Recalibrating the Philippines’ path forward through decarbonization
BACK IN 2013, we witnessed firsthand as a company the devastation wrought by Typhoon Haiyan, the most powerful typhoon ever to make landfall. The storm made a direct hit on Leyte, severely damaging our largest geothermal power plants and disabling them for months. That single typhoon upended the lives of thousands of people on the island for years and, despite help and efforts to rebuild, many never recovered what they lost. It became crystal clear to us even then that we had just experienced the fury of being at ground zero of a climate-changed planet. Haiyan was our rude wake-up call that it can no longer be “business as usual.”
In 2016, we began building our energy portfolio around the theme of decarbonizing our electricity supply. By 2020, we had recast the First Gen mission statement to read “to forge collaborative pathways for a decarbonized and regenerative future.”
‘GLOBAL WEIRDING’
Since that time, all parts of the world have witnessed their own versions of the “global weirding” of our weather — the intensifying, unpredictable, and often contradictory pattern of climate extremes. 2024 was the hottest in 125,000 years, with global average annual temperature hitting 1.55°C above that of pre-industrial times. The extreme heat has brought about deadly wildfires, scorching heatwaves, severe droughts, and record-breaking levels for ocean heat and acidification that fuels more frequent and stronger typhoons causing heavier rainfall, flooding and landslides. The rising temperature is also accelerating ice sheets melting, sea level rising, and coral bleaching that threaten water and food security. Up to a million animal and plant species are now threatened with extinction, many within decades. All these we are witnessing in our daily lives or seeing in the news everywhere in the world.
It’s becoming more and more apparent each year that we are crossing several irreversible tipping points for the planet. The rapidly changing climate is not only bringing massive destruction in its wake but also dispossessing millions of families of everything they have on a brutal and repeated basis. The effects are cascading, and further inaction will make it increasingly more difficult for life on this planet to adapt fast enough.
HEADWINDS AND CHALLENGES
Ten years ago, the world came together at the 21st Conference of the Parties (COP 21) in Paris and agreed to limit global warming to well below 2°C above pre-industrial levels. More recently, the United Nations’ Intergovernmental Panel on Climate Change underscored the urgency to target 1.5°C to avoid catastrophic climate impacts. The historic agreement to transition away from fossil fuels in energy systems and to support vulnerable nations through a Loss and Damage Fund was reached at COP 28, while several pivotal agreements aimed at intensifying global climate action were achieved in last year’s COP 29.
However, these wins were somewhat dampened by subsequent events that threaten progress on climate actions. Despite the dramatic 90% decline in renewable energy prices over the last 15 years, hydrocarbons still comprised 80% of the global primary energy mix in 2024, almost unchanged from the 1990s. The United States’ withdrawal from COP 21’s Paris Agreement cut climate funding and has emboldened some companies to ease off their own emissions reduction targets. Several major banks from the US, Canada, Japan and in Europe have also abandoned the Net Zero Banking Alliance, reducing decarbonization financing for many climate-vulnerable nations.
Even among corporations, progress is mixed. Although a majority of the world’s largest 2,000 companies now have net-zero targets covering 65% of annual revenues, only 16% are on track, with nearly half reporting increased emissions. The 2023 Global Stocktake, a core component of the Paris Agreement, confirmed that the world is not on track for 1.5°C.
For the Philippines, despite the Department of Energy’s Renewable Energy Roadmap and the moratorium on new coal power plants, coal still accounts for 62% of the electricity generated in 2024. Even today, interests are at work to expand coal plants, arguing that it is “cheaper.” This ignores the hidden costs of coal on public health, the environment, and the climate. If the grid moves in the wrong direction, it nullifies the decarbonizing effects of electrification. Electric vehicles, for example, become effectively coal-powered.
How then can the Philippines recalibrate for growth amid these global realignments, political frictions, and evolving economic realities?
THE JOURNEY TO NET ZERO
In the last few years, I’ve been speaking about what many believe are the three necessary phases to “solve the climate crisis”:
• Phase 1 – REDUCE Greenhouse Gases (GHGs) from current global emissions of 50 Gigatons of GHGs per year. (Emissions peak by 2025.)
• Phase 2 – ELIMINATE all emissions of GHGs and get to Net Zero by 2050
• Phase 3 – NET NEGATIVE EMISSIONS by reducing (or literally sucking out) the concentrations of greenhouse gases in the atmosphere.
Unfortunately, much of the world’s actions are still primarily focused on Phase 1 reductions, and emissions peaking by 2025 is certainly not about to happen.
Still, the ultimate goal here is to solve the climate crisis that, by all accounts, is undeniably real and in urgent need of action.
There is no other way to go but Net Zero.
For energy transition, the Journey to Net Zero involve these five cornerstones:
1) reducing the carbon intensity of electricity;
2) scaling up energy efficiency efforts;
3) electrifying as much of transport and the industrial sectors;
4) using carbon-neutral fuels for other hard-to-reach sectors; and
5) deploying nature-based and man-made carbon capture, use and storage.
Sometimes we imagine technology breakthroughs, and now the artificial intelligence (AI) revolution can help solve the world’s most intractable problems. These are exciting and more powerful tools that enable us to go beyond historical human limits. But this is also a double-edged sword as fueling this AI revolution will now put even more strain on our power grids and the demands imposed by the energy transition to net zero.
Prior to AI, the expectation was the world would need five times more electricity and ten times more clean electricity by 2050. With AI, those projections make exponential leaps. Global data center developers fueling AI expect to be constrained not by demand, but by access to reliable power. Between now and 2030, AI is projected to require an additional 45,000 megawatts (MW) of power, equivalent to what France or Germany uses today.
Over the past several decades, the prospect of more affordable, 24/7 renewable power, batteries, and electric vehicles has become increasingly feasible. This progress can be largely attributed to China’s economies of scale and globalization. Yet all these may encounter headwinds as the world deglobalizes and bifurcates further. We will need to watch this space closely.
Admittedly, when we see the compressed time frame of 25 years we have left to achieve all three phases of decarbonizing our economies, our lives, and the planet before we tip into irreversibility, it all can feel extremely daunting.
STAYING THE COURSE
Given all these headwinds and challenges, many may ask: is our mission of decarbonization and regeneration still realistic? Our answer is a resounding YES, even more so!
At First Gen, our diverse portfolio of clean and renewable energy sources gives us the best opportunity to shepherd the country’s energy transition. We have aligned with the Philippine Energy Plan and set a target to grow our low-carbon portfolio to 13,000 MW by 2030 through our various investments in geothermal, hydro, wind, solar, energy storage and natural gas.
Beyond creating a future-ready energy system, our being among the top five countries on the world’s climate vulnerability list necessitates that we prepare Philippine cities, communities, and infrastructure for resilience in a climate-changed world. We need infrastructure that is reliably built, not substandard as many communities are finding out today. All these investments are about resilience, flexibility, and ensuring reliable, affordable, and clean power for the country.
The impacts of the climate crisis as well as climate action that will be demanded of everyone are among the forces in history that are in no way linear. We have used the phrase “gradually, then suddenly” to describe how it will progress and today’s almost exponential acceleration of climate shocks can no longer be ignored. Likewise, the socio-political and economic forces that will transform the way we live and work on this planet are not, and will also never be linear. But the direction and scale of the natural forces unleashed is undeniable and so must be the scale and intensity of our actions. I’ll say it again: this is the greatest transition in the history of mankind. Thus, it’s a must to continue shaping our platform of businesses to help shepherd our country’s energy use toward staying relevant as well as profitable in this rapidly decarbonizing world.
Federico R. Lopez is the Chairman and Chief Executive Officer of First Gen Corp.
