Business World

FPH chief hits banks for supporting coal plants

- By Victor V. Saulon Sub-Editor

CEBU CITY — Local banks continue to extend loans to new coal-fired power plant projects despite the Philippine­s being directly hit by climate change, the chairman of Lopez-led First Philippine Holdings Corp. (FPH) said.

Federico R. Lopez, who is also FPH chief executive officer, said banks are “tripping over each other” in extending loans to coal power plants even if they recognize that burning the fossil fuel means emitting greenhouse gases.

“Coal-fired power plants, being the easiest to develop and its fuel supply the simplest to procure, every competitor and new entrant is seeking to build more coal-fired power plants in a vicious race to the bottom,” he told participan­ts of the second Philippine Environmen­t Summit in Lahug, Cebu City on Thursday.

“Adding to these pressures is the fact that majority of banks continue to finance coal production and coal-fired power generation,” he said.

“In fact, major banks financed the top 120 coal plant developers by more than $600 billion over the last four years. They’ve been slow to embrace COP (Conference of Parties) 21 despite verbal pronouncem­ents and still have quite a way to go,” he said, referring to the conference in Paris in 2015 that agreed to limit greenhouse gas emissions and slow down the rise in the earth’s temperatur­e.

He said if banks transition­ed away from coal there would be a shift toward lower carbon alternativ­es, renewable energy (RE) sources and even the adoption of energy efficiency measures.

Mr. Lopez also called out the government for its short-term perspectiv­e and ambivalenc­e about climate change issues.

“Despite our countrymen’s vulnerabil­ity to the effects of global warming, only token importance is given to such concerns in national public policy. Priority is power adequacy and cheap electricit­y prices,” he said.

Mr. Lopez said the recent initiative to impose a coal tax is a step in the right direction but would only amount to as little as P0.01 to P0.03 per kilowatt-hour (kWh) tariffs to coal-fired power plants.

He said in other countries such as India, the coal tax is equivalent to P0.06 per kWh. South Korea’s tax on the fuel even reached P0.25 per kWh.

Mr. Lopez, who also chairs FPH units First Gen Corp. and Energy Developmen­t Corp. (EDC), said his group faces “quite a number of challenges” in the Philippine­s. First Gen produces power using natural gas while EDC’s output comes from geothermal plants.

He noted price competitio­n is intense, and retail competitio­n and open access is underway. Low price is still the main driver of electricit­y for consumers, he added.

“This has driven down profit margins of all power producers. But we’re driving down costs in our geothermal business, both the old fashioned way and through the use of new technology,” he said.

Despite the obstacles, Mr. Lopez said the companies he chairs are committed to a “green road.”

“There are more and more companies that are conscious about greening their footprints and supply chains. This has a lot to do with the millennial consumer coming of age. In the Philippine­s we’ve been seeing some electricit­y customers specifical­ly coming to us because they want to green their supply chains with renewable power,” he said.

He said another reason why the Lopez group is committed to its green energy platform is the country’s competitiv­e market.

“The Philippine­s is primarily a services-driven economy. Retail competitio­n and open access that’s underway and progressin­g will disaggrega­te that demand. Our portfolio that blends flexible natural gas-fired plants and geothermal, which is the only competitiv­e 24/7 RE technology today, is a better combinatio­n for serving this type of demand called mid-merit,” he said.

He said natural gas and geothermal, which respective­ly have only a third or a tenth of the carbon emissions of even the most advanced coal plants, are capable of beating the latter’s prices.

“Another reason for optimism about clean energy is that the forces of technology moving very fast. Solar, wind, and battery storage have experience­d exponentia­l cost reductions over the last few years. Never in my 20 years in the power industry have I seen anything move so fast,” he said.

Given the rapid pace of renewable energy developmen­t, Mr. Lopez said coal-fired power plants “can’t keep up with that kind of variabilit­y and may likely end up as underutili­zed or stranded assets in 10 years or less.”

“In countries like Australia, Germany, and some US states like California with even modest renewable energy penetratio­n they are already experienci­ng coal and even gas plants being utilized less or being idled,” he said.

 ??  ?? FIRST Philippine Holdings Corp. Chairman and CEO Federico R. Lopez called out the government for its short-term perspectiv­e and ambivalenc­e about climate change issues in a speech at the second Philippine Environmen­t Summit in Lahug, Cebu City on...
FIRST Philippine Holdings Corp. Chairman and CEO Federico R. Lopez called out the government for its short-term perspectiv­e and ambivalenc­e about climate change issues in a speech at the second Philippine Environmen­t Summit in Lahug, Cebu City on...

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