A new carbon trading model could generate over $40 billion in annual revenue by 2050 while helping the Philippines achieve net-zero emissions in its power sector, according to research from the University of Surrey.
The study found that revenues from carbon markets would more than cover the costs of deploying renewable energy and emissions reduction technologies.
THE financial surplus could potentially lower electricity bills for Filipino consumers and businesses in a country that currently faces the highest power costs in Southeast Asia.
The Philippines averaged $187.60 million per terawatt-hour in 2023. These high costs hinder business competitiveness and deepen poverty, particularly for small enterprises and low-income households. The nation also imports 98 percent of its coal, leaving it vulnerable to global price shocks.
University of Surrey co-author Gul Hameed said the research shows that integrating carbon trading with renewable energy and carbon capture technologies could make the transition more affordable.
Hameed noted that by 2050, carbon trading revenues could significantly exceed the investment needed for clean energy, creating opportunities to reduce prices rather than increase them.
Researchers used open-source software to model the Luzon grid, which generates 72 percent of the nation’s electricity.
They compared two pathways to reach net-zero by 2054. One scenario relied primarily on renewable expansion, while the second included carbon capture and storage in existing fossil fuel plants starting in 2035.
The second scenario resulted in lower electricity prices and reduced cumulative emissions by 184 million tons of CO2. This path required half the generation expansion of the first and aligned with national targets to reach a 65 to 70 percent renewable share by 2054. However, the study noted that the feasibility of geological CO2 storage requires more research due to the region’s high tectonic activity.
University of Surrey co-author Michael Short said the Philippines is the only country in Southeast Asia without a net-zero strategy despite its high energy costs.
Short said the carbon trading legislation passed in February provides the government with a mechanism to strengthen energy security and lower bills simultaneously. He said the findings provide a roadmap for developing countries to prove they do not need to choose between affordable energy and climate action.
University of Surrey Institute for Sustainability director Ravi Silva said the research represents a practical solution to help families struggling with bills and businesses forced to close due to high costs.
The study, titled “Optimal transition pathways to a net-zero power grid in the Philippines,” was published in Energy Strategy Reviews. Funding was provided by the South Asia Research Hub, the UK Foreign, Commonwealth & Development Office, and the International Science Partnerships Fund.
