Philippines Eyes Higher Bioethanol Blend, Seeks Cheaper Feedstocks to Lower Fuel Prices

MANILA, Philippines — The Philippine government is pushing to increase the bioethanol blend in gasoline from the current 10 percent to 15 percent, aiming to lower pump prices. To achieve this, the Department of Agriculture (DA) and the Department of Energy (DOE) are collaborating to secure cheaper feedstocks, boost local production, and reduce import dependence. Agriculture Secretary Francisco Tiu Laurel Jr. and Energy Secretary Sharon Garin recently met to discuss strategies for lowering feedstock costs, maximizing the utilization of idle distillery capacities, and expanding domestic ethanol production. Key discussions revolved around exploring various feedstock options, including molasses and sugarcane juice from the sugar industry, as well as locally produced corn. "We are studying these options carefully, and there is potential for them to help bring down gasoline prices," Tiu Laurel stated. However, a significant challenge is that locally sourced feedstocks are more expensive than imported supplies, leading to domestically produced bioethanol prices being double those of imported bioethanol. Increases in feedstock costs can translate directly to higher ethanol prices, with an estimated P1 increase for every percentage point rise in feedstock cost. While corn availability is not an issue, securing it at a price that makes ethanol production commercially viable remains a hurdle. Domestic ethanol producers estimate an annual output of 325 to 385 million liters from sugarcane-derived feedstock, yet existing plants possess a total capacity exceeding 500 million liters. The government has indicated that to protect the sugarcane industry, any additional production from corn should occur within the unused capacity, without displacing existing agricultural output. The DA is also considering measures to enhance corn production, such as improved seeds, mechanization, and contract farming arrangements between producers and ethanol plants. Nevertheless, the department has cautioned that increased demand from ethanol producers could drive up corn prices for the livestock sector. Diversifying feedstocks is seen as a way to alleviate pressure on any single agricultural commodity and potentially lower local bioethanol prices. The Philippines has had a mandatory 10 percent bioethanol blend since 2011, with a 20 percent blend being voluntary. Last month, the DOE announced it was working on the necessary policy and technical preparations to safely and effectively introduce a 15 percent ethanol blend. The DA also has a pending proposal to amend Joint Administrative Order No. 2008-1, Series of 2008, which prohibits the use of corn as a feedstock for bioethanol production. READ: Philippines emerging as robust market for American ethanol READ: Gov’t studying use of corn as bioethanol feedstock