Why This Matters for Your Business
The Philippines has introduced mandatory sustainability and energy reporting. Two overlapping regulations now affect thousands of enterprises — and deadlines are approaching fast.
SEC Mandatory Sustainability Reporting
SEC Memorandum Circular No. 16 (Series of 2025) requires Philippine companies to report their greenhouse gas emissions under PFRS S1 and PFRS S2 — aligned with international ISSB standards. This replaces the old voluntary framework and now carries legal weight.
- Who: All publicly listed companies, plus large non-listed entities with revenues above PHP 15 billion
- What: Scope 1 (direct emissions including F-gas leaks), Scope 2 (grid electricity), and eventually Scope 3
- How: Attached to annual reports filed with the SEC, with board sign-off required
RA 11285 Energy Efficiency Act
The Energy Efficiency and Conservation Act classifies every commercial and industrial facility into regulatory tiers based on annual energy consumption. Higher tiers require certified energy managers, mandatory audits, and DEOS portal reporting to the Department of Energy.
- Who: All businesses consuming over 100,000 kWh-equivalent per year (including diesel and LPG)
- What: Facility classification (Exempt, ODE, Type 1, Type 2) with escalating compliance obligations
- How: Energy audits, CECO/CEM appointment, energy management plans, DEOS portal submissions
SEC Reporting Timeline — Three-Tier Rollout
The Hidden Trap Most Companies Miss
When companies think "carbon reporting," they think electricity bills. But for any facility running HFC chillers, fugitive F-gas leaks are often the single largest Scope 1 emission source — and most companies don't even know they need to report it. A single 100 TR chiller leaking R410A can generate more CO₂e than a fleet of delivery trucks. Use our calculators below to find out where you stand.
Source: SEC Memorandum Circular No. 16, Series of 2025 · GreenFi Analysis
Understanding Scope 1, 2 & 3 Emissions
Under PFRS S2, Philippine companies must report greenhouse gas emissions across three "scopes." Here is what each one means for your facility — and where boilers and chillers create hidden liabilities.
Your facility produces these directly
Any greenhouse gas released on your premises from fuel you burn or refrigerant that leaks. This is where boilers, diesel generators, and HFC chillers hit your carbon report hardest.
- Diesel boilers — 0.253 kg CO₂ per kWh of heat produced
- LPG boilers — 0.215 kg CO₂ per kWh of heat produced
- Natural gas boilers — 0.184 kg CO₂ per kWh of heat produced
- Diesel gensets — backup generators running on fuel
- F-gas refrigerant leaks — R410A (GWP 2,088), R22 (GWP 1,810), R134a (GWP 1,430)
- Company vehicles — fleet fuel combustion
From the electricity you purchase
Even if your facility burns nothing on-site, the power grid has a carbon footprint. In the Philippines, every kWh from the grid produces emissions because the generation mix includes coal and gas.
- Philippine grid factor — 0.712 kg CO₂ per kWh (DOE 2023)
- Electric resistance heaters — 100% grid-powered, COP 1.0
- Electric chillers — grid electricity for compressor operation
- Lighting, HVAC, office loads — all purchased electricity
- Reducing Scope 2 — higher COP equipment does the same work with less grid kWh
Everything upstream & downstream
The hardest to measure but often the largest — covering your supply chain, product use, employee commuting, and waste. SEC reporting will eventually require Scope 3 for Philippine companies.
- Purchased goods — raw materials, packaging, supplies
- Transportation — freight, logistics, product distribution
- Employee commuting — staff travel to/from work
- Business travel — flights, hotels, conferences
- Waste disposal — landfill, water treatment
- Product end-of-life — downstream use and disposal
Why Boilers Are Your Biggest Scope 1 Problem
A diesel boiler running at 85% efficiency produces 0.253 kg CO₂ for every kWh of heat delivered. For a hotel using 5,000 litres of diesel per month, that is 16.2 tonnes of CO₂ per year in Scope 1 alone — all of which must now be reported to the SEC. An R290 heat pump producing the same heat has zero Scope 1 emissions because it burns nothing on-site.
How Bad Are Boilers? The Numbers Speak
Every fuel has a carbon cost. This table shows the CO₂ emissions per kWh of useful heat delivered to your facility — including boiler efficiency losses. The heat pump alternative eliminates Scope 1 entirely.
| Heating System | Fuel | Efficiency | Scope 1 kg CO₂/kWh heat |
Scope 2 kg CO₂/kWh heat |
Total kg CO₂/kWh heat |
|---|---|---|---|---|---|
| Diesel Boiler | Diesel / Gas Oil | 85% | 0.312 | 0 | 0.312 |
| LPG Boiler | LPG (Propane/Butane) | 85% | 0.264 | 0 | 0.264 |
| Natural Gas Boiler | Natural Gas / LNG | 90% | 0.227 | 0 | 0.227 |
| Electric Resistance | Grid Electricity | COP 1.0 | 0 | 0.712 | 0.712 |
| Legacy Heat Pump | Grid + R410A | COP 3.0 | F-gas leaks* | 0.237 | 0.237 + F-gas |
| Karnot iHEAT R290 | Grid + R290 (GWP 3) | COP 4.5 | ≈ 0 | 0.158 | 0.158 |
The Diesel Boiler Problem
A typical Philippine hotel burning 3,000 litres of diesel per month for hot water generates 9.7 tonnes of CO₂ per year in direct Scope 1 emissions. Add the cost of fuel at ₱72/litre and you are paying ₱2.6 million/year to pollute. Under SEC PFRS S2, every kilogram of this must now be reported, audited, and disclosed to investors.
The Electric Heater Problem
Electric resistance heaters seem "clean" because nothing burns on-site — but with the Philippine grid at 0.712 kg CO₂/kWh, they produce the highest total emissions of any heating method. COP 1.0 means every kWh of heat needs a full kWh of grid electricity. A heat pump at COP 4.5 does the same job using 78% less electricity — slashing your Scope 2 by the same amount.
The Hidden F-Gas Bomb
Legacy chillers using R410A (GWP 2,088) or R22 (GWP 1,810) leak 8-15% of their refrigerant charge annually. An 80kg charge leaking 12% releases 9.6kg of refrigerant — equivalent to 20 tonnes of CO₂e for R410A. That single chiller can have a larger Scope 1 footprint than all your diesel generators combined, and most companies don't even track it.
The Karnot Natural Refrigerant Solution
Switching to R290 (GWP 3) or CO₂/R744 (GWP 1) eliminates your Scope 1 F-gas and combustion liability entirely. The higher COP of 4.5 means 50% less grid electricity than a legacy chiller (COP 3.0), cutting your Scope 2 as well. For SEC reporting, that means fewer numbers to track, lower carbon intensity, and a credible ESG story for investors.
The Bigger Picture
By 2027, ESG stress testing becomes a formal supervisory requirement in the EU — and Philippine banks lending to carbon-intensive borrowers face pressure to assess transition risk. Companies with high Scope 1 from boilers and F-gas may find it harder to secure financing. The EU's Carbon Border Adjustment Mechanism (CBAM), active from 2026, also prices embedded carbon in exports — affecting Philippine manufacturers selling to Europe. Decarbonizing your heating and cooling now is not just a compliance exercise. It is a competitive advantage.
Emission factors: DEFRA 2024, Philippine DOE Grid Factor 2023, IPCC AR6 GWP values, ASHRAE 90.1 · ESG Stress Testing · CBAM Guide
RA 11285 DOE Classification Calculator
Republic Act 11285 classifies all Philippine commercial and industrial facilities into regulatory tiers based on their Annual Energy Consumption (AEC) measured in kWh-equivalent. This includes electricity, diesel, and LPG converted to a common thermal energy baseline. Your tier determines whether you need a Certified Energy Manager, mandatory energy audits, and DEOS portal reporting.
Enter your facility's average monthly energy consumption below. The calculator annualizes your inputs, converts all fuels to kWh-equivalent using DOE-standard conversion factors, and determines your legal classification under the Energy Efficiency and Conservation Act.
Karnot Engineering Insight
SEC PFRS S2 Carbon & F-Gas Converter
The Philippine SEC's adoption of PFRS S2 (aligned with IFRS S2) requires listed companies to disclose Scope 1 and Scope 2 greenhouse gas emissions. For facilities with HFC chillers, fugitive F-gas refrigerant leaks often represent the single largest — and most overlooked — Scope 1 emission source. A single 100 TR chiller leaking R410A can generate more Scope 1 CO₂e than a fleet of diesel trucks.
Enter your chiller specifications below to quantify your total SEC carbon reporting liability. The calculator reveals both your Scope 2 grid emissions and your hidden Scope 1 F-gas liability, then shows the Karnot natural refrigerant alternative.
The Karnot Natural Refrigerant Alternative
Free 2026 Compliance Pack
Download our Philippine Energy Audit & SEC Compliance Guide — includes RA 11285 checklist, PFRS S2 reporting template, and F-gas inventory worksheet.
Frequently Asked Questions
What is RA 11285 and who does it apply to?
Republic Act 11285 is the Philippine Energy Efficiency and Conservation Act. It applies to all commercial and industrial establishments consuming more than 100,000 kWh-equivalent of energy annually. Facilities are classified into tiers (ODE, Type 1, Type 2) with increasing compliance requirements including mandatory energy audits, certified energy managers (CECO/CEM), and DEOS portal reporting.
What are Scope 1 and Scope 2 emissions under SEC PFRS S2?
Scope 1 covers direct emissions from on-site fuel combustion and refrigerant leaks (F-gas). Scope 2 covers indirect emissions from purchased grid electricity. Under the Philippine SEC's adoption of PFRS S2 (aligned with IFRS S2), listed companies must disclose both scopes. F-gas leaks from HFC chillers often represent a hidden Scope 1 liability that many companies overlook.
How do F-gas leaks from chillers affect my SEC carbon reporting?
Synthetic refrigerants like R410A (GWP 2,088), R134a (GWP 1,430), and R22 (GWP 1,810) have extremely high global warming potentials. A typical 100 TR chiller leaking 10-15% of its charge annually can generate 15-25 metric tons of CO₂e in Scope 1 emissions. This must be disclosed under PFRS S2 and often exceeds the facility's electricity-related emissions.
How does switching to natural refrigerants reduce my SEC reporting burden?
Natural refrigerants like R290 (propane, GWP 3) and CO₂/R744 (GWP 1) have near-zero global warming potential. Switching to a Karnot iCOOL or iHEAT system eliminates your Scope 1 F-gas reporting liability entirely, while the higher COP (4.5 vs 3.0) simultaneously reduces Scope 2 grid emissions by 30-40%.
When does mandatory SEC sustainability reporting start in the Philippines?
SEC Memorandum Circular No. 16 (Series of 2025) introduced a three-tier rollout. Large-cap companies (market cap above PHP 50 billion) must report for FY 2026, with their first filing due in 2027. Mid-cap companies follow for FY 2027, and small-cap plus large non-listed entities for FY 2028. Limited assurance on Scope 1 and Scope 2 emissions is required two years after each tier's first report.
Does my company need to report if we are not publicly listed?
Possibly. Under SEC MC No. 16, large non-listed entities with annual revenues exceeding PHP 15 billion are included in Tier 3 and must begin PFRS S1 and S2 reporting for FY 2028. Additionally, regardless of listing status, RA 11285 applies to any commercial or industrial facility consuming more than 100,000 kWh-equivalent of energy annually.
What industries are most affected by these new regulations?
Energy utilities, manufacturing, financial services, real estate, and hospitality face the most significant transition demands. Any business operating large HVAC or refrigeration systems with HFC refrigerants should pay particular attention to their F-gas Scope 1 liability, as this is often the most overlooked — and largest — emissions line item.
How much CO₂ does a diesel boiler produce?
A diesel boiler operating at 85% efficiency produces approximately 0.312 kg of CO₂ for every kWh of useful heat delivered. For a facility burning 3,000 litres of diesel per month for hot water, that equates to roughly 9.7 tonnes of CO₂ per year in direct Scope 1 emissions. Under PFRS S2, every kilogram must be disclosed in your SEC annual report.
Are electric heaters better than boilers for emissions?
Not necessarily. Electric resistance heaters (COP 1.0) produce zero Scope 1 emissions but generate the highest total emissions of any heating method in the Philippines. With the grid emission factor at 0.712 kg CO₂/kWh, every kWh of heat costs a full kWh of grid electricity. An R290 heat pump at COP 4.5 delivers the same heat using 78% less electricity, dramatically cutting Scope 2.
What is CBAM and could it affect Philippine exporters?
The EU Carbon Border Adjustment Mechanism (CBAM) requires importers to pay for carbon emissions embedded in goods entering the EU. From 2026, exporters must disclose production emissions and importers purchase certificates to offset the carbon content. Philippine manufacturers exporting cement, steel, aluminium, fertilisers, or electricity to Europe face direct exposure. Reducing your Scope 1 and 2 now protects your EU market access.
Will ESG performance affect my ability to get bank financing?
Increasingly, yes. ESG stress testing becomes a formal supervisory requirement for EU financial institutions by January 2027. Banks must assess whether borrowers can remain financially viable under a disorderly climate transition. Companies with high Scope 1 emissions from boilers, gensets, and F-gas leaks may face higher borrowing costs or restricted access to capital as lenders price in transition risk.
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