Philippines consumption of biodiesel expected to rise further

MANILA, Philippines — The country’s biofuel consumption is expected to continue to recover this year on the back of economic growth, as well as the increase in ethanol and biodiesel demand, according to the United States Department of Agriculture (USDA).

In a report by its Foreign Agricultural Service (FAS), the USDA said ethanol demand is projected to grow by 13 percent this year to 660 million liters.

“The plan to have full in person classes in schools in August 2022 will drive the fuel demand despite the current high prices,” it said.

Meanwhile, biodiesel demand is forecasted to jump by 31 percent to 250 million liters.

In terms of production, the USDA said biodiesel production may rise by 25 percent to meet the demand from the B5 biodiesel blend.

The increase from the current two percent biodiesel blend (B2) to five percent is anticipated after the Department of Energy (DOE) revised the biofuels roadmap posted on its website.

“The blend target for B5 is set for 2022 and E20 beyond 2025,” the USDA said, citing the DOE roadmap.

The US agency expects the biodiesel volume uptake to take effect no sooner than the third or fourth quarter.

The Biofuels Act of 2006 mandates that all liquid fuels for motors and engines sold in the Philippines shall be blended with biofuels – ethanol for gasoline and coco methyl ester (CME) for diesel.

The mandated blends have remained at B2 and E10 since 2009 and 2012, respectively, and higher blend targets initially set have not been met to date.

Sought for comment, a DOE official said nothing is final on the increase in biodiesel blend as the National Biofuels Board (NBB) has yet to convene under the new administration.

The NBB is an oversight and recommendatory body created by the Biofuels Act and is composed of eight government entities that are part of the implementation of the said law.

It is chaired by the DOE Secretary and is supported by the administrator of the Sugar Regulatory Administration (SRA) as vice chair on bioethanol concerns, and the administrator of the Philippine Coconut Authority (PCA) as vice chair for biodiesel concerns, with representatives from the Departments of Agriculture, Trade and Industry, Science and Technology, Finance, and Labor and Employment.

But with the update in the DOE roadmap, the USDA said the industry is prepared to meet the biodiesel demand once the higher blend is implemented.

“The rated production capacity of 707.9 million liters per year is a result of the industry’s overexpansion in anticipation of the B5 blend and is now more than enough to cover the required blending for 11 billion liters of diesel consumption,” it said.

As for ethanol production, it is projected to slow by 1.4 percent to reach 360 million this year due to feedstock problems.

This is despite the overcapacity of fuel ethanol plants due to the unexpected shift of seven potable alcohol producers to fuel ethanol following the implementation of a 22-percent excise tax on potable alcohol, the USDA said.

“Competitiveness of the local sugarcane industry to provide the needed feedstock remain a challenge,” it said.

Currently, local producers can only supply 50 percent of the bioethanol requirement for the 10 percent gasoline blending while the other 50 percent is served by ethanol imports, which are mainly sourced from the US.

“There are recommendations to use corn as feedstock, but this would run counter to the government’s food security program and would require huge investments to establish plants. To date, the Philippines has no option but to continue to use molasses and sugarcane,” the USDA said.

With the projected reduction in local ethanol production, the US agency expects the Philippines to accelerate its total fuel ethanol imports by 33 percent to 300 million liters to fill in the gap due to the expected increase in consumption.

During the three-day US agricultural trade mission, the US Grain Council (USGC) signed a memorandum of understanding (MOU) with Mariano Marcos State University (MMSU) to facilitate the exchange of expert knowledge, technical information, and best practices related to the biofuels industry and policy development.

The USGC’s ethanol development program works with partners globally to expand the market for fuel and industrial use ethanol.

Located in Batac, Ilocos Norte, MMSU is a leading institution of higher education and houses the NBERIC, a USAID-supported state-of-the-art hub for bioenergy research, training, extension, and technopreneurship.