Government to push biofuels sector even amidst falling oil prices

The Department of Energy (DOE) will intensify the development of the biofuels industry amid a continuing decline in world crude prices, a DOE official said.

DOE Director Mario Marasigan said the continuing efforts to further improve the utilization of biofuels is mandated under the Biofuels Law.

“In the Philippines, the use of alternative fuels is mandated by the law so we should not be affected,” Marasigan said.

An oil expert earlier expressed fear that with dropping world crude prices, biofuels’ expansion may be less significant.

“There would be lesser growth role at a time [for biofuels] when prices [of oil] go down,” Jorge Montepeque, Platts global director for market reporting, said.

It was believed that biofuels development should not hinge basically on supply and demand of oil but its contribution to cleaning the environment.

“The Philippines is still very bullish on the growth of the alternative fuels industry. Oil price is only one among the different causes of alternative fuels,” he added.

It will be noted that utilization of alternative fuels is intended to spur development of various industries such as farming (coconut, sugar, cassava) and refining.

“There is still need for more ethanol plants and the ethanol mandate will start in February 2009 and that’s the best incentive for investors (to invest in biofuels),” Marasigan said.

In fact, he said the DOE is pushing through with the implementation of higher biodiesel blends next month.

He said there is no intention to suspend the mandated implementation of the five percent blend of ethanol by January next year.

Another DOE official also pointed out that biofuels development would have more benefits for the country.

“I would like to believe that we are still on the right track. It has even resulted in being beneficial to the economy. We export sugar, coconut oil and if our export market will contract, then we can use more of those products for our feedstock to our biofuels program. I think at this present time, it would still be beneficial for the country,” DOE director Zenaida Monsada said.

But Monzada admitted that the National Biofuels Board (NBB) is currently studying the status of the Biofuels Law mandate if there is a need to increase it or not.

“The law has put in place safeguards that state that future increases in blends would have to be deliberated by the NBB –which look into the local supply availability,” she  said.

The Biofuels Law mandates an increase in biodiesel blend to two percent from one percent and five percent ethanol blend starting next year.

The country’s biodiesel requirement at one percent biodiesel blend is around 60 to 70 million liters annually because demand for diesel is between six to seven billion liters.

For B2, biodiesel requirement will be double to around 112 to 114 million liters by 2009.

Studies from the Asian Institute of Petroleum Studies, Inc. (AIPSI) and the US National Biofuels Board released in the middle of this year indicated that biofuels production poses no threat to food security.