Biofuel Law to Boost Economy and Break Oil Dependence

Biofuel project in Iba, Zambales

Biofuel project in Iba, Zambales (Photo credit: treesftf)

Hailed as a positive legislative breakthrough, the passing of the Biofuels Act demonstrates the country’s pressing need for the government to actually carry on with its jobs by composing and enacting more vital pieces of legislation which will clearly benefit the country. With the support of local industry, the agricultural sector, and the international community, this development also stands out as a bright spot in the attempt to resolve the complicated and problematic balance between man’s need for energy and responsibility to our environment.

President Gloria Macapagal-Arroyo formally signed into law Republic Act No. 9367, also known as the “Biofuels Act of 2006” last January 17. Together with Senate President Manuel Villar and House Speaker Jose de Venecia Jr., the President affixed her signature on the new law during the ceremonial signing held at Malacañang’s Rizal Hall.

Biofuel refers to bioethanol and biodiesel and other fuels made from biomass and primarily used for motive, thermal and power generation with quality specifications in accordance with the Philippine National Standards. Biofuel can be used both for central- and decentralized production of electricity and heat. As of 2005, bioenergy covers approximately 15% of the world’s energy consumption.

Sugar cane residue can be used as a biofuel

Sugar cane residue can be used as a biofuel (Photo credit: Wikipedia)

The law promotes the use of biofuels as a measure to develop and utilize indigenous renewable and sustainably-sourced clean energy sources. This aims to reduce dependence on imported oil, thus also facilitating economic growth and expanding opportunities for livelihood by increasing rural employment and income, and giving due regard to the protection of public health, the environment and natural ecosystems by lessening toxic and greenhouse gas emissions.

The law mandates that within two years of going into effect, all liquid fuel for motors and engines sold in the Philippines shall contain locally-sourced biofuel components of at least 5 percent bio-ethanol in the annual total volume of gasoline fuel actually sold and distributed by each and every oil company in the country.

House Bill No. 4629 or the Biofuels Act of 2005 was principally authored by Bukidnon Representative Juan Miguel F. Zubiri and co-sponsored by more than 100 other congressmen. It was then unanimously approved by the House of Representatives and sent to the Senate last year. Senator Miriam Defensor-Santiago has pushed for the passage of the bill and defended it on the floor. Although the bill had been certified urgent by President Arroyo, it had been previously set aside by the Senate which had been preoccupied by other political agendas.

Rep. Zubiri explains how the program aims to replace within four years a tenth of national gasoline consumption with a VAT-free, cheap, clean fuel produced from the likes of cane and coconut through the granting of tax and financing incentives. Under the law, biofuel producers will be exempted from paying tariff and duties in the importation of all types of inputs and machinery that they will exclusively use for the program. The Board of Investments is likewise tasked to identify other suitable incentives to encourage investments in domestic production of bio-ethanol fuel. This could translate to biofuel costing as much Php 10.00 lower compared with existing premium gas prices. Rep. Zubiri’s office has also calculated how the reduction in fuel imports could lead to billions of pesos in annual foreign exchange savings. A Tariff Commission is required under the bill to create a tariff line for bioethanol fuel and gasohol but this will be harmonized with the World Trade Organization and ASEAN Free Trade Area agreements.

The Department of Energy (DOE), is now conducting a series of consultations with the National Biofuel Board (NBB) and various stakeholders and other agencies concerned with the drafting of the implementing rules and regulations which should be promulgated within three months upon effectivity of the Act. The NBB is chaired by the Secretary, and its members include the Secretaries of the Departments of Trade and Industry, Science and Technology, Agriculture, Finance, Labor and Employment, and the administrators of the Philippine Coconut Authority and Sugar Regulatory Authority. The DOE has stated that talks are expected to provide extensive inputs for the smooth implementation of the Act.

Agricultural products specifically grown for use as biofuels include corn and soybeans, primarily in the United States; as well as flaxseed and rapeseed, primarily in Europe; sugar cane in Brazil and palm oil in South-East Asia. Biodegradable outputs from industry, agriculture, forestry, and households can also be used to produce bioenergy; examples include straw, timber, manure, rice husks, sewage, biodegradable waste, and food leftovers. Rep. Zubiri  has stated how the country has the means to ride on the alternative fuels boom, with 2.4 million hectares planted to corn, 3.2 million hectares to coconut, 390,000 hectares to sugarcane, and 330,000 to cassava and camote. President Arroyo has also recently promoted sweet sorghum as another alternative feedstock for biofuel production.  Projections made by the Department of Agriculture point to 300,000 new farm jobs created with the law’s passage. In addition, bioethanol plants, of which two are gearing up for operation in Negros and Bukidnon, are expected to hire at least 10,000 workers. The reduction in air pollution will also save the country billions of pesos from medical costs and lost income due to illness, and help diminish losses due to environmental damage and the deleterious effects of climate change.

In light of rising and unstable prices of petroleum-based fuel, and international treaties on climate change such as the Kyoto Protocol to the United Nations Framework Convention on Climate Change and the Montreal Action Plan, which have assigned mandatory targets for the reduction of greenhouse gas emissions to signatory nations, there has been a mounting global push towards the development of alternative fuels. As of December 2006, a total of 169 countries and other governmental entities, including the Philippines, have ratified the agreement. Notable exceptions include the United States and Australia, who have signed the treaty but refuse to ratify it. Other countries, like India and China, which have ratified the protocol, are not required to reduce carbon emissions under the present agreement despite their relatively large populations. In his previous State of the Union address, US President Bush had stated that the US government will also begin funding research for advanced methods in producing biofuel. In 2005 the Swedish government announced their intention to become the first country to break their dependence on oil and other ‘fossil raw materials’ by 2020, aiming to reach this goal through the further development of domestically grown biofuel. During the recently-concluded 12th ASEAN Summit in Cebu, the 16 heads of state of the Association of Southeast Asian Nations (ASEAN) and its dialogue partners ratified the Declaration on East Asian Energy Security which promotes the use of alternative fuels.

Biofuels Defined

Bioethanol – shall refer to ethanol (C2H5OH) produced from biomass;

Bioethanol Fuel – shall refer to hydrous or anhydrous bioethanol suitably denatured for use as motor fuel;

Biofuels – shall refer to a liquid fuel produced from biomass and primarily used to fuel vehicles, but can also fuel engines or fuel cells for electricity generation, and may include bioethanol and biodiesel, among others;

Biomass – shall refer to any organic matter, particularly cellulosic or ligno-cellulosic matter, which is available on a renewable or recurring basis, including trees, crops and associated residues, plant fiber, poultry litter and other animal wastes, industrial wastes, and the biodegradable component of municipal solid waste


-reportage by Jude Defensor, some rights reserved. published in What’s On & Expat newspaper and Moon Herald newspaper, 2007.

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  1. 2 things crucial to the future of your business: the local economy and what you value most « power of language blog: partnering with reality by JR Fibonacci

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