Philippines revamps biofuels compliance rules

The Philippine Department of Energy (DoE) has tightened biofuels accreditation and reporting requirements, in a move aiming to boost transparency of trade and blending.

Key changes outlined include explicit requirements for gasoline, diesel or ethanol importers with blending facilities to register as accredited biofuel participants and submit regular trade reports, along with refiners that were formerly required to do so.

Refiners and importers must now notify the DoE's Oil Industry Management Bureau ahead of buying or selling domestically produced biofuels or imported ethanol in the domestic market, as well as before direct ethanol imports as previously.

They must also submit quarterly reports on blending compliance and plans for lifting assigned local monthly allocations (LMAs) of domestic ethanol for the next quarter. Monthly trade reports must become more detailed, including quantifying domestic purchases of imported ethanol for the first time.

Penalties for administrative noncompliance have been added, including a 500,000 pesos ($9,970) fine for refiners or importers operating without accreditation. Blenders failing to lift their full LMAs are already liable for a P1mn-5mn fine and five years' imprisonment under guidelines published in 2015.

The DoE hopes the revised requirements will improve tracking and enforcement of its ethanol blending mandate. The Philippines has maintained a 10pc blending in gasoline (E10) mandate since 2011, but actual blend rates have consistently lagged below target after meeting it once in 2014. The US Department of Agriculture estimated ethanol made up a 8.7pc share of the gasoline pool in 2020 and 2019.

Downstream oil companies must blend their entire LMAs, set at a record high of 103.6mn litres for this quarter before they can import ethanol to supplement volumes.

Stringent enforcement is needed as chronically uncompetitive domestic feedstock costs typically inflate Philippine ethanol to between double and treble the price of imports. The domestic reference price averaged P57.26/l ($1,139/m³) so far during the Philippine September 2020-August 2021 sugar crop year compared with US imports at $564/m³ cfr over the same period.

By Lauren Moffitt