1 
Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City 
TWENTIETH CONGRESS 
First Regular Session 
HOUSE BILL NO. 2055
Introduced by Representative Jose Manuel F. Alba 
AN ACT PROMOTING INVESTMENTS IN LOW CARBON ECONOMY, 
ESTABLISHING FOR THIS PURPOSE A CARBON EMISSION PRICING 
FRAMEWORK AND IMPLEMENTATION MECHANISM TO ACHIEVE LOW 
CARBON AND CLIMATE-RESILIENT ECONOMIC DEVELOPMENT 
EXPLANATORY NOTE 
The Earth’s temperature continues to rise at an alarming rate, 
significantly affecting every aspect of human life: food security, water 
supply, health, livelihood, economic growth, and human security. This is 
largely due to human activities. There is thus a pressing need to balance 
man’s desire for economic progress and the upkeep of our environment, our 
only source. 
In order to address the concerns relative to Climate Change, the Paris 
Agreement was adopted by almost 200 parties, including the Philippines, in 
2015. Its goal is to limit global warming to under 2°C above pre-industrial 
levels, and at the same time maintain the increase to 1.5°C.  
The Philippines has committed a 75-percent greenhouse gas (GHG) 
emission reduction and avoidance from 2020 to 2030 for its National 
Determined Contribution (NDC) under the Paris Agreement. 
This bill provides the mechanism to achieve this commitment. To 
determine GHG emissions across sectors, an inventory system will be 
July 17, 2025
8:03 am


2 
established. The Climate Change Commission (CCC), being the lead policy-
making body for climate change, shall be the lead implementing agency to 
manage and report the Philippine Greenhouse Gas Inventory System 
(PGHGIS) as well as the National Determined Contribution (NDC). It shall 
coordinate with various government agencies which shall lead in their 
respective sectors. The CCC shall also coordinate with Local Government 
Units (LGU) ensuring the integration of climate change adaptation and 
mitigation measures into their local plans and programs. Government 
agencies may be tapped to participate in capacity building of LGUs and 
economic sectors. 
Through the use of nationally appropriate carbon market and non-
market approaches, this bill promotes the utilization of Cap and Trade 
System aimed at pushing for transition to emission avoidance/reduction 
measures for stakeholders that is both just and equitable. 
It is worth noting that this bill was already deliberated upon by 
relevant government agencies and civil society groups during the 19th 
Congress, was approved by the House of Representatives, and was 
transmitted to and received by the Senate of the Philippines. 
For the foregoing reasons, the immediate consideration and approval 
of this bill is earnestly sought. 
JOSE MANUEL F. ALBA 
Representative, 1st District, Bukidnon


1 
Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City 
TWENTIETH CONGRESS 
First Regular Session 
HOUSE BILL NO. 2055 
Introduced by Representative Jose Manuel F. Alba 
AN ACT 
PROMOTING 
INVESTMENTS 
IN 
LOW 
CARBON 
ECONOMY, 
ESTABLISHING FOR THIS PURPOSE A CARBON EMISSION PRICING 
FRAMEWORK AND IMPLEMENTATION MECHANISM TO ACHIEVE LOW 
CARBON AND CLIMATE-RESILIENT ECONOMIC DEVELOPMENT 
Be it enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled: 
ARTICLE 1 
General Provisions 
SECTION 1. Short Title. – This Act shall be known as the “Low Carbon 
Economy Investment Act.”   
SEC. 2. Declaration of Policy. – It is hereby declared the policy of the 
State to promote sustainable development and environmental stewardship 
through the establishment of a low-carbon economy. This Act aims to 
achieve the country’s national climate targets by instituting a comprehensive 
carbon emission pricing framework and implementing mechanisms that 


2  
  
drive greenhouse gas (GHG) emissions reduction, enhance climate resilience, 
and foster sustainable economic growth.  
  
In pursuit of these goals, the State shall:  
  
(a) Institutionalize systems and methodologies for accurate and 
transparent GHG inventory management and reporting at all 
levels;  
(b) Develop and enforce sectoral decarbonization pathways and 
emission reduction targets in alignment with international climate 
agreements, particularly the   Paris Agreement;  
(c) Provide financial, technological, and capacity-building support to 
ensure the effective implementation of national climate action 
plans; 
(d) Promote investments and adoption of low-carbon technologies, 
renewable energy sources, and energy-efficient practices across all 
sectors of the economy;  
(e) Integrate climate change adaptation and mitigation measures into 
national and local development plans and programs;  
(f) Establish robust compliance mechanisms and incentives to 
encourage private sector participation in decarbonization efforts; 
and 
(g) Facilitate access to international climate finance and carbon 
markets to support the country’s transition to a low-carbon 
economy.  
 
By adhering to these principles, the State commits to fostering a 
resilient, inclusive, and sustainable future for all Filipinos.  
 
SEC. 3. Definition of Terms. – As used in this Act:  
 
(a) 
Carbon emission pricing framework refers to a system for setting a 
price on carbon emissions to incentivize reductions in GHG 


3  
  
emissions through market-based mechanisms such as carbon 
taxes, emissions trading systems, 18 and carbon offset 
mechanisms;  
 
(b) 
Carbon offset refers to reduction in GHG emissions or an increase 
in carbon storage, e.g., through reforestation, that is used to 
compensate 
for 
emissions 
occurring 
elsewhere, 
typically 
measured in metric tons of carbon dioxide equivalent (CO2e); 
 
(c) 
Covered enterprises refer to large and medium-sized enterprises 
whose emissions exceed a specific threshold set by the Climate 
Change Commission (CCC). These enterprises are required to 
prepare and implement decarbonization plans in accordance with 
this Act; 
 
(d) 
Decarbonization fund refers to a fund established by covered 
enterprises to allocate financial resources for emissions reduction 
activities, including investments in low-carbon technologies and 
carbon offset projects; 
 
(e) 
Decarbonization pathway refers to a strategic plan outlining 
specific, measurable, and time-bound targets and actions for 
reducing GHG emissions. This pathway includes emissions 
baselines, reduction strategies, and investment roadmaps aligned 
with national and sectoral decarbonization targets;  
 
(f) 
Emission reduction targets refer to specific goals for reducing 
GHG emissions, stated as percentage reductions from a baseline 
year, aimed at achieving national climate targets in line with 
international agreements such as the Paris Agreement; 
 


4  
  
(g) 
Emissions allowance refers to the permitted level of GHG 
emissions allocated to a covered enterprise for a specific period, 
as determined by the CCC; 
 
(h) 
Greenhouse gas emissions refer to emissions of gases that 
contribute to the greenhouse effect by absorbing infrared 
radiation, including carbon dioxide (CO2), methane (CH4), nitrous 
oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), 
and sulfur hexafluoride (SF6); 
 
(i) 
Internationally Transferred Mitigation Outcomes (ITMOs) refer to 
mitigation outcomes that are transferred between countries 
under Article 6 of the Paris Agreement, used to achieve nationally 
determined 
contributions 
and 
other 
international 
climate 
commitments;  
 
(j) 
Mitigation refers to actions taken to reduce or prevent the 
emission of GHG, including strategies to enhance energy 
efficiency, transition to renewable energy sources, and improve 
waste management practices;  
 
(k) 
Nationally Determined Contribution (NDC) refers to the Philippines’ 
long-term roadmap for GHG mitigation and climate resilience, 
outlining commitments to reducing emissions and adapting to 
climate impacts as part of the global effort to limit temperature 
rise under the Paris Agreement;  
 
(l) 
Paris Agreement refers to an international treaty under the United 
Nations Framework Convention on Climate Change aimed at 
limiting global warming to well below two degrees Celsius (2°C) 
above pre-industrial levels, with efforts to limit it to one point five 
degrees Celsius (1.5°C); and  


5  
  
(m) Third-party verifier refers to an independent entity accredited by 
the CCC to assess and verify the accuracy and reliability of GHG 
emissions data and the compliance of covered enterprises with 
the provisions of this Act.  
  
  
ARTICLE 2 
NATIONAL GHG EMISSIONS INVENTORY 
  
SEC. 4. Institutionalization of the Philippine Greenhouse Gas Inventory 
System (PGHGIS). – The PGHGIS is hereby institutionalized to systematically 
manage and report GHG inventories across multiple levels, including 
national, community, entity, facility, and project levels. This system is 
designed to enable the Philippines to transition towards a climate-resilient 
pathway, promoting the avoidance, reduction, and removal of emissions for 
sustainable development.  
  
SEC. 5. Lead Implementing Agency. – The CCC shall serve as the lead 
agency for the implementation of the PGHGIS. The CCC shall be responsible 
for the following:  
  
(a) Direction and Guidance – Provide overarching direction and 
guidance in the accounting and reporting of GHG emissions from 
identified key source sectors. This includes the development and 
maintenance of centralized, comprehensive, and integrated data 
on GHGs at all inventory levels, particularly at the community and 
entity levels; 
 
(b) System and Methodology Development – Continuously develop 
and update the system and methodology for the archiving, 
reporting, registering, monitoring, and evaluating of GHG 
inventories. This ensures that the methodologies used are up-to-
date and in line with international best practices; 


6  
  
(c) Capacity-Building 
– 
Facilitate 
continuous 
capacity-building 
initiatives in the conduct of GHG inventories to ensure the 
application of the latest methodologies. This includes providing 
training and support, with assistance from relevant agencies such 
as the Philippine Atmospheric, Geophysical and Astronomical 
Services Administration (PAGASA); and 
 
(d) Strategic 
Measures 
– 
Formulate 
strategic 
measures 
in 
collaboration with national government agencies, local government 
units (LGUs), academe, the private sector, and other relevant 
sectors to ensure continuous avoidance, reduction, and removal of 
GHG 
emissions. 
This holistic 
approach 
ensures 
that 
all 
stakeholders are engaged and contributing to national goals.  
  
SEC. 6. Sectoral Agencies and Other Relevant Agencies. – To ensure 
the effective implementation of the PGHGIS, the following sectoral agencies 
shall take the lead in their respective areas, with assistance from the 
Philippine Statistics Authority (PSA):  
  
(a) Department of Agriculture (DA) – Responsible for the agriculture 
sector; 
(b) Department of Energy (DOE) – Responsible for the energy sector; 
(c) Department of Environment and Natural Resources (DENR) – 
Responsible for the 28 waste, industrial processes, and forestry and 
other land-use sectors; and 
(d) Department of Transportation (DOTr) – Responsible for the 
transport sector.  
  
Other agencies such as the Department of Science and Technology 
(DOST), Department of Health (DOH), Department of Public Works and 
Highways (DPWH), Department of Tourism (DOT), Department of Trade and 
Industry (DTI), and the Securities and Exchange Commission (SEC) shall 


7  
  
also collaborate to ensure the application of transformative options under 
the NDC.  
  
SEC. 7. Role of Local Government Units. – LGUs shall integrate climate 
change adaptation and mitigation measures into their local plans and 
programs. The following agencies, in coordination with the CCC, shall 
provide technical and capacity-building support to LGUs for the effective 
implementation of these measures:  
  
(a) DENR; 
(b) DTI; 
(c) SEC; 
(d) DOTr; 
(e) DA; 
(f) PSA; and 
(g) DOE.  
  
SEC. 8. National Integrated Climate Change Database and Information 
Exchange System (NICCDIES). – The CCC shall institutionalize the NICCDIES 
as the primary platform for climate change and resilience information. The 
responsibilities of the CCC regarding NICCDIES include:  
  
(a) Issuing Guidelines – Develop and issue guidelines for the 
improvement, development, and utilization of NICCDIES to ensure 
it meets national and international standards for climate data 
management;  
 
(b) Engagement – Engage various stakeholders including government 
agencies, 18 academe, and the private sector to contribute data 
sets to the NICCDIES. This collaborative approach ensures a 
comprehensive and inclusive database; and   
 


8  
  
(c) Feedback Mechanisms – Institute feedback mechanisms to 
enhance the content, access, and continuous improvement of the 
NICCDIES. Regular updates and user feedback will ensure the 
system remains relevant and effective.  
  
By institutionalizing these systems and clearly defining the roles and 
responsibilities of various agencies and stakeholders, the Philippines aims to 
create a robust framework for managing and reducing GHG emissions, 
thereby contributing to global climate goals and ensuring sustainable 
development for future generations.  
  
ARTICLE 3 
NATIONAL CLIMATE CHANGE ACTION PLAN AND MONITORING, 
REPORTING, AND VERIFICATION SYSTEM 
  
SEC. 9. Nationally Determined Contribution. – The NDC shall serve as 
the Philippines’ long-term roadmap for GHG mitigation and climate 
resilience, outlining the country’s commitments to reducing emissions and 
adapting to climate impacts. The NDC shall include the following 
components: 
 
(a) National and Sectoral Decarbonization Pathways and Emission 
Reduction Targets – Specific goals for reducing GHG emissions, 
stated as percentage reductions from a baseline year. These 
targets shall be ambitious yet achievable, reflecting the country’s 
commitment to international climate agreements, including the 
Paris Agreement. The national decarbonization pathway will 
provide an overarching strategy for emissions reductions across all 
sectors, while sectoral pathways will outline specific strategies and 
targets for key sectors such as energy, transportation, industry, 
forestry, and agriculture. Each pathway shall include milestones 
and timelines to ensure progressive emissions reductions, 
consistent with the objective to limit global temperature rise to 


9  
  
below 2ºC, with efforts to limit it to 1.5ºC above pre-industrial 
levels; 
  
(b) Adaptation Measures – Strategies and actions to adapt to the 
impacts of climate change. This includes building resilience to 
extreme weather events, protecting vulnerable ecosystems, and 
implementing climate-resilient cities, industrial hubs, agriculture, 
and other key economic aspects of the country including among 
others public health, water resources, and infrastructure to 
ensure comprehensive resilience; 
 
(c) Mitigation Actions – Plans for implementing policies, measures, 
and projects aimed at reducing GHG emissions across various 
sectors such as energy, transportation, industry, forestry, and 
agriculture. Mitigation actions shall include transitioning to 
renewable energy sources, enhancing energy efficiency, promoting 
sustainable land use practices, and reducing emissions from 
waste management; and 
  
(d) Finance, Technology Transfer, and Capacity-Building – Support 
from developed countries in terms of finance, technology transfer, 
and capacity-building to effectively implement the NDC. This 
includes mobilizing international climate finance, fostering public-
private partnerships, and leveraging technology for low-carbon 
development. 
Capacity-building 
initiatives 
shall 
focus 
on 
enhancing the skills and knowledge of stakeholders involved in 
climate action.  
  
SEC. 10. Comprehensive Engagement with the Private Sector in NDC. – 
The CCC 26 shall actively engage with the private sector and develop 
comprehensive national and sectoral decarbonization strategies and 
roadmaps. This includes working closely with relevant government agencies, 


10  
  
industry stakeholders, and experts to ensure these strategies align with 
both national and international climate goals.    
  
The CCC shall integrate the actions and contributions of the private 
sector into the NDC. This involves incorporating decarbonization pathways 
provided by covered enterprises and regularly updating the NDC to reflect 
these contributions accurately.  
  
Additionally, the CCC shall continuously review and update these 
decarbonization pathways based on data from covered enterprises. This 
ensures that the strategies remain aligned with international climate 
commitments and the latest advancements in climate science and 
technology.  
  
SEC. 11. Establishment of Monitoring, Reporting, and Verification 
System. – The CCC shall establish a comprehensive Monitoring, Reporting, 
and Verification (MRV) system to track mitigation outcomes and the 
accomplishments of the NDC. This system shall ensure accurate, 
transparent, and timely reporting of national climate actions and 
compliance with international carbon market standards. The consolidated 
mitigation outcomes shall be reflected in the NICCDIES and shall be made 
available to the public.  
  
SEC. 12. Mandates of Other Relevant Agencies on MRV. – The 
following agencies are also provided the following mandates relevant to 
NDC’s MRV system:  
  
(a) The DENR is mandated to work with the CCC to monitor and 
report mitigation outcomes in the forestry, waste, and industry 
sectors. The DENR shall implement conservation, restoration, and 
waste management practices that contribute to GHG emission 
reductions and ensure these are accurately accounted for in the 
national climate action framework;  


11  
  
 
(b) The DOE is mandated to coordinate with the CCC to monitor and 
report mitigation outcomes in the energy sector. The DOE shall 
implement and oversee energy efficiency and renewable energy 
projects that contribute to GHG emission reductions and ensure 
these are accurately accounted for in the national climate action 
framework;  
 
(c) The DOTr is mandated to collaborate with the CCC to monitor and 
report mitigation outcomes in the transport sector. The DOTr shall 
implement and oversee transportation initiatives that contribute to 
GHG emission reductions and ensure these are accurately 
accounted for in the national climate action framework; and 
 
(d) The DA is mandated to collaborate with the CCC to monitor and 
report mitigation outcomes in the agriculture sector. The DA shall 
implement and oversee agricultural practices that contribute to 
GHG emission reductions and ensure these are accurately 
accounted for in the national climate action framework.  
 
SEC. 13. Climate Change Expenditure Tagging as part of MRV. – The 
Climate Change Expenditure Tagging (CCET) is hereby institutionalized as 
an audit tool to track climate adaptation and mitigation projects and 
programs. The CCET shall be jointly administered by the CCC, Department 
of Budget and Management (DBM), Department of the Interior and Local 
Government (DILG), Office of the Civil Defense, and other relevant agencies, 
with the Commission on Audit producing timely audit reports on climate 
expenditure. The CCET shall:  
  
(a) Monitor and evaluate the allocation and utilization of funds for 
climate projects; 
(b) Ensure transparency and accountability in climate finance; 
(c) Identify funding gaps and recommend measures to address them;  


12  
  
(d) Facilitate the efficient allocation of resources towards high-impact 
climate initiatives; and 
(e) Support the integration of climate finance into national and local 
budgeting processes.   
  
SEC. 14. Local Climate Change Action Plan Quality Assessment Review 
(LCCAP QAR) System as part of MRV System. – The CCC, in collaboration 
with the DILG and PAGASA, shall formulate and institutionalize the LCCAP 
QAR system. This system will provide feedback mechanisms for LGUs to 
improve their Local Climate Change Action Plans (LCCAPs), ensuring 
responsiveness to local hazards and socio-economic 6 transformation 
towards low-carbon pathways. The LCCAP QAR shall:  
  
(a) Establish criteria and indicators for assessing the quality and 
effectiveness of LCCAPs; 
(b) Provide technical guidance and capacity-building support to LGUs 
for the 10 preparation and enhancement of their LCCAPs; 
(c) Facilitate peer reviews and knowledge-sharing among LGUs to 
foster continuous improvement; and  
(d) Ensure alignment of LCCAPs with national and international 
climate goals.  
  
SEC. 15. NDC Steering Committee. – The CCC shall be the lead agency in 
the development, implementation, monitoring, and evaluation of the NDC. 
The NDC Steering Committee shall be composed of representatives from the 
following agencies:  
  
(a) National Economic and Development Authority; 
(b) DA; 
(c) DOE; 
(d) DENR;  
(e) DOTr;  
(f) 
Department of Foreign Affairs;  


13  
  
(g) Department of Finance; 
(h) DBM;  
(i) 
Department of Labor and Employment; 
(j) 
DOST;  
(k) DILG; 
(l) 
DOH; 
(m) DPWH; 
(n) DOT; 
(o) Department of Human Settlements and Urban Development; 
(p) DTI; 
(q) Department of Education, Commission on Higher Education, and 
Technical Education and Skills Development Authority;  
(r) National Commission on Indigenous Peoples; 
(s) Philippine Commission on Women; 
(t) National Youth Commission; 
(u) National Anti-Poverty Commission; 
(v) Representatives from the academe;  
(w) Representatives from each of the covered sectors; and 
(x) Representatives from civil society organizations.  
  
SEC. 16. Responsibilities of Government Agencies as members of NDC 
Committee. – The aforementioned agencies shall align their policies and 
strategies with the NDC and undertake the following responsibilities:  
  
(a) Alignment with National Development Priorities – Ensure the 
alignment of the NDC 5 with national development priorities and 
strategies, integrating climate goals into economic and social 
planning; 
 
(b) Sector-Specific Mitigation and Adaptation Strategies – Lead the 
implementation of 8 sector-specific mitigation and adaptation 
strategies. Each agency shall develop and execute plans tailored to 
their sector’s unique challenges and opportunities; 


14  
  
 
 
(c) Coordination for Technical Assistance and Climate Finance – 
Facilitate coordination with development partners for technical 
assistance and climate finance. This includes mobilizing resources, 
securing grants and loans, and ensuring the efficient use of funds; 
 
(d) Annual Appropriations – Ensure annual appropriations for the 
implementation of unconditional policies and measures related to 
climate action. Budgeting should reflect the urgency and scale of 
climate initiatives; 
 
(e) Promotion of Low-Carbon Technologies and Innovations – Promote the 
development 
and 
adoption 
of 
low-carbon 
technologies 
and 
innovations. Agencies shall support research, development, and 
deployment of sustainable technologies; 
 
(f) Technical and Capacity-Building Support to LGUs – Provide technical 
and capacity-building support to LGUs for integrating the NDC into 
local plans and programs. This includes training, workshops, and 
technical assistance;  
 
(g) Development of Nature-Based Tourism Solutions – Develop and 
promote nature-based tourism solutions that align with climate goals. 
This includes sustainable tourism practices that protect natural 
resources and enhance local resilience; 
  
(h) Integration with Urban Development Plans – Ensure the integration of 
the NDC with urban development plans, promoting low-carbon and 
climate-smart 
infrastructure 
projects. 
Urban 
planning 
should 
prioritize sustainability and resilience; 
 


15  
  
(i) Inclusion of Indigenous Peoples’ Needs and Rights – Ensure the needs 
and rights of indigenous peoples are addressed, applying a gender 
lens in the NDC implementation process. Policies should promote 
equity and social inclusion; and 
 
(j) Representation of Youth Interests – Represent youth interests and 
ensure intergenerational justice in policies and measures. Youth 
engagement should be a cornerstone of climate initiatives.  
  
  
ARTICLE 4 
INTERNATIONAL TRANSFER OF MITIGATION OUTCOMES 
 
  
SEC. 17. Mandate to the Climate Change Commission. – The CCC is 
hereby mandated to establish the necessary protocols, procedures, and 
systems to effectively implement the mechanisms for ITMOs and other 
Article 6 transactions, including:  
 
(a) System for Issuance of Letters of Authority (LoA). – The CCC shall be 
responsible for issuing LoA to project developers seeking to engage in 
ITMOs. This LoA shall serve as official government approval for the 
transfer of carbon credits under Article 6 mechanisms, ensuring 
compliance with national and international regulations; 
 
(b) System for Corresponding Adjustments. – The CCC shall establish a 
system for making corresponding adjustments to the national GHG 
inventory and mitigation outcomes to reflect the transfer of ITMOs. 
This system shall prevent double counting of emission reductions and 
ensure the integrity of the country’s NDC commitments. Carbon 
credits based on carbon rights granted by the government to tenure 
holders for lands of the public domain, as well as those generated in 
public lands and ancestral domain lands, shall not be claimed by the 
government as part of its NDC accomplishment or must be removed 


16  
  
from government accounts. Such credits must be excluded from 
government accounts to prevent double-counting and ensure they 
remain available for market transactions. Corresponding adjustments 
shall be reflected dynamically and in real time into the NDC ITMOs 
accounts in the NICCDIES and shall be made available to the public. 
This provision aims to uphold the integrity of private and indigenous 
carbon projects and their contributions to global climate mitigation 
efforts; 
 
(c) Optimizing International Climate Finance and NDC Achievement. – The 
CCC shall coordinate with relevant agencies to develop a strategy that 
optimizes both the generation of climate finance through ITMOs and 
the achievement of the NDC objectives. The CCC shall formulate a 
comprehensive mitigation strategy to guide government actions in 
meeting NDC targets; and  
 
(d) Enabling Private Sector Engagement in Carbon Markets. – The CCC 
shall facilitate the participation of the private sector in carbon 
markets by enabling private entities to generate and sell carbon 
credits from their mitigation activities. The government shall focus its 
investments on areas outside the opportunities available to the 
private sector, such as investments in protected areas for Reducing 
Emissions from Deforestation and Forest Degradation Plus initiatives. 
This approach ensures that government efforts are complementary to 
private sector actions, thereby maximizing the overall impact on 
national mitigation outcomes.  
   
ARTICLE 5 
DECARBONIZATION PLAN AND INVESTMENT ROADMAP FOR COVERED 
ENTERPRISES 
  
SEC. 18. Enterprises and Sectors Covered in this Act. – Covered 
sectors are those that materially contribute to national GHG emissions, as 


17  
  
determined by the government. This determination considers both the 
current and potential future contributions of these sectors to GHG 
emissions. Materiality assessments will be based 8 on emissions volume, 
economic significance, and potential for emission avoidance and reduction. 
The covered sectors include:   
 
(a) Sectors with Energy-related emissions: 
(i) Petroleum refining, electricity generation, combined heat and 
power generation. 
(ii) Manufacturing and other industries and construction with 
fuel combustion activities – iron and steel, chemicals, pulp 
and paper, food processing, beverage, tobacco, mining and 
quarrying, textile, infrastructure, utilities, among others. 
(iii) Industries with fugitive emissions – oil and natural gas, fuel 
transformation (coke production, gasification transformation, 
etc.).  
  
(b) Transport sector – includes aviation, water-borne, and road 
transport.  
 
(c) Sectors with Industrial Process Emissions and Product use:  
(i) Mineral Industry (Cement, Lime, Glass, etc.). 
(ii) 
Chemical 
Industry 
(Petrochemical 
and 
Carbon 
Black 
Production, Fluorochemical production).  
(iii) Metal Industry.  
(iv) Electronics Industry.  
(v) Product use of Ozone-depleting substances substitutes (Air-
Conditioning 
and 
Refrigeration, 
blowing 
agents, 
fire 
protection).  
  
(d) Sectors with Agriculture- and Forestry-related emissions:  
(i) Manufacturing companies with supply chain in agriculture 
and forestry, e.g., 30 food and beverage, palm oil, etc.  


18  
  
(ii) Companies with land conversion activities that result to loss 
of carbon stocks.  
  
(e) Sectors with Wastes-related emissions:  
(i) 
Manufacturing 
and 
commercial 
establishments 
that 
generate biodegradable wastes that end up in landfills.   
(ii) Manufacturing 
and 
commercial 
establishments 
that 
generate effluents with high Biological Oxygen Demand 
content.  
(iii) Manufacturing establishments that use packaging that 
ends up in dumpsites that are subjected to open burning.  
  
(f) All other emerging sectors that materially contribute to the 
countries’ GHG 4 emissions as determined by CCC.   
  
SEC. 19. Mandate for Covered Enterprises. – All covered enterprises 
shall be mandated to prepare a decarbonization plan aligned with the 
objective to limit global temperature rise to below two degrees Celsius (2ºC) 
above pre-industrial levels, with the goal of achieving net-zero emissions by 
2050.  
  
 
The decarbonization plan shall outline specific, measurable, and time-
bound carbon reduction pathway with milestones and targets from the 
effectivity of this law towards 2050. These milestones shall include annual 
targets to ensure a progressive reduction in GHG emissions. The 
decarbonization pathway must be consistent with national decarbonization 
pathways and sector-specific targets established under this Act and shall 
incorporate the latest climate science and technological advancements to 
ensure effectiveness and relevance.  
  
 
 


19  
  
The decarbonization plan shall include the following components:  
  
(a) Emissions Baseline and Projections – A detailed inventory of 
current GHG emissions using globally acceptable GHG inventory 
standards and future emissions projections under a business-as-
usual scenario. The business-as-usual scenario represents the 
projected emissions trajectory if no additional mitigation measures 
are implemented beyond those already in place.  
 
(b) Emissions Reduction Strategies – A comprehensive strategy for 
reducing 
direct 
and 
indirect 
emissions, 
including 
the 
implementation of energy efficiency measures, adoption of 
renewable energy, and other low-carbon technologies. This shall 
include: 
 
i. 
Reduction Strategies within the Value Chain – Measures and 
initiatives to reduce emissions within the enterprise’s own 
operations and supply chain. This includes implementing 
energy efficiency improvements in production processes and 
facilities, transitioning to renewable energy sources for power 
and heating needs, enhancing waste management practices 
to minimize methane emissions, and reducing emissions 
from logistics and transportation through fleet optimization 
and the use of low-emission vehicles.  
 
ii. 
Reduction Strategies beyond the Value Chain – For emission 
sources within its value chain that are not yet financially 
viable to reduce, the covered enterprises are given the option 
to meet their reduction milestones and targets:   
 
1) Insetting – Covered enterprises may invest outside 
their value chain to drive a corresponding amount of 
reduction beyond their value chain that can be more 


20  
  
financially viable. This may involve 1) establishing 
and operating a new decarbonization enterprise that 
focuses on reducing emissions through innovative 
projects and technologies; or 2) investing in existing 
companies or by buying equity in firms that are 
dedicated to decarbonization investments, ensuring 
these enterprises contribute to significant emissions 
reductions.  
 
2) Offsetting – Covered enterprises may also purchase 
carbon credits from certified projects developed by 
other entities that reduce or remove emissions. This 
allows covered enterprises to achieve their emissions 
reduction targets by supporting external projects that 
are 
verified 
and 
credible. 
Examples 
include 
purchasing credits from renewable energy projects, 
reforestation projects, or other certified emissions 
reduction initiatives.  
  
(c) Investment Roadmap – An investment plan detailing the financial 
resources and investments required to achieve the emissions 
reduction targets within the short-, medium-, and long-term 
planning horizons.  
 
SEC. 20. Submission and Approval. – Covered enterprises shall 
submit their decarbonization pathways to the DENR for review and approval 
within one year from the effectivity of this law. The DENR shall assess the 
pathways for compliance with the established national and sectoral 
decarbonization targets and provide feedback for necessary revisions.   
  
SEC. 21. Periodic Update of Decarbonization Plan. – Decarbonization 
pathways shall be reviewed and updated at least every five (5) years to 
incorporate new scientific data, technological advancements, and policy 


21  
  
changes. Covered enterprises shall submit updated pathways to the DENR 
for approval, ensuring continuous alignment with national climate goals and 
international commitments.  
  
ARTICLE 6 
CARBON PRICING AND DECARBONIZATION FUND 
  
SEC. 22. Emissions Allowance. – The CCC shall be responsible for 
determining and allocating the permitted emissions, known as the emissions 
allowance, for each sector and for each covered enterprise within that sector. 
The emissions allowance shall be established annually based on the sectoral 
consolidated decarbonization pathways of covered enterprises as provided in 
Section 19.  
  
(a) Determination of Sectoral Emissions Allowance – The CCC shall 
determine the annual emissions allowance for each sector by 
consolidating and analyzing the decarbonization pathways submitted 
by all covered enterprises within the sector. This includes evaluating 
the 
sector’s 
overall 
emissions 
reduction 
targets, 
considering 
advancements in climate science and international commitments, and 
coordinating with relevant stakeholders to ensure the allowances are 
ambitious and achievable.  
  
(b) Allocation of Emissions Allowance to Covered Enterprises – The CCC 
shall allocate the annual emissions allowance to each covered 
enterprise within the sector, proportionate to their contribution to the 
sector’s total emissions and their potential for emissions reduction, 
ensuring alignment with sectoral and national decarbonization 
targets.  
 
(c) Review and Adjustment of Emissions Allowance – The CCC shall 
regularly review and adjust the emissions allowances based on new 
data, technological advancements, and changes in climate policy. This 


22  
  
involves collecting and analyzing updated emissions data and progress 
reports from all covered enterprises, incorporating feedback from 
stakeholders, and issuing revised emissions allowances and guidelines 
to maintain the effectiveness and relevance of decarbonization 
strategies.  
  
SEC. 23. Determination of Excess Emissions and Pricing. – Any GHG 
emissions by a covered enterprise that exceed the annual emissions 
allowance for a given year shall be subject to a carbon price set by the CCC. 
The following provisions shall apply: 
 
(a) Determination of Excess Emissions – The excess emissions of a 
covered enterprise shall be calculated as the difference between 
the actual GHG emissions for the year and the allocated annual 
emissions allowance of the same year.  
 
(b) Imposition of Carbon Price – Covered enterprises with excess 
emissions shall be required to allocate funds equivalent to the 
carbon price for each metric tonne of CO2e emitted above the 
allowed limit. This carbon price shall be determined by the CCC in 
consultation with stakeholders and relevant agencies, based on 
the methodology provided in Section 24.  
  
SEC. 24. Methodology of Pricing Carbon Emissions. – The methodology 
for pricing carbon emissions shall be anchored on objective and reasonable 
bases. The total carbon price shall be based on two principal cost 
components:  
 
(a) Mitigation Cost Component – The price of carbon shall reflect the 
cost of mitigating carbon emissions, specifically the cost associated 
with the removal of one metric tonne of CO2 or its equivalent from 
the atmosphere. This component ensures that the carbon price 


23  
  
covers the expenses related to 32 emissions reduction technologies 
and practices.  
 
(b) Preventative Resilience Cost Component – In addition to the 
mitigation cost, the carbon price shall also include the cost of 
preventive resilience measures. This considers the broader socio-
economic costs of carbon emissions, factoring in the expenses 
required to effectively adapt to, avoid, and minimize the adverse 
impacts of climate change on communities, industries, ecosystems, 
society, and the economy.  
  
The carbon price shall be reviewed and adjusted periodically every 
three (3) years to reflect changes in mitigation and resilience costs, ensuring 
that the pricing mechanism remains effective and aligned with national and 
international climate goals. This dynamic approach guarantees that the 
carbon price accurately represents the true cost of carbon emissions and 
drives continuous improvement in emissions reduction efforts.  
  
SEC. 25. Decarbonization Fund. – Covered enterprises shall establish 
a decarbonization fund into which the funds corresponding to the carbon 
price for excess emissions shall be allocated. These funds shall be 
exclusively used to finance emissions reduction activities.    
  
SEC. 26. Options for Allocation of Decarbonization Fund. – Covered 
enterprises shall be given the option to allocate its own decarbonization fund 
into the following options:   
 
(a) Reduction of Emissions within the Value Chain – Covered 
enterprises 
shall 
allocate 
decarbonization 
fund 
to reduce 
emissions within their value chain where viable. This includes 
implementing energy efficiency improvements, transitioning to 
renewable energy sources, and enhancing waste management 
practices. 


24  
  
(b) Investment in Viable Business Models Beyond the Value Chain – 
Covered enterprises may allocate decarbonization fund to invest 
in decarbonization activities beyond their value chain through the 
following options:   
  
(i) Investment and Operation of Own Decarbonization Enterprise 
– Establishment and operation of their own enterprise focused 
on decarbonization technologies and practices.   
 
(ii) Collective Investment – Pooling of resources with other covered 
enterprises to invest in and operate a decarbonization 
business model or technology, thereby achieving economies 
of scale and greater impact.  
  
(iii) Equity Investment – Purchase of equity in an enterprise solely 
dedicated to investing in and operating decarbonization 
projects and technologies.  
  
(c) Transfer of Decarbonization Fund and Obligations – Covered 
enterprises 
may 
transfer 
their 
decarbonization 
fund 
and 
obligations to third parties, including:   
  
(i) Government Allocation – Transfer of funds to the national 
government for allocation for decarbonization and climate 
resilience programs, projects, and activities such as those 
financed by the People’s Survival Fund.  
 
(ii) Purchase of Allowance or Carbon Offsets – Purchase of excess 
allowance from obliged enterprises with emissions falling 
below their emissions allowances or purchase of carbon 
offsets from certified projects implemented in the Philippines 
that 
meet 
internationally 
recognized 
carbon 
credits 
certification standards and methodologies, ensuring that the 


25  
  
offsets represent real, measurable, and additional emissions 
reductions.  
  
  
SEC. 27. Decarbonization Taxonomy. – The CCC shall, in coordination 
with relevant government agencies and private sector stakeholders, develop 
a decarbonization taxonomy, as guidance for companies to allocate their 
decarbonization fund towards sustainable investments. This taxonomy will 
categorize various decarbonization technologies and projects, including 
nature-based solutions, providing standardized definitions and criteria that 
align private sector investments with national and global decarbonization 
goals.   
  
ARTICLE 7 
COMPLIANCE MECHANISM 
  
SEC. 28. Annual Compliance Report. – All covered enterprises are 
required to submit an Annual Compliance Report to the DENR. The Annual 
Compliance Report shall contain the following:  
  
(a) Emissions Baseline and Reduction Progress – A detailed inventory of 
the current GHG emissions, including any reductions achieved 
during the reporting period, measured against the enterprise’s 
decarbonization pathway. 
 
(b) Reduction Activities and Outcomes – A comprehensive description of 
specific emissions reduction activities undertaken, their outcomes, 
and the impact on the enterprise’s overall GHG emissions. This 
shall include the following:  
 
(i) Implementation of energy efficiency improvements;  
(ii) Transition to renewable energy sources;  
(iii) Enhancements in waste management practices;  


26  
  
(iv) Other measures and initiatives undertaken within the value 
chain to reduce emissions; and  
(v) Quantitative and qualitative outcomes of these activities and 
their contributions to the enterprise’s emissions reduction 
targets.  
  
(c) Emissions Allowance and Excess Emissions – Documentation of the 
allocated emissions allowance for the year and any excess 
emissions, including the calculation of funds allocated to the 
decarbonization fund. 
 
(d) Allocation of Decarbonization Fund – A comprehensive account of 
how the decarbonization fund was allocated, detailing investments 
in emissions reduction activities, both within and beyond the value 
chain.  
 
(e) Future Plans – Outline of planned emissions reduction activities 
and investments for the upcoming year, aligned with the 
enterprise’s decarbonization pathway.  
  
SEC. 29. Third-Party Audit Report. – Covered enterprises are required 
to secure a third-party audit report to accompany their Annual Compliance 
Report. The third-party audit shall include:  
  
(a) Verification and Compliance Assessment – Verify the accuracy of 
the 
emissions 
data, 
reductions 
achieved, 
allocation 
of 
decarbonization fund reported by the covered enterprise, and 
assess the enterprise’s compliance with the emissions allowance. 
  
(b) Audit Findings – Include detailed findings and recommendations to 
enhance the enterprise’s compliance with its decarbonization 
pathway.  
  


27  
  
SEC. 30. Role of DENR in Compliance Monitoring. – The DENR shall be 
responsible for monitoring the compliance of covered enterprises for their 
submission of Annual Compliance Report and third-party audit report as 
specified in this Act.    
 
SEC. 31. Development and Implementation of Verification Standards 
and Methodologies for Emissions Reporting and Compliance. – The CCC shall 
develop 
and 
implement 
comprehensive 
standards, 
procedures, 
and 
methodologies for the verification of emissions reporting and compliance 
with the provisions of this law by covered enterprises. These standards will 
guide third-party verifiers in their verification processes and in the issuance 
of statements of attestation.   
  
The established standards and methodologies shall:  
  
(a) Guarantee the integrity, accuracy, and reliability of reported 
emissions data and the compliance verification process.  
(b) Include specific criteria and practical approaches for both verifying 
emissions 20 data and assessing compliance with this Act.  
  
SEC. 32. Development and Administration of Accreditation Process for 
Third-Party Verifiers. – The CCC is hereby vested with the authority to 
develop procedures and administer the accreditation of independent 
verifiers. The CCC shall:  
  
(a) 
Develop 
Accreditation 
Procedures 
– 
Establish 
clear 
and 
comprehensive procedures for the accreditation of third-party 
verifiers. These procedures shall be designed to ensure that 
third-party verifiers meet the stringent standards required for the 
verification of emissions reporting and compliance assessments.   
 
(b) 
Administer the Accreditation Process – Implement the entire 
accreditation process from application to approval, ensuring that 


28  
  
all third-party verifiers undergo a rigorous evaluation based on 
the established procedures and standards.  
 
(c) 
Ensure Compliance with Accreditation Standards – Regularly 
review the performance of accredited third-party verifiers and 
ensure they are compliant to the latest version of the 
accreditation standards.  
   
ARTICLE 8 
PENALTIES FOR NON-COMPLIANCE 
 
  
SEC. 33. Penalties for Non-Compliance. – Covered enterprises that fail 
to comply with the provisions of this Act shall be subject to the following 
penalties:  
  
(a) Payment of Penalties – Covered enterprises that exceed their 
emissions allowance and fail to allocate the required funds to their 
decarbonization fund shall pay a penalty amounting to twice the 
estimated amount of the decarbonization fund that should have 
been allocated. 
 
(b) Failure to Submit Reports – Covered enterprises that fail to submit 
their Annual Compliance Report or third-party audit report by the 
designated deadlines shall be subject to a penalty determined by 
the DENR.  
 
(c) Revocation of Business Permit – Covered enterprises that commit 
violations of the provisions of this Act, for three (3) consecutive 
years, including failure to submit required reports and failure to 
meet emissions reduction targets, shall be subject to the 
revocation of their business permit.  
 
(d) Authority to Impose Penalties – The DENR shall have the authority 
to impose the 18 penalties specified in this section on covered 


29  
  
enterprises found to be non-compliant with the provisions of this 
Act.  
  
ARTICLE 9 
ENABLING MECHANISMS 
  
SEC. 34. Access to Carbon Markets. – The CCC shall provide technical    
assistance to covered enterprises to facilitate access to carbon markets. This 
assistance shall include:  
  
(a) Linkage to Potential Buyers – The CCC shall facilitate connections 
between covered enterprises and potential buyers of carbon credits 
to support the sale and trading of carbon credits. 
 
(b) Technical Support for Registration – The CCC shall provide 
technical support for the registration of carbon projects in 
recognized 
carbon 
certification 
programs, 
ensuring 
that 
enterprises meet the necessary standards and requirements to 
participate in carbon markets.  
 
(c) Tax Deductibility of Certification Expenses – Carbon certification 
expenses shall be considered allowable deductions from gross 
income in accordance with Section 34 of the National Internal 
Revenue Code of 1997, as amended.  
   
SEC. 35. Tax Incentives. – Investments in emerging low-carbon 
technologies by covered enterprises shall be eligible for income tax holidays 
and enhanced deductions on research and development expense in 
accordance with Title XIII of the National Internal Revenue Code of 1997, as 
amended by Republic Act No. 12066, otherwise known as the “Corporate 
Recovery and Tax Incentives for Enterprises to Maximize Opportunities for 
Reinvigorating the Economy (CREATE MORE) Act”.   
  


30  
  
SEC. 36. Facilitation of Access to International Climate Finance. – The 
CCC shall facilitate access to international climate finance to support the 
implementation of decarbonization pathways and related initiatives by 
covered enterprises. This includes identifying funding opportunities, 
assisting in the preparation of funding proposals, and ensuring compliance 
with international funding requirements.  
  
SEC. 37. Other Support Function of CCC. – The CCC shall be 
responsible for consolidating the reduction strategies and roadmaps of 
covered enterprises, developing and maintaining an online registry, creating 
standardized templates for GHG emissions accounting and reporting, 
facilitating national and sectoral decarbonization strategies, and facilitating 
access to international climate finance and mechanisms for trading ITMOs 
under the Paris Agreement. The mandates and responsibilities of the CCC 
shall include the following:  
 
(a) Creation of Templates for GHG Emissions Accounting and Reporting 
– The CCC 21 shall develop and provide standardized templates 
for the accounting and reporting of GHG emissions baselines, 
adopting globally acceptable methodologies. These templates shall 
ensure consistency, accuracy, and transparency in the reporting 
process and shall be mandatory for all covered enterprises.  
 
(b) Consolidation of Reduction Strategies and Roadmaps – The CCC 
shall be responsible for collecting and consolidating the 
decarbonization pathways submitted by all covered enterprises. 
This includes assessing and validating the individual pathways to 
ensure alignment with national decarbonization targets and 
sector-specific goals.  
 
(c) Development and Maintenance of an Online Registry – The CCC 
shall establish and maintain a comprehensive online registry to 
be integrated in NICCDIES, that serves as a centralized database 


31  
  
for all decarbonization pathways and related information. The 
online registry shall:  
  
(i) Contain detailed information on the decarbonization pathways 
of all covered enterprises, including emissions baselines, 
reduction strategies, investment roadmaps, monitoring and 
reporting mechanisms, and risk management plans.  
(ii) Ensure transparency and accessibility, allowing public access 
to relevant data while protecting confidential business 
information, 
and 
include 
features 
for 
stakeholder 
engagement, public feedback, and knowledge sharing. 
(iii) Enable real-time tracking and reporting of progress in 
achieving emissions reduction targets, integrating third-party 
verification reports and compliance audits for data accuracy 
and reliability.  
(iv) Support the analysis and reporting of aggregated data to 
inform 
national 
climate 
policy, 
facilitate 
international 
reporting, 
and 
continuously 
improve 
decarbonization 
strategies at national and sectoral levels.  
(v) Establish protocols for data security, user access, and 
protection of sensitive information, ensuring the registry is 
regularly updated with the latest data from covered 
enterprises.  
  
SEC. 38. Support Function of LGUs. – LGUs should integrate climate 
change adaptation and mitigation measures in their local plans and 
programs. LGUs shall support and facilitate the activities of covered 
enterprises as regards their decarbonization investments within the 
respective jurisdiction of LGUs.   
  
 
 


32  
  
ARTICLE 10 
Miscellaneous Provisions 
  
SEC. 39. Appropriations. – The amount necessary for the initial 
implementation of this Act shall be charged against the current year’s 
appropriations of the department or agencies concerned. Thereafter, such 
sums as may be necessary for the continued implementation of this Act 
shall be included in the annual General Appropriations Act.  
  
The LGUs concerned, in consultation with the CCC, may provide the 
necessary funds for the implementation of this Act.   
  
SEC. 40. Annual Report to Congress. – The implementing agencies 
shall report to Congress on their progress in carrying out the provisions of 
this Act for each fiscal year. The reports shall be consolidated by the CCC 
for presentation to the appropriate committee at Congress at a meeting 
called for the purpose.   
  
SEC. 41. Staffing Complement of the CCC. – The CCC shall determine 
the additional positions required for purposes of this Act consistent with its 
organizational structure and staffing pattern, subject to evaluation and 
approval of the DBM.  
  
SEC. 42. Implementing Rules and Regulations. – The CCC shall, in 
coordination 
with 
the 
NDC 
Steering 
Committee, 
draft 
and 
issue 
implementing rules and regulations necessary, in coordination with other 
relevant and appropriate government agencies within sixty (60) days after its 
approval.   
  
SEC. 43. Separability Clause. – If for any reason any section or 
provision of this Act is declared by the court as unconstitutional or invalid, 
the other sections or provisions thereof shall not be affected thereby.  
  


33  
  
SEC. 44. Repealing Clause. – All laws, ordinances, rules, and 
regulations, and other issuances or parts thereof, which are inconsistent 
with this Act, are hereby repealed 3 or modified accordingly.  
  
SEC. 45. Effectivity. – This Act shall take effect fifteen (15) days after 
its publication in the Official Gazette or in a newspaper of general 
circulation.  
    
Approved,