Biofuels Act: Will it lessen foreign firms’ grip on Philippines’s energy sector?
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At first glance, the Biofuels Act seems like a promising start on the road towards national energy independence and weaning away from dependence on imported energy sources. But a closer look reveals how the law ultimately promotes foreign control over the Philippines’s natural resources, which is already the present state of the oil industry.
By Arnold Padilla
Ibon Features
MANILA — The search for indigenous energy sources is a vital one for the Philippines, given its dependence on imported oil. In the wake of recent record-high oil price levels, the Arroyo government has been actively promoting the search for alternative energy sources.
In her 2005 State of the Nation Address, President Gloria Arroyo had asked Congress to pass legislation on renewable and indigenous energy. She also actively promoted the Alternative Fuels Program of her Medium-Term Philippine Development Plan (MTPDP) 2004-2010 as one of the long-term solutions to high oil prices.
The passage of the Biofuels Act seems to be one answer to this search for indigenous energy sources. It calls for the use of “biofuels” such as bioethanol, biodiesel, and other fuels made from biomass (i.e. any organic matter which is renewable).
Bioethanol refers to ethanol produced from feedstock and other biomass suitably denatured for use as motor fuel while biodiesel refers to fatty acid methyl ester derived from vegetable oils or animal fats technically proven and approved by the Department of Energy (DoE) for use in diesel engines.
The law prescribes that a minimum 1% biodiesel be blended into all diesel engine fuels within three months of the implementation of the law, while bioethanol should comprise 5% of the annual total volume of gasoline fuel actually sold and distributed by all oil companies in the country within two years of the Act’s effectivity. Further, the Department of Energy is mandated by the Act to determine the feasibility of bioethanol increasing to a minimum of 10% of the total volume of gasoline fuel within four years and 2% for biodiesel within two years from the effectivity of the law.
Indigenous materials would be used to produce biofuels locally. Coconut would be used as feedstock for biodiesel. To ensure the program’s sustainability, the DOE is also studying other possible biodiesel feedstocks such as Jathropa Curcas or tuba-tuba. For bioethanol production, government aims to utilize sugar cane, corn, cassava, and nipa.
Thus, at first glance, the Biofuels Act seems like a promising start on the road towards national energy independence and weaning away from dependence on imported energy sources. But a closer look reveals how the law ultimately promotes foreign control over the country’s natural resources that is already the present state of the country’s oil industry.
Foreign Investors Cash In
It is expensive to set up an ethanol plant; one estimate pegged the cost at P2 billion for a plant with a capacity of 100,000 liters daily. The Act’s principal author, Miguel Zubiri, has said that the country needs to set up at least 25 ethanol plants in order for the Philippines to meet the prescribed ethanol-gasoline mix.
This high expense is why foreign corporations are behind most of the ethanol projects launched in the wake of the law.
For example, Saudi Aramco, 40% owner of Petron Corporation, expressed its plan to build an ethanol distillery or a jathropa processing plant in Mindanao as part of its commitment to invest $300 million in new investments from 2007 to 2010 to expand its refinery.
Meanwhile, the country’s first ethanol plant– the P2.28-billion San Carlos Bioenergy Inc. (SCBI) in San Carlos City, Negros Occidental with a production capacity of 27.3 million liters per year– was built by Bronzeoak Philippines, a local unit of British firm Bronzeoak Ltd. (60% ownership), together with the National Development Corporation.
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Photo Essay: A call for a stop to human rights violations in Compostela Valley
June 11th, 2007 at 9:57 am
Parochial Mindset on Natural resources
An elegant rendition but like a cry for help from Planet Zorg in the Melphian Galaxy.
Listen; watch my lips closely: things will not change. Read Shakespeare’s; “all men have history etc etc by which we learn”. But do we learn in the Philippines. No chance. Just look at the international paper company from Santa Rosa that uprooted and exited the country on a ‘natural resources’ issue… and that was merely water. We all know the story of how a certain Senator attempted to blackmail the company and ‘make public’ the use by a foreign company of natural resource issue; ie water and that foreign company called his bluff. Now that same company provide employment for a thousand Thais whereas those jobs previously resided with Filipinos.
These cries are reminiscent of Russia in 1918; of Cuba in 1959. Common’ folks, which planet are we living on? Admittedly we are seeing an incipient re-make of a Cuban 1960’s nationalising in Venezuela with Chavez but there the people are firmly behind him. He is taking on the feudal families that have held an iron grip on the country for hundreds of years; and seemingly winning. And that’s the issue. Like Latin America, the feudal families of pre-Spanish colonialism are the one and only threat to economical enhancement for the Philippines, not ‘foreign devils’.
Wake up and smell the coffee… simply look at the power companies in the Philippines. Who owns them? The Lopez family has the iron grip on Luzon power market whereby the Aboitiz family retain the Vasayas and Mindanao regions. So similar to how New York is calved up by “the families”. How more feudal can you get and just like Europe 700 years ago. So hang in there and in 5 to 700 years the situation may have resolved itself. Meanwhile, even Chavez is sagacious enough to realize he needs the international players.
But the Animal Farm Syndrome appears to be good rhetorical food for the pseudo-patriotism, as long as it is Filipinos exploiting Filipinos we are happy. A brave concept but one which held onto will see the Philippines demise deeper and deeper into global economical oblivion. Once number two after Japan we are now in a position that is off the rating league table. I can smell the coffee… foreign investment and foreign use of natural resources to jointly create wealth is the only way forward. Have you never read Adam Smith? Don’t you really know how it works? Let go of the false patriotism and re-join the world.