The Philippines is prioritizing the energy and transport sectors in its decarbonization strategy under a draft Just Transition Framework released this month by the Department of Environment and Natural Resources.
The draft report defines a just transition as a deliberate, inclusive and rights-based process toward a low-carbon and climate-resilient society. It warns that failing to keep pace with the global shift could have socio-economic consequences far beyond environmental damage.
Domestic inaction could cut estimated gross domestic product growth by up to 3 percentage points and raise unemployment by 2 percentage points by 2040.
As international markets increasingly favor low-carbon products, the report notes the Philippines could face risks in market access, financial flexibility and overall competitiveness. The country could also face larger fiscal deficits and growing debt due to disasters triggered by natural hazards, which may delay the Philippines’ path toward high-income status.
A primary concern remains the country’s dependency on coal, which accounted for 60 percent of electricity generation in 2022.
The report states that continued reliance on fossil fuels perpetuates energy insecurity and exposes the economy to price volatility and global supply shocks.
Department of Environment and Natural Resources officials noted in the report that “a managed phaseout of coal-fired power generation with clear timelines aligned with ambitious renewable energy deployment should form the backbone of a low-carbon, decentralized and inclusive energy system.”
The framework calls for the gradual retirement of coal plants alongside comprehensive support for affected parties.
Proposed measures include worker upskilling, social protection for vulnerable households and financing for small enterprises in carbon-intensive communities. Beyond energy, the report identifies transport as a major risk channel because the sector remains dominated by fossil-fuel-powered road vehicles, contributing to severe congestion and public health issues.
The report says that modernizing transport through e-mobility and cleaner public options is critical to meeting climate targets and reducing economic losses from traffic.
However, the transition in transport involves a “deep social transition” because jeepneys and other traditional public utility vehicles play vital cultural and economic roles. The report states that “advancing this shift will require strong political will and broad public support, which can only be secured if drivers, operators and their families are provided with adequate opportunities [and] compensation for losses.”
The framework suggests that the shift to e-mobility should include establishing domestic electric vehicle assembly and integrated urban planning to ensure the efficient movement of people and goods.
A well-designed transition could turn these vulnerabilities into “strategic national strengths” by reducing reliance on expensive fuel imports and improving price stability.
