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Business

Carbon money

HIDDEN AGENDA - Mary Ann LL. Reyes - The Philippine Star

San Miguel Corp. recently celebrated 132 years of operations with a promise to build a better future for all.

SMC president Ramon Ang said that from being a food and beverage company when it started in 1890, it has expanded and evolved to become a diversified conglomerate that builds and operates major roads, airports, mass transport systems, modern power generation plants, state-of-the-art fuel refining facilities, and various manufacturing plants that drive the country’s economic growth and help enhance its competitiveness.

But one area that has not changed for SMC all through these years is its emphasis on corporate social responsibility.

Last month, SMC completed its two-year cleanup initiative for the Tullahan River. Using its own fund, the company was able to remove 1.12 million metric tons of waste from the river covering 11 kilometers stretching all the way from Manila Bay to Navotas City, thus deepening and widening it and in the process helped mitigate flooding in nearby communities. Then, there is its still ongoing P2-billion Pasig River cleanup project which has removed over 500,000 metric tons of silt and waste as of end-August. All these, at no cost to the government.

Also part of its social responsibility programs is providing housing and livelihood for disadvantaged families in areas where SMC operates. In recent years, this particular project has benefited around 2,685 families in several provinces.

To help boost the country’s food security and generate more employment and livelihood opportunities, SMC is also putting up four integrated poultry mega-facilities in various locations with the aim of producing 960 million chickens per year when all the plants become operational by 2024.

Given SMC’s immense contribution to the country’s economic and social growth and its strong commitment to undertake other similar activities in the future, it would definitely be unfair to say that SMC is all about making money. Just like any corporation, it has a responsibility to its shareholders to earn profits from its operations. But making money for its shareholders is not the end-goal. As a good citizen, SMC has undertaken to serve not only its direct stakeholders; making the country better and giving its citizens a better life has become an equally if not a more important goal for the country’s biggest conglomerate.

SMC is also in the power generation business. Among its power plants are the Sual coal power plant in Pangasinan administered by South Premiere Power Corp. and the natural gas-fired power plant in Ilijan, Batangas run by San Miguel Energy Corp.

The purchase by Manila Electric Co. of power from these plants are covered by fixed rate power supply agreements (PSA), which means that regardless of the cost of producing these power, Meralco’s purchase rate remains the same.

Unfortunately, unforeseeable developments in the world market, including the invasion by Russia of Ukraine, have increased coal and natural gas prices to record-highs. In fact, in August, SMC said its Ilijan and Sual plants already suffered combined losses of P15 billion.

This prompted SMC and Meralco to propose to the Energy Regulatory Commission a rate increase, but only for a six-month period and at a tempered rate. Otherwise, SMC will have no choice but to terminate its PSAs with Meralco.

Activist groups, funded by so-called “carbon money” which is generated by reducing greenhouse emissions, saw an opportunity to push their agenda. Some of them are now opposing SMC’s proposed rate hike, saying that electricity prices should not be allowed to increase to compensate for dirty energy generation.

These supposedly environmental activities are spending millions of pesos for newspaper advertorials, social media postings, activities, and rallies, using SMC’s petition as an excuse to bring people’s attention to their cause.

But SMC is not the only power producer using coal. Even the Aboitiz Group, through AboitizPower, has its coal-fired power plants. In its website, AboitizPower said its Therma South coal-fired plant has a facility that safely stores coal deposits and prevents dust pollution caused by its combustion. So using coal doesn’t have to be dirty after all.

I am not here to argue about whether coal as a fuel source can be clean. But many studies have already shown that for responsible power plant owners and operators, coal-fired electricity generation can be clean using the right technology and equipment.

In a bilyonaryo article, Aboitiz Equity Ventures (AEV) chair Enrique Aboitiz has said that their company will still use coal for at least one more generation.

AEV, in a report to the Philippine Stock Exchange, said that given the current state of power needs in the Philippines and the expected build progression of new plants over the next 10 years, AboitizPower believes its existing coal assets will need to continue to play a significant role for at least another 15 to 20 years.

That’s because like the other companies investing in energy, like SMC which is building the country’s biggest battery storage facility for renewable energy (RE), Aboitiz Power also has to transition to RE as it is doing now.

If SMC is not granted the temporary increase, it will be forced to terminate its PSA with Meralco, which will be a bad thing for consumers. Without a fixed PSA, power generators can easily pass on their increased fuel generation cost to the customers.

Yes, we could dream of a time when our electricity all comes from the sun, water, geothermal, and other supposedly cleaner sources of energy. Unfortunately, it is not realistic. We have all been subsidizing the cost of producing renewable energy before in our electricity bills because the cost to produce is high for many years. But the feed-in tariff (FIT) allowance, which was part of our electric bill, for solar and wind projects mostly has been suspended.

Inspite of this, companies like SMC, Aboitiz Power, MVP Group, Ayala and DMCI are still pursuing projects to produce clean energy.

In the meantime, all other sources, such as coal, gas, even natural gas, are now affected by world-market developments including the Russia-Ukraine conflict.

These realities are not being mentioned by these lobby and activist groups, however.

 

 

For comments, e-mail at [email protected]

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