Preserving and Managing Our Natural Capital in a World of Scarce Resources

First Gen recognizes the urgent need for the energy grid to stop relying on coal and to shift to clean and renewable energy. The Company’s natural gas, geothermal, hydro, wind, and solar assets play an important role in creating a low-carbon economy to stop projected natural catastrophes brought about by climate change. The Company’s power plants operate in the most efficient, safe, and environmentally sound manner to manage the scarce resources that serve as natural capital for the business.

First Gen’s Environment, Safety, and Health (ESH) policy guides the Company’s compliance with regulations and management of its environmental impacts through responsible management of effluents and wastes; and stewardship and environmental protection through its low-carbon emissions and efficient use of natural resources. Its power plant operations are compliant with government and industry environmental standards and their Environmental Management Systems (EMS) are certified under ISO 14001:2015. Below is a summary of the EMS scope per power plant.

First Gen and and its subsidiary Energy Development Corporation (EDC), through the Legal and Regulatory Group, participate in government consultations on relevant environmental protection and management policies and regulations and contribute information on the particulars of First Gen and EDC energy technologies so they can be covered in the regulations. Some of the policy discussions participated in by the Company include House Bills No. 144 and 8089 requiring "Mandatory Environmental Insurance Coverage for Environmentally Critical Projects of the Department of Environment and Natural Resources (DENR)” and those of the Department of Energy (DOE) such as Circular No. DC2020-04-0009 “Guidelines Governing the Issuance of Operating Permits to Renewable Energy Suppliers under the Green Energy Option Program” and Circular No. DC2020-07-0017 “Promulgating the Guidelines Governing the Policy for the Conduct of Green Energy Auction in the Philippines”.

CLIMATE RISK STRATEGY

Taking an active role in addressing climate change risks

Because of the nature of its business, First Gen has a high contribution to the GHG of the power sector. As such, the Company continues its commitment to never invest in coal and focus on its natural gas and renewable energy portfolio. This is how the Company contributes to climate change mitigation: by avoiding emissions that would have otherwise been released via coal, the Company’s clean and renewable energy portfolio will help bring down the power sector’s carbon intensity.

First Gen employs adaptation and mitigation strategies to limit the impacts of Climate Change in its operation. First Gen invested in enhancing flood control systems to avoid flooding in critical facilities during heavy rains and typhoons. Through typhoon monitoring, early warning advisory, and effective typhoon preparedness protocol implemented at the sites, the impacts of typhoons have been minimized.

Renewable energy technologies contribute significantly to reducing GHG emissions and to the security of the energy supply. In comparison with conventional coal power plants, First Gen’s renewable energy projects prevented GHG emissions of about 6,944,415.1 tCO₂e in 2020, contributing significantly to climate change mitigation.

First Gen recognizes its role in educating host communities on climate change and its impact. Since 2017, First Gen has been conducting information, education, and communication (IEC) campaigns on climate change adaptation and mitigation in its host schools and communities. The Company also holds mentoring sessions to help the communities identify and implement local climate actions that would address the need of their communities. The Company institutionalized its employee advocacy through training them as facilitators and climate ambassadors.

EMISSIONS

Using natural gas as main fuel for First Gen’s CCGT power plants in Batangas City provides a great leverage versus that of other fossil-fuel fired thermal power plants due to its low carbon emissions. First Gen’s total carbon emissions of 5,532,523.1 tCO₂e in 2020 is 71% lower than a coal-fired power plant’s carbon emissions, generated from producing the same amount of energy of 19,684,415.0 MWh. Moreover, producing power using our clean and renewable energy plants have avoided the release of 13,564,692.9 tCO₂e GHG emissions, equivalent to removing approximately 2.9 million passenger vehicles driven for one year.

Carbon Emissions

Reduction of GHG Emissions

As part of First Gen’s GHG emission reduction initiative, its FGCEC installed rooftop solar panels in its Administration building. Through this initiative, from January to December 2020, 55,910.1kWh of electricity was reduced, which is equivalent to 32.4 tCO₂e reduced for the Company’s Scope 1 emissions.

In 2020 the parent company in collaboration with First Gen conducted a decarbonization study for the power segment of the business. The details of the study are for discussion with concerned groups of First Gen in 2021.

Other Emissions

With the dry-low NOx technology that is embedded in the plants’ combustion systems, the Company is assured that the flue gas emissions are way below the emission limits set under the RA 8749 (Philippine Clean Air Act).

ENERGY EFFICIENCY

First Gen implements an extensive maintenance program to ensure that the power plants are operating at its optimum efficiency. The Heat Recovery Steam Generator (HRSG) units of the CCGT power plants help optimize the power plant’s output and the conversion of fuel to electricity versus that of a conventional thermal power plant.

EDC launched a fleetwide program called Bantay Enerhiya that aims to reduce electricity consumption of city offices and other facilities consuming electricity from the grid. In the program, electrical components were assessed and optimized to reduce electricity consumption. One of the key activities was the optimization of the Uninterrupted Power Supply (UPS) complements at the Head Office. The number of UPS units were reduced; hence, saving electricity from some rooms which run on 24/7 air conditioning. The overall office air conditioning was also optimized by setting a common and comfortable temperature all throughout the day. Furthermore, employees utilize smaller rooms and not the main floor when rendering overtime work, thereby minimizing the utilization of bigger size air conditioning units.

To strengthen efforts in energy management and in compliance to the requirements of RA 11285, otherwise known as the Energy Efficiency and Conservation Act, all requisitions on energy- consuming products including appliances, lighting, electrical equipment, and machinery and transport vehicles are compliant with the Minimum Energy Performance (MEP) standards requirements of DOE. In addition, FG Hydro adopted the requirements of ISO 50001:2018 or the Energy Management Standard. This is to ensure that it has a structured approach in energy management. FG Hydro is currently developing its Energy Baseline, Performance Indicators, Objectives, Targets, and Action Plans for those areas within FG Hydro operational control of significant energy use.

WATER AND WASTEWATER MANAGEMENT

Regular monitoring of water withdrawal is conducted in all First Gen power plants to ensure compliance with the extraction rate limits set by the National Water Resources Board for groundwater and seawater. The seawater used by thermal plants for condenser cooling employs a once-through system and returned to the sea. Wastewater treatment facilities comply with effluent quality before discharge to receiving bodies of water. Effluent quality is regularly monitored before discharge, in compliance with the Philippine Clean Water Act of 2004.

¹EDC implements a Zero Discharge System

First Gen endeavors to minimize the environmental impacts of its operations by using water efficiently and ensuring that the quality of its wastewater discharges is within the limits set under Republic Act (RA) 9275 (Philippine Clean Water Act). Wastewater is treated to ensure that the pollution loads of its effluents are just minimal and will not affect the carrying capacity of the receiving body of water.

Water Management Project

First Gen ensures that its operations comply with international standards related to quality, environment, safety and health (QESH). Water is essential in the operation of the plants as well as in their administrative offices. First Gen recognizes the importance of industrial water resource management both at the societal and industrial context. As part of its corporate water stewardship and efforts for continuous improvement of its operations and services, First Gen intends to determine the water footprint of its natural-gas power plants, prepare water use disclosure reports, and determine opportunities for improving its water footprint. In view of ensuring the sustainability of its operations and of the water environment, First Gen wants to determine the sustainability of its water footprint, determine opportunities and options for water use reduction assess its present water resource, determine risks pertaining to its dependence on water resources, and evaluate other available water resource.

In connection with the water use improvement objective, First Gen commissioned the University of the Philippines National Engineering Center (UPNEC) to conduct a water footprint assessment and to provide technical assistance in developing a corporate water strategy for First Gen, focusing on the identification of opportunities for reducing water use and minimize the impact of its operation on water systems as well as the risk associated to its dependence on water resources. Tools that are currently being utilized in industrial sustainability reporting were used to determine the water footprint of First Gen.

The water footprint assessment tracked the water flow from the point of entry into the facility until its point of discharge. It identified points of water use and estimated the water usage in each point and quantified unaccountable water losses and possible leaks. It also considered the quality of the water used and the water discharged. The water audit determined the water footprint for each unit of operation or process to determine the water usage rate per industry.

The study adopted available water accounting and auditing tools for water use profiling and calculating the business water footprint. To be able to develop a corporate water strategy for water sustainability, water resource assessment and water risks assessment will be done for several scenarios of water demand and water supply on the succeeding phase of the project.

WASTE AND HAZARDOUS MATERIALS MANAGEMENT

First Gen manages its various wastes in a way that cross contamination of non-hazardous and hazardous wastes are prevented from the point of generation, storage, transport, treatment, and disposal. The Company ensures that its wastes are managed according to the waste management hierarchy: elimination, reduction, reuse or recycling, treatment, and disposal that is in accordance with the RA 9003 (Philippine Ecological Solid Waste Management Act) and RA 6969 (Toxic Substances and Hazardous and Nuclear Wastes Control Act). The Company established an integrated waste management program to ensure that hazardous and non-hazardous wastes are stored, transported, treated, and disposed of according to regulatory requirements and standards. Due diligence of third-party service providers is carried out in compliance with regulatory requirements.

Both hazardous and non-hazardous wastes were greatly reduced from 2019 generation due to the work-from-home arrangements implemented by the Company starting March 2020 because of the pandemic.

Waste diverted from and directed to disposal

All hazardous wastes generated are transported, treated, and disposed of by DENR-recognized transporters and treaters. Recyclable hazardous waste (i.e., waste oil and used lead-acid batteries) are disposed of under the Bantay Kalikasan Project of the ABS-CBN Lingkod Kapamilya Foundation, Inc. (ALKFI). Proceeds from the recycling of waste oil and used lead-acid batteries are donated to ALKFI. Used lead-acid batteries (ULABs) and used oil are disposed of under the Bantay Kalikasan.

Non-hazardous wastes in FGCEC, on the other hand, are composted and used as fertilizer for the plants in the area.

The Company employed waste minimization methods in its operations and support processes. Hazardous wastes are reduced through process improvement and change in use of raw materials. Its laboratories improve operations by substituting regulated chemicals with non-regulated chemicals, including reducing the volume of samples, which translates to less generated wastes.

POLLUTION REDUCTION

Using the best available technology and best environmental practices in First Gen’s facilities ensure that pollution sources are managed right from the point of generation. For the pollutants that the Company cannot eliminate from the source, the Company ensures that programs are implemented to limit its impacts within the set threshold. Periodic assessments are being conducted for the various First Gen sites to ensure that cumulative impacts of its facilities are assessed, and environmental risks are adequately managed.

EDC implements a Zero Discharge System in its geothermal sites. Through this setup, geothermal waters (brine and condensate) are contained and re-injected into the geothermal reservoir; thus, it sustains the geothermal resource while avoiding contamination of surface waters and shallow groundwater sources. Effluents from daily operation of facilities are limited to domestic wastewater and washings, which are conveyed to septic tanks. The quality of the effluents is monitored and evaluated against the DENR effluent standards under the Administrative Order 2016- 08, or the Water Quality Guidelines and General Effluent Standards.

Being a hydro company, FG Hydro’s power plants (PHEP and MHEP) emit zero pollution during plant operation. Auxiliary equipment like Emergency Diesel Generators (EDGs) is utilized sparingly throughout the year as needed for plant start-up. Despite this, the Company ensures that its issued Permit to Operate (Air Pollution Source & Control Installations) for these EDGs is renewed annually to ensure compliance to regulatory requirement. The Company vehicles are also regularly maintained to ensure the highest performance and lowest possible emissions.

CONSERVATION OF THE NATURAL WORLD

First Gen strives to protect and enhance its immediate environment as it operates its businesses.

Protecting the environs of First Gen Clean Energy Complex (FGCEC)

First Gen established a natural buffer zones consisting of a 10-hectare mangrove forest, within its facilities. This mangrove forest provides a habitat to various aquatic and terrestrial fauna and regulates seawater inundation in the area. This mangrove reforestation site has been a source of mangrove propagules and seedlings being distributed to various mangrove-replanting sites within Batangas province. These habitats also help offset the Company’s carbon footprint. Toward the marine environment of the natural gas power plant, the Company continues to implement the “Center of the Center Project” that contributes to the conservation of the biodiversity of the marine protected area, the Verde Island Passage. First Gen also has a long-term partnership with DENR, under the Adopt an Estero/ Water Body program that protects and enhances the Cabubulag River in Brgy. Sta. Clara, Batangas City.

Protecting the environs around renewable energy projects

The forest cover around the Company’s geothermal and hydropower plants are protected and propagated to ensure the delivery of optimum forest goods and services that help recharge energy reservoirs and serve the various publics and compatible enterprises dependent on the watershed.

¹ Declared Protected Area, International Union for Conservation of Nature (IUCN) Protected Area, Convention on Wetlands of International Importance (Ramsar Convention), etc.

Habitats Protected or Restored

Below is a summary of the various environmental programs that enrich the habitats in areas around the Company’s clean and renewable energy projects.

In 2020, the Company established and restored forests in the following areas, bringing the total area of forests restored under BINHI to 9,570.0 hectares.

• New plantations of 91.0 hectares of indigenous forest trees in BacMan, Negros Oriental, and Pantabangan
• Enrichment planting of 30.0 hectares old plantations and forest gaps in Mt Apo
• Maintained1,399.0hectaresofexisting plantations in BacMan, Negros, Mt. Apo, and Leyte
• Generated more than 276,000 quality seedlings of Philippine native tree species in the Company’s various nurseries (seedlings are used for reforestation or dispersed to partners to expand restored areas)

In Pantabangan, the 1,058.0 hectares planted since 2010 is estimated to be able to sequester up to 103,781.0 tCO₂e based on the USAID’s Agriculture, Forestry and Other Land Use (AFOLU) calculator.

Carbon sequestered from First Gen’s forest protection and reforestation initiatives is estimated at 1,844,489.0 tCO₂e.

The following are the estimated carbon sequestered per site:

The Company undertakes a holistic approach in managing the forests within its project sites. Despite the pandemic, First Gen’s geothermal subsidiary continued to conduct forest protection initiatives as the deputized manager of watersheds within its geothermal reservations. Last year, the Company patrolled and protected 34,744.0 hectares of conservation areas within and adjacent to its four geothermal reservations. These entailed 779km of forest patrols using the technology-based Lawin Forest and Biodiversity Protection System, 25km of fire line protection in Mt. Apo, and 350km of drone patrols in Leyte watersheds.

BIODIVERSITY AND WATERSHED MANAGEMENT

First Gen established and continues to manage the mangrove forest within the periphery of its natural gas power plants, despite being in an industrial zone in Batangas City. The mangrove forest has become a sanctuary for various flora and fauna species.

In the geothermal and hydropower sites, the Company has developed in-house experts and specialists in its EDC subsidiary who can implement a comprehensive Biodiversity Conservation and Management which entails monitoring of flora, fauna, and freshwater macro invertebrates; mapping and protecting High Conservation Value Areas (HCVA) within geothermal reservations; and adopting wildlife species. The Company also implements a holistic upland community management program that helps transform upland communities within the vicinity of its project sites into effective stewards of watershed resources.

Forest Restoration and Protection

As the deputized watershed manager in geothermal reservations, First Gen’s subsidiary EDC has the responsibility and unique opportunity to protect the forest resources and the diverse wildlife that thrive within the watersheds. Its main forest management program BINHI involves forest protection and upland community management resulting in the continuous provision of ecosystem services to all upstream and downstream communities. BINHI is one of the country’s biggest private-sector led reforestation initiatives to protect and conserve the environment not only to the EDC’s area of operations but nationwide using native trees and high-value tree crops.

Mainstreaming of Philippine Native Trees

EDC continuously implements its multi-awarded initiative to rescue, protect, and propagate 96 Philippine native tree species, many of which are categorized as critically endangered or at the brink of extinction. Through BINHI, EDC serves as a national catalyst for strategic partnerships on mainstreaming Philippine native trees throughout the country.

BINHI’s strategy in mainstreaming Philippine native trees entails two approaches. One ex-situ conservation, which involves collaborating with stakeholders to put up arboreta and tree parks that are specifically dedicated to house threatened native trees. The Company aims to grow these into mother trees that will produce viable seeds for years to come. The arboreta and tree parks are also strategically located in areas where people can visit and gain awareness about the importance of forests and biodiversity. EDC and its BINHI partners have so far collectively established 15 arboreta as well as 162 tree parks that serve as safe havens for threatened native tree species.

The second approach, called in-situ conservation, involves the protection of the threatened native trees in their natural habitat. EDC has identified six habitats or landscapes that collectively host 11 of the rarest and most threatened Philippine native tree species. Last year, EDC signed a Memorandum of Agreement (MOA) with the Ecosystems Research and Development Bureau (ERDB), the principal research and development unit of the DENR. Through this partnership, EDC and ERDB will collaborate and research on site-species suitability and growth development, as well as on the development of propagation protocols for the most rare and threatened among the BINHI native tree species.

Biodiversity

For 2020, there were a total of 615 species of fauna, 85 species of flora and 33 species of mangrove monitored. Three species, classified by IUCN as critically endangered, were encountered during the monitoring period. These are the following, two bird species: 1) Philippine eagle (Pithecophaga jefferyi) and 2) Negros bleeding heart (Gallicolumba keayi); and one medium mammal species: Visayan warty pig (Sus cebifrons).

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OPPORTUNITIES IN RENEWABLE ENERGY

First Gen is among the leaders for clean energy, with a portfolio consisting of hydropower and natural gas power plants. The Company continues its sustained development of its natural gas portfolio to help pave the way to further opportunities in the renewable energy sector. Aside from being a much cleaner alternative to coal, natural gas is also a crucial to the platform to ensure a smooth transition towards increased renewable energy dependence—particularly considering intermittent renewable energy, such as solar and wind. While solar and wind technologies are increasingly becoming more viable, they still need better storage and flexible energy sources to provide electricity on instances where there is an insufficient amount of sunlight or wind speed.

First Gen contributes to enabling the transition toward increased renewable energy penetration by developing flexible natural gas availability in the Philippines—the crucial supporting infrastructure that ensures energy security throughout the transition. Natural gas is clean, affordable, and flexible; its rapid reaction times help compensate for the lost electricity during renewable energy intermittency. By utilizing both renewable energy and natural gas, First Gen can help the country capitalize on renewable energy opportunities without sacrificing energy security in the process.

There is potential for expanding the Company’s renewable energy capacity, particularly its hydropower platform. In 2021, the Company will continue its business expansion efforts for the following hydropower projects: First Gen Bubunawan; First Gen Tagoloan; and First Gen San Isidro; all in Bukidnon Province, and First Gen Puyo in Agusan del Sur.

FG Bukidnon, the company’s 1.6-MW run-of-river plant, has just acquired the land assets covering the admin facilities and the power component. This endeavor is in line with the Company’s efforts to uprate the Agusan River Hydro Electric Plant (ARHEP) up to 5MW and allow the plant to operate beyond 2025. The initial study’s projected completion is in 2021.

Consistent with First Gen’s mission of “forging collaborative pathways for a decarbonized future,” the Company remains committed to offering low- carbon, renewable energy solutions to its customers.