The General Framework for Carbon Credits in the Energy Sector establishes a national framework for carbon credit generation, management, and monitoring in the energy sector. It operationalises the country’s energy-sector contribution to its Nationally Determined Contribution (NDC) and sets the basis for participation in Article 6 markets, domestic compliance systems, and the voluntary carbon market (VCM). The framework defines the rules for generating Carbon Credit Certificates (CCCs) from eligible energy-related mitigation activities and authorising and accounting for Internationally Transferred Mitigation Outcomes (ITMOs).
Institutional Arrangements
- Department of Energy (DOE): The DOE is the lead agency, responsible for policy development, authorisation of CCCs adn ITMOs, monitoring, and oversight of the carbon credit framework.
- Designated National Authority (DNA): The DNA coordinates and approves participation in Article 6 cooperative approaches. The DOE must report eligible projects and CCC issuance to the DNA.
- Technical Working Group on Carbon Pricing Instruments (CPI TWG): The CPI TWG is responsible for developing national carbon pricing policies (ETS and carbon tax) that the DOE must align with.
Project Eligibility
- Eligible mitigation activities include: voluntary early retirement of coal-fired power plants; renewable-energy installation or expansion; early fossil-fuel decommissioning with RE replacement; energy-efficiency upgrades; low-carbon hydrogen, nuclear, and energy-storage projects; fuel switching or hybridization; electric-vehicle deployment; and biofuel blending.
- Ineligible mitigation activities: activities classified as unconditional NDC measures.
- The TFECC recognizes internationally accepted carbon-crediting standards (e.g., Gold Standard, Verra, ISO) and accredits validation and verification bodies.
Authorisation and Corresponding Adjustments
<ins>Conditions for Authorisation</ins>
- Unconditional NDC activities are not eligible for authorization.
- Conditional NDC activities may be authorized, provided financial additionality is demonstrated.
<ins>Corresponding Adjustments (CAs)</ins>
- Applied only to authorized ITMOs or VCM credits used for Other International Mitigation Purposes (OIMP).
- CCCs used toward the Philippines’ own NDC do not undergo CA.
- The DOE records and tags each CCC accordingly in coordination with the DNA and TFECC.
Market Participation
- Project proponents retain full ownership and transfer rights to CCCs generated by their mitigation activities.
- CCCs may be sold, traded, transferred, or retired domestically or internationally under voluntary or compliance systems.
- Under the Renewable Energy Act (2008), proceeds from CCC sales are tax-exempt.

Circular DC2025-09-0018: National framework on carbon credits for the energy sector

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Passed/Approved

Philippines

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An aim to achieve a quantifiable outcome within a given time-frame, set by an institution such as a national government.

Policy instruments are techniques or tools used by governing authorities to promote certain policies in order to achieve predetermined goals. Put simply, instruments are how a government tries to achieve its goals, with this taxonomy being focused on national policy instruments.

Risk is the potential for adverse consequences resulting from the dynamic interplay between (climate-related) hazards, exposure, and vulnerability of affected human or ecological systems.

Groups  of people who are adversely affected by climate change or the response to it

A set of principles, processes, and practices that build economic and political power to shift from an extractive economy to a regenerative economy.

Justice is the ethical and political framework that addresses fairness, including issues of responsibility, rights, and structural inequity.

Renewable energy means all forms of energy produced from renewable sources in a sustainable manner.

Fossil fuel is a generic term for non-renewable energy sources such as coal, fossil gas, and oil (including crude oil, and petroleum products), that can be used for electricity and heat generation. Fossil fuels are hydrocarbons formed from pressurised and heated organic material buried over millions of years.

Molecules in the atmosphere that play a key role in the greenhouse effect by trapping heat radiating from Earth’s surface.

Area of the economy in which actors engage in identical or related activities.

In human systems, the process of adjustment to actual or expected climate change and its effects, in order to moderate harm, increase resilience or exploit beneficial opportunities. In natural systems, the process of adjustment to actual climate change and its effects; human intervention may facilitate adjustment to expected climate change and its effects.

The management and allocation of funds, assets and investments to meet various objectives

A tax advantage is a fiscal incentive where the government reduces or exempts selected activities, goods or actors from taxes.

Tradable permits are market-based tools that grant permission for specific activities, frequently used to regulate emissions. These permits can be issued within a trading system to manage environmental impacts.

Financial actors and resources that are primarily directed towards climate change mitigation, adaptation and compensation.

Either money or something of monetary value is transferred between two or more organisations, people or countries.

The release of heat-trapping gases, primarily from human activities such as burning fossil fuels, agriculture and industry.

A long-lived, colourless gas, chiefly emitted from fossil fuel combustion, deforestation and cement production.

Replacing technologies that burn fossil fuels directly with alternatives powered by electricity.

Actions to reduce emissions in energy generation and supply.

Technologies that capture and hold energy in reserve for later use.

Social protection systems consist of policies that help people manage social risks in order to prevent poverty and maintain decent incomes and living standards

Energy derived from biological compounds that are renewable due to their short life cycle within the carbon dioxide cycle.

Social inclusion is the process of improving the terms on which individuals and groups take part in society—improving the ability, opportunity, and dignity of those disadvantaged on the basis of their identity.

Coal is a combustible sedimentary rock formed from carbonised plant matter, rich in carbon and hydrocarbons, and occurring in several main types including hard coal and brown coal.

Any compulsory, unrequited payment to the government levied on corporations or individuals. This can be for environmental reasons, such as introducing a Carbon tax to set a price that emitters must pay for the greenhouse gases they emit.

The activities of industries that transforms raw materials into finished goods through industrial processes.

The activities of industries involved in the production, distribution, and sale of energy, including electricity, gas, and renewables.

This sector involves activities to move goods and people, alongside the storage of products.

Activities of businesses and institutions that provide financial services and products to individuals and organisations.

Activities that involve the cultivation of crops and raising of livestock for food, fibre, and other products essential for human life and industry.

the fair distribution of risks and opportunities of climate change and the transition to a regenerative economy, cognisant in particular of disproportionate impacts on vulnerable communities and the working class

Procedural justice means ensuring that decision making is safe, transparent and inclusive, emphasizing the agency and influence of vulnerable groups and those most impacted.

Circular DC2025-09-0018: National framework on carbon credits for the energy sector

Policy instrument

Just transition

Climate justice

Renewable energy

Fossil fuel

Greenhouse gas

Economic sector

Adaptation/resilience

Finance