CEED Official Statement on the Approved Bicameral Version of the Coal Tax

The Center for Energy, Ecology, and Development (CEED) lauds the bicameral unity reached in levying a tax on coal, starting with a 50-peso tax which will increase to 100 pesos, then 200 pesos within the period of 2018 to 2020.
The tax measure, if pursued in line with the framework of energy justice, respect for ecological limits, and a people-centered sustainable development, will be instrumental to bringing about meaningful change much needed and long demanded in the country’s energy system.
Nevertheless, the 50-100-200 formula on the coal excise tax is a step in the right direction. This policy sends a strong message to the public and market that the Philippines is committed towards clean, renewable and sustainable energy and low carbon economy.
CEED commends the leadership in both Houses of Congress in heeding the wisdom of coal-affected communities, electricity consumers, and civil society. We recognize the complexity of a taxation mechanism which has effects on the price of electricity and energy security in the country, and so we also acknowledge the legislators who exercised political will in order to arrive at this historic mechanism.
Coal has enjoyed a plethora of incentives and support from the government since 1976. Coal mining companies in the Philippines at present can deduct as much as 90 percent of gross proceeds as expenses, the highest recoverable cost in the extractive industry. Local governments are left with only 1.2 percent of the gross proceeds from coal while the national government is left with only 1.8 percent. This is a far cry from the 7 percent of all gross proceeds from coal enjoyed by contractors alone. Meanwhile, imported coal is taxed at a mere 0.25 percent at P10, the lowest tax rate among fossil fuels in the country.
Aside from being a revenue-generating mechanism, the coal tax serves as a corrective measure as well. Despite being among the world’s most vulnerable countries, the Philippines was ranked 39th among global carbon emitters in 2016, with 41.5 million tonnes of CO2 emissions coming from coal. The excise tax will help boost the country’s commitment to shift to a low carbon economy through renewable energy, as reflected in the Renewable Energy Law of 2008 and our Nationally Determined Contribution (NDC) pledged in line with the Paris Agreement.
In all this, CEED calls on legislators – both those who have supported and have opposed the coal tax – to work together in safeguarding the consumer from the possible adverse effects of the coal tax on the electricity consumer, particularly in their electric bills. Already, the Philippines has gained infamy for having among the highest power rates in Asia-Pacific.
We reiterate the need to remove from the current energy regulatory framework the pass-on provision allowing companies to burden consumers and the energy poor with additional costs brought about by the mechanism. We also reiterate the need to expand “lifeline rates” which effectively subsidize marginalized or low-income electricity consumers.
We also urge the Department of Energy to follow through with the implementation of the long-delayed Retail Competition and Open Access (RCOA), as it will help see through the potential of the coal tax to shift investment and support to renewables. RCOA, in institutionalizing competition in the supply of electricity, will allow the least-cost supply option to reach electricity end-users. With this mechanism in place, consumers will be able to maximize the effects of the drastic decrease in cost in renewable energy.
In conclusion, CEED hopes that this bicameral unity will indeed be one of the first steps in ending the country’s “coal addiction.”  We remain firm in our belief that with the guiding framework of ecological and energy justice and the goal of social progress with social justice, this tax mechanism on coal will yield a better energy future, and a cleaner development path for the Filipino people.