Philippines to save P16 billion annually from higher ethanol blend

MANILA, Philippines —  Increasing the ethanol blend in gasoline products from 10 percent to 20 percent could cut fuel prices by as much as four percent, resulting in as much as P16 billion in annual savings for Filipino vehicle owners, according to the United States Department of Agriculture-Foreign Agricultural Service (USDA-FAS).

The US government agency said the E15 and E20 blend in gasoline products may cut fuel prices by two percent and four percent, respectively.

The higher ethanol blend would result in an average annual savings of P7.947 billion for E15 blend and P15.893 billion for E20 blend, according to the international agency’s Global Agricultural Information Network report.

“Such a move would have also facilitated an opportunity to share a portion of gained consumer welfare with local fuel ethanol producers via higher prices for locally produced fuel ethanol, which in turn, would have encouraged local producers to maximize production,” it said.

The Philippines is currently implementing an E10 blend, with government regulators signifying interest to hike the blend to a voluntary E20 mix. However, the Department of Energy has yet to issue the necessary circular to facilitate the discretionary use of higher ethanol blend in gasoline products.

To be driven by more car purchases, the Philippines’ ethanol demand is expected to recover this year, growing by 8.42 percent year-on-year to 682 million liters.

USDA-FAS attributed the hike in consumption to “increased” fuel supply in anticipation of higher gasoline blends coupled by expansion in total fuel ethanol plant capacity.

“The expected growth relates to the increasing car purchases with double-digit growth in 2023, which continue to contribute to the increase in gasoline consumption,” it said.

The USDA unit said the present “overcapacity” of fuel ethanol plants is a result of the “unexpected” shift of seven potable alcohol producers to fuel ethanol production following the implementation of a 22 percent excise tax on potable alcohol.

Local fuel ethanol production is estimated to meet almost 58 percent of the country’s total requirement. The USDA-FAS projected domestic biofuel output this year to reach a record 395 million liters, two percent higher than last year’s 387 million liters.

The country’s fuel ethanol imports, meanwhile, could rise by 14 percent on annual basis to 280 million liters from 246 million liters, according to the report.

The Ethanol Producers Association of the Philippines has been pushing to raise the blend from 10 percent to 15 or 20 percent to further pull down gasoline prices and generate more savings from avoided greenhouse gas emissions.