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STATUS OF BIOFUELS IN THE STATUS OF BIOFUELS IN THE PHILIPPINESPHILIPPINES

Ruby B. de GuzmanOIC-Chief, Biomass Energy Management Division

Department of Energy

Biofuels: Trends and UpdatesAstoria Plaza Hotel

November 17, 2009

Provides fiscal incentives and mandates the use of biofuel-blended gasoline and diesel fuels

RA 9367: RA 9367: BiofuelsBiofuels Act of 2006Act of 2006

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Republic Act No. 9367Republic Act No. 9367 It mandates the use of It mandates the use of biofuelsbiofuels

-- blending a minimum of 1% biodiesel by volume into blending a minimum of 1% biodiesel by volume into all diesel all diesel engine fuel distributed and sold in the country from engine fuel distributed and sold in the country from effectivityeffectivity of the of the Law, and increasing blend if feasible; minimum biodiesel blend to Law, and increasing blend if feasible; minimum biodiesel blend to 2% beginning February 6, 2009.2% beginning February 6, 2009.

-- blending of 5% blending of 5% bioethanolbioethanol in total gasoline volume beginning in total gasoline volume beginning February 6, 2009February 6, 2009

It provides incentives in the production, distribution It provides incentives in the production, distribution and use of locallyand use of locally--produced produced biofuelsbiofuels

It creates the National It creates the National BiofuelsBiofuels Board that shall Board that shall monitor and evaluate the implementation of the monitor and evaluate the implementation of the National National BiofuelsBiofuels ProgramProgram

Incentives under the Incentives under the BiofuelsBiofuels LawLaw

Tax incentivesTax incentives

Specific Tax per liter of volume capacity, is zero (0) for Specific Tax per liter of volume capacity, is zero (0) for biofuelsbiofuels component;component;

Water effluents from the production will not be covered Water effluents from the production will not be covered by RA9275 or Clean Water act. by RA9275 or Clean Water act.

High priority from Government Financial Institutions to High priority from Government Financial Institutions to entities that will engage in production, storage, handling entities that will engage in production, storage, handling and transport of and transport of biofuelbiofuel and and biofuelbiofuel feedstock, including feedstock, including the blending with petroleum as certified by DOE, the blending with petroleum as certified by DOE,

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BiofuelsBiofuels Implementation PlanImplementation Plan

Use of B1 in GovernmentVehicles(M.C. 55)

Biofuels Law: mandatory use of

biofuels:To Start at

1% biodiesel(B1)

Biofuels Law:2% biodiesel5% bioethanol

2004 2007 2011

Biofuels Law:>2% biodiesel10% bioethanol

2009

RA 9367 Effectivity

BIOFUELS REQUIREMENTSBIOFUELS REQUIREMENTS BIODIESELBIODIESELMinimum Blends:Minimum Blends:@ 1% (2007) = 62.10 M liters@ 1% (2007) = 62.10 M liters@ 2% (2009) = 133.68 M liters@ 2% (2009) = 133.68 M liters@ 2% (2010) = 138.70 M liters@ 2% (2010) = 138.70 M liters@ 2% (2014) = 160.70 M liters@ 2% (2014) = 160.70 M liters

Biodiesel Supply:Biodiesel Supply: 12 Accredited Producers 12 Accredited Producers

with annual total capacity of with annual total capacity of 395.62 million liters395.62 million liters

FeedstocksFeedstocks used:used: Coconut oil (current)Coconut oil (current) JatrophaJatropha ( under study)( under study)

BIOETHANOLBIOETHANOLMinimum Blends:Minimum Blends:@ 5% (2009) = 208.11 M liters@ 5% (2009) = 208.11 M liters@ 5% (2010) = 218.93 M liters@ 5% (2010) = 218.93 M liters@ 10% (2011) = 460.63 M liters@ 10% (2011) = 460.63 M liters@ 10% (2014) = 536.29 M liters@ 10% (2014) = 536.29 M liters

BioethanolBioethanol Supply:Supply: 2 Accredited Producers with 2 Accredited Producers with

annual total capacity of 39 million annual total capacity of 39 million litersliters

2 production facilities to be on2 production facilities to be on--stream between 2010stream between 2010--2011 with 2011 with additional capacity of 68 million additional capacity of 68 million liters/yearliters/year

Additional capacities totaling to Additional capacities totaling to about 100 million liters/year by about 100 million liters/year by 20122012

FeedstocksFeedstocks used:used: Sugar Cane, Molasses (current)Sugar Cane, Molasses (current) Sweet sorghum, cassava ( under Sweet sorghum, cassava ( under

study)study)

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BiofuelsBiofuels Law Implementation UpdateLaw Implementation Update

Formulated Philippine National Standards for biodiesel (B100) & CME blends (B1/B2), anhydrous bioethanol and blended bioethanol (E10)

Accredited 12 Biodiesel producers and 2 Bioethanol producers including monitoring and compliance to PNS

Monitored Compliance of Oil Companies’ blending facility capability build-up, handling and storage facilities/procedures & biofuel sourcing

Conducted inspection and sampling of depots to determine biodiesel blend conformance to PNS and oil companies’ compliance to the mandate was validated

EnsuredEnsured thethe availabilityavailability ofof EE1010 ((1010%% bioethanolbioethanol)) inin gasolinegasoline stationsstationsandand BB22 inin allall dieseldiesel fuelsfuels

Prepared the National Prepared the National BiofuelsBiofuels Program and same was approved by Program and same was approved by the National the National BiofuelsBiofuels Board on September Board on September 1919, , 20082008

Published JAO No. Published JAO No. 20082008--11, Series of , Series of 2008 2008 providing the “Guidelines providing the “Guidelines Governing the Governing the BiofuelBiofuel FeedstocksFeedstocks Production, and Production, and BiofuelsBiofuels and and BiofuelBiofuelBlends Production, Distribution and Sale under Republic Act No. Blends Production, Distribution and Sale under Republic Act No. 93679367” ” which took effect on March which took effect on March 2020, , 20092009

Issued Department Circular No. Issued Department Circular No. 20092009--0202--0002 0002 “Mandating a Minimum “Mandating a Minimum of of 22% Blend of Biodiesel in all Diesel and % Blend of Biodiesel in all Diesel and 55% % BioethanolBioethanol in Annual in Annual Total Volume of Total Volume of Gasoline”effectiveGasoline”effective May May 66, , 20092009

Issuance of Memorandum Circular No. Issuance of Memorandum Circular No. 184 184 “Directing all Departments, “Directing all Departments, Bureaus, Offices and Instrumentalities of the Government, Including Bureaus, Offices and Instrumentalities of the Government, Including GovernmentGovernment--Owned and Owned and ontrolledontrolled Corporations to Use Ten Percent Corporations to Use Ten Percent ((1010%) by Volume %) by Volume BioethanolBioethanol in their Gasoline Requirements” on in their Gasoline Requirements” on October October 2626, , 2009 2009

Conducted IEC campaignsConducted IEC campaigns

BiofuelsBiofuels Law Implementation UpdateLaw Implementation Update

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RA No. RA No. 9513 9513 -- Renewable Energy Act of Renewable Energy Act of 20082008

AccelerateAccelerate thethe developmentdevelopment ofof thethe country’scountry’s renewablerenewableenergyenergy resourcesresources byby providingproviding fiscalfiscal andand nonnon--fiscalfiscalincentivesincentives toto privateprivate sectorsector investorsinvestors andand equipmentequipmentmanufacturersmanufacturers // supplierssuppliers..

RE Developers (New & Existing)RE Suppliers, Fabricators,

Manufacturers7 year Income Tax Holiday (ITH) 7 year Income Tax Holiday (ITH)

10 year Duty-free Importation of RE Machinery, Equipment and Materials

10 year Tax and Duty-free Importation of Components, Parts and Materials

1.5% Special Realty Tax Rates on Equipment and Machinery

7 year Net Operating Loss Carry-Over

10 % Corporate Tax Rate after ITH

Accelerated Depreciation

Zero Percent Value-Added Tax Rate Zero-rated value added tax transactions

Cash Incentive of Renewable Energy Developers for Missionary Electrification

Tax Exemption of Carbon Credits

100% Tax Credit on Domestic Capital Equipment and Services

100% Tax Credit on Domestic Capital Components, Parts and Materials

Exemption from the Universal Charge

Payment of Transmission Charge

Hybrid and Cogeneration Systems Financial Assistance program

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Other IncentivesOther Incentives Incentives for Farmers Engaged in the Plantation Incentives for Farmers Engaged in the Plantation

of Biomass Resourcesof Biomass Resources

•• All individuals and entities engaged in the plantation of All individuals and entities engaged in the plantation of crops and trees used as biomass resources such as but crops and trees used as biomass resources such as but not limited to not limited to jatrophajatropha, coconut, and sugarcane, as , coconut, and sugarcane, as certified by the Department of Energy;certified by the Department of Energy;

•• Within ten (10) years from the Within ten (10) years from the effectivityeffectivity of the Act, of the Act, ddutyuty--free importation and be exempted from Valuefree importation and be exempted from Value--Added Tax (VAT) on all types of agricultural inputs, Added Tax (VAT) on all types of agricultural inputs, equipment and machinery;equipment and machinery;

fertilizer, insecticide, pesticide, tractor, trailers, trucks, farm fertilizer, insecticide, pesticide, tractor, trailers, trucks, farm implements and machinery, harvesters, threshers, hybrid seeds, implements and machinery, harvesters, threshers, hybrid seeds, genetic materials, sprayers, packaging machinery and genetic materials, sprayers, packaging machinery and materials, bulk handling facilities, such as conveyors and minimaterials, bulk handling facilities, such as conveyors and mini--loaders, weighing scales, harvesting equipment, and spare loaders, weighing scales, harvesting equipment, and spare parts of all agricultural equipment parts of all agricultural equipment

CHALLENGES AND CHALLENGES AND CONCERNS CONCERNS

Development of Development of other locally grown nonother locally grown non--food food feedstockfeedstock

Cost effective and efficient technologies to reduce Cost effective and efficient technologies to reduce production cost of biofuelsproduction cost of biofuels

Investments for bioethanol production facilitiesInvestments for bioethanol production facilities

Sustained communication planSustained communication plan

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Thank you ! ! !Thank you ! ! !www.doe.gov.ph