When First Philippine Holdings Corporation (FPH) Chairman and CEO Federico Lopez declared in 2016 that his companies would not invest, develop, or manage any coal-fired power plants, many in the energy industry balked. Coal, after all, was generally considered the least expensive and most convenient way to meet the needs of a growing economy and for one of the largest power producers in the country, refusing to build coal plants was just leaving money on the table.
But Lopez, along with his predecessor at FPH (and his father) Oscar M. Lopez, had long been strong advocates of environmentally responsible business. It was FPH – through its power subsidiary First Gen – that pioneered the use of low-carbon natural gas as a fuel for power plants. It was also First Gen that purchased the government’s portfolio of geothermal power plants in 2007, making it one of the world’s largest producers of renewable geothermal power. It is also owner and operator of the largest wind farm in the country. And as global opposition to coal fired power plants began to grow, it was only natural for FPH to swear off of coal.
FPH’s commitment to developing clean sources of energy isn’t only about caring for the environment; it was also an astute reading of trends in the energy sector. As the cost of renewable energy sources like solar and wind became cheaper and more reliable, and as the negative impacts of climate change became more severe, communities, governments, and consumers began to demand more clean energy and less dirty energy. Over the years, as the power sector’s contribution to the rise in greenhouse gases has become more of a concern, public opinion has turned sharply against coal and fossil fuels as a source of energy. More communities around the world have refused to host coal plants, governments have begun to actively encourage clean energy and discourage coal, and consumers have pushed business to divest from coal. This confluence of circumstances has made it more expensive and difficult to build coal plants, thus making investing in these assets more risky.
In the Philippines, this trend has only just begun. About half of our country’s power needs are met by coal-fired plants and many coal plants are still under construction. But by leading the transition to clean energy Lopez has given FPH first mover advantage, putting it in prime position to reap the benefits of a future powered by clean energy. This is why many forward looking, ESG conscious globally astute investors have chosen to partner with FPH and take long term positions in First Gen.