Higher biofuels blend to mitigate spiking fuel prices

The Department of Energy will release the guidelines before the year ends to govern the implementation of the long-delayed higher biofuels blend—a measure that would help offset increasing fuel prices.

Energy Secretary Raphael Perpetuo Lotilla announced at a press conference hosted by the Presidential Communications Office on Tuesday that the current 10 percent ethanol blend, also known as E10, in gasoline will be voluntarily increased to 20 percent or E20.

Likewise, Lotilla added that the current two percent or B2 coco methyl ester or CME blend on diesel will be adjusted to three percent or B3.

Based on the DoE calculation, implementing the E20 blend could significantly cut gasoline prices by around P1.28 to P1.50.

While ethanol is generally cheaper than gasoline, Lotilla, however, noted that local ethanol at P79.49 a liter is still more expensive than the imported supply at P41.84 per liter.

Relatedly, Lotilla said the DoE will bank on the coconut industry, whose production reaches up to 15 billion nuts annually, to complement the B3 shift.

"An additional 1 percent blend only needs 2.6 billion nuts. The increase in the blend can also drive down the cost of CME because there will be a bigger market for it. Right now, we expect pure diesel to be at parity with the per liter price of CME," Lotilla explained.

Under Republic Act 9367 or the "Biofuels Act of 2006," a one percent CME blend was added to local diesel; it was last increased to 2 percent in 2007. It also mandates that only locally sourced biofuel components should be used in the biodiesel blend.

The Biofuels Act intends to create a sustainable future by decreasing the importation of refined fuel, such as diesel and gasoline, while also boosting farmers' incomes.

Responding to the development, Dean Lao Jr., president of Chemrez Technologies Inc., the country's biggest producer of premium CME, said the move will significantly benefit the consumers.

"The feedstock is available and the capacities for making CME are ready to support the increase in mandate. We expect many benefits to come with a B3 mandate: mileage improvement; lower pollution; import substitution and value-adding of coconut oil," Lao said in a separate statement.

"These benefits will come with no practical cost to the government, yet have extensive benefits to the country," he added.