The United States Department of Agriculture (USDA) has raised alarms about a potential biodiesel shortage in the Philippines, which could lead to increased fuel prices.
According to a report from Manila Bulletin, the USDA Foreign Agricultural Service (FAS) indicated that the local supply of coco methyl ester (CME), a crucial biodiesel ingredient, is declining due to the rise in coconut oil (CNO) exports.
The USDA FAS pointed out that CNO producers are focusing on international markets where they can secure better prices, resulting in a tighter domestic supply.
As a consequence, CME prices have surged from Php 57 per liter in 2021 to between Php 90 and Php 95 per liter in 2024, thereby elevating biodiesel costs.
The USDA FAS also forecasts a 15% drop in coconut oil production for the 2024/2025 season, which will further constrain CME availability.
In response to this situation, the Department of Energy (DOE) has mandated a gradual increase in the biodiesel blend for diesel fuel.
Effective October 1, 2024, diesel must contain at least 3% CME (B3), up from the previous 2% (B2).
Industry projections suggest that this new requirement will boost biofuel demand, necessitating an additional 450 million liters.
The blend mandate is expected to rise to 4% (B4) in October 2025 and 5% (B5) in October 2026.
The USDA FAS noted that meeting a 1% increase in the blend requirement will require an additional 900 million coconuts to produce about 100-120 million liters (88,000-105,000 MT) of CME.
In light of these challenges, the Philippine Coconut Authority (PCA) has proposed several strategies to tackle the biodiesel feedstock deficit, including expanding coconut farms, which currently span 3.6 million hectares and contain approximately 300 million trees.
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