6/11/2020 Biomass Industry in the Philippines - ASEAN Business News

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Biomass Industry in the Philippines

 May 19, 2017 Posted by ASEAN Briefing (https://www.aseanbriefing.com/news/author/asean-briefing/) Reading Time:

10 minutes

Op-ed by Bob Shead

This article will attempt to describe the economic advantages and environmental efficiencies
of biomass power generation in the Philippines. The biomass industry in the Philippines,
while still far behind fossil fuel-based power generation, is rapidly advancing. The term
biomass normally refers to biological material that can be used as fuel. It can be something
as simple as a wooden log or more complex like alcohol. Biomass for millennia has been the
primary energy source on the planet. Although it is considered that all fossil fuels such as
coal and oil originate from vegetation, they are excluded from the definition of biomass.

Sources of Biomass in the Philippines

The Philippines has large and abundant supplies of biomass resources, including agricultural
crop residues, forest residues, animal waste, agro-industrial waste, municipal solid waste and
aquatic biomass. The most common agricultural waste are rice hull, bagasse, coconut shell
husk and coconut coir. This use of commercially produced agricultural residues converted
into biofuels is increasing in the Philippines, as fossil fuel prices continue to rise. Rice husks
are perhaps the most important underdeveloped biomass resource that can be fully utilized in
a renewable and sustainable manner for generation of electrical power.

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Currently, biomass technologies used in the Philippines include the use of bagasse as boiler
fuel for cogeneration; rice and coconut husks dryers for crop drying; biomass gasifiers for
mechanical and electrical applications; fuelwood and agricultural wastes for oven kilns; and
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furnaces and cooking stoves for cooking and heating purposes. Biomass technology
represents the largest installations in the Philippines in comparison with the other renewable
energy or energy-efficient and greenhouse gas abating technologies.

Biomass energy has, and continues to play a vital role in the Philippines’ energy supply.
Nearly 30 percent of the energy for the 100 million plus people living in the Philippines
comes from biomass, and is mainly used for household cooking by the rural population.
Biomass energy sources, account for approximately 15 percent of the primary energy use in
the Philippines. These resources that are available in the Philippines can generate biomass
power projects with a potential capacity of more than 200 MW. It is estimated that about 70
percent of this biomass use can be traced to the cooking needs of the residential sector, as
compared to the industrial and commercial applications that account for the remainder.

It has been estimated that the volume of residues in the Philippines, from rice, coconut, palm
oil, sugar and wood industries is 16 million tons per year. Bagasse, coconut husks and shell
can account for at least 12 percent of total national energy supply. The World Bank-Energy
Sector Management Assistance Program estimated that residues from sugar, rice and
coconut could produce 90 MW, 40 MW, and 20 MW, respectively.

The development of agricultural residual recovery systems, the improvement of agro-forestry

systems, the introduction of the latest energy conversion technologies, and development of
biomass supply chains, will play a major role in biomass energy development in the
Philippines. The country is also amongst the nations most vulnerable to climatic change, and
has experienced some of the largest crop losses due to climate change. The country has
demonstrated a strong self-interest in the advancement of clean energy technologies, and
has the potential to become a role model for other developing nations on account of its broad
portfolio of biomass energy resources.

Agriculture in the Philippines

The Philippines is primarily a country that relies on agricultural produce. It has a land area of
30 million hectares, 47 percent of which is agricultural. The total area devoted to agricultural
crops is 13 million hectares distributed amongst food grains, food crops and non-food crops.
The crops grown in the Philippines include rice, coconut, bananas, pineapple and sugarcane,
and these are the major contributors to biomass energy resources. The majority of
agricultural waste in the Philippines is mainly made up of rice husk, rice straw, coconut husk,
coconut shell, banana, pineapple and general bagasse. The country has a very good
potential for biomass power plants, as approximately one half of the country’s agricultural
land produce includes rice, coconut and other tropical fruit products. Consequently large
volumes of rice straw, husks and the waste of tropical fruit produce are generated.

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Rice is the staple diet in the Philippines. Filipinos are amongst the world’s biggest rice
consumers. The average Filipino consumes about 100 kilograms of rice per year. Though
rice is produced throughout the country, Central Luzon and Cagayan Valley are the major
rice growing regions, with more than 1.2 million hectares of rice producing areas. The
country produced about 16 million tons of rice in 2015. This rice production gives an
estimated production of rice husks of more than 2 million tons per annum. This is the
equivalent of approximately 5 million barrels of oil in terms of energy. Rice straw is another
important biomass resource with a potential production of about 5 million tons per annum.

In 2006, the Philippines government passed the Biofuels Act. This was aimed at the sugar
industry in the Philippines, which is the major source of ethanol and domestic sugar, and a
major agricultural industry. About 380,000 hectares of land is devoted to sugarcane
cultivation, and it is estimated that 1.17m tons of sugarcane waste is recoverable as a
biomass resource in the Philippines. In addition, 6.4m tons of surplus bagasse is available
from local sugar mills. There are 29 operating sugar mills in the country with an average
capacity of 6,900 tons of sugarcane waste per day. The majority of these mills are located in
Negros Province, which supplies about 46 percent of the country’s annual sugar production.

The Philippines has the largest number of coconut trees globally, and produces the majority
of coconut oil and copra meal globally. The majority of coconut waste includes coconut shell,
coconut husks and coconut coir dust. Coconut shell is the most widely utilized however the
reported utilization rate is very low. Approximately 500 million coconut trees in the
Philippines produce very large amounts of biomass as husk, estimated at 6m tons annually.

Maize is also a major agricultural crop in the Philippines, and produces a large amount of
agricultural waste. It is estimated that 4m tons of grain maize and 1m tons of maize cobs are
grown annually in the Philippines. Maize cob burning is the main energy application of the
crop, and is widely practiced by small farmers to supplement fuelwood for cooking.

The development and optimal use of the country’s renewable energy resources is central to
the Philippine’s sustainable energy agenda. Renewable energy is an essential part of the
country’s low emissions development strategy, and is vital to addressing the challenges of
climate change, energy security, and access to energy in the Philippines.

Philippines Department of Energy – National Renewable Energy Programme (NREP)

The National Renewable Energy Program (NREP) outlines the policy framework enshrined in
Republic Act 9513. It sets the strategic building blocks that will help the country achieve the
goals set forth in the Renewable Energy Act of 2008. The NREP signals the country’s big
leap from fragmented and halting renewable energy initiatives into a focused and sustained
drive towards energy security and improved access to clean energy. The NREP sets out

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indicative interim targets for the delivery of renewable energy within the timeframe of 2011 to
2030. Meeting the large targets up to 2020 will be challenging as detailed planning,
financing, and building of renewable energy infrastructure will have to be undertaken at a
scale, and within a time frame, never done before.

The NREP lays down the foundation for developing the country’s renewable energy
resources, stimulating investments in the renewable energy sector, developing technologies,
and providing the impetus for national and local renewable energy planning that will help
identify the most feasible and least-cost renewable energy development options. The NREP
proceeds from the assumption that certain activities can be taken right away, while others will
take time to implement. As a national program, it will require periodic review to ensure it
conforms to the policy objectives set out in RA 9513.

Beyond the scale, however, are fundamental issues of transmission and grid integration for
intermittent renewable energy resources. Social and economic impacts cannot be
overlooked. These are issues that will be kept under close review, and action will be taken
toward meeting the challenges of balancing the country’s energy security needs and the
overriding goal of providing clean, affordable, and sustainable energy for all.

The NREP promises a continuing and well-coordinated effort to drive development in the
renewable energy industry, promote technology advancements, and achieve economies of
scale. It provides the basis for national and local renewable energy planning that will identify
specific actions and times upon which outcomes will be generated. Such plans will factor in
cross-cutting issues and essential interventions in the areas of transmission development
and integration, energy efficiency, off-grid electrification, climate change, technology transfer
and development, local capacity building, and partnerships.

Given the dynamic nature of the country’s energy sector, the NREP is an active document.
Forecasts and targets will be updated periodically as key developments in the energy sector
emerge. Programs will be reviewed, and deployment of renewable energy projects will be
monitored to ensure that stakeholders make good on their promise to deliver. Above all,
partnerships will be enhanced to ensure a country-wide approach in developing the country’s
renewable energy resources.

Investments in Philippine Biomass Industry

Rice farmers and millers have started to warm up to biomass power. A consortium of rice
millers, Isabela Biomass Energy Corp. (IBEC), is building a 20-MW rice-husk-fired power
plant in Alicia, Isabela. IBEC has tapped local bank Banco de Oro for a credit line of P1.8
billion to help finance the power project and its link to the national grid. Biomass power
generation can rejuvenate agri-focused businesses as well. Victorias Milling Co. Inc. is

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energizing its way to financial health with a P1.1 billion 40MW biomass power project. It is
set to put up a cogeneration facility using bagasse (leftover sugarcane fiber or sapal) at the
VMC agro-industrial complex in Victorias City, Negros Occidental province.

VMC’s usage of 3.1m to 3.3m tons of sugarcane is seen to provide enough raw materials for
the facility. When the biomass power station starts transmitting power to the Visayas grid,
VMC will be able to collect on the feed-in-tariff (FIT) incentive. VMC has formed a subsidiary,
Victorias Green Energy Corp. (VGEC) to undertake its power related projects. One of the
biggest suppliers of refined sugar in the Philippines, VMC supplies about 30 percent of the
country’s daily need for refined sugar. It sources its raw materials from district and non-
district planters as well as through cane and raw sugar purchases.

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The International Finance Corp. (IFC), with support from the Government of Canada and
Clean Technology Fund, announced in August 2016, a US$161 million investment in three
Biomass power plants in Negros Occidental. It was also announced recently that Bronzeoak
Philippines, owned by the sugarcane farming Zabaleta family will develop these three
projects in Negros Occidental to support the country’s clean renewable energy initiatives. IFC
will be joined by the Canadian government and the Clean Technology Fund in funding the
specified renewable energy projects being developed by the Zabaleta-based Bronzeoak
Philippines in the towns of Manapla, San Carlos and La Carlota in the Visayas grid. IFC has
stated that the project is expected to generate 70MW of clean renewable energy for the
country. Bronzeoak subsidiary South Negros BioPower developed, in partnership with
ThomasLloyd and funded by Cleantech Infrastructure Fund, a 25MW Biomass Power Plant
that would deliver about 175MW of electricity per year.

Amongst the foreign investors who have also started to take notice of the Philippines’
potential for biomass power, is the British company MacKay Green Energy (MGE). MGE is
discussing the investment of US$100 million in a biomass power plant and plantation for
feedstock in Mindanao. The Company Chairman James R. Mackay has said that MGE
would construct three Biomass power stations with a capacity of 32 MW. The Aboitiz Group
is also into biomass, with its 9MW biomass plant in Batangas, under Aboitiz Renewables
nearing completion. Biomass power is also being considered for the transport industry.
Aboitiz’s company AseaGas Corp 9MW Lian Biomass power plant in Batangas is keen on
exporting power to the Luzon grid and is considering prospects in powering modern
commercial trucks with gas. Oil firm Eastern Petroleum Group is also diversifying into
biomass power and has been seeking funding for a P4 billion biomass plant.

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About Us

Bob Shead is ASEAN Briefing’s Philippines Correspondent and is based in Manila. He has 25 years
experience as a diplomat in Asia.

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