Deferral of biodiesel blend hike proposed

MANILA, Philippines — The National Biofuels Board (NBB) is recommending the suspension of the scheduled increase in biodiesel blend this year to prevent a spike in diesel prices as prices of feedstock, particularly coconut oil, have risen to unprecedented levels due to tight supply.

The Philippine Coconut Authority (PCA) said the proposed deferral would avert inflationary shocks in the market.

The NBB is an inter-agency recommendatory body chaired by the energy secretary, with its members composed of the secretaries of agriculture, trade and industry, finance, labor and employment.

The administrators of the PCA and the Sugar Regulatory Administration are also members of the board.

The temporary suspension of the one percent increase in the coco-methyl ester (CME) biodiesel mandate from three percent, or B3 to B4, has been one of the key suggestions of local industry stakeholders amid rising coconut oil prices.

Coconut oil prices, which is influenced by the global vegetable oil market situation, have been rising this year due to tight supply in the world market amid growing demand for such commodity.

The rise in coconut oil prices directly impacts CME prices since the former serves as the raw material for the production of the latter.

The average price of coconut oil in the world market has reached a record-high of over $2,700 per metric ton in May, based on World Bank data.

Last year, the Department of Energy (DOE) ordered the scheduled increase in CME content to three percent last Oct. 1, 2024, four percent by October of this year and to five percent starting October next year.

The increase from B2 to B5 in 2020 was delayed due to lack of assurances on the sufficiency of biodiesel supply and logistical limitations brought about by the COVID-19 pandemic.

The last time the biodiesel blend increased was in 2007 when it was adjusted to two percent. It has remained at such rate since then.

Under the Biofuels Act of 2006, all liquid fuels for motors and engines sold in the country must be blended with biofuels.

At present the prevailing retail price of diesel in the National Capital Region ranges from P44 to P60.75 per liter, based on DOE data.

Last Tuesday, diesel prices went up by P0.95 per liter.

Diesel prices have deflated for the third straight month in April, posting a contraction of 8.3 percent, according to the Philippine Statistics Authority.