**2. The Philippine biodiesel industry**

#### **2.1 Biodiesel situation in the Philippines**

As the country foresees to become energy self-sufficient, the alarming energy crisis poses challenges caused mainly by heavy reliance on fossil fuels and imported

#### *Comparative Analysis of Biodiesel Production from Different Potential Feedstocks… DOI: http://dx.doi.org/10.5772/intechopen.102724*

energy as well as the continuously rising energy demand. With the average annual rate of 4.2% increase in energy consumption, the total final energy consumption of the country is expected to rise from 29.8 million metric tons of oil equivalent (Mtoe) in 2015 to about 54.9 Mtoe by 2030. Primarily, transport, industry, residential, commercial, and agriculture are the major energy-intensive sectors [4].

Following the implementation of the Comprehensive Automotive Resurgence Strategy (CARS) Program which aims to strengthen the Philippine automotive industry, local production and domestic sales or market for automotive vehicles are expected to significantly increase. As a result, the transport sector will continue to dominate the Philippines' total final energy consumption with 35.7% average share annually [5]. Consequently, bulk percentage averaging to about 46% of the country's total energy requirement is sourced from petroleum products. Particularly, gasoline and diesel account for average shares of 28.4 and 50.5% of the total oil requirement, respectively [4]. In 2018, it was reported that oil products' consumption reached about 16.9 Mtoe [5]. A slightly lower consumption of 16 Mtoe was recorded in 2020 due to the halted activities especially the public and private transportation brought about by the COVID-19 pandemic restrictions [6]. Nonetheless, with the expected continuous increase in demand for petroleum products as transport fuel, the need for a more sustainable and cleaner alternative fuel such as biofuels is necessary.

Presently, DOE has maintained the implementation of 2% by volume biodiesel blends even though a 10% planned increase in blending must have been imposed for the year 2020 (**Figure 1**). Due to marginally higher pump prices, the recommended increase in blending target has been delayed. With the anticipated implementation of increased blending mandate, a total of 13 biodiesel accredited facilities operate as of December 2020, with a total production capacity of 707.90 million liters biodiesel per year (MLPY) (**Table 1**). With the current scenario, the total local biodiesel production as reported by DOE is 187.67 million liters in 2020 and an overall sale of about 160.42 million liters [6–10]. This volume of local production translates to approximately 26.5% of the total biodiesel production capacity of the country.

Clearly, the local biodiesel production capacity is sufficient to meet the biodiesel demand since 2007 (**Figure 2**). However, amid excess supply of coconut which is the sole feedstock for biodiesel in the country, fluctuating feedstock cost remains a challenge resulting to limitation in feedstock supply for biodiesel. Consequently, higher fuel pump prices at increased blending rate continues to be the main concern impeding the implementation of the recommended increase in biodiesel blending mandates.

As shown on **Figure 3**, the same trend was observed for biodiesel price and the local price of feedstock CNO. An increase in feedstock price results to a rise in the biodiesel selling price since total production cost for biodiesel is largely dictated by the cost of feedstock. On the average, a huge price difference can be observed between diesel and biodiesel prices. This entails that a further increase in the biodiesel blending rate would

**Figure 1.** *Mandated biodiesel blending based on the Biofuels Act of 2006.*


#### **Table 1.**

*List of accredited biodiesel producers in the Philippines as of 31 December 2020.*

#### **Figure 2.**

*Biodiesel plant capacity utilization in the Philippines, 2007-2021.*

cause a significant rise in diesel fuel pump prices. Perhaps, this remains as the drawback of implementing the increased biodiesel blending. Hence, feedstock diversification is a great advantage to substantially improve the cost savings for higher biodiesel blends.

#### **2.2 Biodiesel industry outlook**

With the expected increase in diesel demand in the next 20 years, biodiesel requirement will hike up, more so with the implementation of the impending higher biodiesel blending mandates. At present, the production capacity of the country is about 384% of the biodiesel requirement for a 2% blending [11]. In 2022, the demand *Comparative Analysis of Biodiesel Production from Different Potential Feedstocks… DOI: http://dx.doi.org/10.5772/intechopen.102724*

#### **Figure 3.**

*Comparative prices of diesel, biodiesel, and feedstock CNO, 2011-2020.*

#### **Figure 4.** *Biodiesel demand projection, 2020-2040.*

for biodiesel is projected to be 690 million liters if the 5% blending mandate will be imposed (**Figure 4**). At an 80% plant utilization rate, additional capacity of nearly 160 million liters is needed to meet this demand. In terms of feedstock availability, the target biodiesel supply even at the increased blending rate by 2022 only requires about 40% of the total coconut oil (CNO) available in the country. By the end of the planning period, further increasing the blending mandate to 20% will require around 6700 million liters biodiesel. This brings the target total production capacity of biodiesel to approximately 8400 million liters by 2040 and a feedstock requirement which is about four times the current local supply of CNO.
