Switch to alcogas hinges on Congress

Not a few readers wrote to question the line in my piece on biofuels (Gotcha, 4 May 2005) that alcogas is largely experimental. They invariably pointed to Brazil, which has been using biogas for decades, as well as product introductions in America and Europe. To reiterate, alcogas (or biogas) from sugarcane is largely experimental in RP; that is why no market price has yet been set. In contrast, biodiesel from coconut is available in auto supply stores, though still not many enough to make a dent in dollar savings and air cleaning, at P65-P80 per liter.

Gas stations in Brazil sell 80-percent biogas blend, that is, four parts of alcogas from homegrown sugarcane to one part of regular gasoline. It not only saves billions of dollars from imported fossil fuels, but also exports biogas to neighboring Latin American states and Japan–for billions more in dollar earnings. Its sugarcane industry is thriving, unlike RP’s.

Local biogas makers hesitate to go commercial for three reasons. One is the failure of the product in the ’70s. To offset rising fuel prices from the first worldwide oil crunch, then-President Ferdinand Marcos decreed the use of alcogas in Negros (sugarlandia) and government gasoline vehicles. But the formulation was wrong, causing engine knock. Even Negrenses began shunning the sugarcane bi-product. Besides, oil prices dropped to their old affordable levels.

Technology has since advanced. Alcogas today is proving to boost engine power, conserve fuel, and reduce most toxic emissions. It contains ethanol, almost pure alcohol (99.7 percent), mixed 10 percent with regular gas, or one part alcogas to nine parts of the latter. Blends beyond that can corrode fuel lines. Brazil is able to use 80 percent because of engine modifications.

Still, emission is the second reason for alcogas to stay in the drawing boards. Some environmentalists question the mix of methane, a greenhouse gas, as the fuel’s primary component. Others maintain, though, that ways can be devised to reduce methane emission to levels that can justify alcogas use, because other toxic gases are eliminated. That debate rages.

Third reason: alcogas makers worry that all the country’s sugarcane would not be enough to supply a massive switch to even only a 10-percent blend. But then, wouldn’t that be a happy problem to have? I say, launch the product, even if only for the few believers in biofuels. Let the rest of the country follow when crude oil finally hits $100 per barrel, pushing local pump prices to P50-P100 per liter. That’s inevitable with China and India, comprising a third of the world population, joining the global merry-go-round, sucking in all the oil they can get and buying cars like crazy.

That launch may come soon. Congress is mulling a law that would require all gas stations to sell 5-percent and eventually 10-percent alcogas. By then, not only sugarcane but corn planters too would have found ways to extract large amounts of ethanol.

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Pacific Plans Inc. e-mailed a rejoinder to my piece on how it seemed to be made to fail on purpose (Gotcha, 2 May 2005). Its points:

"(1) On leaving 34,000 (traditional education plan holders) in a lurch. By filing for rehabilitation, PPI sought to protect the interest of the 18,000 plan holders who are still to avail of the benefits under the plan.

"(2) On PPI’s P1-billion profit in 2003. The reported P1-B gain is from trust funds of three product lines: education, pension and memorial. Trust Fund income accrues to the Trust Fund, and under SEC regulation cannot be disbursed for any purpose other than for the payment of benefits.

"(3) On the setup of Lifetime Plans and transfer of 99.6percent of assets. Based on audited financial statements at the time of transfer, only 70% was moved to Lifetime.

"(4) That holders will be given anywhere from P7,000 to P35,000 to cover part of tuitions which actually amount to P50,000-P150,000. Tuition support ceiling is given based on school category, ie., exclusive, non-exclusive and government-subsidized. Tuition support for those enrolled in non-exclusive and government-subsidized schools is estimated to cover 90-95% of their last tuition. Admittedly, tuition support for exclusive schools are less because of their higher tuition costs.

"(5) That balance will be paid only in 2010 with 7% annual interest. PPI is currently negotiating for a liquidity window where plan holders can encash the fixed value plan before 2010.

"(6) That investment in Napocor, which has been losing P100-B a year, was PPI’s lookout. Napocor bonds are unconditionally and irrevocably guaranteed by the Republic of the Philippines.

"(7) On stock replies to anticipated questions. These were meant to address questions by plan holders about the spin-off. This is usual for any organization undergoing changes."

One of the major developments in the PPI saga came not with the rejoinder but in the form of a terse announcement on May 4, entitled "AY comes to PPI’s rescue," to wit:

"Amb. Alfonso Yuchengco said that he is raising funds from personal resources to assist Pacific plan holders. He stressed that although this is a corporate matter for Pacific Plans, he is doing this in his desire to help parents pay their children’s tuition requirements for this year’s school opening. The fund to be raised, which shall be up to P250m, will be used to provide additional tuition support, details of which are being finalized and will be announced shortly. With the end in view of resolving the issue, PPI shall meet and dialogue with the concerned plan holders."

The announcement appears to meet two demands of the 34,000 plan holders, that is, for PPI to make good on its obligations and to talk to them. Still PPI and they need to discuss if the P250-million infusion would suffice to pay not only this school year’s tuitions but succeeding ones as well.

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