Reflections on what carbon markets really ask

For the Philippines, climate change has never been theoretical. It shows up in prolonged extreme heat that strains households and power systems, in coastlines slowly retreating, and in infrastructure under pressure from climate impacts that are no longer episodic. We have lived the climate crisis long before it became a global headline.

What is new, and far more consequential, is this. As the world finally begins to put a price on carbon, countries with less climate risk than ours are already capturing that value. They are monetizing forests, energy transitions, and avoided emissions at premium prices. The Philippines, despite its vast natural capital and renewable energy potential, now stands at a point where clearer systems can unlock that value.

This is not a failure of ambition. It is an opportunity to build the systems that allow ambition to matter.

That distinction matters, because carbon markets do not reward vulnerability. They reward credibility.

At their core, carbon markets are not acts of charity. They are rules-based exchanges built on trust. Buyers, whether governments meeting climate commitments or companies under tightening carbon constraints, pay premiums only when a country can do a few things well: It must authorize credits clearly. It must account for them transparently. And it must be able to stand by those decisions when questioned.

We often talk about carbon markets in terms of projects waiting to happen. A mangrove restored here. A renewable facility there. Those projects matter. But capital does not only move project by project. It also moves jurisdiction by jurisdiction. Investors ask who has the authority to approve, how emissions are counted nationally, and whether international commitments are taken seriously.

When those answers are unclear, even good projects struggle. They are discounted. Sometimes they are passed over entirely.

From the global policy and market discussions I participate in, this shift is unmistakable. As co-chair of the OECD Inclusive Forum on Carbon Mitigation Approaches, I see how expectations are converging around coherence, transparency and interoperability. Carbon markets are no longer judged by volume alone, but by whether they fit cleanly within national accounting and international rules. Fragmented arrangements are treated as risk.

The same lesson appears in multilateral climate processes. Under the Paris Agreement, particularly Article 6, carbon credits are not just private assets traded between willing buyers and sellers. Once authorized for international transfer, they become sovereign accounting decisions. Every ton sold abroad must be reflected in the country’s own emissions balance. That obligation does not sit at the project level. It sits at the national level.

This is why carbon markets cannot sit outside a country’s core climate and development frameworks. Under the Marcos administration, the Philippines has focused on getting the fundamentals right. A National Adaptation Plan that prioritizes resilience where risks are highest. An NDC Implementation Plan that translates commitments into sectoral action. A strengthened national greenhouse gas inventory that anchors reporting. And a Philippine Development Plan that treats climate action as part of economic strategy. Carbon markets add value only when they reinforce these systems. Detached from them, they create noise.

A market where authorization, accounting and reporting are scattered across competing mandates does not inspire confidence. It raises questions. In markets, unanswered questions usually mean higher risk and lower prices.

This is why serious buyers ask different questions from those we often hear at home. They already know which countries are climate-vulnerable. What they ask instead is whether a country can guarantee three things at the same time: integrity, equity, and sovereignty.

These principles reflect a growing convergence in global carbon market practice, shaped by UNFCCC rules under Article 6, guidance from the Integrity Council for the Voluntary Carbon Market, and analytical work by the OECD and other multilateral institutions. Across these forums, the lesson is consistent: markets scale only when environmental integrity is protected, benefits are shared equitably, and host countries retain strategic control over how mitigation outcomes are used.

Integrity means that a credit represents a real, additional and verifiable climate outcome. One ton must mean one ton. When this discipline slips, trust erodes quickly. Prices follow.

Equity matters for a similar reason. Markets are durable only when benefits reach those who protect carbon on the ground. Indigenous communities, farmers and local stewards must have standing in the system. Without it, social risk becomes market risk.

Sovereignty requires restraint. A country must know which emissions reductions it can sell and which it must keep to meet its own nationally determined contribution. Selling the cheapest reductions today, only to struggle tomorrow, is not strategy. It is short-termism.

In discussions at the UNFCCC Adaptation Committee, where I sit as representative of developing nations, the contrast is often stark. Countries with unified governance frameworks are able to link adaptation priorities, mitigation outcomes, and finance more effectively. Those without struggle to scale beyond pilots.

Other developing countries learned this early. They invested in governance before chasing volume. Clear authorization processes. Unified registries. Alignment between sectoral action and national accounting. As a result, they now attract higher-value transactions and longer-term partnerships. Not because they are more virtuous, but because they are more credible.

Carbon markets will not save the Philippines by themselves. But they do deliver something important. They reward countries that can govern clearly and consistently. They reward discipline. They reward trust.

A useful way to think about this is to treat a carbon credit like a land title. You can plant trees, build renewable plants and manage resources on the ground. But without a clean title, that asset cannot be mortgaged, transferred, or trusted by serious investors.

Sectoral agencies and private developers create the physical asset. A unified national authority provides the attestation of a clean title. That division of labor is what gives carbon its credibility in global markets.

For the Philippines, this means moving away from fragmented authority and toward a unified, high-integrity governance framework for carbon — one that sits above sectors, aligns mitigation with national plans, and anchors decisions in transparent accounting. This is not about centralizing power. It is about making responsibility legible.

When carbon is governed this way, climate action stops being episodic. It becomes part of how the State plans, reports and decides. That is the standard the global market is now setting. And it is the standard the Philippines must be ready to meet.