Hailed as a positive legislative breakthrough, the passing of the Biofuels Act demonstrates the country’s pressing need for the government to actually carry on with its job by composing and enacting more vital pieces of legislation which will clearly benefit the country. With the support of local industry, the agricultural sector, and the international community, this development also stands out as a bright spot in the attempt to resolve the complicated and problematic balance between man’s need for energy and responsibility to our environment.

President Gloria Macapagal-Arroyo formally signed into law Republic Act No. 9367, also known as the “Bi­ofuels Act of 2006” last Jan. 17. Together with Senate Presi­dent Manuel Villar and House Speaker Jose de Venecia Jr., the President affixed her signature on the new law during the ceremonial signing held at Malacañang’s Rizal Hall.

Biofuel refers to bioethanol and biodiesel and other fuels made from biomass and primarily used for motive, thermal and power gen­eration with quality specifications in accordance with the Philippine National Standards. Biofuel can be used both for central- and decen­tralized production of electricity and heat. As of 2005, bioenergy cov­ers approximately 15 percent of the world’s energy consumption.

The law promotes the use of biofuels as a measure to develop and utilize indigenous renewable and sustainably-sourced clean energy sources. This aims to reduce dependence on imported oil, thus also facilitating economic growth and expanding opportunities for liveli­hood by increasing rural employment and income, and giving due regard to the protection of public health, the environment and natural ecosystems by lessening toxic and greenhouse gas emissions.

The law mandates that within two years of going into effect, all liquid fuel for motors and engines sold in the Philippines shall contain locally-sourced biofuel components of at least 5 percent bio-ethanol in the annual total volume of gasoline fuel actually sold and distributed by each and every oil company in the country.

The Biofuels Act of 2005
House Bill No. 4629 or the Biofuels Act of 2005 was principally au­thored by Bukidnon Representative Juan Miguel F. Zubiri and co-spon­sored by more than 100 other congressmen. It was then unanimously approved by the House of Representatives and sent to the Senate last year. Senator Miriam Defensor-Santiago has pushed for the passage of the bill and defended it on the floor. Although the bill had been certified urgent by President Arroyo, it had been previously set aside by the Sen­ate which had been preoccupied by other political agendas.
Rep. Zubiri explains how the program aims to replace within four years a tenth of national gasoline consumption with a VAT-free, cheap, clean fuel produced from the likes of cane and coconut through the granting of tax and financ­ing incentives. Under the law, biofuel producers will be exempted from paying tariff and duties in the importation of all types of inputs and machinery that they will exclu­sively use for the program. The Board of Investments is likewise tasked to identify other suitable incentives to en­courage investments in domestic production of bio-etha­nol fuel. This could translate to biofuel costing as much Php 10.00 lower compared with existing premium gas prices. Rep. Zubiri’s office has also calculated how the reduction in fuel imports could lead to billions of pesos in annual foreign exchange savings. A Tariff Commis­sion is required under the bill to create a tariff line for bioethanol fuel and gasohol but this will be harmonized with the World Trade Organization and Asean Free Trade Area agreements.

The Department of Energy (DOE) is now conducting a series of consultations with the National Biofuel Board (NBB) and various stakeholders and other agencies con­cerned with the drafting of the implementing rules and regulations which should be promulgated within three months upon effectivity of the Act. The NBB is chaired by the Secretary, and its members include the Secretaries of the Departments of Trade and Industry, Science and Technology, Agriculture, Finance, Labor and Employ­ment, and the administrators of the Philippine Coconut Authority and Sugar Regulatory Authority. The DOE has stated that talks are expected to provide extensive inputs for the smooth implementation of the Act.

Agricultural products specifically grown for use as bio­fuels include corn and soybeans, primarily in the United States; as well as flaxseed and rapeseed, primarily in Eu­rope; sugar cane in Brazil and palm oil in South-East Asia. Biodegradable outputs from industry, agriculture, forestry, and households can also be used to produce bioenergy; examples include straw, timber, manure, rice husks, sew­age, biodegradable waste, and food leftovers. Rep. Zubiri has stated how the country has the means to ride on the alternative fuels boom, with 2.4 million hectares planted to corn, 3.2 million hectares to coconut, 390,000 hectares to sugarcane, and 330,000 to cassava and camote. Presi­dent Arroyo has also recently promoted sweet sorghum as another alternative feedstock for biofuel production.  Pro­jections made by the Department of Agriculture point to 300,000 new farm jobs created with the law’s passage. In addition, bioethanol plants, of which two are gearing up for operation in Negros and Bukidnon, are expected to hire at least 10,000 workers. The reduction in air pollution will also save the country billions of pesos from medical costs and lost income due to illness, and help diminish losses due to environmental damage and the deleterious effects of climate change.

Global Push for Alternative Fuels
In light of rising and unstable prices of petroleum-based fuel, and international treaties on climate change such as the Kyoto Protocol to the United Nations Frame­work Convention on Climate Change and the Montreal Action Plan, which have assigned mandatory targets for the reduction of greenhouse gas emissions to signatory nations, there has been a mounting global push towards the development of alternative fuels. As of December 2006, a total of 169 countries and other governmen­tal entities, including the Philippines, have ratified the agreement. Notable exceptions include the United States and Australia which have signed the treaty but refuse to ratify it. Other countries, like India and China, which have ratified the protocol, are not required to reduce car­bon emissions under the present agreement despite their relatively large populations. In his previous State of the Union address, US President Bush had stated that the US government will also begin funding research for ad­vanced methods in producing biofuel. In 2005 the Swed­ish government announced their intention to become the first country to break their dependence on oil and other ‘fossil raw materials’ by 2020, aiming to reach this goal through the further development of domestically grown biofuel. During the recently-concluded 12th Asean Sum­mit in Cebu, the 16 heads of state of the Association of Southeast Asian Nations (ASEAN) and its dialogue partners ratified the Declaration on East Asian Energy Security which promotes the use of alternative fuels.

Biofuels Defined

Bioethanol – shall refer to ethanol (C2H5OH) pro­duced from biomass;
Bioethanol Fuel – shall refer to hydrous or anhy­drous bioethanol suitably denatured for use as motor fuel;
Biofuels – shall refer to a liquid fuel produced from biomass and primarily used to fuel vehicles, but can also fuel engines or fuel cells for electricity generation, and may include bioethanol and biodiesel, among oth­ers;
Biomass – shall refer to any organic matter, par­ticularly cellulosic or ligno-cellulosic matter, which is available on a renewable or recurring basis, including trees, crops and associated residues, plant fiber, poul­try litter and other animal wastes, industrial wastes, and the biodegradable component of municipal solid waste

More Facts about Biofuel law Incentives for Biofuel Inventors
To encourage private entities to invest in the production of bioethanol and distribution of gasohol at and be­yond the minimum mandated blends, the following incentive scheme is hereby provided in Section 6 of the Ethanol Bill:

a. Fiscal Incentives
i. All entities engaged in the production of bioethanol fules as may be certified by the Department of Energy shall, for a period of ten (10) years from the effectivity of the act, be exempted from the payment of tariff and duties in the importation of all types of inputs, machinery and equipment such as, but not limited to, bio­ethanol. Provided, however, That the imported inputs, machinery and equipment shall be for the exclusive use of the importing entity; and

ii. Gasohol shall be taxed at the same rate as those prevailing for unleaded gasoline and shall remain at such levels for a period of ten (10) years from the effectivity of the act.

b. Non-Fiscal Incentives
i. Subject to the rules and regulations of the Board of Investments, all investments in the production and blending of bioethanol fuel and bioethanol fuel feedstock shall be classified as pioneering and/or preferred areas of investment under its annual investment priorities plan (IPP) and shall enjoy the applicable fiscal and non-fiscal incentives as may be provided for under the Omnibus Investment Code, as amended; and

ii. All distillery slops and water effluents from the production of bioethanol fuel applied to land as irrigation and fertilizer, and used for other agricultural purposes are considered reuse and are therefore not covered under Section 13 of Republic Act No. 9275, the Philippine Clean Water Act: Provided, however, That such application shall be in accordance with the guidelines issued pursuant to Republic Act No. 9275.

c. Financial Assistance
Government Financial Institutions such as the Development Bank of the Philippines, Land Bank of the Phil­ippines, Quedancor and such other government institutions providing financial services shall in accordance with and to the extent allowed by the enabling provisions of their respective charters or applicable laws, accord high priority to extend financing to entities that shall engage in activities involving production of bioethanol fuel feedstock including but not limited to sugarcane, cassava, sweet sorghum and corn.

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