Written by Roselle K. Yu, 18 January 2007
“We do not inherit the earth from our ancestors, we borrow it from our children.” This Native American proverb is echoed in the most commonly cited definition of sustainable development. In 1987, the term “Sustainable Development” was defined in a report commissioned by the United Nations as development that meets the needs of the present without compromising the ability of future generations to meet their own needs.
Twenty years later, the Biofuels Act of 2006 (Republic Act No. 9367) is signed into Philippine law on January 12, 2007. As used in the Act, biofuel refers to bioethanol, biodiesel and other motor fuels made from organic matter that is available on a renewable or recurring basis. Feedstock for biofuel includes animal wastes and plant materials such as sugarcane, corn, molasses, grains, cassava and coconut.
The Biofuels Act is a product of the government’s policy on sustainable development and aims to reduce our dependence on imported fuels by providing cheaper and more environment-friendly alternatives to traditional fossil fuels.
Fossil fuels, such as coal and petroleum, are limited and harmful to the environment. Biofuels, in contrast, are made from renewable materials that are indigenous to primarily agricultural countries like ours. Thus, the National Biofuels Program will not only give us improved air quality through cleaner emissions from vehicle engines, it will also boost economic activity in the countryside through the establishment of alternative markets for agricultural products.
The Act adopts a two-pronged approach toward energy independence and a cleaner environment namely: the gradual elimination of harmful gasoline additives and the gradual introduction of locally-sourced bioethanol and biodiesel in motor fuels.
Within three months, a minimum volume of 1% biodiesel shall be blended into all diesel engine fuels sold in the country. This expands the already existing directive on all government agencies and corporations to use 1% coco-biodiesel blends for their diesel fuel requirements as early as February of 2004. Within two years, the National Biofuel Board (NBB) created under the Act, shall determine the feasibility of increasing the minimum percentage to 2%, or higher, subject to the availability of locally-sourced biodiesel components.
Within two years, the total volume of gasoline fuel actually sold and distributed by oil companies in the country must contain a minimum of 5% locally-sourced bioethanol fuel. Upon recommendation by the NBB, the mandated blend may increase to a minimum of 10% within four years from the effectivity of the law.
Apart from a guaranteed market for locally-produced biofuels, the government offers the following incentives to encourage investments in the biofuels industry:
- Zero (0) specific tax on local or imported biofuel components
- Value added tax (VAT) exemption on the sale of raw materials used in the production of biofuels such as, but not limited to, coconut, jatropha, sugarcane, cassava, corn and sweet sorghum
- Exemption of all water effluents from wastewater charges under the Philippine Clean Water Act (Republic Act No. 9275)
- High priority financial assistance from government financial institutions and government institutions providing financial services shall be granted to Filipinos or Filipino companies (i.e., entities at least 60% of the capital stock of which belongs to Philippine citizens) that shall engage in activities involving the production, storage, handling and transport of biofuel and biofuel feedstock, including the blending of biofuels with petroleum, as certified by the Department of Energy (DOE).
The relentless rise in oil prices and environmental problems have led to increased awareness of and interest in alternative fuel technology. Potential savings from the bioethanol program alone cannot be ignored. According to the DOE, the mandatory use of a 5% blend of locally-produced bioethanol in the next two years would result to potential gasoline displacement of 236 million litres, equivalent to US$129 million of forex savings per year, while a 10% mandated use would yield US$294 million in annual forex savings.
The benefits are palpable even at the level of personal consumption. Currently, E10 (10% bioethanol blend) sold at certain pump stations is priced 50 centavos cheaper than regular unleaded gasoline. Coco-biodiesel, on the other hand, is touted to increase a diesel engine’s mileage per litre yielding savings of P1 per additional kilometre travelled. Moreover, biofuels will help engines run smoothly and perform better and longer since cleaner fuel translates to cleaner engines.
Studies show that current gasoline-powered vehicles can run on mixtures of 10% ethanol and 90% conventional gasoline (E10) without modifications to the fuel engine, while a 1% mix of coco-biodiesel is enough to significantly reduce emissions of diesel engines. However, concerns have been raised by the CAMPI (Chamber of Automotive Manufacturers of the Philippines) regarding the use of bioethanol on vehicles fitted with carbureted engines.
A national biofuels program is a necessary step towards energy independence. Though certain problems or issues might arise during the implementation of the program, I am confident that with full government support, these issues can be aptly addressed as the program develops. Given our country’s immense agricultural potential, it is a natural candidate to hop on the biofuels bandwagon. If this program succeeds, it may not be long before we see greener cars being commercially viable on Philippine roads. Surely, many metropolitan lungs, including mine, are eagerly awaiting such times.
