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Coconut Methyl Ester as an Alternative Fuel1

E.V. Carandang2
INTRODUCTION

W
hen I was invited to speak before you by the Society for the Advancement of Technology Management in
the Philippines (SATMP) to discuss the recent developments and issues on the use of alternative fuels in the
Philippines, I accepted the invitation with some hesitation knowing full well I will be facing technology
experts.
As I made my decision, I thought I would provide some insights on the coconut industry having had
experience in the past 15 years experience in the industry working not only with coconut oil but with
coconut methyl ester production and its use as an alternative fuel to petroleum diesel.
I was informed to limit my discussion in the next 15 to 20 minutes to the following:
state of research on Coconut Methyl Ester (CME) in the Philippines
anticipated problems/issues on the adoption of the CME technology
appraisal of efforts of government agencies and/or private sector to promote CME
suggested measures to accelerate mass adoption of CME
Before proceeding to the main topic, please allow me to give you some background on the coconut
industry.
The present economic condition continues to adversely affect the withering coconut industry. During
the last 18 months, copra prices traded at the lowest price in many years in March 2001. It has since very
slowly recovered. There was a time when coconut farmers would not even harvest their copra because
prices were not remunerative. At present, a kilo of copra could not provide a farmer with a kilo of rice.
Based on the consumers price index, a kilo of copra should have a purchasing power of P 25. Its current
value at farm gate, however, is only less than P 5.00. Looking for a profitable alternative, farmers have
found a new business in coco lumber that provides outright income which copra could give them in 10 to
15 years.
In the global context, the outlook is not any brighter either. America and Europe, our largest or major
markets, will not eliminate their trade distorting farm subsidies which give their farmers an edge over their
third world counterparts. The European Union has allotted $20 billion oilseeds subsidy, enabling it to pay
farmers better even with prevailing low farm prices to stockpile production and to sell at a loss. When
they drop their prices, other oils follow creating a distortion that has placed the price of coconut oil at
unremunerative levels.
Canola, a new variety of rapeseed developed through biotechnology which is high in both oleic and
stearic fatty acids is now commercially planted and marketed. Still, biotechnology has gone further in a
later work by Calgene that has genetically altered rapeseed to mimic coconut oils high laurate property.
In a few years, when Calgenes high-laurate rapeseed variety becomes available in the world market,
coconut oil could be tossed off the competition.
Coconut is the only agricultural crop and the only 100% Filipino product among the top five dollar
earners of the country. Total land area in the country planted with coconut is estimated at 3.10M hectares.
Land utilized for coconut planting in year 2000 stood at 31.73% of total agricultural area; production
represented 18.35% of total crops harvested; and with value representing 8.91% of aggregate. Coconut
exports bring in US $600 M to more than US $1 B a year. For many years, except for the last 18 months,
coconut oil (CNO) which is the primary product of coconut enjoyed a premium price in the world fats and
oils market.
1

Paper presented in the Roundtable Discussion on the Current Development and Issues of Alternative Fuels in the Philippines, Society for the
Advancement of Technology Management in the Philippines (SATMP), April 11, 2002, AIM Conference Center, Makati City, PHILIPPINES.
2
Author is former Executive Director, Philippine Coconut Research and Development Foundation (PCRDF), 3F PCRDF Bldg. Pearl Drive, Ortigas
Center, Pasig City, 1605 PHILIPPINES.

The high demand for coconut oil is due to its high lauric fatty acid content, the base material used for
detergent and cosmetic products. Of the total Philippine coconut oil production, 70% is exported, 80% of
which is used for industrial application and the rest for food. However, coconut oil has always been a price
taker. Since coconut oil is only 5.58% in 1998 to less than 5% in 2000 of the total world fats and oils
market and with only a handful of big users, it is the world market that dictates the price of coconut oil here
and abroad. Unlike soybean and palm oil which supply more than 60% of vegetable oils and fats trade,
coconut oil is not traded in the commodity exchange. There are several factors that can influence the
pricing of coconut oil but generally it all boils down to supply and demand.
Price forecast and past prices for coconut oil, Phil., CIF Rott. (US$/MT)
July/June

Feb
Mar
Apr
May

93/94
94/95
95/96
96/97
97/98
98/99
99/00
00/01
2001
2001
2001
2001

526
634
730
731
608
743
617
328
285
289
293
295
Source: Oil World 2001

Changes in political administration most often cause changes in policies. During the Marcos years,
the industry started to go into the production of oleochemicals from just being copra exporter even when
the industry was run by just a few individuals. The Aquino years were known for the deregulation and free
market policy resulting to significant increase in processing capacity beyond what coconut production
could supply.
The Ramos years were committed to the adherence to the World Trade Organization
(WHO) and AFTA, and to strengthening the small coconut farmer organizations, thus causing
unprecedented increase in the number of coconut farmers from 1.2 million to more than 3 million. The
Estrada years had the unsettled issue on the coconut levy fund and the maunlad program trying to
maximize the use of the coconut land for other agricultural and marine projects to increase farmers
income. The Arroyo administration is showing great interest in the development of the coconut industry by
increasing domestic consumption and creating a million jobs. Several government agencies, especially
those under the Office of the President, including private groups are being mobilized to think how to
revitalize the coconut industry. They were asked to come out with recommendations to help the ailing
coconut industry.
Causes of low prices for coconut oil

The free market policy sometimes results in a glut of CNO abroad. The uncontrollable sell and sell
syndrome created huge inventories that even when we want to sell more; buyers already refused to buy.
This surely brings down prices. This situation happened during the late 2000 when prices dropped
substantially so that coconut farmers didnt even bother and just left the nuts to fall on the ground. At
times, even if inventory abroad is low, news of an increase in coconut production due to good weather still
could pull down prices. There were times when news like government/industry plan to supply National
Power Corporation (NPC) with coconut oil to be incorporated with bunker fuel created nervousness in the
international market raising the price of coconut oil then. Low prices mean not only loss of dollars for the
country, or less profit for the traders and manufacturers, but most of all losses in terms of coconut
producers income.

OIL AND FATS: 1998 WORLD EXPORTS (% Share by commodity)


1. Palm oil
2. Soybean oil
3. Sunflower oil
4. Tallow and Greases
5. Rapeseed oil
6. Coconut oil
7. Palm Kernel oil
8. Corn oil
9. Butter
10. Olive oil
11. Fish oil
12. Casto Bean oil
13. Ground nut oil
14. Cottonseed oil
15. Lard
16. Linseed oil

1998
34.38
24.42
8.70
7.06
6.68
5.58
3.23
2.44
1.74
1.37
1.16
0.83
0.79
0.66
0.53
0.36

2000
30.34 (2)
30.45 (1)
8.16 (4)
4.40 (5)
9.50 (3)
4.34 (6)
2.44 (7)
1.53 (10)
1.31 (11)
1.04 (12)
1.66 (8)
0.59 (15)
1.64 (9)
0.86 (13)
0.40 (16)
0.78 (14)

Source: UCAP Coconut Statistics 1998 and 2000.

Philippines search for alternative fuel using CME

* A big portion of the countrys dollar reserve is spent on rising costs of crude oil prices and petroleum;
* Fossil fuels are becoming scarce and every country is in desperate search of a renewable energy source;
* 70% of mineral oil deposits are located in politically unstable areas;
* Price of coconut oil in the world market is still depressed.
In search of these materials, several questions are being raised:
- will these materials be competitive enough technically and economically against petroleum based fuels?
- what can these substitutes offer that even the cheapest petroleum based fuels can not provide?
- will these alternative fuels create opportunity or are they necessity?
- can these alternative fuels answer the major issues and concerns such as environmental protection and
ecological balance, cost, performance and availability of supply?
Studies conducted on the use of coconut methyl ester as biodiesel in the Philippines:
- In the 70s, the late Dr. Julian Banzon of UPLB already talked of converting coconut oil into methyl ester
as fuel.
- 1983, ITDI started producing Coconut Methyl Ester and Coconut Ethyl Ester under laboratory condition.
- 1985, Bio-energy (Phil) Inc. demonstrated how to produce CME from coconut oil. They also reported
the test conducted in Australia thru Bio-energy Australia Pty. Ltd. that CME is far superior as compared
to rapeseed methyl ester (RME). 1986, Engr. Francisco Hernandez of PNOC-ERDC reported the results
of their studies on the CME.

- 1991, Engr. Rodolfo Seredrica of PNOC-ERDC reported results on their study of CME as a diesel fuel
extender. They run a 250-hour durability test for stationary engine using 30/70 blend. The extent of
carbon deposits; lube oil contamination and effects of early and late injection timing were included in his
report.
- The studies on passenger buses using 20/80 blends included their findings on the use of CME:
- performance comparable with diesel fuel
- noticeable reduction in power
- increase in fuel consumption
- low carbon deposits
- mineral wear noted after 250 hr
- no lube contamination
RP Coconut Oil Mills: Capacity Utilization (in 000 MT, Copra Terms)
Year
1966
1970
1975
1980
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000

Annual rated capacity


1, 205
1, 205
1, 698
3, 325
3, 627
3, 638
4, 667
4, 784
4, 891
5, 063
5, 021
5, 021
5, 350
5, 321
5, 269
5, 069
4, 869
4, 943
5, 065
5, 187

Estimated copra crushed


777
640
1, 220
1, 737
1, 459
2, 519
2, 153
1, 700
1, 594
2, 294
1, 798
1, 852
2, 071
1, 862
2, 670
1, 808
2, 237
2, 369
1, 176
2, 132

Estimated capacity utilized (%)


64.5
62.4
71.8
52.2
40.2
69.2
46.1
35.5
32.6
45.3
35.8
36.9
38.7
35.0
50.7
35.7
45.9
47.9
23.2
41.1

Source: UCAP Coconut Industry Kit 2000.

- February 1990, Philippine Coconut Research and Development Foundation, Inc. (PCRDF) started using
100% CME (neat) as diesel substitute completing 100, 000 kilometer run. Results showed that in the
ISUZU C240D diesel engine, 100% CME as fuel does not cause any engine trouble, no cavitations of
injection pumps, and no engine wear and tear. As expected, fuel consumption using CME was higher by
12% to 15% depending on the load due to its low BTU as compared to diesel;
- March 1991 PCIERD of DOST coordinated the study implemented by the JVA
Management Corp.
through Davao Fruits, Hijo Plantation and Twin Rivers Plantation in Tagum, Davao del Norte with the
UPCE, ITDI and Resin Inc. They made used of 20/80; 30/70; 50/50; 80/20; and 100% CME. The
performance of CME was comparable with diesel fuel except for observed reduction in power and
increase in fuel consumption as percentage of CME increased; the 50/50 blend was tested in 12 test
vehicles from May 20 to June 30, 1991 and 6 vehicles using 100% CME from July 1 to August 31, 1991.
- 1995, Philippine Coconut Authority (PCA) piloted the CME produced using the Cruzterification
process.
* 57, 943 km were run using brand new Light Commercial Vehicle Mitsu 4D56 diesel engine with
100% CME
* 18, 943 km with B40
- Late 90s, University of the Philippines at Los Baos (UPLB) did some R&D in the production of CME
using CNO and used oil. No information if actual road test was conducted.
The common tests conducted were:

* number of hours or the number of km the test vehicle run


* fuel consumption
* lube oil analysis
* viscosity
* ash
* water content
* total base number
* fuel dilution
* pentane insoluble content
For the CME, the following tests were conducted
* heating value
* cetane index
* pour point
* specific gravity
* flash point
* viscosity
* corrosivity
* sulfur content
Biodiesel helps to solve three important problems
1.
2.
3.

Protection of environment because it has a close carbon dioxide cycle and wide range of
sustainable applications
Preservation of resources
Avoidance of over production (demand and supply management). Important since pricing of
coconut oil is dictated by the world market based on the supply and demand level.

Missing information:
To further support the claim about the safety and usefulness of coconut methyl ester, there is a need to
supply some pertinent information needed to assure its quality and safety. Aside from doing the life cycle
analysis to determine the energy supply that CME can provide, there is a need to do studies on the detailed
chemical characterization of exhaust emission among different engines. Also, other information needed are:
Environmental and Safety Information
> acute and oral toxicity (neat and blend)
> skin irritation human
> aquatic toxicity
> biodegradability
> flash point
Handling and Storage
> disposal consideration
> spill clean-up procedures
> transport information
Physical and chemical properties
Stability and reactivity (things to avoid)
Hazard identification and first aid in case of:
> inhalation
> eye contact
> skin contact
> ingestion
> exposure control/personal protection

Fire fighting measures


> extinguishing media
> special fire fighting procedures
> unusual fire and explosion hazards
Engine and material compatibility
Specification and standards as fuel or as fuel additives
Impact assessment in relation to Philippine economy is needed; the right economic figures in terms of
coconut production; balance of trade and effects to the local economy. We also need to verify and make
inventories on the existing testing laboratories, apparatus and equipment as well as the specification and
standards for the CME or its blends with diesel.
Anticipated problems/issues on the adoption of CME

The biggest stumbling block for biodiesel use is the cost and public acceptance. Roughly, in the cost
of biofuel, 75% is the raw materials. Another is the cost of methanol (19% + 3%xs = 22%) which is P17/L
(Metro Manila price) at P51/US$. Some pricing relief comes from the production itself which yields
glycerol (12%) a by-product that can be sold.
However, glycerol, which is a by-product, is in crude form and the price is very low. For every million
metric ton production of biodiesel, 80, 000 MT glycerol is also produced adding in to the world market
inventory of glycerol. Technical issues can be resolved by doing studies on various aspects.
World Glycerin Production
TOTAL VOLUME
Soap
Fatty acids
Ester/alcohol
Biodiesel
Synthetic
Total

800, 000 TONNE


25 %
40 %
15 %
10 %
10 %
100 %

Source: Brunskill, FPG Oleochemicals

In economic and supply projection, use of CME can increase domestic consumption (market
expansion) consequently better price for copra. High copra price means high coconut oil price,
correspondingly high CME price and eventually high fuel price. That we have to pay the price, for cleaner
environment is negated by the present adverse economic condition. We can peg the copra price at the
lowest level to keep the price of CME low but it would be a disadvantage the coconut farmers. Are we
preventing them to earn more from coconut? As such, sustainability will be a big question.
The idea of using coconut oil for fuel was a measure taken previously when the prices of copra were
low. However, that was only a stop gap measure whose operation was driven by depressed coconut oil
price in the foreign market.
Appraisal of efforts of government agencies and/or private sector to promote CME

The Philippine Coconut Authority (PCA) and the Office of the President for Agricultural Modernization are
planning to come out with recommendation to the Office of the President to issue an Executive Order
mandating the use of CME starting at 1% level in the diesel fuel blend. The Management Association of
the Philippines is making CME a part of their regular meeting to discuss the mechanics on how it can be
implemented. PCA has a Thursday club, a regular meeting every Thursday discussing about CME. We at
PCRDF are continuously advocating the use of CME; we have cooperators from San Pablo, Northern

Samar and other interested parties here in Metro Manila who are regularly buying from us. We provide
technical information to several groups and individuals who have a business interest in biodiesel. Prior to
the idea of setting an ASEAN BIODIESEL CONSORTIUM, I have met several times with the delegations
from Thailand Parliamentary Congress regarding some aspects of biodiesel. The United Coconut
Associations of the Philippines (UCAP) is also coming out with their recommendation to the government
on how to get this program off the ground.
Suggested measures to accelerate mass adoption of CME

Commercial users are interested in biodiesel as long as it is given free but when they have to pay the
real cost at two or three times the cost of ordinary diesel fuel, their interest wane. Biodiesel program
should be introduced in a market that has the greatest chance of choosing biodiesel despite its higher cost.
In the US, alternative fuels are used mostly in niche markets such as those willing or required to pay
premium price for an environmental friendly fuel or those that face federal fines if they do not move into
compliance with air quality standards.
Biodiesel can be marketed as an additive to reduce engine wear. The proposal to lower further the
sulfur content in diesel will result in losing its lubricity. Studies have shown that at 1% level, biodiesel can
replace this loss in lubricity. Unlike other additives that can prevent engine wear but have no fuel value,
biodiesel can perform both the function of an additive and a fuel.
Coconut methyl ester (CME) material balance

1.0MT
COPRA

0.310 MT
Copra Meal

0.630 MT
COCONUT OIL
+
0.1197 MT
METHANOL
+
0.00315 MT
CATALYST

0.6339 MT
COCONUT METHYL ESTER

0.90 MT
GLYCERIN

Of importance right now are the fundamentals. Pilot projects can get very good publicity and are also
beneficial in meeting some of the regulatory policy requirements but they do nothing to improve fuel
characteristics. Few studies have been based on cost-benefit comparisons of alternative fuels over the life
of the vehicles involved.
This gathering is a good idea to come out with strategic planning on how the CME can get off the
ground, and to meet with stakeholders such as the petroleum commercial interest, diesel fleet operators,

research laboratories, academe, entrepreneurs, engine manufacturers, farmers, producers and other
interested members.
Considering the culture of the Filipinos, it will be a good idea if we will implement the biodiesel
program gradually or in phases. One way is, while waiting for the results of further studies on the
CME/Diesel blend, the President can issue Memorandum Order mandating the use of 1% to 5%
CME/Diesel blend in all government diesel engine vehicles. If the general public sees the benefits and
advantages of using CME/Diesel, it will be easier to expand the program.
Suggested participation of other agencies

Department of Energy

= for comprehensive energy plan, specifications, standards and


quick test for biofuels;

Department of Finance

= Tax incentives; 0% VAT, subsidy

Department of Agriculture

= Supply commitment and logistics

DENR

= Clean Air Act, Environmental protection

Department of Trade

= Tax Incentives, Logistics and Monitoring, Pricing

Department of Tourism

= Advocacy and Promotion

DOST/Academe/Research
Organization/Petroleum Industry/
Auto Industry

= Scientific studies and testings

Office of the Press Secretary

= Information campaign, tri media exposure

NEDA/DTI/DA/PCA/Private Sector = Comprehensive studies to determine the ideal level of production


that will satisfy all the sectors involve; COCONUT ECONOMICS
PCA with private sector

= Impact Assessment, Logistics

Impact Assessment to be composed of:


* Effects on the RPs economy, increase in demand for coconut oil can perk up the price of coconut oil;
* Effects on the RPs balance of trade vis--vis how much of the petro imports can be reduced and the
dollar loss by not exporting the coconut oil;
* Job creation and economic activity;
* Benefits to the coconut farmers
OFFICE OF THE PRESIDENT
I thank you.

= STRONG POLITICAL WILL