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CHAPTER 2. |
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Policies related to Biofuels |
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The Philippines has a number of policy regulations , overarching laws and regulatory framework for the development of Biofuels in the Philippines. These policy and regulatory instruments provides for the direction, objectives, mandates, incentives, safety and monitoring controls. |
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2.1 Overarching Energy Policy Framework |
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The Philippine Energy Plan (PEP) defines the overall energy sector policy framework in the Philippines. It is an affirmation of the country’s commitment to pursue the energy independence agenda that focuses on attaining a sustainable 60% energy self sufficiency beyond 2010 and promoting a globally competitive energy sector. PEP focuses on the effective implementation of the following: (a) accelerating the exploration; development and utilization of indigenous energy resources; (b) intensifying renewable energy resource development; (c) increasing the use of alternative fuels; and (d) enhancing energy efficiency and conservation. The continuing reforms in the power sector as well as the downstream oil and gas industries will pave the way in realizing a globally competitive Philippine Energy Sector. |
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2.2.1 BIODIESEL. |
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To promote the utilization of coco-biodiesel, a number of policy initiatives have been issued. |
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- In February 2004, President Gloria Macapagal-Arroyo issued Memorandum Circular (MC) No. 55 mandating all government offices to use 1% coco-biodiesel blend in all their diesel fuel requirements. MC 55 was meant to serve as a pilot test to determine the techno-economic viability of CME as an alternative transport fuel. In March 2004, Department Circular (DC) No. 2004-04-003 was subsequently issued known as the Implementing Rules and Regulations for MC 55.
- Philippine National Standard (PNS) 2020:2003 was promulgated by the DTI – Bureau of Product Standards (BPS) upon endorsement by the Technical Committee on Petroleum Products and Additives. The Committee is composed of representatives from the DTI-BPS, DOE, DOST, DENR, Petron Corporation, Pilipinas Shell Petroleum Corporation, Caltex Philippines, Inc., Unioil Petroleum Philippines, Inc., Filipino Car Foundation, Philippine Automotive Federation, Inc., Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) and the Agricultural Machinery Manufacturers and Distributors Association. PNS compliant firms are issued with a Certificate of Fuel Additive Registration (CFAR) upon application for accreditation with the DOE.
- Department Circular 2005-04-003 was issued in March 2005, Promoting The Use of Coco-biodiesel as an Alternative Clean Fuel. Under the said Circular, oil companies in the Philippines are enjoined to support the alternative energy program of the Department by making available coco-biodiesel (in bottle) as a retail shelf item in all their gas stations nationwide. LGUs are likewise enjoined to issue the proper ordinances to ensure compliance with the said circular
- The program gained another boost in August 2004 with the intensified implementation of the energy efficiency and conservation program. Through the issuance of A.O. 126, all government agencies were instructed to strictly use 1% coco-biodiesel blend in their diesel fuel requirements.
- The Supreme Court of the Philippines issued M.C. No. 07-2004, “Use of Coconut Methyl Ester (CME) in the Diesel Requirements of the Courts” on 23 June 2004, directing all its judiciary branches to support the said program. Also, in collaboration with the USAID, various LGUs in the provinces of Baguio, Isabela and Davao have issued Ordinances promoting the use of CME in the diesel fuel requirements of their respective municipalities. The USAID – USDOE Sustainable Energy Development Program (SEDP) is likewise helping the DOE in its information, education campaign through its Clean Cities Program.
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2.2.2 BIOETHANOL |
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The government issued the following policy directives to encourage stakeholder participation in the program: |
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- E.O. 488 “Modifying the Rate of Import Duty on Components, Parts and Accessories for the Assembly of Hybrid, Electric, Flexible Fuel and CNG Motor Vehicles under Section 104 of the Tariff and Custom Code of 1978” issued on 12 January 2006, allows importations under the Motor Vehicle Development Program at zero percent rated-import duty on parts and components that will be used for the assembly and manufacture of vehicles powered by alternative fuels;
- E.O. 449 “Modifying the Rates of Import Duty on Bioethanol Fuel under Section 104 of the Tariff and Customs Code of 1978” issued on 22 July 2005, reducing import duties on bioethanol products to be used in the program from 10.0 percent to 1.0 percent; c) Revenue Regulations No. 08-2006 issued in May 2006 by the Bureau of Internal Revenue (BIR) implementing the guidelines on the taxation and monitoring of bioethanol blended gasoline and imported or locally manufactured fuel bioethanol for excise tax purposes; and,
- DC. No. 2006-08-0011 issued by the DOE in August 2006 prescribing “Interim Guidelines for the Accreditation of Oil Industry Participants in the Bioethanol Program”for the effective monitoring and implementation of the program while in the voluntary phase and in the preparation for a smooth transition to nationwide legislated mandate.
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2.2.3 Biofuels Law or R.A. 9367 |
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Serious global energy insecurity and technical factors contributed to the move for biofuels alternative. Likewise, results of the pilot program on government vehicles were encouraging and reports submitted by the agencies affirmed the findings of the tests conducted by a Technical Working Group (TWG) headed by the DOE that CME or coco-biodiesel promotes fuel efficiency and reduces a vehicle’s emission levels even with 1% minimum blend.. All the concerted efforts for energy self-sufficiency in a significantly improved environment in the Philippines have brought the landmark legislation with the signing of the Biofuels Law., “An Act to Direct the Use of Biofuels, Establishing for this Purpose the Biofuels Program, Appropriating Funds thereof, and for other Purposes,” otherwise known as the Biofuels Act of 2006, on 12 January 2007 by President G. M. Arroyo provides the impetus for the full development and utilization of biofuels in the country.
The Biofuels Law aims to achieve the following: |
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- Develop and utilize indigenous renewable and sustainably-sourced clean energy sources to reduce dependence on imported oil;
- Mitigate toxic and green house gas (GHG) emissions;
- Increase rural employment and income; and
- Ensure the availability of alternative and renewable clean energy without any detriment to the natural ecosystem, biodiversity and food reserves of the country.
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In compliance with RA 9367, all liquid fuels for motors and engines sold in the Philippines shall contain locally-sourced biofuels as components. The mandatory use of biodiesel is summarized as follows: |
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- Within three (3) months from the effectivity of the Act, there shall be
- a minimum of 1% biodiesel by volume in all diesel engine fuel distributed and sold in the country;
- blend conformity with Philippine National Standards for Biodiesel.
- Within two (2) years from the effectivity of the Act, the NBB shall
- determine the feasibility of increasing the blend to 2%, and;
- recommend to DOE to mandate a minimum of 2% blend of biodiesel by volume subject to domestic supply and availability of locally-sourced biodiesel component.
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In addition the mandatory use of bioethanol is summarized as follows: |
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- Within two (2) years from the effectivity of the Act
- at least 5% bioethanol shall comprise the annual total volume of gasoline fuel actually sold and distributed by each and every oil company in the country; and
- ethanol blend conforms to PNS.
- Within four (4) years from the effectivity of the Act
- NBB is empowered to determine the feasibility of increasing the blend of bioethanol to minimum 10% blend by volume;
- DOE shall mandate a minimum of 10% blend of bioethanol by volume into all gasoline fuel distributed and sold by each and every oil company in the country; and
- Oil companies shall be allowed to import bioethanol in the event of supply shortage of locally-produced bioethanol.
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