DOE cautioned on cost, supply impacts of increased biodiesel blend

Published July 13, 2019, 10:00 PM By Myrna M. Velasco and Madelaine B. Miraflor

https://business.mb.com.ph/2019/07/13/doe-cautioned-on-cost-supply-impacts-of-increased-biodiesel-blend/

The Department of Energy (DOE) is being cautioned on prospective price hike effect of any proposed increase in biodiesel blend to 5.0 percent from currently at 2.0 percent, especially if feedstock sources will not be well calculated for long term requirements.

Senate Committee on Energy Chairman Sherwin T. Gatchalian acknowledged that biodiesel supply is more than sufficient to meet the 2.0 percent biodiesel blend at present– hence, it is not surprising that there is a clamor for the blend by volume to be adjusted higher.

“Consumption is lower than production at 210 million liters,” he said, further citing that “while supply is the main difficulty in bioethanol, demand is the barrier in biodiesel.”

Nevertheless, he flagged the energy department to carefully study first the dynamics of feedstock availability before rendering any decision on higher blend of coco methyl ester (CME) to diesel products.

“Although the final decision on the blend increase will be from the Executive branch – through the National Biofuels Board and DOE – we, from the legislative branch emphasize the necessity to ensure sufficient and sustainable supply of CME to prevent any shortage of biodiesel supply in the future,” Gatchalian said.

He has been citing the case of bioethanol, which had not flourished as expected because there had been feedstock scarcity for production. Hence, the country had to resort to importation on the bulk of its ethanol needs – and in the process, it also resulted in higher prices for the consumers.

For the biodiesel sub-segment, despite the teeming supply currently, he noted that such condition must not be repeated.

Biodiesel producers in the country have indicated that they already submitted data and required information to the DOE so it could be prudently armed with justification and basis on plea for the 5.0 percent biodiesel blend.

For ethanol, Gatchalian emphasized that the legislative branch “remains committed to bolstering the growth of local bioethanol production through increased research and development.”

The local coconut producers arel lobbying for the increase of Coco Methyl Ester (CME) content on all fuels and are now even willing for gradual adjustment.

For many years, the industry has been calling on the government to increase the percentage of biodiesel component blended in locally available diesel to 5 percent from the current level of 2 percent, known in the industry as B5.

Blending biodiesel CME in local diesel started in 2007 upon the implementation of Republic Act No. 9367 or the Biofuels Act of 2006. On the first year of the law, diesel was blended with 1 percent CME. It was doubled to 2 percent in 2007 and has remained at that level since.

On Thursday, Philippine Biodiesel Association (TPBA), composed of 11 companies, said they are now okay even for a gradual adjustment — from 2 percent to 3 percent by end of this year to 4 percent by 2020 and 5 percent in 2021.

TPBA spokesperson Dean Lao Jr. said the Philippines was the pioneer in Southeast Asia in blending biodiesel, but when Indonesia and Malaysia followed suit, they immediately jumped to 5 percent using palm-biodiesel.

“Indonesia is already considering increasing that level to 30 percent. Why are we getting left behind?” Lao said.

Rafael Diaz, Advisor to the DOE and President of Asian Institute of Petroleum Studies (AIPS), said it’s really up to the Department of Energy (DOE) to mandate fuel firms to increase their CME content.

The problem, he said, is that the DOE is misinformed about its numbers but industry doesn’t want to clash and agitate the government agency.

“Getting to B5 is a difficult task. There’s a mindset that it will increase the price of fuel by P2 per liter. It’s very erroneous. Based on our computation, it should just be P0.22 per liter,” Diaz said.

“We need to correct the wrong computation. They have a mindset of their own,” he added.

While admitting that increasing the CME blend may not lower pump price of diesel at this time, Diaz said that such move would translate to fuel savings.
“Coco-biodiesel makes diesel fuel burn easily and completely, leading to more power and mileage improvement. If there is a 10 percent mileage improvement and diesel cost is at P40, you can effectively save P4 per liter,” he further said.