Trade group lobbies for including palm oil use in Philippine biofuel mandate

The Federation of Philippine Industries (FPI) is lobbying the government to amend the Philippines’ Biofuels Act of 2006 to allow the use of palm, in addition to coconut, oil as currently mandated by law.

FPI Chairman Jesus L. Arranza says that allowing the use of palm oil will considerably reduce the cost of biodiesel blending in the Philippines. Currently, the cost of palm oil in the international market is USD725 per metric tonne compared to coconut oil which is approximately USD1,500 per metric tonne.

“The specifications in implementing it [Biofuels Act]—particularly the formulation for the fuel mix—were made so that only coconut can qualify. We’re suggesting that the details be changed so palm oil, a cheaper additive, can be used,” Arranza said.

One of the law’s objectives was to boost the production of locally available materials for ethanol and biodiesel and thereby reduce the importation of crude oil; since the Philippines is a major producer of coconut, but not palm, the law specifically required the use of coconut methyl ester or CME. Currently the law mandates a biodiesel blend of 2% CME with 98% diesel fuel. The biodiesel ratio may be increased depending on the availability of local supply.

The country’s coconut production in 2016 declined by 15% from 2015 to 12.59 million metric tonnes (MMT), due to the lingering effects of El Niño and the typhoons that hit major coconut-producing provinces last year, according to the Philippine Coconut Authority (PCA).

Indonesia and Malaysia are major producers of palm oil, but the Philippines is not ideally suited to grow palm. Given the higher yield of palm oil per hectare, palm oil should be considered as a fuel additive, Arranza argued. While the move could potentially benefit consumers due to the lower price of palm oil currently, it would run counter to the original intent of the law.

“The potential for growth of palm-oil production is at least a million hectares. As a cheaper additive, you can bring down the price as well,” he said.

Under the Implementing Rules and Regulations of the Biofuels Act, the National Biofuels Board (NBB) consisting of representatives from key government agencies is responsible for determining the availability of locally available materials and for recommending to the Department of Energy the appropriate percentage of biofuel content in gasoline and diesel fuel. The Philippine Department of Science and Technology (DOST) is responsible for identifying and developing the viable feedstock for biofuel production.