consumer cost burdens, including, but not limited to, rebates, socialized utility rates,
29 
or direct cash transfers, particularly for low-income and climate-vulnerable
30 
households.
31 
All disbursements from the CRF shall be subject to the regular audit processes
32 
of the Commission on Audit (COA) and to a results-based monitoring and evaluation
22


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16 
17
system, to be developed in coordination with the CCC, to ensure transparency, 
accountability, and effectiveness in the use of funds. The CCC shall include a summary 
of CRF utilization and outcomes in its annual report to Congress under Section 39 of 
this Act.
The CRF may accept contributions from Official Development Assistance (ODA), 
private sector corporate social responsibility (CSR) programs, and other climate- 
related funding sources, provided such contributions are consistent with the objectives 
of this Act.
ARTICLE XII 
Miscellaneous Provisions
Sec. 38. Appropriations. - The amount necessary for the initial implementation 
of this Act shall be taken from existing allocations of the agencies concerned. 
Thereafter, such sums as shall be necessary to carry out the provisions of this Act 
shall be included in the annual General Appropriations Act.
Sec. 39. Annuai Report to Congress. - The DENR, in coordination with the CCC
18 
and the DOF, shall submit to Congress an annual report on the implementation of this
19 
Act.
20 
The report shall include:
21 
a. GHG emissions data and trends;
22 
b. Sectoral compliance with emissions caps and allowances;
23 
c. Performance of the carbon trading system, including revenues
24 
generated and utilization of the Climate Reinvestment Fund;
25 
d. Progress on implementation of the Sectoral Decarbonization
26 
Roadmaps and LCCAPs;
27 
e. Any proposed amendments to improve the implementation of this Act
28 
based on evolving science, technology, and global standards.
29 
Sec. 40. Impiementing Ruies and Reguiations. - The CCC, in coordination with
30 
the NDC Steering Committee agencies, shall draft and issue implementing rules and
31 
regulations necessary, in coordination with other relevant and appropriate government
32 
agencies within sixty (60) days after its approval.
23


1 
Sec. 41. Separability Clause. - If for any reason any section or provision of this
2 
Act is declared by the Court as unconstitutional or invalid, the other sections or
3 
provisions thereof shall not be affected thereby.
4 
Sec. 42. Repeating Clause. - All laws, ordinances, rules, and regulations, and
5 
other issuances or parts thereof, which are inconsistent with this Act, are hereby
6 
repealed or modified accordingly.
7 
Sec. 43. Effectivity. - This Act shall take effect fifteen (15) days after its
8 
complete publication in the Official Gazette or in two (2) newspapers of general
9 
circulation.
Approved,
24