Arthur D. Little Southeast Asia principal Anna Rellama believes the Philippines is paying too little attention to one of the most important emerging tools in the clean-energy transition: voluntary Renewable Energy Certificates, or RECs.
“Most conversations about renewable energy in the Philippines focus on power plants, grid constraints, or electricity prices,” Rellama said. “But Renewable Energy Certificates, or RECs, which are instruments that represent the environmental attribute of renewable electricity also demand attention."
Rellama explained that RECs are instruments representing the environmental attribute of renewable electricity. “When 1 MWh of electricity is generated from a qualified renewable source, a certificate is issued for that renewable attribute,” she said. “The electricity flows into the grid. The REC tracks the clean-energy claim.”
According to Rellama, this matters because companies increasingly need “credible ways to show their electricity is backed by renewables,” especially exporters, manufacturers, business process outsourcing firms, data centers, and corporations facing sustainability and supply-chain requirements.
She noted that the Philippines’ compliance REC market has already advanced significantly through the Department of Energy-led Renewable Energy Market and the Philippine Renewable Energy Market System, or PREMS, which reached full commercial operations in December 2024.
But Rellama argued that the next challenge is whether the Philippines should now build a stronger domestic voluntary Renewable Energy Market, or VREM, for companies wanting to go beyond compliance requirements.
“Based on our recent work… the answer is yes — but with important conditions,” she said.
Rellama stressed that the market already exists in practice. She pointed out that Philippine I-REC issuance reached 4.7 million certificates in 2024, with 3.5 million redemptions, while the country also participated in Tradable Instruments for Global Renewables systems largely supported by geothermal and hydropower assets.
Still, she said most activity remains dependent on international systems instead of a local framework.
“A domestic VREM would create a local structure for issuance, trading, tracking, and retirement,” Rellama said.
She argued that such a system would allow Philippine companies to “buy locally credible renewable attributes instead of defaulting to offshore options,” while also giving renewable generators “a new revenue incentive for their clean energy.”
Rellama added that a domestic market would also help prepare the Philippines for future regional REC trading within ASEAN.
For businesses, she said voluntary RECs are not meant to replace actual energy-efficiency efforts, but instead help companies bridge growing sustainability-reporting demands.
“RECs allow electricity consumption to be matched with renewable generation attributes, provided the certificates are credible, properly retired, and not double-counted,” she said.
At the same time, Rellama warned that the market would only succeed if companies and consumers trust it.
“The promise of voluntary RECs is real, but the market will only work if people trust it,” she said.
Among the biggest risks she identified were double counting, unclear ownership of environmental attributes in legacy power contracts, diversion of compliance RECs into higher-paying voluntary markets, unfair pricing impacts on consumers, and weak registry systems.
Rellama stressed that PREMS “must remain the single source of truth for issuance, transfer, and retirement,” backed by strong anti-double-counting safeguards.
She also warned that ASEAN’s neighboring markets, including Singapore, Vietnam, Thailand, Malaysia, and Indonesia, are already moving toward cross-border REC systems, raising the stakes for the Philippines.
Ultimately, Rellama argued that the issue goes beyond technical energy policy.
“Companies want credible clean-energy claims, generators need better revenue signals, and the country needs more renewable investment,” she said.
“A well-designed VREM can help connect these needs.”