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IMPROVEMENTS IN CONVENTIONAL FUELS AND UPDATES ON ALTERNATIVE FUELS PROGRAM

IMPROVEMENTS IN CONVENTIONAL FUELS AND UPDATES ON ALTERNATIVE FUELS PROGRAM. 2004 Energy/Power Mix. Oil. Oil. 36.8%. 14.8%. Power Mix. Energy Mix. Natgas. Hydro. Others. Hydro. 22.6%. 15.3%. 32.1%. 5.6%. Natgas. 6.3%. Coal. Geo. Geo. Coal. 18.4%. 12.3%. 28.9%. 6.8%.

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IMPROVEMENTS IN CONVENTIONAL FUELS AND UPDATES ON ALTERNATIVE FUELS PROGRAM

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  1. IMPROVEMENTS IN CONVENTIONAL FUELS AND UPDATES ON ALTERNATIVE FUELS PROGRAM

  2. 2004 Energy/Power Mix Oil Oil 36.8% 14.8% Power Mix Energy Mix Natgas Hydro Others Hydro 22.6% 15.3% 32.1% 5.6% Natgas 6.3% Coal Geo Geo Coal 18.4% 12.3% 28.9% 6.8% Source: Department of Energy

  3. Fuels and Vehicle Emissions VEHICLE FUEL EMISSION DOE DOTC / LTO / MMDA / DTI / DOST DENR

  4. Fuel Quality Improvement

  5. CAA Requirements – Fuel Specs Unleaded Gasoline Aromatics45% max Jan. 1, 2000 Benzene4% maxJan. 1, 2000 AKI 87.5 minJan. 1, 2001 RVP9 psi max Jan. 1, 2001 Aromatics35% maxJan. 1, 2003 Benzene2% maxJan. 1, 2003 Automotive Diesel • Sulfur0.2% maxJan. 1, 2001 • Cetane No./Index48 minJan. 1, 2001 Sulfur 0.05% max Jan. 1, 2004 Industrial Diesel Sulfur *0.3% maxJan. 1, 2001 *Note: 0.05% max effective Jan. 1, 2009, per PNS

  6. Fuel Quality Standards 1. CONVENTIONAL FUELS • PNS 1131:2000 (ULG complying to CAA for 2000 specs) • PNS 20:2000 (Diesel complying to CAA for 2001 specs) • PNS 1131:2001 (Multigrade ULG complying 2001 specs) • PNS 1131:2002 (ULG complying to CAA 2003) • PNS/DOE QS 004:2003 (Diesel complying to CAA for 2004 specs, and possible differentiation between tax-free and tax-paid) • PNS/DOE QS 001:2005 (ULG with sulfur level conforming to EURO II standard of 0.05% mass max.) • DPNS/DOE QS 007:2005 (Bunker Fuel) Phase out lead in gasoline 9 mos. ahead of sked – MM Accelerated sulfur reduction to 0.05% S in ADO 2 mos. ahead of sked MM

  7. Fuel Quality Standards • 2. ALTERNATIVE FUELS • PNS 2020:2003 (B100 = 100% CME) - DOE CME Logistical Test Protocol • PNS/DOE QS 003:2003 (2-stroke Lubricating Oils, update of 1992) • PNS/DOE QS 005:2005 (Auto-LPG, update of 1990) • DPNS/DOE QS 007:2005 (Anhydrous Bioethanol Fuel) • Drafting of standard for Jatropha DEPARTMENT OF ENERGY

  8. ALTERNATIVE FUEL PROGRAM (Fuel Ethanol Program) • DPNS QS 007:2005 Anhydrous Bioethanol Fuel Specification • 1. Raw Materials • Imported Ethanol – 99% purity • Local Ethanol • Anhydrous • Hydrous • 2. Intermediate Products • Fuel Ethanol • Pre-blended gasoline • Finished product offered at gas stations • E-gasoline, E5 & E10

  9. Facilities Quality Standards • FACILITIES STANDARDS • PNS/DOE Petroleum Products for Retail Outlets (promulgated by BPS Feb. 23, 2005) • PNS/DOE FS 1-1:2005 – Health, Safety and Environment • PNS/DOE FS 1-2:2005 – Underground Storage Tank • PNS/DOE FS 1-3:2005 – Piping System • PNS/DOE FS 1-2:2005 – Dispensing Pumps • DPNS on LPG Refilling Plant (For promulgation 1Q 2006) • Drafting PNS for Storage Facilities • Draft DC on Handling, Transport & Distribution of LPG Cylinders DEPARTMENT OF ENERGY

  10. DOE Role - Additives Registration • Fuel Additives Registration * • Total Applications filed - 79 • Permanent Registration granted - 24 • Total Provisional Registration Issued - 31 • Applications Reviewed/Evaluated - 24 • (subject for further compliance) • * As of 15 October 2005 • Types of additives applied/registered: • Octane enhancer • Lubricity/friction modifier • Emission/smoke suppressant • Fuel efficiency improver • Detergent • Deposit control • Anti-valve seat recession and others DEPARTMENT OF ENERGY

  11. Alternative Fuels Program

  12. ALTERNATIVE FUEL PROGRAM (Coco-Biodiesel Program) POLICY INITIATIVES • MC No. 55 “Directing all Departments, Bureau, Offices and Instrumentalities of the Government …. to Incorporate the Use of 1% by volume CME in Their Diesel Requirements (Feb 9, 2004) • DC No. 2004-04-003 “Rules and Regulations Implementing MC 55 (March 29, 2004) • Supreme Court M C No. 07-2004 “Directing the Supreme Court, Court of Appeals, Sandiganbayan and the Court of Tax Appeals to Use 1% CME (June 23, 2004) • DC No. 2005-04-003 “Promoting the Use of Coco-Biodiesel as an Alternative Clean Fuel” (March 1, 2005) • Alicia, Isabela Resolution No. 2004-009 “Requiring the Use of CME by All Motorists… In support of the Clean Air Act (Feb 11, 2004) • Baguio City Resolution No. 154, Series of 2004 “Encouraging the Use of CME by All Motorists …. In Support of the Clean Air Act (June 29, 2004)

  13. ALTERNATIVE FUEL PROGRAM (Coco-Biodiesel Program) Coco-Biodiesel Distribution Network • B100 Dealers/retailers • 192 gasoline stations (Flying V and Seaoil) • 110 retailers/distributors (Chemrez and Senbel) • Pre-blended 1% CME (B1) outlets - Flying V stations - Unioil - Seaoil - FilOil - USA 88 DEPARTMENT OF ENERGY

  14. ALTERNATIVE FUEL PROGRAM (Coco-Biodiesel Program) I E C • Stakeholders consultations and seminars on Coco-Biodiesel Program, M C 55 and demand expansion (expanded utilization of CME) in cooperation with TUP, PCA, CME manufacturers and USDOE/USAID SEDP • Audio visual presentations, collateral materials & website • Focused group discussions (i.e. clean cities program) DEPARTMENT OF ENERGY

  15. ALTERNATIVE FUEL PROGRAM (Coco-Biodiesel Program) Steps Forward • Legislative measure: Biodiesel/Biofuels Bill - mandate 1% CME blend by 2006 to all diesel fuel • Continue IEC campaigns to accelerate public acceptance especially in Clean Cities pilot areas (Baguio, Davao, Marikina and Makati) • Expand utilization of CME: nationwide; power generation and marine transport DEPARTMENT OF ENERGY

  16. ALTERNATIVE FUEL PROGRAM (Fuel Ethanol Program) LEGISLATIVE MEASURES • HB 4629 – Mandating the Use of Bioethanol or Ethyl Alcohol and other Biofuels as Transport Fuel • SB 2007 – Mandate the Use of Biofuels in the Transport Sector DEPARTMENT OF ENERGY

  17. ALTERNATIVE FUEL PROGRAM (Fuel Ethanol Program) Ethanol Production • NDC-Bronzeoak Fuel Ethanol and Power Plant - Location: San Carlos City, Negros Occidental - Investment: P1.5 Billion - Ethanol Distillery: 100,000 liters/day (30 million liters/yr.) - Cogeneration Plant: 9 MW - Timeline: 1Q 2006 (construction); 2nd Half 2007 (operation) SUPPLY DEPARTMENT OF ENERGY

  18. ALTERNATIVE FUEL PROGRAM (Fuel Ethanol Program) INCENTIVES • Executive Order No. 449 – Tariff is reduced from 10% to 1% when imported with certification from the Department of Energy that this article will be used for the Fuel Ethanol Program. • - Quality Specification: Ethyl alcohol strength by volume of exceeding 99% volume • Tax Code – P 0.05/l excise tax on fuel ethanol vs. P23.30/l • DOF–DOE Joint Guidelines drafting • BIR Draft Revenue Regulation

  19. ALTERNATIVE FUEL PROGRAM (Natural Gas Program) • POLICY INITIATIVES • Executive Order 164 providing 1% import duty of NGV related equipment, parts and components(January 10, 2003) • Promulgation of 48-sets of Philippine National Standards for Natural Gas Utilization for Transport (June 2003) • Executive Order 290 “Implementing the Natural Gas Vehicle Program for Public Transport”(February 24, 2004) • Department Circular No. 2004-04-004 “Guidelines on the Issuance of Certificate of Accreditation (CA) and Certificate of Authority to Import (CAI) Under the NGVPPT”(April 2, 2004) • Executive Order 396 “Reducing the Rates on CNG Vehicles and NGV Industry- Related Equipment”(December 31, 2004) • Department Circular No. 2005-07-006 Directing the |Enhance Implementation of the NGVPPT and the Development of compressed Natural Gas (CNG) Supply and Infrastructure.(July 5, 2005) DEPARTMENT OF ENERGY

  20. ALTERNATIVE FUEL PROGRAM (Natural Gas Program) INCENTIVES • Attractive CNG price substantially lower than the pump price of diesel (P 14.52/diesel liter equivalent) • Zero percent (0%) rate of duty • Income Tax Holiday • Preferential franchises • Manpower development and capability building through training and technology transfer • Affordable and commercially tenable financial package from GFIs • Accelerated issuance of ECC for NGV facilities and refueling stations DEPARTMENT OF ENERGY

  21. ALTERNATIVE FUEL PROGRAM (Natural Gas Program) MARKET DEVELOPMENT • Accreditation of 7 bus operators - HM Transport, RRCG Transport, KL Transport, Pascual Liner, Greenstar Express, Biñan Bus Line, CNG Vehicles Corp. • Delivery Schedule of CNG Buses - 5 units (October 2005) - 200 Units (Total by 1st quarter 2006) • Target for 2007-2008 - 2,000 CNG buses, 10 CNG refueling stations • Potential suppliers of CNG buses Cummins Westport Asia, Daewoo, Ashok Leyland DEPARTMENT OF ENERGY

  22. ALTERNATIVE FUEL PROGRAM (Natural Gas Program) Standards Development (48 sets of PNS promulgated on June 2003) • Road vehicles • Refueling Station • Gas Cylinders • Gas Quality I E C • Libreng Sakay Sa NGVs” and testing by bus operators (May 17, 2004 with 2,286 passengers) • Bus operators participation • Presentation of the first CNG Commercial Bus (July 1, 2005) DEPARTMENT OF ENERGY

  23. ALTERNATIVE FUEL PROGRAM (Natural Gas Program) STEPS FORWARDS • Expansion of the NGVPPT implementation • Encourage more investments in CNG-related industry (CNG suplly infrastructure, NGV assembly/manufacture, etc.) • Formulate pricing mechanism for commercial phase • Enhance incentives and standards DEPARTMENT OF ENERGY

  24. ALTERNATIVE FUEL PROGRAM (Auto LPG) • INCENTIVES • Inclusion of autogas assembly facilities, conversion shops, refueling stations, and taxi fleet operations in BOI’s 2005 IPP • DBP to finance acquisition of autogas vehicles through the “Clean Alternative Transport Fuel Financing Program” • STANDARDS • Standards Technical Committees (TC6, TC44, TC- dispensing stations) drafted standards for autogas vehicles, autogas cylinders and autogas dispensing stations. DEPARTMENT OF ENERGY

  25. ALTERNATIVE FUEL PROGRAM (Auto LPG) • SUPPLY INFRASTRUCTURE • Petron Gasul • - 4 dispensing pumps in MM and Cebu - - Future installation: 10 dispensing stations w/in MM / Luzon • Shell LPG - 4 dispensing pumps in Cebu and 1 dispensing pump in Cagayan de Oro City - - Future installation: 2 garage-based pumps DEPARTMENT OF ENERGY

  26. ALTERNATIVE FUEL PROGRAM (Auto LPG) • MARKET DEVELOPMENT • Metro Manila 110 • DBP 28 - Freedom taxi 26 - Munich taxi 24 - ABC taxi 15 - Saigon taxi 10 - Basic taxi 2 - Alcotby taxi 2 - Avis 1 - AAP 1 - Ambi Energy 1 • Cebu 258 • Corominas taxi 144 - Emersons transport 60 - Jays Express 44 - RP Corominas 10 • Cagayan de Oro 2 - Jays Express 2 DEPARTMENT OF ENERGY

  27. ALTERNATIVE FUEL PROGRAM (Auto LPG) STEPS FORWARD • Public hearing and promulgation of autogas standards • Consultations with autogas stakeholders • Recommendation for policy action • Information, education and communication (IEC) DEPARTMENT OF ENERGY

  28. Diesel Demand vs. Supply in MBCD

  29. Gasoline Demand vs. Supply in MBCD

  30. …Fuel Quality is Only One of the Factors Affecting Emissions ENGINE DESIGN FUEL QUALITY EMISSION VEHICLE USE ENGINE MAINTENANCE TRAFFIC MANAGEMENT

  31. Thank you

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