July 12, 2019
The United Coconut Association of the Philippines (UCAP) is lobbying for the immediate implementation of increased coconut content in diesel to three percent by yearend.
Doing so, UCAP said, serves as a gradual adjustment until the commodity reaches five percent in the next two years.
Biodiesel is a blend of diesel fuel and Coco Methyl Ester (CME), a derivative of coconut oil.
In Southeast Asia, the Philippine biodiesel has the lowest percentage of vegetable oil mixed with regular diesel, said Rafael Diaz, President of Asian Institute of Petroleum Studies and Adviser of Department of Energy, in a press briefing on Thursday in Quezon City.
Malaysia and Thailand have five percent and seven percent biodiesel blend, respectively, while Indonesia has as much as 30 percent of CME in its mix, he said.
“We will consider B3 as a compromise. If they don’t want B5 content in the diesel, then we can go to B3 first then B4 next year then B5 after,” Diaz said.
Blending CME in local diesel started in 2007 upon the implementation of Republic Act 9367 or the Biofuels Act of 2006. On the first year of the law, diesel was blended with one percent CME.
Diaz lamented that while it was doubled to two percent in 2007, the coco-biodiesel blend remained at that level since then.
The increase in use of palm-biodiesel in Malaysia and Indonesia was driven by an oversupply of their palm oil. The Philippines can do the same with the oversupply of coconut oil, Diaz said.
However, he noted that coconut oil is far more superior as a biodiesel feedstock compared to palm oil and other types of oil (including soya bean oil, canola oil, and sunflower oil), which would make our local biodiesel better in quality.
The UCAP, an industry body composed of 11 companies, is projecting that an increase in coco-biodiesel blend to B5 can translate to 350,000 tons of coconut oil consumption, which is about 29 percent of coconut oil production in one year.
Currently, the country produces over 1.2 million tons of coconut oil. This increase will benefit the local coconut industry, which covers more than six million farmers nationwide, UCAP said.
Diaz admitted the move to increase the country’s biodiesel content to 5 percent is a “difficult task [as] it is not our decision but the decision of the Department of Energy”.
He pointed out the actual increase of B5 by 2021 would result to just 20 centavos per liter additional price of fuel, significantly lower than the P2.49 per liter price build up computed by the DOE.
“We need to correct the wrong computation and right now that’s a hurdle that we have to overcome because the people in the Department of Energy, they think that what they’re doing is correct,” he said.
“Their current system is that they get 5 percent of the cost of CME and then they subtract 5 percent of the landed cost of diesel. That’s not exactly correct because you cannot equate the cost of 2 percent or 5 percent of CME and then deduct 2 percent or 5 percent of landed cost of diesel because the landed cost of diesel must include excise tax and the VAT. In the case of coconut, there is no VAT and excites tax. So it is not appropriate,” Diaz explained.
Meanwhile, UCAP Vice Chairman Marco Reyes said increasing the CME blend may not lower pump price of diesel at this time, but the fuel savings translates to measurable mileage gain, and the savings can be substantial.
“Actually, our drivers will earn more money. Our public utility vehicle drivers will earn more even with 20-25 centavos increase. [This is] because of the increase in mileage. Their vehicles will run longer… This is where we should focus,” Reyes said.
“Our plants’ capacity to produce B5 biodiesel tomorrow is there. Our respiratory diseases such as bronchitis are also exploding. We just need to implement it,” Reyes added, citing families of the coconut industry as foremost beneficiaries of the said proposal.
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