First Philippine Holdings Corporation chairman Federico R. LopezExcerpt from the remarks by chairman Federico R. Lopez at the First Philippine Holdings Corporation annual stockholders’ meeting held at the PSE Auditorium on May 29, 2017.
At last year’s annual shareholders’ meetings, FPH and the various companies in our group pledged that we would no longer consider developing or investing in coal-fired power plants. When we made that decision to close the door to any of our companies putting up coal-fired power plants, it was not an easy one. Even today, we are the only large energy company in the country that has done so unequivocally.
Recently we’ve been inundated by even more global evidence telling us that we have much less time to act than originally believed. Global warming is already wreaking havoc on the Earth’s water cycles and creating weather extremes like we’ve never seen before; and it is accelerating faster than previously imagined because of all the feedback loops being unleashed.
All 16 years of the 21st century rank among the 17 warmest on record, and the five warmest years have all occurred since 2010 with 2014, 2015 and 2016—in quick succession—having been the hottest years on historical record. According to the National Aeronautics and Space Administration, the combined Arctic and Antarctic sea ice numbers last February 13, 2017 were at their lowest point since satellites began to continuously measure them in 1979. Since that period we’ve, on average, “lost a chunk of sea ice larger than Mexico”!
Last April 18, 2017, another record was broken when the CO2 level in the atmosphere breached the 410 ppm threshold. We’ve used up 90% of that carbon concentration budget as most scientists agree we should not go beyond 450 ppm.
Our country is ground zero for the calamitous effects of global warming. None of us will ever forget the aftermath of typhoon Yolanda (Haiyan) and the immense suffering of communities who lost loved ones and whatever few possessions they had; and when we just think of the scale of rescue, relief and rebuilding efforts that came after, those images cannot but have an enormous impact on how we move forward as a company. For the Philippines, global warming is not some distant future event; it’s here, it’s now, and it’s affecting the very people and communities we love and serve.
This is why the rush away from fossil fuels and toward renewables needs to accelerate; the world will need to deploy technology to utilize energy more efficiently in our buildings and homes; we will need to protect and enhance the trees and oceans that today still absorb half the world’s emissions; and we need to transform our food system from a major greenhouse gas emitter into one that’s at least GHG neutral.
However, as more renewables penetrate our lives, this will have serious strategic implications for electric utilities and power generators given its ability to change the shape of demand daily and yearly.
This is where our natural gas platform has a distinct advantage, as it is capable of flexible operation, rapid starts-stops and has less than half to a third of the CO2, NOx, and SOx emissions of even the best coal-fired plants. As indigenous gas sources taper down in the next seven to 10 years, we are preparing to develop the country’s capability to import and use LNG through a regasification terminal in the heart of the First Gen clean energy complex in Batangas City.
This component is essential as we believe natural gas plants will play a key role in keeping the lights on and costs affordable in the transition to a clean, decarbonized energy paradigm.
Our geothermal platform is essential to a decarbonizing world that’s emerging. Today, it’s the only renewable energy technology capable of 24/7 baseload power at prices that already compete head to head with fossil fuels. We will continue to drive our costs down as we expect even more intense competition amongst various fuels and technologies in the years to come.
Our solar and wind projects, on the other hand, have been beneficiaries of feed-in tariff (FIT) regimes but we know these are just transitory mechanisms meant to encourage early entry of renewables into the grid mix. We are preparing, however, to deploy these technologies in the competitive arena where they stand on their own merits, without subsidies or FITs. That day is coming soon.
The electricity industry and many others today are changing very rapidly, whether it’s from the need to address a dangerously warming planet or a business landscape being constantly redrawn by disruptive technology. The forces at work move faster than many of us could even have imagined a mere 10 years ago. But just as paradigm shifts bring risks, they likewise create opportunities for those that move decisively enough to capture them.
This is uncharted territory for many but our business platform at FPH is continuously changing, evolving and advancing with the times.
Whether it’s in energy, real estate, construction, transformer manufacturing, or the new businesses and services we have yet to initiate, one thing is certain: they will not look like anything we have done in the past. This is a time for new mind-sets, new capabilities and even new ways of organizing how our people and companies operate. Your company is at an exciting juncture and we intend to test the boundaries of the new world with creativity, innovation and boldness in the years to come. Many thanks for your valuable