Sustainability think-tank Center for Energy, Ecology, and Development (CEED) said on Thursday that San Miguel Corporation (SMC)’s power subsidiary San Miguel Global Power Holdings (SMGPH) is implementing a losing strategy that is having devastating consequences on shareholders and investors, energy consumers, and the environment.
In an online briefing held ahead of SMC’s 133rd anniversary, CEED alongside the Institute for Energy Economics and Financial Analysis (IEEFA) and Bishop Gerry Alminaza of advocacy group WagGas raised alarm over SMC’s questionable decision to push for fossil fuels, especially imported liquefied natural gas (LNG).
“While San Miguel is pursuing the country’s further dependence on fossil fuel, it is also losing on the actual energy transition development as we speak. San Miguel has already lost in the race to secure new permits for new renewable energy capacity, which will be built in the next two to three years,” Gerry Arances, Executive Director of CEED said during the briefing.
Sam Reynolds, author of an IEEFA report detailing the financial issues SMC faces because of its reliance on coal and gas, added that the company’s overexposure to volatile fossil fuel prices, the groups find, could sink its financial health and that “SMGP’s overreliance on fossil fuels has weakened its financial health – moving from coal to LNG is not going to solve the fundamental problem of overexposure to fossil fuel prices. This is especially true when you consider the company’s lack of contracts for its existing and proposed LNG facilities,” he added.
SMC’s status as one of the country’s biggest conglomerates entails that the company should be among those leading the transition away from fossil fuels.
“It is completely incompatible for SMC to be promoting more fossil fuels amid an intensifying climate crisis. Just yesterday, the International Energy Agency (IEA) reiterated the urgency of moving away from fossil fuels if we are to protect the ambition to keep global temperature rise to no more than 1.5 °C,” said Bishop of the Diocese of San Carlos, the site of a 300 MW LNG plant proposed by San Miguel Corporation.
Reynolds also doubts the company will be able to fulfill the 2050 net zero commitment it unveiled earlier this year.
“Unless there is a major, material pivot within the company to transition to renewables and phase out its fossil fuel expansion plans, the company is going to have very little chance of achieving its 2050 net zero target. Without a strategic, material, immediate pivot, that goal is simply unrealistic,” Reynolds said.
The IEEFA report is the latest publication questioning SMC’s reliance on fossil fuels in its power generation businesses. Earlier this year, CEED also published a separate report, which stressed SMC’s important role in the ongoing transition to renewable energy.
“There’s a lot of opportunity for San Miguel to right the wrongs and to be the key driver in the energy transition that our country should be pursuing. If this happens, it will strengthen the Philippines’ voice in international negotiations on climate and mitigation action so we can hold rich countries accountable for dilly-dallying in their supposed role to lead the reduction in fossil fuel dependence,” Arances said.