World Bank: Carbon tax to help secure additional revenue

MANILA, Philippines — The imposition of a carbon tax in the Philippines will help the cash-strapped government secure additional revenue needed to recover from the pandemic and address long-term risks of climate change, the World Bank said.

In its latest report, the Washington-based multilateral financing institution said carbon pricing now applies to over a fifth of global greenhouse gases, generating some $53 billion in revenues.

Despite the progress, global efforts to slap taxes on carbon remain small and are not on track to meet the Paris Agreement goals. Many countries, including the Philippines, have yet to ride on the carbon tax.

The Asia-Pacific is both exposed to climate risk and a major contributor to greenhouse gas emissions considering that the region is home to the majority of the world’s population and has been the main driver of global growth in decades.

But World Bank said a carbon tax may not always be the best and most preferred choice considering every circumstances like in the Philippines where power rates are among the costliest in the region, reducing the country’s overall competitiveness.

The Department of Energy earlier said the Philippines was not ready for carbon tax as this would make the country uncompetitive in terms of power rates.

The World Bank said social packages aimed to stimulate economic rebound can lay the groundwork for a more climate-resilient pathway but most stimulus expenditures are not directed toward a green recovery.

“Alongside other measures, a carbon price can play a role to support a sustainable recovery, primarily through three mechanisms: supporting green industries, investments, and revenue,” the World Bank said.

The World Bank emphasized that carbon pricing helps support sustainable industries and the competitiveness of low-carbon products, which can generate additional jobs.

Global estimates indicate the employment impact of the energy efficiency and renewable energy sectors can be substantial, generating three times as many full-time jobs as equivalent government spending in fossil fuels.

Further, a carbon price can encourage investments in and mobilize revenue toward low-carbon, net-zero, and net-negative technologies. It can also generate much-needed government revenue to support additional stimulus and investment programs.

Currently, 64 carbon pricing instruments are in operations around the world, covering over 20 percent of global greenhouse gas emissions and generating $53 billion in revenue.