The New Age - Biofuels

SOMETHING SMELLS!

Negros Daily Bulletin

By Lourdes Ledesma

When the prices of crude oil skyrocketed several years ago and stayed relatively high, the industrialized countries scrambled to find alternative sources of energy. So did the Philippines. In an earlier article, I gave a bird’s eye view of alternative sources of energy, among them, biofuels, water and wind energy, all green, as far as environment is concerned. In this article, allow me to focus on biofuels. 

Alternative fuels are not based on petroleum and are desirable because they provide energy security and environmental benefits. Biofuels are produced from feedstock and other organic sources that are renewable like animal wastes, biodegradable organic wastes, such as leaves, crops, plant fibers, and animal and vegetable oils. The originator of the use of biofuels was Mr. Rudolf Diesel, when he built the first diesel engine fueled by vegetable oil. The two major types of biofuels are : 1) bio-ethanol, derived from starch or sugar from sugarcane, corn, sweet sorghum, cassava and nipa; 2) biodiesel, sourced from plant oils, such as palm, jatropha, soy, coconut and rapeseed, waste vegetable oil, and animal fats, which include, tallow, lard, and yellow grease from fish oil. 

Republic Act 9367, known also as the Biofuels Act of 2006, was authored by Cong. Juan Miguel Zubiri, and was signed into law in January, 2007. This piece of legislation, considered a landmark and a model for other countries to emulate, opened the door to business opportunities as well as research and development of alternative energy sources, bringing relief to an otherwise poverty-stricken country, held captive to high fuel prices. In this legislation is a clear mandate for the government and the private sector to cooperate in developing biofuels, while setting standards for its production and use, and creating the National Biofuels Board. It mandates that all liquid fuels for motors and engines sold in the Philippines shall contain locally-sourced biofuel components as follows: 

1) Within three months from the signing of this Act, a minimum of 1 percent biodiesel by volume shall be blended into all diesel engine fuels sold in the country, provided the blend conforms to standards. And within two years, the blend may be increased to 2 percent as may be determined by the NBB. 

2) Within two years from the effectivity of this Act, 5% bioethanol shall comprise the annual total volume of gasoline fuel sold and distributed by each and every oil company in the country; provided that the ethanol blend conforms to standards set by the NBB. 

3) Within 4 years from the effectivity of this Act, the NBB is empowered to determine the feasibility and thereafter recommend to the Department of Energy to increase the minimum percent of bioethanol to 10 percent blend by volume of all gasoline fuel distributed and sold by each and every oil company in the country. In the event of supply shortage of locally-produced bioethanol, oil companies shall be allowed to import bioethanol, but only to the extent of the shortage, as determined by the NBB. 

The Biofuels Act of 2006 also provides incentives to spur research and production, such as exemption from: 1) VAT, on sale of raw material used in biofuel production, 2) specific tax on local or imported biofuel materials, 3) waste water charges from effluents from biofuel production, if used as liquid fertilizer and other agricultural purposes (“re-use”), and 4) financial assistance from lending institutions for business entities that shall engage in activities involving production, storage, handling and transport of biofuel and biofuel feedstock, including the blending of biofuels with petroleum, as certified by the DOE. The role of this government agency is the preparation of the Philippine Biofuels Program and the accreditation of biofuels producers. 

Other salient features of R.A. 9367 is the phase-out of harmful gasoline additives, which when added to gasoline, increase the amount of oxygen in the gasoline blend, the prohibition and penalizing of distribution, sale and use of such fuel, also the sale and distribution of blended fuel that failed to meet set standards, false labeling of gasoline, diesel, biofuels and biofuel-blended gasoline and diesel, and diversion of biofuels, whether locally-produced or imported, to purposes other than those envisioned in this Act. 

The implications of using biofuels are many: it is cheaper than fossil fuels, it is clean, in terms of lower emissions (30-60%). Carbon dioxide is likewise reduced at the rate of 3 kilos/liter of biodiesel used. According to data from the DENR, the use of the mandated 1% coco-biodiesel blend (B1) has significantly cut down carbon emissions in Metro Manila in the third quarter of 2007. Since it is biodegradable, it is safe to handle and transport, less toxic and has a higher flashpoint than petroleum diesel fuels. It is efficient, in terms of usability, as according to the Chamber of Automotive Manufacturers of the Philippines, a 2% biodiesel and a 10% bioethanol blend will not require any engine modifications in cars, pumpboats and hand tractors. 

Furthermore, biodiesels extend the life of diesel engines because they are more lubricating than petroleum diesel fuels. As for being cost-effective, the savings that would accrue to our foreign exchange is substantial. The projected savings nationwide if 1% biodiesel blend is used, at a volume of 86 million liters, is $41 million. When the country shifts to 5% biodiesel, it would stand to save $205 million at a volume of 429.4 million liters. (Figures from PNOC Alternative Fuels Corporation). Currently in use now in the Philippines is B1 (1% coco-diesel blend), and E10 (10% bioethanol-gasoline blend). E10 is being sold in all Seaoil stations nationwide. 

The Philippines is the first country to use coconut as a source of feedstock for biodiesel. A Japanese firm is currently engaged in developing a $600-million coconut plantation project in northern Luzon. Many other major players are interested in investment opportunities in biofuel projects. A Singaporean firm, D1-BP Fuels Crops Asia Pacific Pte. Ltd., has been approved by the Securities and Exchange Commission to form a corporation for a biofuel project. The state-run PNOC-AFC has engaged in a project in Mindanao with jatropha as feedstock. It is assessing probable locations for plantations in several provinces, engaging in the research and propagation of seedlings, and forming joint venture/partnerships with investors, landowners and oil companies to transform land with an aggregate area of 700,000 hectares into jatropha plantations. Then it is setting up biodiesel refineries in strategic locations, for the extraction and processing of oil from jatropha. It is allocating P50 million to undertake a pilot plantation in northern Mindanao. 

Feedstock for the production of bioethanol will come from sweet sorghum and sugarcane. Negros Occidental, where most of the sugarcane in the country is produced, will be leading the thrust of bioethanol production. San Carlos Bioenergy is in the process of setting up an ethanol distillery with an integrated generation power-plant. The project is funded by a consortium of banks led by the Development Bank of the Philippines, Land Bank of the Philippines, Banco de Oro, China Bank and Equitable PCI. The project cost is P1.78 billion. The government banks are mandated to provide loans for biofuel producers, blenders and transporters. The distillery will be producing 125,000 liters per day (35 million liters/year) of fuel grade ethanol, while the power plant will have a capacity of 8 MW. The distillery is located at the San Carlos Agro-Industrial Economic Zone. 

Petron Corporation is expected to start offering 5% ethanol-blended gasoline within the year. Basic Energy plans to plant 10,000 hectares of idle lands in Zamboanga del Norte into sugarcane, for ethanol production. In General Santos City, Eastern Petroleum Corp. is planning to construct a P1.8-billion ethanol plant with Chinese firm Guanxi State Farm. Sen. Juan Miguel Zubiri was quoted to say that San Miguel Corp. plans to invest between P16 billion-20 billion in putting up 10 ethanol plants around the Philippines. According to official data, since R.A. 9367 was enacted, investors have committed at least $2 billion in investments. 

This augurs well for our country in savings, in more livelihoods for our people, and a cleaner environment, I would say. Things are looking up, don’t you think?*