Lack of feedstock keeps bioethanol plants closed in Philippines

In 2006, the Philippine government passed the Biofuels Act, a law which mandated the development and utilization of indigenous renewable and clean energy sources to reduce the country’s dependence on imported crude oil. Four years later, the Philippines has not produced a drop of bioethanol. Sugar and molasses are the major feedstock to produce bioethanol in the country, and these products are being diverted to sugar production because it is more profitable. Add to that an acute price distortion and an imbalance in the import tariffs and it is no wonder that the country’s bioethanol plants are not operating. At the present time, the Philippines imports all of its bioethanol requirement. The Philippines currently has three bioethanol plants: San Carlos Bioenergy, Leyte Agri Corp. and Roxhol Bioenergy. All three plants are currently closed due to the lack of feedstock. Sugar prices are at a thirty year high due to a small harvest and high import tariffs on sugar. The import duty on sugar is 38% while the duty on bioethanol is only 1%. And while sugar prices rose to new highs, the price for bioethanol fell to unprofitable levels. Eventually the tariff situation will even out under the provisions of the Association of Southeast Asian Nations free trade agreement. The sugar tariff will go through a phased reduction from 45% in 2010 to 38% in 2011, 28% in 2012, 18% in 2013, 10% in 2014 and down to .05% in 2015. (March 7, 2011)