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Biodiesel industry bats for more coconut in diesel

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A taxi driver checks his car's engine at a biodiesel refilling station in Pasay, Philippines on December 14, 2011 -- BW FILE PHOTO

HIGH DIESEL prices might provide an opportunity to add more coconut-based biodiesel into the blended-diesel fuel mix, the head of the biodiesel lobby said.

Dean A. Lao, Jr., president of The Philippine Biodiesel Association, said rising diesel prices coupled with a decline in coconut prices make this a good time to use ore coconut-based biodiesel, known as coconut methyl ester (CME).

“You can see that petroleum prices are on the way up while coconut prices are on the way down. The two will meet,” Mr. Lao said in an interview on the sidelines of a Senate hearing.

He said the latest Philippine Energy Plan (PEP) drafted by the Department of Energy (DoE) calls for the increase in the percentage of biodiesel in blended diesel to 5% from 2% by 2020, giving ample time for the industry to gradually adjust.

“If the coconut oil supply continues to increase — and that’s caused by favorable weather, fertilization and better production — the price will continue to fall, so the timing is getting better,” said Mr. Lao, who is also managing director of biodiesel processor Chemrez Technologies, Inc.

Aside from the rising prices of fuel on the international market, local diesel pump prices were further pulled up by the excise tax on fuel because of Republic Act 10963 or Tax Reform for Acceleration and Inclusion (TRAIN).

Mr. Lao said that using a reference price of P35 per liter for diesel and P90 for biodiesel, which he said has recently dropped to P80, every percentage increase in the contribution of biodiesel to the blended fuel would add about P0.40-P0.45 per liter to pump prices.

A yearly increase of P0.40-P45 per liter until 2020 might be the “smoothest way” implementing the PEP requirement, he said.

“It can also be 5% in a sudden jump and they can be ahead of the Philippine Energy Plan,” he added.

He said official figures from the Philippine Coconut Authority (PCA) show the country’s production of coconut oil at a little over 1 million tons, which means a shift to 5% would translate to 490,000 or 45% to 49% of supply can be covered by existing production.

“(If there is a further increase in) production then it would be even easier,” he said.

However, Teddy M. Reyes, executive director of Philippine Institute of Petroleum, said an increase to 5% should be carefully studied, suggesting a review of whether Republic Act No. 9367 of the Biofuels Act of 2006 has achieved its goal.

He said his calculation of the increase in diesel pump prices if the biodiesel component is raised to 5% is about the same as Mr. Lao’s — at P0.30 to P0.40 per percentage point increase. But he disagrees on the availability of coconut oil supply.

“There are two schools of thought. One sector says, there’s not enough. Even DoE said that. The reason why they cannot go 5% at once is because there is not enough feedstock, meaning to say, the raw material,” he said in an interview.

“The other side, PCA says there is enough supply because the production of coconut significantly increased,” he added.

During the hearing on biofuels on Tuesday, Sen. Sherwin T. Gatchalian urged the National Biofuels Board, an advisory body to the DoE, to take into consideration whether an increase to 5% is warranted.

Marissa P. Cerezo, director of the DoE’s renewable energy management bureau, said the increase will be on the board’s agenda when it meets this quarter. The DoE chairs the board. — Victor V. Saulon