FPI bats for palm oil as biodiesel additive

The Federation of Philippine Industries (FPI) is pushing for the use of palm oil as a new additive for biodiesel to soften the blow of looming higher fuel prices for consumers.

FPI chairman Jesus Arranza said there is a need to revise the implementing rules and regulations of the Biofuels Act of 2006 by the Technical Committee on Petroleum and Petroleum Additives of the Department of Energy.

“It’s about time the specifications be rehashed because now, you can only use coconut for biodiesel. Based on the specifications, the formula for additive seems tailor-made only for coconut oil,” Arranza said in a recent briefing.

“What we want is to review now so that we can now make use of palm oil in the formulation of biodiesel so it will bring down prices of diesel and at the same time, allow the exportation of coconut for higher value products to foreign countries,” he added.

Arranza said he would raise the proposal to Finance Secretary Carlos Dominguez III in line with the looming fuel excise tax increase.

“As we all know there is a proposed excise tax increase. If you use a cheaper additive then the impact may become workable. It will soften the impact because you will lower the cost of the base material,” the FPI official said.

Arranza said palm oil prices in world market currently average at $625 per metric ton as compared to $700 per metric ton for coconuts.

“Remember, coconut can only produce 450 kilos of oil per hectare. Palm oil can produce five tons of oil per hectare so you don’t need a genius to come up with a computation,” he said.

The FPI said there is currently some 80,000 hectares of palm oil plantation in the country, with a potential to grow to over one million hectares.

Palm oil production domestically is at 100,000 metric tons a year, all of which is consumed locally, mostly for cooking.

“There is no shortage of palm oil in the world market and the sources are very near like Malaysia,” Arranza said.

The Philippines currently uses coconut as feedstock for biodiesel.

The Biofuels Act of 2006 mandates the amount of coconut oil for fuel to be blended with diesel may be increased taking into account the domestic supply and availability of locally sourced biodiesel.

By 2015, the biodiesel blend should be at five percent, and would be raised to 10 percent and 20 percent by 2020 and 2030, respectively. It has remained at two percent since 2009.