A real opportunity

The world is in a mad scramble for alternatives to fossil fuel.

There’s no turning back for crude oil prices which have reached $75 per barrel. It is for this reason that sugar, a major source of alternative fuel, is demanding this much attention as an energy commodity, probably more than as a food commodity.

World fuel ethanol production this year is projected to reach 38.7 billion liters, and this volume is expected to easily double by 2010, with Brazil and the United States as the dominant producers.

Brazil is way ahead of the pack, mainly because it started its ethanol program 30 years ago. But it continues to expand. It is putting up 90 new sugar and ethanol mills between now and 2010 and expanding its cane area by five percent each year.

But other countries like the United States, the European Union are trying their best to end their dependence on crude oil. The EU in January this year announced its biofuels strategy, which calls for a two percent mandatory blend of ethanol in gasoline, increasing to 5.75 percent in 2010. The US meanwhile has phased out the use of MTBE (methyl tertiary buthyl ether which is an additive to petroleum and said to be toxic) and has thus included renewable fuel standards in the energy bill.

According to International Sugar Organization (ISO) senior economist Lindsay Jolly, Thailand, which has mandated a 10 percent ethanol blend, is setting up 13 ethanol distilleries by the end of 2007 and is replacing gasoline with gasohol by January next year. India which suspended in mid-2004 the five percent mandatory blend due to molasses shortage, has revived the program last year and needs about 350 to 420 million liters of ethanol.

China now mandates ethanol use in nine provinces and needs 1.5 billion liters of ethanol, mainly from imports. Japan meanwhile has been requiring a three percent and 10 percent blend, all imported because it does not produce its own ethanol. Colombia has mandated beginning September last year a 10 percent blend while Central America is looking to develop a fuel ethanol program using sugarcane.

The prices for sugar will remain high, mainly because it has ceased to become mainly a food commodity. It has become the solution to high crude oil prices.

Jolly, during the recent Philsutech convention in Cebu, has stressed that there are real opportunities for the global sugar industry as ethanol spreads from the traditional homes of Brazil and the US. Ethanol is increasingly becoming a global commodity.

With the Philippines awaiting the passage of its landmark biofuels bill, we can soon partake of this opportunity that will not only minimize our dependence on crude oil, but will also help generate rural activity due to increased farm incomes and employment generation, and help rid the environment of pollutants.

Everything seems to point to a passage of the bill into law soon. Car manufacturers are joining the worldwide clamor for environment-friendly cars. Ford has unveiled its environmentally advanced bio-ethanol powered vehicles in Europe called Flexi-Fuel cars beginning with Ford Focus which was also unveiled in Manila recently. (Flexi-fuel vehicles are vehicles are cars that can run on two sources of fuel, usually gasoline and ethanol).

Meanwhile, even before the biofuels law is passed, Shell and SeaOil have started making available to the public gasoline blended with 10 percent ethanol. Petron is reportedly awaiting the passage of the law while Caltex seems not to be as excited because it does not have a refinery and therefore merely imports petroleum products.

Sugar planters in the Philippines are also eagerly awaiting the passage of the law and together with the Sugar Regulatory Administration (SRA) are scouting for new areas to plant to sugarcane. I’ve heard that a 100,000-liter ethanol plant will need 5,000 hectares planted to sugarcane devoted to the needs of the plant. Beneficiaries of the agrarian reform are also reportedly more than willing to enter into contract growing schemes for production of sugarcane for ethanol purposes.

Let’s hope that our legislators see the immense potentials that a biofuels law will give to the country. Who knows, ethanol can become one of our biggest export products, in case our production exceeds our demand? There are so many countries who are not agriculturally gifted that they cannot plant sugarcane, but are now in a mad scramble for sources of imported ethanol. And here we are wasting our God-given resources?

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