BK urges for consistency in governance: Environmental impacts of coal mining and conflicting policies

September 25, 2014, Manila, Philippines – During the recently concluded UN Climate Change Summit in New York City, President Benigno Aquino called out to developed countries that the Philippines is carrying the burden of their greenhouse gas emissions as the country is always in the path of typhoons, one of which is the strongest typhoon that made landfall ever recorded in history: Typhoon Yolanda.

However, according to Bantay Kita (BK), a coalition of organization pushing for transparency and accountability in the extractive industries, the Philippines has conflicting policies. While the government recognizes the vulnerability of the countries to Climate Change, the Department of Energy continues to promote mining and utilization of coal energy.

As of December 2012, there is a total of 60 coal operating contracts (COCs) in the country, 29 of which are for exploration and 31 are for development and production.

Coal production in the country has been a significant contributor to the country’s CO2 emissions, a greenhouse gas linked to the increasing rate of global warming. On the average, 21 percent of the total CO2 emission in the Philippines from 2001 to 2009 was attributed to coal usage.

Moreover, coal mining also has a significant health impact such as respiratory diseases due to steam coal dust. This is specifically prevalent among coal mining workers and communities residing within the vicinity of the operations.

“If this continues, we are not merely victims, but we’re also perpetrators of the worsening environmental condition,” Gerry Arances, national coordinator of Philippine Movement for Climate Justice (PMCJ), said.

According to BK, if the country is serious about climate change, then it should also change its energy policy.  It should review the fiscal policy governing coal mining. With the minimal royalty and the incentives that are provided to the coal companies, the public in effect is subsidizing coal production in the country.

Coal companies in the Philippines can deduct as much as 90 percent of their gross proceeds as expenses, the highest recoverable cost among extractive industries. Oil and natural gas companies, for example, are only allowed to deduct up to 70 percent of total proceeds of their extractions as expenses. Contractors are also entitled to basic fees and special allowances amounting to 70 percent of the net proceeds, which is equivalent to at least seven percent of the gross proceeds of coal.
On top of the 90 percent recoverable cost, the taxpayers are giving mining companies 7 percent of the remaining 10 percent revenue as payment for mining. With these deductions, local governments are entitled to at least 1.2 percent of the gross proceeds while the national government is left with 1.8 percent of the gross proceeds from coal.

“The goal of the Philippines is to reduce coal production and dependency on coal energy. However, the government is doing the contrary,” said Roldan Gonzales, Executive Director of  GITIB, Incorporated, a non-profit and non-governmental organization supporting indigenous peoples and marginalized communities.
The country’s National Framework Strategy on Climate Change (2010-2022), as legally mandated by the Climate Change Act of 2009 (Republic Act 9729), aims to ensure a climate-risk resilient Philippines by reducing greenhouse gas emissions from the energy sector and maintaining a competitive energy investment climate.
“The current fiscal regime does not take into account the negative effects of coal mining and coal consumption. Instead, it is providing incentives to continuously conduct coal mining operation without regard to the negative social and environmental effects. Our fiscal regime should reflect how much it really cost to mine coal,” concluded Anton Ragos author of the policy paper entitled “Coal Mining: An Inequitable Share.”

According to Ragos, aside from its ill effects on human health and its minimal contribution to poverty alleviation at the local level, coal mining leaves an indelible mark on the environment, which will deter us from achieving our goals in climate change adaptation.
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According to BK, the government should make its policy consistent. To address and cope with Climate change, coal mining and use of coal as a source of energy should be discouraged and it is time to review the outdated policy on coal mining.