The Geothermal Story of the Philippines

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A presentation on the development of geothermal energy use in the Philippines. Presented as part of the Ring of Fire programme jointly implemented by EDC and WWF Philippines

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  • Agnes C. de JesusSenior Vice President, Energy Development Corporation (Philippines)Presented in Jakarta, IndonesiaOverview of shale gas and algal fuelEnvironmental and social ImpactFinancial ReturnRisk AssessmentViabilityRecommendation
  • OutlineOverview of shale gas and algal fuelEnvironmental and social ImpactFinancial ReturnRisk AssessmentViabilityRecommendation
  • OutlineOverview of shale gas and algal fuelEnvironmental and social ImpactFinancial ReturnRisk AssessmentViabilityRecommendation
  • Third Wave?
  • Third Wave?
  • Third Wave?
  • Third Wave?
  • Third Wave?
  • Third Wave?
  • OutlineOverview of shale gas and algal fuelEnvironmental and social ImpactFinancial ReturnRisk AssessmentViabilityRecommendation
  • Integratedsteamfield and power plant
  • Third Wave?
  • Third Wave?
  • Third Wave?
  • Third Wave?
  • Geothermal cycle
  • Third Wave?
  • Third Wave?
  • Third Wave?
  • Streamline climate change considerations into everyday business decision-making to protect property and assets prone to extreme weather events
  • EDC modeled the Environment Impact Assessment Statement system for its projects
  • Multisectoral agreement paved the way for the permission to operate the Mindanao geothermal power projects
  • Geothermal development takes several years to develop EDC needs to start early
  • Terimakasi
  • The Geothermal Story of the Philippines

    1. 1. The EDC Experience: Sustainability as a Business ModelTHE GEOTHERMAL STORY OF THE PHILIPPINESAgnes C. de JesusSenior Vice President, Energy Development Corporation (Philippines)Presented in Jakarta, Indonesia
    2. 2. OUTLINE Geothermal in the Philippines  Origin and history  Enabling laws and mechanisms  The role of geothermal in renewable energy development Sustainability as Business Strategy  EDC’s business value chain  Initiatives, Measures and Processes  Climate change initiatives  Performance measures
    3. 3.  Geothermal in the Philippines Origin and history | Enabling laws and mechanisms | Role in renewable energy development
    4. 4. THE PHILIPPINES HARNESSED ITS FIRST GEOTHERMAL POWER AFTER DR. ALCARAZ OF THEN COMMISSION ON VOLCANOLOGY, LIT UP AN ELECTRIC BULB AT THE FOOT STEP OF MT. MAYON IN 1967 DR. ARTURO P. ALCARAZ,Father of Philippine Geothermal The government recognized the Tiwi experiment as the beginning of the geothermal power era in the country.4 THE COMVOL TEAM
    5. 5. BORN OUT OF A PROMETHEAN VISION, THE PHILIPPINE GEOTHERMAL INDUSTRY HAS GROWN FROM ADDRESSING THE 1970s OIL CRISIS TO PAVING THE WAY FOR RENEWABLE ENERGY IN THE COUNTRYPhilippineCommission on RA 6957 or RA 9136 or RA 9513 orVolcanology the Build, the Electric Renewable(COMVOL) Becomes Operate Power Energy Actinvestigates the Government EDC is created under the world’s Transfer Industry Is enacted PNOC to explore, 2nd largest (BOT) Law Reform Actcountry’s enacts RA geothermalcapability to 5092 known delineate and develop is enacted Is enacted producerproduce as the indigenous resourcesgeothermal Geothermal in the countryenergy Law 1962 1967 1969 1973 1976 1984 1990 2001 2008 The 2.5-KW Oil Crisis: First Wave: Second Wave: Third Wave? noncondensing Philippine National 426MW MakBan 588MW Leyte A Additional pilot power plant is Oil Company 330MW Tiwi 150MW Bacman 5,000MW from commissioned in (PNOC) Is created 112.5MW Tongonan 1 106MW Mindanao RE projects Tiwi, near Mount to support 112.5MW Palinpinon 1 80MW Palinpinon II Mayon commercialization of alternative energy 5
    6. 6. OVER THE PAST FOUR DECADES, GEOTHERMAL ENERGY HAS BEEN CHAMPIONED CREATING A DEVELOPMENT PATH THAT FOSTERED GOVERNMENT-PRIVATE SECTOR COOPERATION 1971 1990s 1996 1997 2005 2006 2007Government enters BOT Law EDC commissions EDC commissions Chevron EDC launches EDC isinto a service contract spurred power its first power 104MW MIndanao acquires the Tiwi its Initial privatized.with Union Oil generation plant, the 125MW and MakBan Public First GenCompany of California investments Upper Mahiao in steamfields Offering – the Corp. of the(UNOCAL) through Leyte, biggest in the Lopez Groupsubsidiary Philippine country that acquires aGeothermal Inc. o year 40%develop the Tiwi economic andsteamfields. In 1973, 60% votingPGI acquires SC for stakeMakBan steamfields 6
    7. 7. THE EFFECTIVE ROLES PLAYED OUT BY KEY PLAYERS SUSTAIN THEPHILIPPINES’ STATUS AS THE WORLD’S 2ND LARGEST GEOTHERMALPRODUCER AND USER OF CLEAN ENERGY IN DOMESTIC ENERGY MIX 7
    8. 8. TODAY, GEOTHERMAL DEVELOPMENT IS GOVERNED BY AN ESTABLISHEDFRAMEWORK ENABLING ROBUST PRIVATE SECTOR PARTICIPATION 8
    9. 9. THROUGH THE RE LAW, INCENTIVES HAVE SUCCESSFULLY ATTRACTED MOREPLAYERS AND ARE ENABLING DEVELOPERS TO PRODUCE POWER ATCOMPETITIVE RATES 9
    10. 10. WITH A FRESH AVENUE TO PURSUE GREENFIELD PROJECTS, GEOTHERMALCAPACITY IS EXPECTED TO DOUBLE OVER THE NEXT 20 YEARS 10
    11. 11.  Sustainability as Business StrategyAdherence to International Conventions | EDC’s business value chain |Initiatives, measures andprocesses | Climate change action | Performance measures
    12. 12. TODAY, EDC IS VERTICALLY INTEGRATED RENEWABLE ENERGY COMPANY WITH OPERATIONS LOCATED ACROSS THE COUNTRYINTEGRATED STEAMFIELD LUZON STEAMFIELD (EDC) AND AND POWER PLANT POWER PLANT (EDC SUBSIDIARY) Leyte Manila Bacman125MW Upper Mahiao 232.5MW Malitbog 110MW Bacman I180MW Mahanagdong 20MW Bacman II 50MW Optimization Leyte Northern Negros VISAYAS 112.5MW Tongonan I49MW Northern Negros (Impaired in July 2011) Southern Negros Mindanao 112.5MW Palinpinon I 52MW Mindanao I 80MW Palinpinon II 54MW Mindanao II MINDANAO 12
    13. 13. BEING SITE SPECIFIC, GEOTHERMAL PROJECTS ARE LOCATED IN VERY REMOTE, OPEN, AND PRISTINE AREAS – 5 SITES ARE LOCATED IN 8 KEY BIODIVERSITY AREAS OF THE COUNTRYEDC manages 266,326 hectares of public lands or 1% of the Philippines’ land area 13
    14. 14. EDC OPERATES IN MOUNTAINOUS AND IMPOVERISHED AREAS Poverty in EDC sites pose a high risk for social restiveness Wanting of government support, residents expected EDC to provide the basic services 14
    15. 15. EDC EXPANDED GEOTHERMAL IN THE PERIOD OF ENVIRONMENTALISM & REVIVAL OF DEMOCRACY IN LATE 80’S Public understanding on geothermal was limited resulting in:  Legal issues: - National parks  Cultural issues: - Ancestral domain/ indigenous peoples’ rights  Environmental issues: - Tree cutting - Threats to biodiversity 15
    16. 16. NATIONAL POLICIES WERE WANTING, EDC NEEDED TO BLAZE THE PATH EDC developed internal policies and protocols to balance energy development, community interests and environmental protection  Social acceptability (1990)  IP Welfare Trust Fund adopted in  Zero disposal (1993) Department of Energy Regulation for all  Third Party Multi-sectoral IPPs (1994) Monitoring Teams (1993)  Community-based EIA (1995) 16
    17. 17. IN ALIGINING PRACTICE WITH PRINCIPLE, EDC ASCRIBES TO 20 INTERNATIONAL CONVENTIONS ACROSS 6 SECTORS Sector International TreatyGeneral 1. Rio Declaration (Earth Summit) 2. World Summit on Sustainable Development (Rio Summit + 10)Atmosphere 3. Climate Change Convention 4. Kyoto Protocol to the UN Framework on Climate Change 5. Vienna Convention for the Protection of the Ozone LayerBiodiversity 6. Convention on International Trade of Endangered Species 7. Bonn Convention on Migratory Species of Wild Animals 8. Convention on Biological Diversity 9. Cartagena Protocol on Biosafety 10. Forests Convention 11. Mountain SummitChemicals 12. Montreal Protocol on Substances that Deplete the Ozone Layer 13. Basel Convention on Transboundary Movements of Hazardous Wastes 14. Rotterdam Convention on the Prior Informed Consent Procedure for Certain Hazardous Chemicals and Pesticides in International Trade 15. Stockholm Convention on Persistent Organic Pollutants 16. UN Convention to Combat DesertificationLand 17. Ramsar Convention on WetlandsCulture 18. Convention Concerning the Protection of the World Cultural and Natural Heritage 19. Convention on Prior Informed Consent 20. UN Declaration of Rights of Indigenous Peoples 17
    18. 18. … AND THE ENVIRONMENTAL AND SOCIAL PERFORMANCE STANDARDS OF OUR INSTITUTIONAL INVESTORIFC PERFORMANCE Coverage STANDARD 1 Social and environmental assessment and management system 2 Labor and working conditions 3 Pollution prevention and abatement 4 Community health, safety and security 5 Land acquisition and involuntary resettlement 6 Biodiversity conservation and sustainable natural resource management 7 Indigenous peoples 8 Cultural heritage 18
    19. 19. EDC DEVELOPED A BUSINESS MODEL THAT CONTRIBUTES TO ECONOMIC WELL-BEING, PROMOTES SOUND ENVIRONMENTAL MANAGEMENT AND HELPS COMMUNITIES BECOME SELF-SUFFICIENTThen and now, EDC’s thrust remains the same – to seek, develop and operate cleansources of energy for present and future generations. 19
    20. 20. OPERATIONAL SUSTAINABILITY IS EMBEDDED IN THE BUSINESS MODEL - FOLLOWING NATURE’S CYCLES AND WORKING WITH PEOPLE TO CREATE GEOTHERMAL’S MULTIPLIER EFFECTComprehensive environmental management Renewable energy technology Watershed, biodiversity, climate change action Wet steam utilization, zero discharge system, fluid collection & recycling system, efficient power plants Stakeholder Engagement Employee development, CSR for 18,000 households 20
    21. 21. EDC HAS VERTICALLY INTEGRATED ITS FIELD AND PLANT ASSETS TONAVIGATE THROUGH THE COMPLEX GEOTHERMAL DEVELOPMENTCYCLE Site Identification Geothermal Exploration 3 - 5 Years Steam Field Development Power Plant Construction 2 Years Start-up & Testing Operation & Maintenance Most of the risk is at the early stage of geothermal projects 21
    22. 22. OPERATING BOTH THE STEAMFIELD AND POWER PLANT OFFERS LITTLE RISK ONCE INTEGRATED AND UP AND RUNNINGContinuous and sustainable energyProven technology in steam field and power generation facilitiesCompetitive with new fossil-based plants 22
    23. 23. EFFORTS TO PRESERVE THE ENVIRONMENT ARE REFLECTED IN THE DESIGN AND OPERATIONS OF THE PROJECTDirectional drilling Wastes are fully Water and air EDC has pioneered is adopted to contained during samples are FCRS to ensure the reduce affected drilling collected to profile renewability of the areas potential wastes resource 23
    24. 24. EMISSIONS FROM GEOTHERMAL IS BENIGN COMPARED TO OTHERPOWER OPTIONS 24
    25. 25. BY HARNESSING GEOTHERMAL , EDC EMITS SIGNIFICANTLY LESS CARBON IN AREAS IN WHICH IT OPERATES 0.21 0.03 CO₂ ton/MWh* in Visayas < CO₂ ton/MWh** In Visayas EDC’s carbon emissions 0.02 CO₂ ton/MWh* in Mindanao < 0.28 CO₂ ton/MWh** in Mindanao are between 85-92% less than the average in regions where the company operates*Primary , Stationary, Scope 1 Emissions on an Operational Basis (2009)Calculated using the World Resource Institute (2008). GHG Protocol Tool for StationaryCombustion. Version 4.0.**Based on the Latest DOE Generation Figures (2008) 25
    26. 26. AS A RESULT OF EDC’S GEOTHERMAL OPERATION, THEPHILIPPINES HAS REDUCED ITS DEPENDENCY ON FOSSIL FUELSAND LOWERED ITS CARBON INTENSITY Using comparative data from CARMA, without EDC the Philippines would jump from #49 to as high as #21 on the list of Carbon Intensity 26
    27. 27. TO ADDRESS CLIMATE CHANGE IMPACT, A PROGRAM HAS BEEN DEVELOPED WITH A DECISION SUPPORT SYSTEM AS ITS CENTERPIECE TOOL II. Environmental III. GHG Accounting IV. Business I. Watershed Monitoring and and Carbon Footprint Development and Management Reporting Management Green Innovations 1: Reduce Risks/Avoid Costs 2: Increase Revenue 3: Regulatory Compliance and ReputationStreamline climate change considerations into everyday business decision-making to protect property and assets prone to extreme weather events 27
    28. 28. THE HAZARD DECISION SUPPORT SYSTEM (HDSS) PROCESSES VARIOUS COMPANY ECOSYSTEM DATA TO PREDICT RISK SCENARIOS THAT WE NEED TO RESPOND TO AND MITIGATEIF WE DO NOTHING TODAY, OUR BUSINESS WILL GET AN ESTIMATED HIT OF P329 M/YRDUE TO FORGONE REVENUES & COST OF REPAIR 28
    29. 29. BECAUSE OF OUR REMOTE LOCATION, WE NEED TO BE STEWARDS OF OUR ENVIRONMENT…  Planted 9,713 hectares and 7.7 M trees storing 5.2 M tons Carbon/yr  Planting for recharge, carbon sink and biodiversity  BINHI program planted 1.5M trees planted since 2009  Rescued 40 premium, rare indigenous species as of August 2011ENVIRONMENT: WE PLANT THE SEEDS FOR SUSTAINABILITY - “ BINHI “ LETTHE FUTURE TAKE ROOT. 29
    30. 30. A COMPREHENSIVE SOCIAL ENGAGEMENT PROCESS MADE POSSIBLE OUR GROUNDBREAKING INTIATIVES Regular and Sustained Engagement Public HearingsConsultation and Focus Group DiscussionsInformation Drive CommunityEDC modeled the Environment ImpactAssessment Statement system for its projects 30
    31. 31. FOR INSTANCE, THE MULTISECTORAL MONITORING TEAM PROVIDES AN AVENUE FOR BUILDING OF TRUST AND DEVELOPMENT OF COMMON ENVIRONMENTAL OBJECTIVES BY BOTH EDC AND ITS STAKEHOLDERSMultisectoral agreement paved the way for the permission to operate theMindanao geothermal power projects 31
    32. 32. WE LISTEN TO THE VOICE OF THE PEOPLE IN OUR COMMUNITIES -- WE CONDUCT SOCIAL SURVEYS 2010 SA: Appreciation for & Willingness to Support EDC and CSR Project100%90% 80% = Acceptable Performance80%70%60% 0-54% LOW50% 55-89% MEDIUM 56-100% HIGH40%30%20%10% 0% BGPF LGPF MGPF NNGPF SNGPF % Appreciation for & Willingness to support EDC % Appreciation for CSR Project 32
    33. 33. KNOWING WHAT THE COMMUNITIES’ CONCERNS MAKE US MORE RESPONSIVE TO THEIR NEEDS100% 91% 82% 90% 72% 80% 66% 65% 70% 61% 58% 60% 50% 40% 30% 20% 10% 0%EDUCATION (91%) & HEALTH (82%) ARE THE MOST APPRECIATED CSR PROJECTS. 33
    34. 34. IN MT APO, WE RESPECTED TRIBAL RIGHTS BY PUTTING UP A TRIBAL WELFARE FUNDINDIGENOUS PEOPLES: Mt. Apo Foundation, Inc. Mt.Apo - Striking a balance between development and culture  Payment of tribal welfare fund of 1 centavo/kWh from the Mt. Apo Project to develop and protect ancestral domain  Mt. Apo Foundation Inc. (MAFI) was established to manage the funds  Helps tribes within Mt. Apo Park radiating from the project (education, livelihood, environment and culture) 34
    35. 35. WE CONVERTED “POACHERS” TO “GOAL-KEEPERS”LIVELIHOOD: Communities prosper in pace with EDC’s growth Social Forestry (1989)  Upland communities mostly subsisted on slash-and-burn farming (kaingin)  EDC introduced demo farms with crops suited to forest environments • Converted kaingeros into forest protectors and entrepreneurs • Predates the “Payment for Environmental Services “Scheme 35
    36. 36. WE BELIEVE OUR ECONOMIC PROGRESS MUST COME WITH THE IMPROVEMENT IN THE LIVES OF THE COMMUNITIES IN WHICH WE OPERATE Environmental Social Trees Planted by EDC: 9,713 hectares Comprehensive Community Partnership Program 7.7 M trees8,000,0007,000,000 NO. of TREES HEALTH6,000,0005,000,000 EDUCATION4,000,0003,000,000 LIVELIHOOD2,000,0001,000,000 ENVIRONMENT 0 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Covers 6 provinces, 10 municipalities, 43 Carbon Footprint: barangays and 17,680 households CO2 tons/MWh • Socio-cultural 0.5 0.47 0.48 • Info education 0.31 0.4 0.3 0.23 EDC • Emergency preparedness and response 0.2 Grid 0.1 nm 0.03 0.01 Philippines • Volunteers program 0.0 • Benefits fund management Luzon Visayas Midanao Philippines OVER THE PAST 10 YEARS, EDC HAS DISPLACED 114 MILLION BBL OF OIL IMPORTS FOR $5.8 BILLION FOREXSAVINGS, AVOIDED 4.1 MILLION TONS OF CARBON/YR, PROVIDED $4 MILLION/YR COMMUNITY SERVICES & SINCE 1984, EDC HAS PAID THE GOVERNMENT A TOTAL OF P34.5 BILLION IN TAXES & OTHER FEES. 36
    37. 37. TO HELP US LEVEL UP, WE INSTITUTED WHAT CAN BE MEASURED• EDC’s initiatives to align its sustainability performance with global standards and practices: – Enterprise Risk Assessment – Balanced Scorecard • Quote from an employee “I’ve been in the company for 27 years, and this is the first time that I’ve been involved in planning for 1- 5 years work program. Before, we just do as instructed by the management.” – Corporate Governance Scorecard for Board • ICD Award for Corp Governance Scorecard: – 2007: 15 top Ranked Listed Corp; 2008 – Silver Awardee; 2009 & 2010 - Gold Awardee; 2011 - Platinum Awardee • Board Self-Assessment: since 2008 – Integrated Annual and Sustainability Report (GRI-checked) • 2009: 30 KPIs; 2010: 70 KPIs (3rd party checked); 2011 82 KPIs GRI G3.1 EUSS 37 – Stakeholder Surveys
    38. 38. AFTER DEVELOPING GEOTHERMAL PROJECTS IN THE PHILIPPINES FORMORE THAN 3 DECADES, EDC IS GOING INTERNATIONAL TO MAINTAINITS LEADERSHIP POSITION 38
    39. 39. EDC UNFURLED THE PHILIPPINE FLAG AT CHILE FLY CAMP FORITS FIRST INTERNATIONAL GEOTHERMAL EXPLORATION (MARCH 2012) 39
    40. 40. The EDC Experience: Sustainability as a Business ModelTHE GEOTHERMAL STORY OF THE PHILIPPINES

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