Natural Capital

Regenerating Our Natural Resources for the Future

EDC acknowledges that nature is the foundation for our business and that therefore, we must take responsibility for the resources we utilize. EDC adopts the “system value” strategy to future-proof our businesses. Business success and the prosperity of society are linked, but both of these depend on the quality and condition of the environment. We recognize that our business and the society in which we operate this business, can only thrive within a healthy and stable environment.

EDC’s deep commitment to environmental stewardship is beyond compliance. We aim to not only safeguard the environment, but also to actually enhance forests and biodiversity in our areas of operation. By protecting and enhancing the forest cover in our work sites, we ensure the delivery of optimum forest goods and services that not only help in the recharge of the geothermal and hydropower reservoirs but also serve the various publics and industries that are dependent on the watershed.

EDC complies with all applicable environmental laws and regulations. We monitor the performance of our facilities. We manage our use of natural resources and the impact of our activities to ensure that we remain a good neighbor to our host communities and a responsible corporate citizen.

Natural Capital Data

Water Use

EDC depends on freshwater resources for operational and domestic purposes. We require fresh water for cooling systems, as well as for occasional geothermal well drilling and related activities.  EDC also uses water for fire-pump testing, maintenance activities, laboratory operations, and domestic use. Our cascading hydropower plant in Nueva Ecija utilizes surface water, which is released for irrigation. We only harness the kinetic energy of water flow when the National Irrigation Administration (NIA) decides to release water for agricultural purposes.  

Our geothermal operations are located in watersheds that are drained by perennial rivers and springs that serve as sources of water supply. These include the BacMan catchment (Manitohan, Cawayan, Botong, Gayong/Osiao, Rizal, and San Isidro river sub-catchments) in Albay and Sorsogon; the Bao River and Kanawagan River catchment in Leyte; the Matingao-Marbel River catchment in North Cotabato; and the Okoy-Banica River catchment in Negros Oriental. 

Based on the 2019 World Resources Institute (WRI) Aqueduct Water Risk Atlas1, our geothermal operations are located in regions with low and low-to-medium water stress2. Our hydropower plant in Nueva Ecija, however, is within a region with medium to high water stress. The table below provides information on EDC’s water withdrawal for geothermal operations with respect to the surface water flow of the catchments. 


Water Withdrawal and Catchment Surface Water Flows in Geothermal Sites


River Watershed Sources*

Water Withdrawal (in ML)

Catchment’s Surface Water Flow 

(in ML, per normalized rainfall)

% Withdrawal / Catchment Surface Water Flow


BacMan catchment: 

Manitohan, Cawayan, Botong, Gayong/Osiao, Rizal, San Isidro Rivers sub-catchments





Bao River catchment





Matingao-Marbel River catchment




Southern Negros

Okoy-Banica River catchment




*Water sources are not located within protected or biodiversity areas.



Total Water Withdrawal, in Megaliters (ML)*
















Southern Negros










Nueva Ecija**





Ilocos Norte





Head Office










*Includes surface water, groundwater, and third-party water. 

**The Pantabangan hydropower facility in Nueva Ecija only harnesses the kinetic energy of  surface water released by the National Irrigation Administration (NIA) for irrigation purposes. 

Emissions Management

Direct Emissions (Scope 1). EDC’s direct greenhouse gas (GHG) emissions come primarily from the venting of non-condensable gases (NCGs) from geothermal power plants and steam fields. This accounts for 99% of all EDC’s GHG emissions, including indirect emissions (Scope 2 and 3). 

In the process of geothermal production, steam from deep within the earth is used to drive the steam turbine, which generates electricity. Afterward, the steam is condensed and reinjected into the geothermal reservoir. Some gases in the steam, however, are non-condensable and are dispersed in the atmosphere by cooling tower fans. 

These inert, non-condensable gases are composed of about 98-99% CO2 and also contain traces of methane (CH4), both of which are classified as GHG. These non-condensable gases are also released in the steam field during the testing of newly drilled wells and routine venting of existing wells.

In 2020, EDC’s facilities emitted a total of 964,436 tonnes of equivalent CO2.  This is a 13% increase over last year’s emissions. This increase in direct CO2 emissions is primarily due to the amount of CO2 in the steam extracted across all geothermal fields. 


Direct GHG Emissions (Scope 1) 

Indirect Emissions from Electricity Consumption (Scope 2). EDC’s electricity consumption dropped significantly due to the implementation of work-from-home (WFH) and shelter-in-place (SIP) arrangements in response to the COVID-19 pandemic. 

Of our project sites, only the Burgos Wind Project did not post such a reduction, with its consumption remaining more less within its average range. The pandemic did not have any notable effect on the Burgos Wind Project since bulk of its consumption is for the operation of wind turbines. During low wind conditions, the wind farm purchases electricity from the grid to power the various sensors in each of its wind turbines.  


Indirect GHG Emissions from Purchased Electricity (Scope 2)

Other Indirect Emissions (Scope 3). EDC’s Scope 3 emissions represent the fuel consumption of rented vehicles and industrial equipment of contractors, such as generator sets and pumps. Activity data included in our Scope 3 emissions also include employee business travel. Due to the mobility restrictions imposed by the pandemic, business travel was reduced, resulting in EDC’s lowest Scope 3 emissions to date.


Other Indirect GHG Emissions (Scope 3)

Carbon Intensity

Emissions intensity, such as carbon intensity, is the emission rate of a given pollutant relative to a business metric. In the case of EDC, the business metric is megawatt-hours (MWh). Overall, EDC retained its carbon intensity of 0.1 tonnes of equivalent CO2 per MWh. Our energy facilities have significantly lower carbon emissions compared to the national grids, which are composed mostly of fossil fuel-based power plants.  The carbon intensity of EDC facilities is seven times lower than the grid and eight to nine times lower than an average coal plant. This provides our customers a green option to reduce their own carbon footprint. Bottomline, our low carbon operation contributes in decarbonizing the nation.


EDC’s Carbon Intensity Vs. Other Technologies and the National Grid

Source: World Bank, 2014; Department of Energy (DOE) Emission Factor, 2015-2017


Waste Management

As part of our commitment to protecting the environment, we strive to prevent pollution by properly managing waste throughout our operations. With respect to waste management, EDC follows the Waste Management Hierarchy by reducing, as much as possible, the disposal of waste in landfills. We do this by employing waste minimization methodologies in our operations and support processes. 

We also aim to reduce our generation of hazardous wastes through process improvements and changes in our use of raw materials. For instance, we made the switch to chromium-free drilling chemicals. Our laboratories have also improved their operations by substituting regulated chemicals with non-regulated chemicals and by reducing the volume of samples, which translates to less waste.

In the process of our operations, we also generate hazardous wastes such as cooling tower sludge, used oil, used batteries, lab wastes, electronic wastes, medical wastes, and other domestic waste such as kitchen oil. However, 80% of our hazardous wastes were diverted out of landfills in 2020.  Recyclable hazardous waste (i.e., used oil and used lead-acid batteries) are disposed of through the Bantay Kalikasan Project of the ABS-CBN Lingkod Kapamilya Foundation, Inc. (ALKFI). These wastes are eventually recovered or recycled for use again, thus, minimizing new resources from being produced.

Proceeds from the recycling of used oil and used lead-acid batteries are donated to ALKFI. However, due to restricted travel due to the pandemic, we deferred our hazardous waste disposal for the year. 


Hazardous Waste Generated, by Type


Other Indirect Emissions (Scope 3). EDC’s Scope 3 emissions represent the fuel consumption of rented vehicles and industrial equipment of contractors, such as generator sets and pumps. Activity data included in our Scope 3 emissions also include employee business travel. Due to the mobility restrictions imposed by the pandemic, business travel was reduced, resulting in EDC’s lowest Scope 3 emissions to date.


Other Indirect GHG Emissions (Scope 3)

EDC’s Commitment to Environmental Stewardship Goes Beyond Compliance

Our management approach reflects this. Here’s how.

Materials and Energy

EDC still uses gasoline and diesel, which makes up a significant portion of our material consumption.

In the selection of products and equipment, EDC has a preference for materials that can be recycled or reused, where possible.

We prioritize the use of energy efficient equipment, as well as those that do not emit pollutants, such as excessive smoke, noise, dust, heat, or radiation and are equipped with anti-pollution devices.


EDC utilizes water for both domestic and operational purposes. Our geothermal assets use water in various phases of our operations: for drilling, in the cooling towers, and for washing equipment during maintenance activities. We have two cascading power plants in Pantabangan that use water to generate power. EDC’s solar and wind plants use minimal amounts of water to wash equipment.

As water is a valuable and vulnerable resource, it is important to us that we manage both our water use and our wastewater discharge.

EDC complies with all regulations and standards concerning water use, withdrawals, and discharge in our areas of operation. On a larger scale, we participate in water management at the watershed level, through our geographic information system–assisted Watershed Management Plan. EDC has a Water Budget Study, which simulates the water balance contribution at the catchment scale at each geothermal area. Using this study and assessing our annual discharge has allowed us to do more in-depth hydrological or groundwater studies. This will help us predict aquifer response to future climatic or land use changes and can support better decision-making and the formulation of more more responsive and strategic watershed management approaches.

With respect to discharge, EDC implements the Zero-Discharge System (ZDS) in all of our operating geothermal project sites. All the geothermal waters extracted three kilometers below the ground–including geothermal brine and condensates–are injected back into the geothermal reservoir after they are used to generate power. This system ensures that the geothermal reservoir is recharged and that the water extracted is not discharged to the natural surface environment.

In terms of a more broad, ecosystem-based management, EDC collaborates actively with external stakeholders to protect, rehabilitate, and restore the forest and promote development in upland communities. We are constantly improving these programs and feedback mechanisms to enable more efficient water monitoring and watershed management.


EDC’s operations, at different phases of project development, can affect the forest environment and the biodiversity contained therein. In the development phase of geothermal operations, activities such as vegetation clearing, can have a negative impact on biodiversity.

Protection of biodiversity is not only a part of our overall commitment to environmental stewardship, but also to maintain the health of the forests that support the geothermal reservoir.

Through EDC’s initiatives, we aim to enhance biodiversity within our project and concession areas. We implement measures to mitigate the possible negative impact of our activities on biodiversity, and evaluate our efforts to ensure that we are successful in this regard.

In our reforestation efforts, EDC prioritizes the use of indigenous, premium, species; we support a “no hunting policy” within our reservation areas; and have established sanctuaries to protect the wildlife in our areas. We encourage integrated pest management in EDC plant nurseries and plantations.

EDC operates within declared geothermal reservations. All our operations are covered by required forestry permits, in compliance with relevant forestry and wildlife laws. EDC has an Integrated Management Plan (IMP) and Comprehensive Development and Management Plan (CDMP) for forested areas. EDC is deputized to manage the watershed and we strictly follow and enforce forestry laws within the geothermal reservation, following Executive Order 223.

To monitor biodiversity parameters, we have permanent forest plots. We use this data to refine our biodiversity management plans. When necessary we undertake environmental impact assessments. We work in partnership with the academe (University of the Philippines – Institute of Biology) to ensure greater accuracy and transparency in our monitoring.

Emissions, Effluents, and Waste

Given that we are in the power generation sector, emissions are a critical and material topic for EDC. We utilize a science-based strategy and the best available technology to support our efforts to manage this aspect of our operations.

At the baseline level, we ensure compliance with applicable pollution control laws, regulations and standards—such as the Philippine Clean Air Act of 1999, the Ecological Waste Management Act of 2000, the Philippine Clean Water Act of 2004, and the recently institutionalized Executive Order 174 (“Philippine Greenhouse Gas Inventory Management and Reporting System”).

With respect to effluents, EDC implements the Zero Discharge System (ZDS). We also practice continuous air quality monitoring and third-party multi-sector monitoring.

EDC has protocols for proper waste management, for both solid and hazardous waste. We engage only DENR-accredited third party contractors to transport, treat and dispose of our waste materials.

Supplier Environmental Assessment

Vendors that we transact with and are involved in contracting/subcontracting undergo accreditation in which part of the requirements are the accomplished Health, Safety, and Environment Questionnaire and applicable permits and certificates to ensure that goods and services to be delivered will not cause a significant negative impact on the environment. Part of their requirements, whichever are applicable, are the following:

1. Duly Accomplished Contractor HSE Accreditation Questionnaire

2. Permit to Transport for Hazardous Waste generated during construction

3. Permit to Operate for Stationary Source (Power Plant and Gensets):

  • Steam Turbine
  • Emergency Diesel Genset
  • Diesel Genset/s (for Construction Purposes)

4. Priority Chemical List Compliance Certificate / Chemical Control Order Registration

5. Certificate

6. Environmental Compliance Certificate / Treatment, Storage, and Disposal Certificate

BINHI continues its greening legacy towards a regenerative future 

Armed with our new mission of forging collaborative pathways for a decarbonized and regenerative future, EDC remains at the forefront of environmental conservation. Through our flagship environmental program BINHI, we continue to collaborate with the country’s leading foresters, botanists, and wildlife biologists to not only reforest degraded watersheds, but also to mainstream the 96 most threatened Philippine native tree species, all while protecting the forests and the wildlife that make up our rich biodiversity.  

Our efforts to take care of the forests and to keep our watersheds healthy enables our ecosystem services to continue providing for the needs of our business and our host communities. Maintaining the forest ecosystem also allows EDC to remain carbon negative. In 2020, our total emissions is 966,767 tonnes of carbon dioxide equivalent (tCO2e), for our Scope 1 and Scope 2 emissions combined. This only totals more than half of the carbon absorbed through EDC’s geothermal reservations and greening activities.  On top of the tree-planting activities and forest restoration initiatives within our backyard, or those credited to EDC, we also expand our reach with greening activities in collaboration with different partners nationwide. This helped bring our total carbon sequestration to 1,739,824 tCO2e.    

Since 2008, we have engaged 88 farmer associations forest communities to reforest denuded and open forests within our geothermal reservations, as well as other watersheds and protected areas. They are our primary partners in completing our 10,000-hectare forest restoration target by 2021.

In 2020, we established another 91 hectares of new plantations for indigenous forest trees in Bacon-Manito, Negros Oriental, and Pantabangan. We also pursued enrichment planting in 30 hectares of old plantations and forest gaps in Mt. Apo, as well as maintained 1,399 hectares of existing plantations in Bacon-Manito, Negros, Mt. Apo, and Leyte. This brings the total area of forests restored under BINHI to 9,570 hectares

To further our goals, we also partnered with the City Government of Digos, Davao del Sur for the restoration of 200 hectares of marginal areas in Mt. Apo. The partnership is part of our intensified BINHI advocacy, which seeks to encourage more individuals and institutions to rehabilitate and restore degraded forests, as well as conserve and protect our native tree species. 

Across our project sites, which house various central and satellite nurseries, we have also produced more than 276,000 quality seedlings of Philippine native tree species to support this intensified advocacy. Some of these seedlings are distributed to various BINHI partners as planting materials during tree-planting activities, while others are currently housed in our nurseries as part of our seedling stock for future reforestation initiatives. 

EDC has a holistic approach to the management of forests within its project sites. Despite the challenges of the pandemic, we continued to conduct forest protection initiatives and upheld our role as the deputized manager of the watersheds within our geothermal reservations. 



In 2020, the forest protection efforts cover the core of the 127,608 hectares of forestlands inside the four geothermal reservations and adjacent forests. These constitute the hotspot areas including the 34,744 hectares of identified forest conservation areas that are in the highest priority for conservation and protection. This includes 779 kilometers of forest patrols using the Lawin Forest and Biodiversity Protection System (Lawin System), 25 kilometers of fireline protection in Mt. Apo, and 350 kilometers of drone patrols in Leyte. 

We continue to be the sole private-sector implementer of the Lawin System. The system uses smartphones to capture patrol data on the presence of biodiversity and imminent threats, as well as open-source technology to perform geo-spatial analysis. Primarily used by our foresters and community patrollers, the system can also record geo-referenced data on the condition of the forests, sightings of important fauna, presence of threats to biodiversity, and then share these findings with the DENR.

In 2020, we also partnered with the Geographic Innovations for Development Solutions (GrIDS), Inc. to update the land cover data on the four geothermal reservations we manage. Using Remote Sensing (RS) and Geographic Information System (GIS) technologies, this initiative will set the baseline data on forest cover to inform our target outcomes for achieving no net forest loss across our conservation areas in the next five years. 

No net forest loss is achieved when the area of forest gained within an identified conservation area within the geothermal reservation is greater than or equal to the area of forest lost. Forest loss, or deforestation, is the conversion of previously forested areas to non-forested areas, often brought about by a variety of anthropogenic drivers (e.g., logging, timber cutting, kaingin farming) as well as natural causes (e.g., forest fires, typhoons).

Aside from identifying target areas for protection, this initiative will also demonstrate the effectiveness of our watershed management initiatives, as well as show our progress towards longer-term conservation outcomes, such as improved biodiversity conditions and ecosystem services.

Through BINHI, EDC also serves as the prime mover of strategic partnerships on mainstreaming Philippine native trees throughout the country. Despite the limitations posed by the pandemic, we continued to forge new partnerships and implement our multi-awarded initiative to rescue, protect, and propagate 96 of the most critically endangered species of Philippine native trees. 

Our strategy for mainstreaming Philippine native trees has two approaches. The first approach is ex-situ conservation, which involves partnering with organizations and institutions to put up arboreta and tree parks dedicated to threatened native trees. The second approach, called in-situ conservation, involves the protection of threatened native trees in their natural habitat.

In 2020, we were able to forge nine new partnerships, bringing our total to 183 BINHI partners nationwide. 

In addition to these strategic local partnerships, EDC also continues to be the sole Philippine partner of the Botanic Gardens Conservation International (BGCI) for its Global Tree Assessment (GTA) Program. The BGCI is the secretariat for Global Tree Assessment (GTA)  of the International Union for Conservation of Nature (IUCN), which advocates for the protection of the environment through data gathering, research, field projects, advocacy, and education.

The GTA Program aims to assess the conservation status of every known tree species worldwide, which will then inform corresponding conservation actions. Since 2019, EDC has already assessed 800 tree species and the IUCN has updated and published 498 of them in their Red List, including 38 priority threatened species under BINHI. Prior to its partnership with EDC, only 248 assessments for Philippine native tree species were published on the IUCN Red List. To date, there are now 1,225 assessments, 42% of which were contributed by EDC in collaboration with Pro-Seeds Development Association, Inc., an organization based in the University of the Philippines Los Baños (UPLB) composed of young professionals engaged mostly in environmental research and the promotion and development of environmentally sound management strategies.

Vegetative Material Recovery (VMR) facilities, designed to facilitate the vegetative or asexual reproduction of tree species, are important in mainstreaming Philippine native trees. The VMR is a state-of-the-art nursery equipped with automated mist irrigation systems, which mimics natural forest habitat conditions and leads to increased survival rates of the seedlings. These VMR facilities address the lack of available planting materials due to the rarity of these threatened native tree species. 

In 2020, EDC launched its fourth VMR facility in Mt. Apo Geothermal Project (MAGP) in Kidapawan, North Cotabato. This new VMR facility will focus on housing and propagating the seedlings of Mindanao-endemic Philippine native tree species. Our three other VMR facilities are located in (1) Bago City, Negros Occidental; (2) Valencia, Negros Oriental; and (3) Antipolo City, Rizal.

Through these VMR facilities, we also developed new propagation protocols for four threatened native tree species, namely: (1) Malakatmon (Dillenia luzoniensis); (2) Bagauak morado (Clerodendron quadriculare); (3) Batikuling (Litsea leytensis); and (4) Kalantas (Toona calantas). These propagation protocols will guide the proliferation of the species, with the hope that they will not go extinct given the right propagation technologies. To date, EDC has already developed propagation protocols for 28 threatened native tree species. 

In 2020, we continued to partner with like-minded organizations to further raise awareness on biodiversity, support biodiversity research, and enhance local conservation actions. Despite challenges, we made strides in some of our key initiatives focused on biodiversity monitoring and conservation.

In January 2020, EDC and the University of the Philippines Institute of Biology (UPIB) published Wildlife Treasures, a coffee table book which showcases the diverse wildlife thriving in our geothermal reservations. This book is the culmination of more than a decade of collaboration between EDC and UPIB to monitor, study, and document the various flora and flora in the geothermal reservations through our Biodiversity Conservation and Monitoring Program (BCMP). The book is also a tribute to EDC’s partners in biodiversity conservation, particularly to the late Dr. Perry S. Ong, a trail-blazing conservation biologist. 

We also sustained our partnerships with the DENR and the Philippine Eagle Foundation (PEF) in protecting the remaining species of the critically endangered Philippine eagle (Pithecophaga jefferyi). In 2020, the PEF and EDC worked together to rehabilitate and eventually release a female Philippine eagle named Makilala-Hiraya

The eagle was rescued after being mobbed by a flock of crows in Barangay Kisante in Makilala, Cotabato, which is located near the Mt. Apo Natural Park and adjacent to EDC’s Mt. Apo Geothermal Reservation. We supported rehabilitation and monitoring activities to ensure that the bird reached sexual maturity and had the chance to nest. Makilala-Hiraya was eventually released from captivity, an event that was live-streamed on Facebook so that more Filipinos can witness this rare occasion. 

Additionally, we also confirmed a Philippine eagle nesting area in the Tawason Forest in November 2020. This is the result of a collaboration among the PEF, EDC, and DENR for the Philippine Eagle Nest Survey, which began in 2019. The survey aims to enhance local awareness and capacity for Philippine eagle conservation, as well as find and study active nesting areas within or around the Mt. Apo Geothermal Reservation. 

Our 2020 Integrated Report


Our Integrated Report tells the story of our efforts to achieve our business objectives, hand-in-hand with our sustainability aspirations.

One of the most powerful cartoons I’ve come across in a while is one by To New Yorker
Magazine which shows a man in a tattered business suit and around a campfire amidst a
future wasteland telling three children, “Yes they destroyed but for a beautiful moment in
time we created a lot of value for. Funny, but tragically so true of how the world works today.

We urgently need to overhaul how we relate with the Earth
if we want to keep it habitable for humans in the decades
to come. We don't have a choice.

The way we measure progress and success in our world is severely broken. Countries are
judged by how fast gross domestic product (GDP) grows, and corporate stocks are deemed
good investments also by how fast they can advance their net incomes regardless of how
it’s achieved. Most successful business models are racing to spur consumption of their
products beyond what consumers really need. As a result, carbon emission trajectories are
leading us toward a catastrophic world that’s 3-6 degrees warmer. Human activity is warming
the Earth 5,000 times faster than the most rapid natural warming occurrence in our planet’s
past, and species are going extinct faster than at any period in geologic history. Microplastics
are already being found in dwelling in the deepest reaches of the Marianas trench as well as
the pristine Pyrenees mountains of France and Spain. These are but a few examples of the
widescale destruction humans are wreaking on our only home. The international no
organization (NGO) Global Footprint Network estimates that we already use up 1.5 Earths
each year just feeding our current level of wants and needs; that’s 50% more than our planet’s
ability to replenish 3the resources used up!

Dear Stakeholders,

Message from the EDC
Chairman and CEO

With every passing year, it becomes increasingly tougher to deny that our climate
is changing faster than previously imagined due to human activity. A large and growing
number of the world’s largest corporations participating in the Carbon Disclosure Project,
more than 75% as opposed to only 10% in 2010, now incorporate climate change into
their business strategies. I believe that today, we are living through one of history's great
paradigm shifts. An age wherein we’re only just beginning to realize the immense impact
we’ve had on the planet and that we urgently need to overhaul how we relate with the
Earth if we want to keep it habitable for humans in the decades to come. We don't have
a choice. There is no Plan B or planet B, as some would say.

Real and lasting shareholder value can only be had when we place the
interests of all our stakeholders, our customers, the planet, and humanity
at the center of everything we do.

Of course paradigm shifts are never easy. They never have been throughout history. But
as the environmentalist and author Bill McKibben rightly puts it: “the math is hard to
argue with; business as usual and growth as usual spell an end to the world as usual.
This is the one overwhelming fact of our lifetimes.” PricewaterhouseCoopers or PWC
quantifies what the world needs to do to keep global temperature rise to less than 2
degrees Celsius. They emphasize that we must reduce the carbon intensity of the
economy—the amount of carbon emitted per dollar of GDP—by 6% each year until 2100.
Although this number looks modest, it is nine times the current rate of important
being experienced in the world today; this only underscores the magnitude of the
transformation needed. At Energy Development Corporation and parent company,
First Gen Corportion, we believe our platform of businesses and our way-to-play are all
geared toward this goal.

Message from the EDC
Chairman and CEO

Our Geothermal plants are today the only large scale 24/7 sources of renewable energy
The relatively fixed pricing we are able to offer our electricity customers is a massive
advantage and gives them certainty at a time when our coal-based competitors cannot. In
addition, the massive transformation taking place in the company is exciting and promises
to transform us into a leaner but more robust and resilient player and competitor.
Our Natural Gas plants at First Gen are key to bringing down the carbon intensity
of the economy as they emit less than half of the carbon and only a fraction of the other
pollutants per kilowatt-hour relative to an equivalent-sized coal plant. This is key to
keeping the economy humming and our lights on, even as we transition to a decarbonized
world. Today, these plants run on the country’s only indigenous gas field
Camago-Malampaya, but we are currently preparing for the day these fields no longer
have indigenous gas through the development of what could be the country's first
Liquefied Natural Gas (LNG) import terminal. In December 2018, First Gen signed a joint
Development Agreement (JDA) with Tokyo Gas Co., Ltd. to push this forward. It's an
exciting time to be doing this as LNG suppliers worldwide are only just beginning to
innovate and show flexibility on gas contracts never before seen in the world of LNG
contracting. Just this April 2019, Shell and Tokyo Gas signed the world’s first coal-indexed
LNG contract. This signals that gas producers are now willing to fight head against
coal plants in competitive power markets, if they aren’t cheaper already. Our decision
several years ago to slam the door on developing any coal-fired power for ourselves
was prescient. Even as more coal- fired capacity comes on line globally, their utilization
and capacity factors are falling. International Energy Agency (IEA) figures for 2017 show
the average capacity factor of coal plants globally has fallen even more to 52.8%, down
from 59.3% in 2013. This is alarming for a technology whose economics only makes sense
when run at baseload rates of 70-80%. The implication is that many coal plants today are
being run sub-optimally and expensively. The fact that they are required to ramp up and
down frequently causes thermal fatigue of components, of materials, and corrosion that
negatively impact efficiency and emissions even more. Aside from the fact that coal-fired
power no longer has a place in a world that needs to decarbonize rapidly, its economics
are being rendered uncompetitive in grids increasingly being penetrated by more
intermittent renewable energy sources. Its days are numbered.

Message from the EDC
Chairman and CEO

Our world today teems with change and disruption. At EDC, we’re all incessantly
and purposefully “sensing the wind” and “reading the tea leaves”. And in such a
world marked by so much complexity, we must also keep our organizations alert,
as well as agile. But let me just say that real and lasting shareholder value can only
be had when we place the interests of all our stakeholders, our customers, the
planet, and humanity at the center of everything we do. The world’s paradigms are
shifting yet again and, as a company, we intend to help that shift in the best way
we can. It is amongst these great challenges where we intend to build the many
great opportunities that will foster true shareholder value.

Thank you for your continued trust and unwavering support.

Federico R. Lopez
Chairman and CEO

Message from the EDC
Chairman and CEO

Due to climate change, only hell is hotter than summer.

We now live in a world that has increased its temperature by 1.5°C from pre-industrial times
and at these levels 14% of the world’s population will experience intense heat waves at least
once in five years. Should things deteriorate further by half a degree, at a 2°C increase from
pre-industrial times, the effect will be 2.7 times worse: 37% of the world’s population will
experience severe heat waves at least once in five years. In 2018, Australia revised their
temperature charts and increased the upper limit to 55 degrees Celsius, or over 135 degrees
Fahrenheit, given what was experienced for a sustained period in the south-central part of
the country in 2018.

Hotter temperatures mean hotter oceans, because water absorbs an estimated 90% of the
heat in the atmosphere and radiant heat from the sun. The “hydrogen bond" between water
molecules is what allows water to absorb a significant amount of energy in the form of heat
before turning to vapor. However, once in vapor form, water rises into the atmosphere, and
the very same life-sustaining water becomes fuel for deadly typhoons and hurricanes that
bring with them torrential rains.

If the earth did not have water and was dry like Mars, our average temperature would be
negative 16°C. Because of the presence of water, the year-round average temparature of
the Earth is now 14°C. Averages have a way of lulling us into complacency until we are shaken
or impacted by terrible horrors, like Typhoon Yolanda in the Philippines, Hurricane Sandy in
New York, Hurricane Maria in Puerto Rico, Harvey in Houston (the costliest hurricane on
earth at USD125B in damage). The common thread among these events? They are all the
worst in either the history of those areas or the worst in centuries. And they all occurred in the
last 6 years.

The diametric opposite of typhoons, drought, is the other side of the same coin. From
California to Cape Town in South Africa, to Greece and Australia, drought has affected millions
of people. Closer to home, Manila is experiencing drought in this summer of 2019.

Dear Stakeholders,

Message from the EDC
President and COO

Our 2018 cover follows the expressive and visceral nature of the images we have chosen in
the past two years. It shows a striking image of what the future holds for us, if we do not
heed the call of the planet to pivot. The harsh reality of climate change is already felt, and
sadly, it is the most vulnerable members of society who bear the brunt of it.

We know the pivot will not be easy, especially in the face of significant vested interests.

The Intergovernmental Panel on Climate Change’s findings say that we may only have
until 2030 to avert “catastrophic climate change.” Despite the warnings however, action
has been slow. And in 2018, carbon emissions increased by another 2% from the previous
year. Scientists remain optimistic and cite the growth of renewable energy as a reason to
believe that the world can achieve the necessary reductions.

This continues to motivate us to do things better, to make a difference toward turning the
tide. Over the past five years, the Energy Development Corporation (EDC) and the rest of
the Lopez group of companies have decided to be the leaders in the business sector of
the Philippines in sounding the warning about the worsening effects of climate change
and the need for decisive action and enlightened choices. We know the pivot will not be
easy, especially in the face of significant vested interests.

Our Performance Report tells the story of EDC’s work-in-progress this year: our efforts to
achieve our business objectives, hand-in-hand with our sustainability aspirations. As
always, we keep track of the metrics that matter most to our stakeholders in alignment
with the framework of the Global Reporting Initiative (GRI) Standards.

Message from the EDC
President and COO

Bouncing back from a tough year

We tempered our expectations for 2018, given that we began the year with damage to
our facilities as a result of Typhoon Urduja, in December of 2017. Despite this setback, the
concerted efforts of our operational units, and inspired action from our employees,
helped us return our assets to service ahead of schedule. As a result of this, we ended
the year with a recurring income attributable (RNIA) of PhP9 billion, slightly ahead of our
2017 numbers.

We continued to execute our strategy with excellent results. We ended the year above our
target for generation. Our Nasulo and Palinpinon II power plants were also re-certified
for the 40 megawatt (MW) (+10MW) Ancillary Services Procurement Agreement (ASPA),
while our BacMan geothermal facility was fully contracted.

We adopted new ways of working and better practices in our operations with promising
results. For instance, majority of our planned maintenance activities were completed in
60% of the time, versus the previous 5-year averages. Fundamental changes have taken
place, such as the safety and medical clearances of contractors prepared a full month
ahead of the start of the activities, versus the old practice of doing this just prior to day
zero. We have also enhanced our reinjection management strategies to support our
efforts to reduce wasted heat and to ensure the recharge of our geothermal reservoirs.

Message from the EDC
President and COO

Taking the long view on sustainability and profitability

We are aware that challenges to the business will arise from time to time, such as natural
calamities or extreme weather. In response to these threats, we made smart investments
in resilience projects. Rather than implement risk reduction and resilience in potentially
hazardous areas, such as the steepest slopes most prone to landslides, we looked instead
at this through the necessary lens of high hazard against the potential value at risk from
the infrastructure in the area. From there, we have now prioritized those works which
mitigate the value at risk (VAR) of our assets relative to the hazard present. This way, we
are sure that we are investing in the right places where we can have the greatest risk
reduction. Using this VAR strategy, we completed 31 landslide mitigation projects in
BacMan, Negros, and Leyte in 2018. This crucial investment in resiliency is being
accelerated in 2019.

We are also investing in the growth and development of our people. People seek
opportunities to work for us because they appreciate EDC’s strategy. We have found that
EDC’s renewable energy focus has made us an employer of choice. Improvements in our
ways of working have given our employees greater flexibility to participate in and
contribute to over 100 simultaneous special projects, resulting in disperse decision-making
and improved accountability.

Our business also faces systemic and market-driven challenges. For example, the energy
sector will have to confront regulatory shifts and changes in tax regimes. This is par for
the course. We will also experience market shifts, which can be disruptive, both from
operational and pricing standpoints. An example would be the influx of non-
conventional, non-base load (intermittent) energy, like solor and wind. These energy
sources have significant impact on the grid, but do not have to shoulder the cost of
ancillary services.

EDC is prepared to face these changes by maximazing the cash generation of our assets.
We upgraded the capability of our plants in order to provide services that support grid
stability. These plans have been implemented, with investments in ancillary services
capability completed. Expanding our services offering has generated economic returns:
revenue from the sale of electricity as contingency and dispatchable reserves increased
143.5% from 2017, to P970 million in 2018.

Message from the EDC
President and COO

Making the shift to low carbon energy

While renewable energy is often seen as an alternative, EDC believes it is necessary and
timely to mainstream clean energy. Renewable energy is not only the environmentally-
responsible choice, but a wise business decision as well. EDC’s experience demonstrates
this, and we hope to convince even the doubters that the future of energy is in renewable
This commitment to clean energy is growing. In the United States, the mood on low-
carbon energy is changing. So much so, that one of the major US energy utilities has
pledged to go carbon free by 2050, and 80% carbon-free by 2030. This is only one utility,
in a wave of energy providers that have announced carbon-reduction goals.

A common theme across those committing to renewable energy is that their customers
are demanding low-carbon energy. And the energy providers, even mining companies are
listening. Renewable energy is not only the environmentally-responsible choice, but a
wise business decision as well. EDC’s experience demonstrates this, and we
hope to convince even the doubters that the future of energy is in

In the capital markets, many large financial institutions have announced they will no
longer finance coal fired power plants. It is their belief that the assets will neither have the
capability to compete nor “the right to operate” based on the preferences of their
customers and other stakeholders such as local communities. For this reason, providing
financing for such assets are seen to be a poor medium- to long-term risk.

Increasingly, our customers are looking for cleaner energy choices, and we are happy to
oblige. Our role is not only to advocate for, but to convert consumers to, renewable
energy. More customers are signing up with EDC, with some choosing us because they
want to be powered by a pure RE company. Companies that have chosen to make the
switch believe it is a critical advantage: in fact, one customer that makes industrial
building materials told us that they want to be known as the first company in their
industry to be 100% powered by RE. We are encouraged by the small, but growing,
population of enlightened consumers that are demanding that the businesses and brands
they support show greater climate responsibility.

Message from the EDC
President and COO

EDC is proud and happy to partner with businesses that want to make positive
environmental change. Together, we will be part of a virtuous cycle that will contribute to
positive climate action.

Staying committed to our sustainability journey

In the last quarter of 2018, EDC completed the process of its voluntary delisting from the
Philippine Stock Exchange. Our delisting was a considered decision and part of an overall
strategy to support EDC’s long-term growth. The move to delist allows us greater flexibilty
over factors like leverage and dividend policies, without the need to excessively focus on
short-term results.
Our shareholders share this long-term focus with us. There is less attention given to
quarterly earnings, in favor of deliberate growth. This gives us the latitude and support to
explore investments in new Capital Expenditure, to test new technologies that alter our future
prospects, without the expectation of immediate results or instant returns.

While the Philippine Stock Exchange and the SEC have established guidelines for
mandatory sustainability reporting beginning in 2020, EDC voluntarily reported on
sustainability for the past nine years. We will continue this practice because we believe
that this is how we can best create and share value with society, and care for the
environment upon which we depend, and the we all share.

Message from the EDC
President and COO

Our clear path ahead

The strong beam from a beacon serves to shine a light on the way ahead, and while we
made some gains in 2018, our journey is far from over. One the business side, we are
confident in the path we are taking to grow and develop our portfolio, invest in our
facilities and our PEOPLE, and continue to support our host communities.

Strategy is fundamentally a choice that is executed well. EDC is committed to our choice
for renewable enrgy and we intend to deliver on our plans to optimuze our assets,
mitigate our risks and grow the business and our talent pool. It is our hope that we can
serve as a role model for the energy sector, our host communities, the local government,
energy are bright, and by all indications, are getting better with each passing day.

Richard B. Tantoco
President and COO

Message from the EDC
President and COO