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U.S. Grains Council promotes ethanol in the Philippines

U.S. Grains Council promotes ethanol in the Philippines

The Philippines is the sixth largest buyer of U.S. ethanol

The U.S. Grains Council highlighted how the government and private industry in the Philippines cooperate to promote ethanol to a delegation of sugar-based ethanol producers from India during the 7th annual Bioenergy Week of the Global Bioenergy Partnership.

The Council sponsored the delegation to connect thought leaders from both countries as the Indian government considers ethanol policy changes that could create a new ethanol market.

The GBEP is a global group that connects public, private and civil society stakeholders to promote bioenergy for sustainable development. The Bioenergy Week forum, held in Manila in June, brought together ethanol industry leaders from eight countries across South and Southeast Asia to provide updates on the programs and policies in their specific markets. Tim Tierney, USGC director of strategic marketing/ethanol - North Asia, spoke as part of a panel on the economic, environmental and human health benefits of increased ethanol use.

“The GBEP has a wide perspective on bioenergy from biogas and waste to energy systems,” Tierney said.

The Philippines ethanol industry is a two-tiered market system in which domestic ethanol and imported supplies co-exist. Domestic producers, which currently use sugarcane or molasses as feedstock, provide the primary supply of ethanol to meet the country’s E10 blend mandate. The government also provides incentives for building new ethanol plants, which has increased ethanol production to 62 million gallons (235 million liters) and capacity utilization to 83%.

With these supports in place, domestic supplies can provide roughly half the ethanol needed to fill the blend mandate. The rest of the demand is met through the second tier of the system - imports, allowed after domestic production is exhausted. Even as domestic production has expanded, ethanol imports have also grown as fuel demand expands due to population increases, rising middle class incomes and an expanded vehicle fleet.

As a result, the Philippines continues to be a consistent buyer of U.S. ethanol, ranking as the sixth largest buyer with sales of 64.3 million gallons (2.53 billion bushels in corn equivalent) thus far in the 2018/2019 marketing year (Sept. 2018-May 2019).

“The story of how ethanol producers, trade groups, government agencies, regulatory boards and even oil companies work together in implementing an E10 mandate in the Philippines is a true success,” said Kent Yeo, USGC regional ethanol consultant for Southeast Asia. “The ethanol industry is also actively working to diversify its feedstock supply options to continue expanding ethanol production and work toward a target of an E20 mandate.”

As part of this work, the Philippines groups are now working on legal, research and implementation fronts to evaluate options to use corn or sorghum as additional feedstock options.

This interorganizational cooperation between government and private industry provides a potential model for India as the government there is working on refining its own ethanol policies. India’s government has proposed blend rates of up to 20%. Yet, current policies restrict the import of ethanol destined for fuel use, relying instead on domestic supplies of sugarcane to produce ethanol for fuel and importing U.S. ethanol only for industrial use. India currently has an average blend rate of 6.1%, but the blend rates vary between states from zero to 3.1% to 8% to 9.5%. Overall, blend rates are trending down slightly as ethanol production has slowed and supplies have decreased.

While in the Philippines, the Indian delegation had side meetings with industry, university and government representatives to discuss the two-tier system and how public-private work has achieved cost-savings and environmental benefits - both important considerations for India.

“If India would implement an E10 blending mandate using domestic and imported ethanol, similar to the Philippines, cost-savings could range between $2.87 to $3.12 billion,” said Amit Sachdev, USGC consultant in India. “A consistent availability of ethanol across the country will not only save money, but also ensure lower particulate matter, improving air quality.”

Access to the fuel sector would also benefit global ethanol exporters. The country is already the third largest market for U.S. ethanol, despite only importing ethanol for industrial uses. India has imported 163.3 million gallons (57.9 million bushels in corn equivalent) of U.S. ethanol in 2018/2019, a 32% increase.

“Gaining access to the fuel market for imported ethanol would create a robust new market and lead the way for other markets in the region to develop similar policies with a role for trade,” Sachdev said.

Source: U.S. Grains Council, which is solely responsible for the information provided and is wholly owned by the source. Informa Business Media and all its subsidiaries are not responsible for any of the content contained in this information asset.
TAGS: Energy
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