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Renewable Energy A Boon or Bane to Agri-Business?

Renewable Energy A Boon or Bane to Agri-Business?. Presented by: Archie B. Amarra Executive Vice President Roxas Holdings, Inc. Relevant policy f ramework for the Renewable Energy Program Republic Act 9637 (Biofuels Act of 2006) Republic Act 9513 (Renewable Act of 2008)

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Renewable Energy A Boon or Bane to Agri-Business?

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  1. Renewable EnergyA Boon or Bane to Agri-Business? Presented by: Archie B. Amarra Executive Vice President Roxas Holdings, Inc

  2. Relevant policy framework for the Renewable Energy Program • Republic Act 9637 (Biofuels Act of 2006) • Republic Act 9513 (Renewable Act of 2008) • Both laws seek to promote the accelerated development and utilization of fuels and power from renewable sources. • Agribusiness, being the channel for biofuels and biopower production, is expected to benefit from the successful implementation of the RE Program

  3. Bioethanol Program • Requirement for mandated 10% blend (w/ gasoline) – 540 million liters p.a. • Status of projects • 21 projects initially proposed after passage of law • 8 out of 21 projects registered with BOI P17.8 B investments (for the incentives) • Presently, only 4 projects (133 M liters/yr) have been completed and operational; only two projects are currently being pursued

  4. Bioethanol Program • Production of bioethanol is largely dependent on the production of feedstock which constitutes about 75% of the cost of production • Required feedstock for 540 M li. bioethanol • @ 90% sugarcane and 10% molasses as feedstock • 7.0 million tonnes cane from 115,000 has. • 200,000 mt molasses • @ 80% sugarcane and 20% molasses as feedstock • 6.0 million tonnes cane from 100,000 has. • 410,000 mt molasses • The Philippine Agriculture Development Corporation has identified greenfield/currently unproductive areas available for the development of new ethanol projects

  5. Bioethanol Program • Contribution to the economy: • Investments in the countryside in the establishment of distilleries • ~ P25 billion in value added from production of feedstock up to sale of bioethanol (@P45/li x 540 M li) • Availability of organic fertilizer from the distillation process • ~ 87,000 jobs in the construction, operation of distilleries and downstream industries • ~ 120,000 additional employment in feedstock production

  6. Renewable Energy Program • Installation target for biomass RE – 250 MW (under Feed-in Tariff mechanism) • 2,693 Giga Watt hours p.a • Equivalent to 5 billion tonnes of biomass • Initially proposed projects - 433 MW installed worth US$ 1.3 Billion investment • Most of the proposed projects are designed to use agriculture residues as fuel

  7. Renewable Energy Program • Estimated volume of biomass from major crops • Volume of biomass required for 250 MW installation target – 5.4 Million mt/yr

  8. Renewable Energy Program • Benefits to agri-business: • Increased investments in the countryside - biomass RE facilities will be installed where the fuel is • Estimated value added to agriculture from utilization of agri residues ~ P7 billion/year • Additional income to rural folks > results in increased purchasing power

  9. Renewable Energy Program • Benefits to agri-business: • Incentivized food production due to higher returns from farming • Sustainable employment • 78,000 Jobs to construct the power plants • 4,000 jobs for plant operation (professionals, skilled and semi-skilled workers) • 7,000 jobs from the feedstock supply chain • 6,000 jobs from cultivation of energy crop

  10. Reality Check • Bioethanol program - 7 years from enactment of Biofuels Law in 2006 • Only four bioethanol plants are operational, supplying 12% of annual bioethanol requirement • 87 percent or 479 million li. – still imported • RE program – 4 years from enactment of RE Law • About four biomass RE plants have been established but still cannot avail of incentives, primarily the feed-in tariff

  11. Barriers to Development of Bioethanol and Biomass RE Projects • Delayed development and implementation of enabling mechanisms for the incentives under the laws, e.g.: • allocation/withdrawal of locally produced bioethanol • Establishment of feed-in tariff for RE-derived electricity; mechanisms for renewable portfolio standards, interconnection and wheeling • Stringent regulatory requirements that scare off developers • DOE registration/contract • DOE plan to implement occupational health, safety and environmental requirements even if these are already being done by other government agencies

  12. Barriers to Development of Bioethanol and Biomass RE Projects • Mixed signals with respect to the commitment of government to push for the development of renewable energy projects • Approval of higher rates/returns for coal-fired power projects compared to biomass • Recent approval for a coal project equates to around P8/kwh rate (@ 18.3% IRR) while the approved FiT for biomass is only 6.63 (@17% IRR) • Proposal to bid out FiT after ERC has already issued the FiT Rules • Limiting installation targets (for availment of FiT) of technologies, particularly run-off river and biomass, which have shown to be competitive with newly approved coal projects

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