Patricia A. O. Bunye | Hannah Bianca L. Perdigon
The Department of Energy (“DOE”) issued on 07 May 2024 DOE Department Circular No. DC2024-05-0014 (“Circular”), the Guidelines on Biofuel Blend Implementation, which apply to all Downstream Oil Industry (“DOI”) participants and the local biofuel producer industries.
The Circular was released in line with the global thrust towards the harmonization of fuel quality standards and specifications, and vehicle technology and emission standards in consideration of the environment, vehicle performance, health and safety and ease in international trade. Furthermore, the National Biofuels Board (“NBB”) has determined that an increase in the bioethanol blend will reduce the pump price of diesel and gasoline fluid and help alleviate the burden of rising prices on consumers, following the drastic increase in the cost of fuel over the past years as a consequence of the Ukraine-Russia conflict, production cuts by the Organization of Petroleum Exporting Countries (“OPEC”) Plus, and global inflation.
Section 2 of the Circular provides for the mandatory implementation of higher biodiesel blend. In particular, all diesel fuel distributed and sold by all DOI participants in the Philippines shall contain biodiesel blend at three (3%) effective 01 October 2024, four percent (4%) effective 01 October 2025, and five (5%) effective 01 October 2026. Prior to the issuance of the Circular, DOE Department Circular No. DC2009-02-0002 mandated the implementation of two percent (2%) biodiesel blend by volume into all diesel fluid sold and distributed by each and every oil company in the Philippines.
In a press release dated 20 May 2024, the DOE stated that results of 30,000-kilometer on-road tests with a higher CME blend of 5%, an increase of around 10% in mileage, showed a corresponding estimated net savings of PhP4.17 per liter of diesel. The DOE further noted that the mandated increase in the biodiesel blend percentages, which is composed of coco methyl ester (“CME”) blend, is expected to create additional market for coconut farmers, biodiesel producers, and other stakeholders in the coconut industry, with around 900 million additional nuts as feedstocks to produce around 100-120 million liters of additional CME requirements to satisfy a 1% mandatory increase in CME blend. Thus, the increase in CME blends are promising for both diesel consumers and coconut producers alike.
Moreover, Section 3 of the Circular provides for the voluntary implementation of twenty percent (20%) bioethanol blend, wherein DOI participants may offer consumers gasoline fuel containing twenty percent (20%) bioethanol blend on a voluntary basis. At present, pursuant to DOE Department Circular No. DC2011-02-0001, the DOE mandates the implementation of ten percent (10%) bioethanol blend by volume into all gasoline fuel sold and distributed by each and every oil company in the Philippines.
According to the DOE, voluntary implementation of the twenty percent (20%) bioethanol blend will have the effect of reducing domestic pump prices. In particular, increasing the ethanol blend to 20% could bring about an estimated decrease of approximately PhP3.21 per liter in the gasoline pump price. DOE Secretary Raphael P.M. Lotilla further stated that the higher biofuels blend is a win-win solution: it promotes economic growth, upholds environmental stewardship, and strives for cleaner energy utilization. Thus, in so doing, the DOE hopes to invest in a future where sustainability drives progress.
Pursuant to Section 7 of the Circular, there shall be a mandatory review by the NBB of industry conditions following the full implementation of increasing biodiesel blend to B3 in 2024, B4 in 2024, and B5 in 2026.