Philippines, Japan work to meet ethanol demands

By Hope Deutscher | July 08, 2009
Due to an ethanol blending mandate in the Philippines, there has been a high demand for the fuel, however, according to a USDA Foreign Agricultural Service Global Agriculture Information Network Report, the investments to establish ethanol production facilities have been insufficient. As a result, the report said that ethanol is being imported so that the country can comply with the Philippine biofuels law, which required local oil companies to begin blending 5 percent ethanol into the gasoline beginning in February.

There are only two ethanol production facilities in the Philippines. The Leyte Agri Corp. has an approximate capacity of 2.38 MMgy and the San Carlos Bioenergy Inc. facility has an approximate capacity of 8 MMgy. Located in the province of Negros Occidental, SCBI is a first-of-its-kind facility in Southeast Asia - integrating a sugar mill, cogeneration plant and distillery complex.

Demand for ethanol is estimated to be around 55.5 MMgy, however the two facilities only have an operating capacity of approximately 10.5 MMgy, which translates into a 45 MMgy deficit of ethanol. According to the report, the shortage of local ethanol has not stopped some local oil companies from selling an E10 blend of gasoline in some of their pump stations. For now, domestic supply shortages are being filled mainly by imported Brazilian ethanol.

Meanwhile, in Japan, the government is focusing on cellulosic biofuels to meet the country's future biofuels production needs, in part, because of the country's limited agricultural resources. According to the USDA report, last year, Japanese ethanol production was approximately 23,775 gallons. Government and private sector research and investment in biofuels has increased since the country's first biomass plan, Biomass Nippon Strategy, was unveiled in December 2002 with four specific focuses - prevent global warming; formulate a recycling society; nurture strategic industry, and revitalize rural communities. The document has been updated several times.

The Kyoto Protocol requires Japan to reduce its carbon dioxide emissions to 6 percent below 1990 levels by 2010. According to the USDA report, Japan's limited agricultural production will make it difficult for Japan to produce enough biofuels to impact the domestic fuel market and greenhouse gas emissions without a major technological breakthrough, such as cellulosic technology. Potential domestically-produced feedstocks include sugarcane, wood, rice, rice straw and rice hulls. A report issued by the prime minister stated that with appropriate technical development, Japan could produce approximately 1.6 billion gallons of biofuels by 2030. Furthermore, a target was set to produce approximately 13 MMgy of biofuels from molasses and off-spec rice by 2011 and 10 percent of domestic fuel from cellulosic materials by 2030.

According to the Japan Automobile Manufacturers Association, 74 million automobiles consume about 15.9 billion gallons of gasoline annually. If an E3 blend of gasoline were nationalized, the GAIN report estimated that demand for ethanol would be around 475.7 MMgy. If E10 were used, the demand for ethanol would increase to 1.6 billion gallons per year.