news/updates
Viability of biofuels market to be proven in two years
By Maria Kristina C. Conti
BusinessWorld
January 8, 2008
NEARLY A YEAR after the law mandating biofuels blends into regular petroleum products was enacted, investors have flocked to the new fuel sources, committing at least $2 billion in investments, according to official data.
But the sector will need two more years to prove it is a viable alternative to fossil fuels, a top government official said.
National Biofuels Board Executive Director Ramon G. Santos said the sector is still in its infancy, but "the fact that its attracting a lot of private sector investors already is encouraging." NBB is the lead agency for the national program, composed of 11 government agencies.
Based on indicative projects, the sector should be in full swing by 2010.
The Biofuels Law, or Republic Act 9367, signed on Jan. 12 last year requires the immediate blending of 1% biodiesel into regular diesel. Because of the abundance of coconut feedstock, the current maximum production of about 252.9 million liters is nearly three times the demand of 78 million liters. The blend, as well as the demand, will double to 2% and 150 million liters in 2009.
Gasoline, meanwhile, should have a 5% bioethanol blend next year, and 10% by 2011. By next year total demand for bioethanol is estimated at 268 million liters.
Currently, six local companies produce coconut methyl ester, or coco-biodiesel, but attention has recently turned to jatropha. Coco-biodiesel is almost twice as expensive as regular diesel, raising the pump price of 1% blended diesel by 30-50 centavos.
The Philippine National Oil Co.-Alternative Fuels Corp. (PNOC-AFC), one of the government agencies dedicated to biofuels, recently turned to jatropha, a local plant that grows in the wild, because it is cheaper.
"Jatropha [biodiesel] is a second-generation fuel. It doesn't have issues of food versus fuel," PNOC President Peter Anthony A. Abaya said in a separate interview.
"We've been studying the feedstock for a long time, and we have all the research to show it is as viable as coco-biodiesel."
The most recent companies to express interest are Spanish firms, which have committed as much as $625 million in jatropha plantations and refineries all over the country. Industry players have cited export potentials, with Japan recently saying it is going for a 5% blend.
For ethanol, among the most recent investors are Guanxi Group of China which teamed up with Eastern Petroleum Corp. for an ethanol project using cassava as feed-stock. The PNOC-AFC is also planning an ethanol plant project worth $1.3 billion.
US firm E-Cane Fuel Corp. recently said it will invest $150 million to put up a fully integrated ethanol processing facility in Central Luzon based on sugar cane.
But expected to be soonest onstream is the San Carlos Bioenergy, Inc. project, which will produce fuel-grade ethanol from sugar cane juice. It is currently being built on a 25-hectare facility in Negros Occidental. The ethanol production is set in late 2009, which will be supplied to Petron Corp., the largest petroleum retailer in the Philippines for E5 up to E10 blending.
