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As the world intensifies its battle against climate change, the shipping industry stands at a crucial juncture. Decarbonising shipping through green hydrogen presents a unique opportunity for the Philippines to improve trade, create jobs, enhance energy and food security, and tap into burgeoning environmental markets.
The global imperative to combat climate change is reshaping industries, and the shipping sector is no exception. As countries implement carbon border taxes to penalize carbon-intensive goods, the Philippines stands at a crossroads. Embracing green hydrogen as a primary fuel for shipping not only aligns with global environmental mandates but also offers a transformative opportunity to boost trade, create jobs, enhance energy security, and improve food security. The transition to green hydrogen is not just an environmental necessity but a strategic economic move that can position the Philippines as a leader in sustainable maritime logistics and the production of green hydrogen.
Navigating Carbon Border Taxes
The imminent introduction of carbon border taxes, particularly by major markets like the European Union and United States, but also India, China, Australia and trading blocks in Africa poses a significant challenge for the global shipping industry. These taxes will penalize carbon-intensive supply chains, potentially increasing costs for countries relying heavily on fossil fuels for transportation. For the Philippines, a nation deeply integrated into global trade networks, this represents both a threat and an opportunity. By adopting green hydrogen as a primary fuel for shipping, the Philippines can not only sidestep these carbon tariffs but also position itself as a leader in regenerative maritime logistics. Green hydrogen, produced via electrolysis using hydro sources, emits no carbon dioxide when used as fuel. This transition could make Filipino exports more competitive in markets with stringent environmental regulations, thereby safeguarding and expanding the nation's shipping industry and trade volumes.
1. Strengthening Trade through Compliance with Carbon Border Taxes
Carbon border taxes are poised to become a significant factor in global trade dynamics. These taxes penalize carbon-intensive products, making net-zero produced goods more competitive. For the Philippines, adopting green hydrogen for shipping can ensure compliance with these emerging regulations, thereby avoiding punitive taxes and maintaining market access. This shift will not only protect existing trade relationships but also make Philippine exports more attractive to environmentally conscious markets in Europe, North America and beyond. By being at the forefront of decarbonised shipping, the Philippines can secure a competitive advantage, facilitating smoother trade flows and increasing its share in global markets.
Job Creation and Technological Advancement The shift to green hydrogen is not just an environmental imperative but also a potent economic stimulus. Developing a green hydrogen economy requires significant technological and industrial investments, leading to the creation of thousands of jobs. The Philippines stands to gain from this through the transfer of hydrogen technology, which will necessitate skilled labour across various sectors, including engineering, manufacturing, and maintenance. Investing in green hydrogen technology can spur domestic innovation and capacity building. Filipino universities and research institutions can collaborate with international experts to cultivate a robust talent pool. This knowledge transfer will ensure that the Philippines remains at the forefront of the hydrogen economy, providing long-term employment and economic stability.
2. Job Creation through Green Hydrogen Technology Transfer
Transitioning to green hydrogen entails developing a new industrial ecosystem, which will necessitate extensive technology transfer and capacity building. This process is expected to create thousands of jobs in various sectors, including engineering, manufacturing, and research and development. The construction and maintenance of green hydrogen production facilities, storage solutions, and refuelling stations will generate employment opportunities across the country. Additionally, the skills and expertise developed through these initiatives can position the Philippines as a hub for green hydrogen technology in Southeast Asia, fostering further economic growth and technological advancement.
Energy and Food Security through Green Hydrogen
Green hydrogen production can significantly bolster the Philippines' energy security. The archipelago is rich in renewable energy resources, particularly hydropower. By harnessing hydro dams for green hydrogen production, the Philippines can reduce its reliance on imported fossil fuels, leading to greater energy independence and resilience against global energy market fluctuations. Moreover, green hydrogen can be converted into green ammonia, a crucial net zero component for fertilizers. This process can enhance the country's food security by supporting Regenerative Agricultural practices. By producing its own green ammonia, the Philippines can reduce dependence on imported fertilizers, ensuring stable and affordable agricultural inputs for its farmers. This will not only boost local food production but also protect the agricultural sector from global supply chain disruptions and increase trade as the carbon border taxes come into place.
3. Enhancing Energy Security with Hydropower-Generated Hydrogen
The Philippines is endowed with significant hydroelectric resources, which can be harnessed to produce green hydrogen. By utilizing hydro dams to generate hydrogen, the country can achieve greater energy security, reducing its reliance on imported fossil fuels and mitigating the volatility of global energy markets. This shift to locally produced, renewable energy not only aligns with sustainability goals but also strengthens national resilience against energy price fluctuations and supply disruptions. Moreover, it ensures a stable and clean energy source for the shipping industry, contributing to the overall decarbonisation efforts.
4. Boosting Food Security through Green Ammonia Production
Green hydrogen is a critical component in the production of green ammonia, which is essential for sustainable agriculture. Ammonia is a key ingredient in fertilizers, and producing it sustainably can enhance food security by ensuring a steady supply of environmentally friendly fertilizers. This, in turn, supports agricultural productivity and resilience, crucial for a country like the Philippines where agriculture plays a significant role in the economy. By integrating green hydrogen into its agricultural supply chain, the Philippines can foster a more sustainable and self-sufficient food system.
Fostering Environmental Markets and access to Climate Finance
The environmental benefits of green hydrogen extend beyond immediate energy and food security. As global markets evolve, Environmental Markets are becoming a critical component of economic competitiveness. The Philippines has the potential to become a major player in Environmental Markets by trading in Renewable Energy Credits from Hydrogen, or iREC-H. The development of a robust green hydrogen sector can help the Philippines generate significant iREC-H, which can be traded internationally. With an estimated market potential of US$14 billion, iREC-H represents a lucrative opportunity for the country. By investing in green hydrogen and other regenerative practices, the Philippines can not only reduce its environmental footprint but also create a new revenue stream, fostering economic growth and environmental stewardship through the meeting of the Philippines Nationally Determined Contributions under the Paris Agreement and trading of ITMOs under Article 6 of The Paris Agreement in the Compliance Market.
Conclusion
Decarbonising the shipping industry via green hydrogen is a multifaceted strategy that promises to deliver substantial benefits for the Philippines. It positions the nation to comply with impending carbon border taxes, thereby safeguarding and enhancing its trade competitiveness. The shift also opens up vast employment opportunities, driving economic growth through technological advancements and industrial development. By leveraging its hydroelectric resources, the Philippines can achieve greater energy security, while the production of green ammonia ensures a sustainable future for its agricultural sector. Embracing green hydrogen is not merely an environmental obligation but a strategic imperative that paves the way for a prosperous and resilient future for the Philippines.
Decarbonizing the shipping industry through green hydrogen offers the Philippines a transformative path towards improved trade, job creation, energy and food security, and participation in environmental markets. By embracing this sustainable technology, the Philippines can enhance its economic resilience, safeguard its natural resources, and position itself as a global leader in the fight against climate change. The benefits are multifaceted and far-reaching, promising a prosperous and sustainable future for the nation as it shares in the US$14 billion in revenues this shift will bring to the Philippines.
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