Philippine businessmen show vibrant interest in carbon market

MANILA, October 27, 2009—Agro-industrial businessmen and local government officials in the Philippines showed keen interest in accessing the global carbon finance market, as they push ahead with new projects that emit less greenhouse gases and use cleaner technology.

Around 50 projects have been identified as potential projects that could be consolidated into one program at the conclusion of the conference “Mitigating Greenhouse Gas Emissions from Livestock and Agro-Industrial Waste,” held at the Peninsula Manila in Makati City last October 15-16, 2009.

The conference hosted by the Department of Environment and Natural Resources, the Department of Science and Technology and the Department of Agriculture with support from the US Environmental Protection Agency’s Methane to Markets Program, and the World Bank, gathered businessmen who are into piggeries, distilleries, slaughterhouses, and desiccated coconut processing.

Local government units, which operate slaughterhouses, landfills, and public markets, were also active participants in the discussions to bring together many small operations that emit greenhouse gases so that they could be packaged together and apply for certified emission reductions (ERs).

Under the Clean Development Mechanism (CDM) of the United Nation’s Kyoto Protocol, developed countries or Annex 1 countries and companies can buy ERs from developing countries and companies to meet their emission reduction commitments. This has led to the creation of a secondary market for carbon.

The upfront costs to have these ERs validated, verified and approved were prohibitively high, however, and these became a barrier that prevented small companies and organizations from accessing the carbon market.

A new approach, called Programs of Activities (PoAs) has become an alternative to doing individual CDM projects whose transaction costs are high, and the World Bank is promoting this approach to consolidate projects and package them in a in a programmatic way to allow small players to join and collectively generate large volume of ERs. This way, the Bank hopes that the carbon market can work to benefit the poor.

The World Bank has been engaged in building the carbon market since 1999. It has embraced climate change as a global challenge, supported sustainable development, and guided financial flows towards developing countries.

Much of the discussion in the conference focused on the technologies that can be used so that greenhouse gas emissions like methane and carbon dioxide from what would otherwise be pollutants—industrial, livestock, and human waste—can be harvested and/or avoided and turned into certified ERs.

“The market is really large in this country, and just talking about emission reductions in the agro-industrial sectors, I can see that the financing prospects are huge,” said Kurt Roos, Team Leader of the Agriculture Methane Programs of the US Environment Protection Agency.

Elisea Gozun, former Environment Secretary and moderator of the conference, said the co-benefits from the new approach make it a useful tool for addressing climate change problems.

“Methane recovery allows people to solve their solid waste problems and tap renewable sources of energy. There are savings for the country because we don’t have to import so much fossil fuels, and savings for the individual because we don’t have to buy so much liquefied petroleum gas for fuel and electricity for lighting,” she said.

Ma. Theresa Capellan, adviser to the Swine Board of the Philippines and executive director of the Ethanol Producers Association of the Philippines, said the conference provided a solution and a remedy to the recent devastation brought by Typhoon Ketsana.

“Now, we are basically into relief and rehabilitation, but these are short-term solutions. Capturing methane and carbon is the long-term solution. We need to build these programs and put in place strategies to handle waste, accelerate waste management solutions and incentives,” she said.

Josefo Tuyor, senior operations officer at the World Bank, said as the expiration of the first commitment period of the Kyoto Protocol in 2012 approaches, there are other carbon finance mechanisms that can be tapped to access the carbon market. The Carbon Partnership Facility is one that could help developing countries develop longer-term transformational programs. Also, around $5 billion have also been pledged for the Clean Technology Fund, which developing countries can access to implement transformational initiatives on renewable energy, transport and energy efficiency.

Benefits from the discussions will not end with the conference, Ms. Gozun said. There will be follow-up conferences in Luzon, Visayas, and Mindanao to reach out to other organizations and inform them of PoAs and various technologies available and encourage them to clean the environment and make money from carbon emission reductions at the same time.