At first glance, the Biofuels Act seems like a promising start on the road towards national energy independence, weaning the country away from dependence on imported energy sources.
BY ARNOLD PADILLA
IBON Foundation
Posted by Bulatlat
Vol. VII, No. 18, June 10-16, 2007
The search for indigenous energy sources is a vital one for the Philippines, given its dependence on imported oil. In the wake of recent record-high oil price levels, the Arroyo government has been actively promoting the search for alternative energy sources.
In her 2005 State of the Nation Address, President Gloria Arroyo had asked Congress to pass legislation on renewable and indigenous energy. She also actively promoted the Alternative Fuels Program of her Medium-Term Philippine Development Plan (MTPDP) 2004-2010 as one of the long-term solutions to high oil prices.
The passage of the Biofuels Act seems to be one answer to this search for indigenous energy sources. It calls for the use of “biofuels” such as bioethanol, biodiesel, and other fuels made from biomass (i.e. any organic matter which is renewable).
Bioethanol refers to ethanol produced from feedstock and other biomass suitably denatured for use as motor fuel while biodiesel refers to fatty acid methyl ester derived from vegetable oils or animal fats technically proven and approved by the Department of Energy (DoE) for use in diesel engines.
The law prescribes that a minimum one percent biodiesel be blended into all diesel engine fuels within three months of the implementation of the law, while bioethanol should comprise five percent of the annual total volume of gasoline fuel actually sold and distributed by all oil companies in the country within two years of the Act’s effectivity. Further, the Department of Energy (DoE) is mandated by the Act to determine the feasibility of bioethanol increasing to a minimum of 10 percent of the total volume of gasoline fuel within four years and two percent for biodiesel within two years from the effectivity of the law.
Indigenous materials would be used to produce biofuels locally. Coconut would be used as feedstock for biodiesel. To ensure the program’s sustainability, the DoE is also studying other possible biodiesel feedstocks such as Jathropa Curcas or tuba-tuba. For bioethanol production, government aims to utilize sugar cane, corn, cassava, and nipa.
Thus, at first glance, the Biofuels Act seems like a promising start on the road towards national energy independence, weaning the country away from dependence on imported energy sources. But a closer look reveals how the law ultimately promotes foreign control over the country’s natural resources, which already characterizes the present state of the country’s oil industry.
Foreign investors cash in
It is expensive to set up an ethanol plant; one estimate pegged the cost at P2 billion ($43,516,100 at an exchange rate of $1=P45.96) for a plant with a capacity of 100,000 liters daily. The Act’s principal author Miguel Zubiri said that the country needs to set up at least 25 ethanol plants in order for the Philippines to meet the prescribed ethanol-gasoline mix.
This high expense is why foreign corporations are behind most of the ethanol projects launched in the wake of the law.
For example, Saudi Aramco, 40 percent owner of Petron Corporation, expressed its plan to build an ethanol distillery or a jathropa processing plant in Mindanao as part of its commitment to invest $300 million in new investments from 2007 to 2010 to expand its refinery.
Meanwhile, the country’s first ethanol plant– the P2.28-billion ($49,608,355) San Carlos Bioenergy Inc. (SCBI) in San Carlos City, Negros Occidental with a production capacity of 27.3 million liters per year– was built by Bronzeoak Philippines, a local unit of British firm Bronzeoak Ltd. (60 percent ownership), together with the National Development Corporation.
Japanese firms are also very active in investing in biofuels; conglomerate Marubeni was reported as among the companies in ‘exploratory stage of venturing into ethanol projects.’ For coco-biodiesel production, Toyo Engineering Corporation (TEC) intends to develop 600,000 hectares of coconut lands with an investment range of P0.10 to P1 million ($2,175 to $21,750) per hectare.
Most recently, Filipino and Chinese companies forged memorandums of agreement to develop bioethanol plants.
All these pave the way for foreign control over the country’s natural resources, like what has been prevailing in the oil industry. In fact, past Philippine governments have systematically placed the country’s energy resources in the hands of foreign business interests, at the expense of Filipino consumers and the national economy. Examples include former president Marcos’ integrated energy program in the 1970s and the Ramos government’s program to liberalize the local energy sector.
