RP still a top biofuels market

The Philippines remains one of the most attractive markets for the development and sale of biofuels, an energy advisory firm said.

Citing an Ernst & Young UK report on Biofuels Country Attractiveness Indices which covers the first semester of 2008, former Energy Secretary Vicente Perez pointed out that the Philippines was ranked 11th in terms of attractiveness in the biodiesel market and 13th in the overall biofuels index.

Perez now heads Merritt Partners, a global energy advisory firm providing advice to energy economies in Asia.

The Philippines maintained its strong ranking following decisions to allot farmlands for the cultivation of biofuel feedstock.

However, the country lost its ranking in the ethanol index. The Philippines was dropped due to its plan to import ethanol from Brazil and Thailand, which will depress domestic investments.

“The Philippines’ stable ranking is a confident booster to current and interested investors in the country’s biofuels industry even as other countries have recently experienced downsides in the implementation of their respective programs,” Perez added.

The biofuels country attractiveness report ranks the country’s attractiveness based on infrastruture index such as market regulatory risk, supporting infrastructure and access to finance; and fuel specific indices such as, among others, offtake incentives, tax climate, domestic and export market growth potential and project size.

Perez noted that the E&Y report confirms the market assessment earlier made by Merritt Partners last May on the biofuels outlook of the Philippines.

The report noted that the domestic demand for biodiesel is expected to reach 151 million liters by 2009 from the current demand of about 70 million liters per year.

Merritt Partners also estimates that the existing capacity is sufficient to cover the two-percent mandated biodiesel blend nationwide.

For ethanol, Merritt Partners forecasts a promising domestic market of about 309 million liters per year by 2009. This is expected to further increase to 664 million liters by 2011 and 713 million liters by 2013.

It further underscored that locally-produced ethanol can be competitive with gasoline given the continued volatility of oil prices.

The Philippines has achieved significant inroads in the development of biofuels with the enactment of the Biofuels Act of 2006, setting mandates on its use and the provision of reasonable fiscal incentives.

Overall, Brazil has overtaken the United States as the leading producer of biofuels. That includes not just production of ethanol and biodiesel but also the infrastructure required.

After Brazil and the US, the other major leaders are France, Spain, Canada, Germany, Thailand, China, Colombia, Sweden, the United Kingdom, India, Italy the Netherlands and Indonesia. — Ted Torres