"The immediate passage of the biofuels bill will enable the agriculture sector to hedge on its competitive advantages by taking advantage of agricultural products as efficient energy crops by developing expertise and adapting technological advances," said Jose Maria Zabaleta, executive director of the PSMA in a recent Business Forum sponsored by the Economic Journalists Association of the Philippines (EJAP).
The biofuels bill mandates the blending of five-percent ethanol to gasoline within two years after the approval of the bill and increasing the ethanol blend to 10 percent upon the creation of the National Biofuels Board which will regulate the ethanol industry.
Zabaleta said approval of the biofuels bill opens up new opportunities for the sugar sector. It will require new investments in ethanol plants and distilleries as well as investments in the expansion of new sugarcane hectarage.
"A five-percent ethanol blend requires 160.67 million litters of ethanol.It will take 10 years to get to this level of production. Specific ethanol projects for one, will require new cane areas," he said, adding that by 2012 when the mandated ethanol blend is at 10 percent, the country will need an estimated 428.04 million liters of ethanol.
The Philippine sugar industry which currently caters mostly to the local food and beverage sector and the US sugar export quota, will have to open up new cane areas for ethanol production.
Zabaleta said that since sugar is the most preferred feedstock for ethanol production, it will not be difficult to provide sugarcane for ethanol use but existing sugar mills and refineries located in traditional sugar districts in the country such as Negros Occidental cannot accommodate the bigger demand.
"Specific projects for fuel ethanol production will require the opening of new cane areas in Northern Luzon, Mindoro and Southern Mindanao."
Some of the identified possible areas for sugarcane-for-ethanol production include Kalinga, Cagayan, Isabela, Masbate, Palawan in Luzon, Bohol in Visayas, and Agusan del Norte, Agusan del Sur, Lanao del Norte, Maguindanao, South Cotabato and Saranggani in Mindanao.
Zabaleta pointed out that the quick passage of the biofuels bill will keep the Philippines in step with the ongoing worldwide shift to cheaper biofuel production for fuel and energy use as crude oil prices continue to soar.
The US for instance is increasing its corn production which is used as feedstock for ethanol, Thailand is using cassava while Brazil, Mexico and Australia are also raising sugarcane production to feed the energy market.
Aside from the sugar sector, Zabaleta said there are other possible feedstock for ethanol such as sweet sorghum, cassava, corn and sweet potatoes.
"So within the agriculture sector, there is an opportunity for product diversification that could increase farmers’ income and stabilize market prices in cases of surplus production."
Investors are waiting for the biofuels bill passage and are closely watching what fiscal incentives and perks companies investing in the ethanol industry will get.
There are several distillery companies that are willing to convert their excess capacities and put up facilities such as $500,000-dehydrators that would enable them to produce anhydrous alcohol or ethanol that would be pre-blended with gasoline.
Zabaleta said once the bill is enacted, the Philippines has the potential to become a major producer of alternative fuels. Bukidnon Rep. Miguel Zubiri said there are several ethanol plants that are in various stages of construction in anticipation of the enactment of the ethanol bill.
He said the group of British firm Bronzeoak Phils. and Bukidnon Sugar Milling Corp. (BUSCO) are putting up a fuel ethanol plant in Bukidnon province in the next three years.
Zubiri said the two groups are conducting feasibility studies for the possibility of establishing ethanol plants in Bukinon. A plant with a 25-MW capacity requires an investment of at least P1.5 billion.
Bronzeoak Phils. is involved in the ethanol facility in San Carlos, Negros Occidental. Bronzeoak is the joint venture partner of the National Development Co. (NDC).