Rising feedstock costs may force shutdown of bioethanol plants

By Myrna M. Velasco – July 16, 2019, 10:00 PM
from Manila Bulletin

The skyrocketing costs of feedstock for bioethanol production may force domestic producers to shutdown operations – especially if government measures to remedy the situation won’t come quick and judicious as they are needed.

Senator Sherwin Gatchalian (Facebook / MANILA BULLETIN)

Senator Sherwin Gatchalian (Facebook / MANILA BULLETIN)

Such dilemma then is prompting a joint oversight committee of Congress to probe the root cause of the unwarranted escalation in feedstock prices, primarily for molasses which is the main raw material being depended upon by ethanol industry players.

As sounded off by Senate Committee on Energy Chairman Sherwin T. Gatchalian, the ethanol producers raised their concerns to him and “they say they might be soon left without a choice but to stop the production of bioethanol.”

He said the pricey bioethanol feedstock had also prevented the oil companies from sourcing their ethanol needs from local producers, because imports proved to be cheaper when it comes to cost pass-on impact on consumers. More than 50-percent of the ethanol requirements of the oil industry is from imports.

“Oil companies no longer buy from local ethanol plants if the price of bioethanol is too high,” Gatchalian said, further narrating “in fact, they are saying there’s already a plant that is no longer producing bioethanol because of high prices of molasses.”

He noted in particular that due to limited supply of molasses in the country, its price had gone up to as high as P11,500 per metric ton – which essentially is the single biggest factor blamed for the P59 per liter hike in bioethanol prices. Roughly 90-percent of bioethanol output in the country relies on molasses as feedstock.

The lawmaker thus stressed that “this situation, if left unaddressed, is expected to worsen given the growing demand for bioethanol brought about by the climbing demand for gasoline.”

For this reason, Congress is engaging the Department of Agriculture and the other agency-members of the National Biofuels Board to “look for ways on how to efficiently grow sugarcane” that could then lead to probable increase in domestic molasses production; and consequently bring its prices down.

The legislative oversight committee, according to Gatchalian, “will also explore interim solutions to provide feedstock for existing ethanol plants and will reiterate the need for increased research and development for feedstock for the long term.”

Citing data from the Department of Energy (DOE), the Senate energy committee noted while the capacity of operating bioethanol plants hover at 365 million liters, actual production had just been reaching 270 million liters to-date.

He said such figure is below the requirement of the 10-percent by volume blend mandated for gasoline products – which supposedly should be reaching a high of 550 million liters.