Disadvantages of the Philippine Biofuel Program

The Biofuels Act of 2006 (R.A. 9367) which was signed into law in January 2007 is supposed to help the Philippines attain energy-self sufficiency and also help reduce the country’s CO2 emissions. Unfortunately, this act is doomed to be both ineffective and problematic in other ways. Let us go through the various disadvantages of biofuels when applied in the Philippines.

It will displace food production.
The biofuel program requires large amounts of crops e.g. sugar, cassava and jatropha, in order to produce the needed bioethanol and biodiesel. The land needed to grow such inputs could very well also be used to grow food crops. While it is true that a lot of the land eyed for the program is at present not used for growing food crops; these lands nevertheless could be used to grow food. The problems are mainly institutional, legal or technical – and these problems need to be solved anyway in order to grow the biofuel crops. Why not just solve the institutional, legal and technical problems and then grow food crops instead?

Proponents of biofuels point out that jatropha could also be planted in less fertile areas. This could be the case, but the volumes needed for the biofuel programs makes it impractical to limit jatropha growing to these less fertile areas. Fertile land will also have to be devoted to jatropha production. But sugar and cassava are also needed for the program, and these need fertile land.

It will not significantly reduce oil consumption.
The biofuels program eventually aims to displace 10% of imported gasoline and diesel by mixing these with bioethanol and biodiesel. But it overlooks the amount of oil products needed in the process of producing bioethanol. The raw materials need to be transported to the processing plant, then these would be transformed to ethanol in the processing plant, which will be followed by the blending of the oil product, and the distribution. All these steps would need oil products to run. These inputs would be equivalent to almost a half of the gasoline or diesel displaced by the biofuels. Thus, instead of the projected 10% reduction in imported diesel and gasoline, it would be only 5% at most.

Some would say that the sugar-to-ethanol plants would be using electricity from burning bagasse fiber from sugar cane and thus would not need imported oil products to run. True, but this are not real savings, because the sugar cane bagasse could be burned to directly produce electricity. Thus, we could say that the sugar-to-ethanol process actually uses up local renewable electricity, which would otherwise go to the benefit of the local population. And since this electricity from bagasse is not used for the electricity grid, the NPC would need to produce additional electricity from imported oil products instead.

Biofuels will  cost more.
The whole process of producing biofuels and mixing these with gasoline and diesel would end up with a fuel that will cost more than the unmixed gasoline and diesel. The production of bioethanol and biodiesel is an expensive process. The whole cycle of producing biofuels from harvesting, to transport and processing it are all dependent on oil products, and thus the cost of producing these biofuels will be to a large extent dependent on the price of the oil products itself. And thus there is little prospect of the oil products becoming more expensive than the biofuels itself.

The government recognizes that biofuels would cost more than ordinary fuel oils; thus, they are exempting the biofuel component of the hybrid fuels (i.e. gasoline/diesel mixed with biofuels) from specific taxes in a bid to lower the overall price of the end product. Also, the government is granting an income tax holiday for companies setting up ethanol plants. These incentives would mean that tax collections will be less, and that the government would have to raise other taxes to make up for the shortfall. And this will mean that in the end, the consumer will still pay for the difference in cost.

Extensive biofuel crop production will aggravate social tensions over land.
The biofuel program and its need for large-scale production will mean that large tracts of land will be needed. This usually means that large plantations will need to be established for this purpose, or more likely big landlords will use the program as an excuse to avoid land redistribution. And we have to consider the likelihood of conflicts over land as a result of this push for large-scale production: lands will be converted, there will be land-grabbing, indigenous peoples rights to land will be disregarded, etc.

Biofuel advocates point out to large tracts of untilled lands, many of which are government owned, which would be used for planting the needed crops. But these lands are not untilled without a reason. Often, the reason would be unsettled land disputes of various kinds. Or the landowners had fled because of armed conflict. Or the land is unfit for crop farming. If these untilled lands would be given to private companies or landholders in order to grow biofuel crops, this is a recipe for big trouble – an avalanche of protests, cases filed, and armed conflict.

Biofuels do not really save on greenhouse gas (CO2) emissions.
It seems like a good idea: produce fuel from plants in order to lessen on CO2 emissions. Theoretically this would be carbon-neutral; since the amount of carbon released from the combustion of plants (or products derived from plants) would equal the amount of carbon the plant absorbed from the air during its growth.

I have pointed out earlier that oil products are going to be used in the production of biofuels. This in itself would mean that biofuel use would end up emitting additional CO2 (i.e. more CO2 than was absorbed by the plants in the first place). But we should also add to this the CO2 that was emitted in clearing the land in order to be able to plant the biofuel crops. Those plants were already absorbing CO2 from the air, meaning that clearing them from the land would in effect be adding CO2 to the atmosphere. And for the (inevitable – especially since the program will need large amounts of crops) cases when rain forest or jungle is cleared in order to make way for the biofuel crops, this would mean the addition of a big amount of CO2 to the atmosphere.

More on the Philippine Biofuel Program

Name your child after a star?

Wondering what to name your child? How about naming her/him after a star? No, I don’t mean “star” in the sense of a movie star, or pop idol; I mean to literally name the child after a “star” as in, up there, a heavenly body….

Some people name their child, not for a particular star, but simply for “star”, in the general sense. Thus, we get names like: Stella (star, in Latin), Estrella (Spanish), Aster (Greek), and even Tala (Tagalog).

But you could also name the child after a specific star. Here are some of possible names, with their meanings:
Andromeda (daughter of Cassiopeia)
Aries (the Ram)
Antares (Roman god, a rival of Mars)
Bellatrix ( woman warrior)
Chara (joy)
Maia (mother)
Mira (wonderful)
Nashira (she who brings good news)
Nihal (camel quenching their thirst)
Rigel (foot)
Vega (eagle)

(for more names of stars: Star Names by Steve Gibson.)

You could also choose not to go so far, but rather just keep within our solar system. I know some people named Sol (latin for sun), but I think their full name is really something like Soliman, or so. Then come the planets:
Mercury – I know someone whose name is “Mercurio“, but I don’t know how happy he is with this unique name 🙂
Venus – a beautiful name, which is appropriate for the name of the Greek goddess of beauty. Minerva, Venus’ latin version is also another possible name.
Earth – I don’t know anybody named “Earth”, but the Greek word “Gaia” seems like a nice name.
Mars – this is generally a nickname, I think; short for “Marcelino” or so,
Saturn – some people are named “Saturnino“, but this gets shortened to “Satur”, or even gets replaced by initials (e.g. “ST”) or even something like “Jun”
Jupiter, Uranus and Neptune – I don’t know anyone named after these planets
Pluto – good name for a puppy, perhaps 🙂

The solar system also has other “heavenly bodies” with nice names. Let’s start with the moons:
(earth’s own) moon – Selene (or Selena), from Greek
Io, Callisto – two of Jupiter’s moons; who know’s? maybe as boy names?
Rhea, Dione – two moons of Saturn
Charon – Pluto’s moon

And then there are names of the asteroids. By the way, there are literally thousands of names of asteroids. Consider the names of the biggest ones e.g. Ceres, Pallas and Vesta. (for more asteroid names:Minor Planet Names: Alphabetical List)

And then there is Eris, which could be considered the 10th planet in our solar system (it is bigger than Pluto and its orbit is farther out ); but it is now officially classified as a “dwarf planet”.

Well, if none of these names catch your fancy; I guess you can always resort to naming your child after a showbiz star.. 🙂

Promoting Overseas Filipino Investments in Small and Medium Scale Businesses

When Overseas Filipinos (OFs) invest money in the Philippines, it is usually spent on real estate or on micro-business ventures e.g. sari-sari store or tricycle. Why aren’t they more entrepreneurial? why don’t they invest in bigger businesses?

One reason is that OFs in general were not entrepreneurs before leaving the Philippines. Because if they were, they would then have had a thriving business, and then there would not be a need to go find a job abroad. Of course, there are OFs who became entrepreneurs while abroad, and these have set up their own businesses where they live. The gap is when we expect OFs to set up Philippine -based businesses while they are abroad. For OFs this is a rather risky proposition. Who will manage these businesses? their close relatives? If their close relatives were good at running businesses in the first place, there would probably have been no great need to have a family member go abroad and remit them money. Let us just say, then, that relatives of OFs are generally not the best managers of any businesses that remittance money could be invested in.

Then there is the question of scale. Why set up only micro-businesses? e.g. sari-sari stores and tricycles? Well, for one, these small ventures need a minimum of management skills, and thus could be entrusted to relatives (or rather, the OF could take the risk to entrust their relatives with the relatively small amounts of money needed for these ventures). If the OF wanted to invest bigger amounts, this is usually accompanied by a decision to base themselves in the Philippines, so that they would manage the business themselves.
Also, the funds available to one OF is usually limited to their personal savings, plus perhaps what they could borrow. This makes it logical that the investment could not be that big.

If we want to promote OF investments into small and medium scale businesses, we need to address the following problems, which are:

– how do we get OF to pool their investment money together to be able to set up businesses of a larger scale?

– how would these businesses be managed? or rather, who will manage them?

– how could we minimize business risk for the OF investor? or in other words, why should they invest in a (relatively risky) Philippine venture, when returns on investment in their host country may be quite attractive (or at least, more secure)?

The Philippine government could do a lot to address the questions listed above; and in so doing, also help to promote OF investments in small and medium sized businesses. There are various ways in which to induce OFs to invest more. One is to find ways by which they could pool their resources. Another is to offer a satisfactory solution to the question of good management. Also, more areas of the economy should be opened for investments by OFs.

I suggest a number of steps the government could take:

1. Pass a law which would recognize all OF investments as Filipino. This means that when OFs who are citizens of their host countries invest in the Philippines, that business will be treated as 100% Filipino and thus be entitled to all the rights that entail. At present, there are many sectors of the economy which are closed to non-Filipinos (and unfortunately also to a lot of OFs), e.g. publishing, retailing (above the sari-sari store level), etc. These sectors would then be open to OF investments. Also, recognizing OF investments as 100% Filipino would entitle these to assistance from a whole range of government agencies.

This approach would be much better than trying to pass an “Overseas Filipino Investments Incentive Law” or something like that.  Passing such a law would be too complicated and tedious; it will also probably omit many things. Simply recognizing OF investments as 100% Filipino is simple, straightforward, and is dignifying and fair to OFs. They are willing to risk their hard-earned savings in a Philippine venture; in return they deserve to be recognized as full-fledged participants in the Philippine economy.

2. As an extension of the 1st point, OF-owned businesses established abroad, and cooperatives of OFs abroad should also be recognized as Filipino.

3. Promote OF investments in existing small and medium sized enterprises (SMEs) through the buying of shares in these companies. With a good method of certifying which businesses would be qualified for this program; this would mean that OFs would no longer have to bear the risk and difficulty of building a business from scratch, and will solve the problem of having a good management of the business.
OFs with money to invest would no longer be forced to have their relatives manage their business. And SMEs would be able to tap on to a source of needed funds.

4. Facilitate the setting up of mutual funds that are owned by OFs, and run for them by professional fund managers.

5. Facilitate the setting up of companies which would administer OF-owned properties. The management of real estate could be more professionally done by such companies than by the relatives of the OFs themselves.

6. Encourage a system in which OF-relatives who want to set up micro or small scale businesses (e.g. buy a jeepney, establish a grocery, etc.) would get a loan from a bank, which would use as collateral a combination of the businesses’ assets (e.g. the jeepney) and a guarantee from the relative abroad. The bank would be in a good position to determine the feasibility of the proposed business, and help to ensure its good financial management. This not only reduces the risk to the OF, it would potentially make it possible for the OF to support bigger investments by their relatives.

With measures such as the ones enumerated here, it should be possible to realize more completely the big potential for OF investments.

Reduce household electricity costs

With all the talk about the dangers of global warming, it would also be good to do some things ourselves to help in the effort to reduce greenhouse gases. By lessening our electricity consumption, we will not only help the planet; we will also be helping ourselves financially.

The Philippines’ electricity consumption is growing fast. In response, and a lot more production capacity needs to be installed, or electricity consumption should be drastically reduced, or both.

Reducing home electricity expenses is both relatively easy for people to do, and the financial gains are felt immediately.

Some things we can do at home to save on electricity

– change all incandescent lamps with Compact Flourescent Lamps (CFLs);

– raise airconditioning expenses by shortening the time when it is on, and by setting the thermostat to 22 degrees C (instead of usual 18 degrees) ;

– conserve refrigerator coldness by minimizing opening its door and regular defrosting;

– turn off computers completely when not in use.

For more detailed tips, look up: Tips to Save Electricity.

The Philippines is almost ripe for solar energy

In the Philippines today, solar energy – through photovoltaic (PV) cells – which transform the sun’s rays directly into electricity – is generally a niche product. It is seen mainly as a way of generating electricity for isolated communities e.g. small islands, etc. since these places would cost too much to get physically connected to the electricity grid (through transmission towers or underwater cables). Electricity from PV cells are viewed as too expensive when compared to electricity from the grid.

Electricity from PV cells is almost ripe for widespread installation in Philippine cities.
Some policy and infrastructure need to be put in place, but the underlying technology and economics of solar energy promise to make it ripe for widespread use very soon. Here are some factors:

Lots of sunlight. In contrast to European countries, the Philippines is endowed with a lot of sunlight all year round. And the sun’s rays are more intense, and the sun is nearly overhead at its highest point. This means that the amount of electricity that a PV cell can generate is potentially greater, and that the solar panel does not have to be “aimed” at a certain direction to get enough sunlight (it can simply lay flat on a roof).

Technological advances. Photovoltaic cells have become cheaper than before due to the substitution of expensive materials used (e.g. gallium and indium) with cheaper silicon, carbon and boron; thinner PV cells and easier installation and operation; advances in the efficiency of batteries, etc. Announcements of breakthroughs in the latest “thin film” technology have been made in January, which potentially could reduce the cost of PV cells by half, are a sign of big (and recent) strides in technology.

Rising Cost of Oil, Appreciating Peso. With the present state of PV development and the abundant sunlight in the Philippines, the cost of electricity from PV cells should now be around 12 pesos/KwH. If we compare this to the cost of producing electricity from oil (around 6 pesos/KwH) or coal (less than 4 pesos/kwH), then solar energy from PV cells is still more expensive. In the last two years, the cost of oil has doubled, and the peso has appreciated almost 20% in relation to the dollar. When the cost of oil rises, this would mean an increase in the cost of electricity generated by oil-fired generators. As the peso appreciates, the price of the imported components needed for solar energy generation goes down. If this trend of rising oil prices and appreciating peso is set to continue, the cost difference between solar energy and oil/coal will lessen.

Ripening?
Solar energy may not yet be ripe for widespread use just yet, but the economic and technological changes make it applicable for more and more places in the country. Where before, it may have been cost-effective for very small islands or really remote communities, the changes may mean that it could be cost-effective for less-remote communities. Some islands which are not connected to the national grid may be more dependent on fuel oil generators, which would mean that their retail cost of electricity would be significantly above the national average of 7 pesos/kwH. (assuming full dependence on fuel oil generators, retail prices would be above 9 pesos/KwH]) [in the national grid, about 30% of the electricity is produced from cheap renewable sources like geothermal, wind and hydroelectric]. In these places, solar power achieve grid-parity (which is when the cost of solar power is equivalent to the cost of electricity from the grid) would come earlier than in the main electricity grid.

While electricity from PV cells is still a bit more expensive than that from fuel-oil generators, there are some advantages of using PV cells even now. This would include:
Lesser transmission costs and risk. Solar energy is produced nearer the consumer, which means less cost for transmitting the electricity, and less risk of having power cuts because of problems in the transmission. After all, terrorists, rebels or extortionists could always blow up power lines; or an earthquake or other disaster could happen.

Possibility of having more sunlight, solar cells lasting longer. All the computations re the cost of solar energy are based on the expected amount of sunlight during a 20-year period. If there happen to be lesser cloudy days than the average, the electricity produced by the PV cells would be more, meaning that the cost per KwH would be less. Also, after the 20-year period, the solar cell will most probably still work; any electricity produced after this point is also cheaper.

Funds for projects that reduce CO2 emissions. Under international agreements meant to reduce greenhouse gases, funds are available for projects (especially in the third world) which reduce greenhouse gases. This is only available in cases where they are not (yet) commercially viable. Solar energy projects in the Philippines would qualify for these grants. These payments could easily bridge the gap between the cost of solar power and conventional electricity.

For more on solar energy: Solar Energy Links , Solar Energy in the Philippines