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Pricey coco oil still biodiesel feedstock of choice
By Maria Kristina C. Conti
BusinessWorld
January 18, 2008
COCONUT OIL is still the most practical choice as feedstock for biodiesel, even as the government promotes the use of non-edible crops to support the country’s growing biodiesel needs.
Industry stakeholders argued that the debate over pollution and food-versus-fuel is irrelevant — high costs are stalling efforts to increase both supply and demand.
Top biodiesel maker Chemrez Technologies Inc. last year had been underutilizing its plants. At maximum production, the firm alone can provide 96% of the country’s demand at about 75 million liters. It used to export excess yield to Europe and Japan, but high costs of coconut oil last year limited its market.
Chemrez Dean A. Lao Jr. said last Wednesday, "We used to export some quantities [of fuel-grade coconut biodiesel]... in 2006, but we stopped last year."
"We still export crude coconut oil, however. This crude oil is used in soaps and plastics, or further refined as virgin coconut oil or as biodiesel," he added.
Mr. Lao declined to disclose total production volume and value. But based on a Chemrez claim that it corners 55% of the local market, its actual output could be only 43 million liters, an underutilization of a facility that was recently touted in a Southeast Asian conference.
The high production costs have also kept coco-biodiesel pricier by 40% than regular diesel since last year. "At P60 per liter, I think that adds 22 centavos to the cost of diesel," Mr. Lao noted.
It’s not a supply problem, Mr. Lao clarified. "Coconut oil prices are high because of its many uses, I guess. But there is available [feedstock]," he said. "I would say with the current 1% blend, this uses only 5% of the coconut oil supply. That means when the blend increases to 2%, that’s only 10% of the coconut oil supply."
Regardless, the price differential has not riled drivers and commuters. "There is no public demand for or against it," noted energy economist Peter Lee U of the University of Asia and the Pacific.
"The claim is that it’s cleaner. So I guess the economics of this is to ask how much you value clean air," he said.
