From ethanol producers with love

Everyone is now talking about rising oil prices, renewable energy, and the need to have our own sources of fuel.

I almost forgot about ethanol. Thanks to the indefatigable Gerardo “Gerry” Tee, COO of Lucio Tan-owned Absolut Distillers, I was reminded that the country, in fact, has ethanol producers; Absolut is just one.

He gave me a call after reading my recent From Russia with Blood columns, discussing the negative impact of Russia’s war against Ukraine on oil prices. Gerry, whom I met through the late Bong Tan Jr. years ago, is still the same passionate executive of Absolut, but I learned that he is also now the chairman of the 10-member Ethanol Producers Association of the Philippines (EPAP).

The oil situation, he said, could be partly addressed with the help of ethanol through biofuels. It’s not only viable, but environment-friendly, too, he told me.

I thought he had a lot more to say, so we decided to sit down for a chat. The group also invited my colleague Danessa Rivera who covers the energy beat. Days after, Danessa and I were sitting down at a long wooden table with EPAP members.

Lower oil prices

There were many issues raised, but primarily, ethanol producers said that at the end of the day, biofuels can really bring down the true cost of gasoline, especially in terms of generating savings from greenhouse gas (GHG) emissions that can be avoided.

Bioeq Energy president and CFO Niteesh Sharma said during the meeting that the savings could be channeled toward flood control, lower the cost of hospitalization in case of disasters, and reduce our overall carbon footprint.

The group is opposing the proposal to suspend the Biofuels Act of 2006, saying that on the contrary, what is affecting the prices of gasoline is not bioethanol, but the tax.

In fact, EPAP is even pushing to raise the blend to 15 percent by 2023 and 20 percent by 2025 from the current 10 percent to further pull down gasoline prices and generate more savings from avoided GHG emissions.

While Gerry acknowledges that domestic ethanol is expensive, ethanol producers import cheaper ethanol to meet the local requirement for blending under the law, which then brings down domestic pump prices of gasoline.

“Now that the fuel cost is so high, it is cheaper to use bioethanol. With our importation of 300 million liters [of ethanol], that would pull down the prices of gasoline,” Gerry said, as quoted by Danessa in her story.

Only 50 percent of the E10 blend is being served by the domestic ethanol while the other 50 percent is fulfilled by imported ethanol.

Ethanol importation

However, ethanol producers lament that they are not allowed to import molasses for biofuels. This has hampered the production of bioethanol, Gerry and his colleagues said.

EPAP members attribute this to the provision in the Biofuels Law and its IRR that puts ethanol producers under the regulatory supervision of the Sugar Regulatory Administration (SRA), which is mandated to protect the sugar industry.

Gerry said the ethanol industry is better off under the regulatory supervision of the Department of Energy (DOE) whose mandate is really to ensure energy security in the country, in which ethanol producers can play a big role in.

“The bioethanol industry recognizes the challenges of the SRA, so we are asking for the industry to be put under the supervision of the DOE,” he said.

Ethanol prices

Domestic ethanol was priced at P64.33 per liter, while imported ethanol cost P43.29 per liter, based on prevailing prices as of March 16, as shared by EPAP executive director Queenie Rojo.

With the average price of domestic and imported gasoline, industry computation showed that E10 gasoline decreased the pump price by P3.40 per liter versus pure imported gasoline.

“But why are we addicted to foreign oil?” Gerry said.

Roxas Holdings Inc. executive vice president George Chung said competition in the ethanol industry also translates to lower domestic ethanol prices, which is good for consumers.

The landmark Biofuels Act of 2006 mandates that all liquid fuels for engines sold in the Philippines must be blended with biofuels. It’s a good law and if implemented well, the Philippines can really reap the economic benefits.

“If the Philippines moves to E15 and E20, using current prices, it would have decreased the gasoline pump prices by 2.9 percent and 5.8 percent, respectively, resulting in an average annual savings equivalent to P17.3 billion and P34.7 billion,” the group said, as reported by Danessa in her story last Monday.

This was also supported by a study conducted by the University of the Philippines Los Baños (UPLB), led by professor and biofuels specialist Dr. Rex Demafelis, who presented the facts during the meeting – the country has avoided 268,091.15 carbon dioxide equivalent (CO2e) per year, which translates to P683.63 million per year.

If E20 blend is implemented in 2025, the study showed the country could have avoided 2.89 million CO2e per year, equivalent to P7.75 billion per year.

“Our carbon footprint does not improve if we import too much oil,” EPAP chairman Gerry said, noting that ethanol producers could complement the oil industry.

The bottomline, they said, biofuels could reduce the country’s dependence on oil, a reality we should be looking at now given the surge in oil prices.

Iris Gonzales’ email address is [email protected]. Follow her on Twitter @eyesgonzales. Column archives at eyesgonzales.com