SIXTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session 
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) 
) 
_~ft1nh 
lJf)Hl;e of H,e ,'j,t'tf1'ttlfV 
'13 
JUL -8 A 8 :17 
SENATE 
< 
S. B. No. 5-l-7 
HY'-f\ __ 
Introduced by Senator LOREN LEGARDA 
EXPLANATORY NOTE 
Global warming has reached an alarming stage. It is not an understatement 
that increasing amounts of carbon dioxide and other greenhouse gases are heating 
up the earth's climate and that inaction could be catastrophic. 
Amidst this looming scenario, our economy is growing at a considerable 
pace. 
The challenge before us then is to accelerate economic growth without 
compromising the state of our environment. 
Thus, this bill introduces the concept of "low carbon economy." The idea is to 
pave the way for a cleaner environment by limiting the release of greenhouse gases 
by the industrial and commercial sector. 
Upon consultation with the industrial sector, the Departrnentof Environment 
and Natural Resources in collaboration with the Department of Trade and Industry, 
shall set a cap on the greenhouse gas emissions of companies. To cushion the impact 
of a cap on companies, this bill allows them to trade credits with each other. 
Allowances for greenhouse gas emissions will be issued to companies which, in 
turn, may be freely traded by them in a market-driven system. 
Companies with 
excess greenhouse gas' emissions may buy allowances from the market, while 
companies with less greenhouse gas emissions may sell their allowances to the 
market. This trading mechanism allows for a pseudo-financial market that allows for 
companies to transact with each other but with an additional benefit of maintaining 
the target emissions in the economy. 
The emission cap-and-trade system is a constructive and business-friendly 
approach to countering global warming. Ultimately, a market for companies that 
emit greenhouse gases shall compete to clean up our air. 
Undoubtedly, a low carbon economy would accelerate reduction of 
greenhouse gas emission, encourage use of new climate change-related technologies, 
and ensure benefits to consumers from the trading in allowances. 
In view of the above, passage of this bill is earnestly sought. 
~ 
Senator 


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SIXTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session 
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) 
) 
SENATE 
S. B. No. Jil. 'i 
'13 
JUL -8 AB:17 
Introduced by Senator LOREN LEGARDA 
AN ACT 
TO PROMOTE A LOW CARBON ECONOMY, ESTABLISHING FOR THIS 
PURPOSE THE EMISSION CAP-AND-TRADE SYSTEM IN THE INDUSTRY 
SECTOR TO REDUCE GREENHOUSE GAS EMISSIONS AND CREATING THE 
CLIMATE REINVESTMENT FUND 
Be it enacted by the Senate and the House of Representatives of the Philippines in 
Congress assembled: 
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SECTION 1. Title.- This Act shall be known as the "Low Carbon Economy 
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Act." 
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SEC. 2, Declaration of Policy. -
It is the policy of the State to promote 
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sustainable development. Towards this end, there is a need to maximize the 
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contribution of the industrial and commercial sector in reducing greenhouse gas 
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emissions and minimize the adverse effects of climate change on small businesses 
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through the establishment of a market-driven system of greenhouse gas tradable 
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allowances. 
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SEC. 3. Definition of Terms. - For purposes of this Act, the following shall 
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have the corresponding meanings: 
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a) "Carbon Dioxide Equivalent" shall refer to the quantity of greenhouse gas that 
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makes the same contribution to global warming as one (1) metric ton of 
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carbon dioxide, as determined by the Department of Environment and 
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Natural Resources (DENR).5ecretary, taking into account the global warming 
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. potentials published by the Intergovernmental Panel on Climate Change; 
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b) "Greenhouse Gas" shall refer to the following gases: carbon dioxide, methane, 
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nitrous oxide, hydrofluorocarbons, perfluorocarbons, sulfur hexafluoride, 
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perfluorocarbons, sulfur hexafluoride, or any other anthropogenically-
emitted gas that is determined by the DENR Secretary to contribute to global 
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warming; and 
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c) 
"Covered Sector" shall refer to the industry and commercial sectors. 
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SEC. 4. Emission Reduction Measures/ Targets. -
Emission reduction 
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measures shall be adopted by the DENR Secretary to achieve maximum 
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technologically feasible and cost-effective reductions in greenhouse gas emissions. 
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Alillual emission reduction targets shall be set for each calendar year by the 
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President, through the DENR in collaboration with the DTI, upon consultation with 
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other agencies having jurisdiction over sources of greenhouse gases. 
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SEC. 5. Cap on Greenhouse Gas Emissions. - To achieve the emission targets 
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set pursuant to this Act, a cap shall be imposed on the greenhouse gas emissions of 
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the covered sector with the-
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a) Highest greenhouse gas emissions; and 
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b) Most cost-effective opportunities to reduce emissions: 
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SEC. 6. Allowances. - The DENR Secretary shall, each year, issue a quantity 
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of greenhouse gas emissions allowances equivalent to the emissions allowed under 
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the cap imposed for such year. Each such allowance shall authorize the emission of 
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one meh'ic ton of carbon dioxide, or in the case of a global warming pollutant other 
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than carbon dioxide, a carbon dioxide equivalent. Such an allowance does not 
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constitute a property right. 
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SEC. 7. Distribution of Allowances. - The allowances shall be distributed by 
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the DENR Secretary to the covered sector by allocation. 
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SEC. 8. Trading System. - There shall be established a trading system under 
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which allowances issued under this Act may be sold, exchanged, purchased or 
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traded by any person or entity. 
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SEC. 9. Monitoring. - The DENR Secretary shall ensure that greenhouse gas 
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emissions and the use of allowances issued under this Act are accurately tracked, 
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reported and verified, to ensure that the cap-and-trade system established under this 
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Act is fully implemented. 
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The initial database on greenhouse gas emissions by covered sectors shall be 
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established within six months from the effectivity of this Act. 
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SEC. 10. Enforcement. - In case of excess greenhouse gas emissions by an 
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entity during any calendar year, the entity shall: 
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a) Submit allowances for such emissions during the following calendar year; 
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and 
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b) Pay a civil penalty. 
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SEC. 11. Penalties. - For each quantity of excess greenhouse gas emissions 
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constituting carbon dioxide or one carbon dioxide equivalent, the amount of civil 
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penalty shall be twice the market price for an allowance at the end of the calendar 
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year in which the excess emissions occurred. The DENR Secretary shall establish the 
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method of determining such market price. 
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SEC. 12. Climate Reinvestment Fund. - There is established a fund to be 
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known as the Climate Reinvestment Fund, hereafter referred to the Fund. The fund 
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shall consist of the amount of civil penalties assessed under Section 11 of this Act. It 
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shall be administered by the DENR to be used exclusively for activities addressing 
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global warming. 
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SEC. 13. Appropriations. -
The amount necessary for the initial 
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implementation of this Act shall be taken from existing allocations of the DENR. 
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Thereafter such sums as shall be necessary to carry out the provisions of this Act 
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shall be included in the annual General Appropriations Act. 
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SEC. 14. Implementing Rules and Regulations. - The Department of 
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Environment and Natural Resources and the Department of Trade and Industry are 
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hereby empowered to issue implementing rules and regulations necessary, in 
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coordination with other relevant and appropriate government agencies within sixty 
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(60)days after its approvaL Failure to issue rules and regulations shall not in any 
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manner affect the executory nature of the provisions of this Act. 
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SEC. 15. Separability Clause. - If for any reason any section or provision of 
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this Act is declared by the Court as unconstitutional or invalid, the other sections or 
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provisions thereof shall not be affected thereby. 
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SEC. 16. Repealing Clause. - All laws, ordinances, rules and regulations, and 
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other issuances or parts thereof, which are inconsistent with this Act, are hereby 
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repealed or modified accordingly. 
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SEC. 17. Effectivity. - This Act shall take effect upon its complete publication 
lOin the Official Gazette or in at least two (2) national newspapers of general 
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circulation. 
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Approved, 
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