Oil companies’ concerns on coco-diesel
The Philippine Star 07/17/2006
The Philippine Institute of Petroleum (PIP), which represents mostly the interest of the country’s three giant oil companies, is in full gear as debates rage on the proposed government policy on the development and usage of alternative fuels.
In February 2004, the government mandated the use of one percent coconut methyl ester (CME) for its diesel-powered vehicles. In March last year, the Department of Energy (DOE) issued a circular enjoining oil companies to sell coco-biodiesel as additive mix in service stations, but with a very clear view of pursuing the implementation of a national coco-biodiesel program.
I recently had lunch with the amiable spokesperson of Pilipinas Shell, Bobby Kanapi, at Tsumura (at 88 Corporate Center, corner Sedeno and Valero Streets, Makati), the authentic Japanese restaurant owned by the well-known restaurateur Jimmy Go. Although we seldom discuss oil industry issues during our regular golf and lunch sessions, our conversation drifted to the issue of bio-diesel.
Bobby had ready answers to the questions raised. After enthusiastically presenting his case, I promised to print the gist of PIP’s position (there is no free lunch, nowadays!) with the caveat that I may have a differing view. Being a true professional, Bobby Kanapi understood.
I am reprinting below excerpts of PIP position, specifically on the oil companies concerns on product quality, supply security, product liability and supply. Here goes:
"While CME, which is a very old technology, my be incorporated as a diesel blend, there is a need for a more extensive and comprehensive technical evaluation based on internationally accepted tests and procedures, including assessment on product stability; product handling, transportation and storage; long-term suitability, solvency and corrosiveness; and long-term effects on the diesel engine in the Philippine setting.
"Likewise, CME which was given a permit as a fuel additive by the Environmental Management Bureau (EMB) must be able to demonstrate on a sustained usage that it will not contribute to the increase in exhaust gas emissions of the transport vehicles
"There were concerns raised during discussions at the technical level of the proposed testing protocols on whether the handling of CME can be undertaken using the current facilities of the industry players. To date, no conclusions have been formulated so far to address this concern.
"The United States National Renewable Energy Laboratory (NREL) representatives presented the results on laboratory tests only and not the performance tests. What it showed was that the properties of the CME blended samples (one percent to five percent blended to diesel) fall within the specifications of the current Philippine diesel standards.
"However, the actual performance of the blending component or additive can only be assessed through comprehensive engine testing based on internationally accepted trials and standards. Positive laboratory test data is not a guarantee that CME will perform the same as diesel fuel. The completion of comprehensive engine tests as well as the durability tests are mandatory.
"It will be recalled that the previous coco-diesel program of the government was halted since the product’s moisture content led to bacterial and algae growth in the storage tanks. This contamination, in turn, led to clogging of fuel filters and breakdown of vehicles.
"To guarantee the quality and performance of products sold at the retail station level, our member companies endorse only products that are of high quality standards. These products undergo strict adherence to safety, environment and quality standards.
"To date, there have been limited study results and available empirical data on CME. We wish to reiterate our collective concern that the sale of CME in retail stations may subject individual oil companies or retailers to customer complaints and possible legal action.
"Recent tests show that five percent FAME (fatty acid methyl esters where CME is categorized/classified) in diesel has negative effects on engine parts. Engine tests on FAME-diesel blends conducted by the Ministry of Economy, Trade, and Industry (METI) of Japan, which was commissioned by the Fuels and Lubricants Sub-Committee of the Japan Automobile Manufacturers Association (JAMA), indicate negative effects on engine parts.
"Using five percent blend of FAME in diesel fuel resulted in the abrasive wear in fuel injector equipment for both Bosch and Denso, fuel flow reduction which means that the engine may suffer power reduction for insufficient supply of fuel. It also found heavy corrosion in fuel tanks, and leakage in fuel filters.
"Similarly, Cummins and Caterpillar neither approves or prohibits use of biodiesel fuel, but failures caused by the use of biodiesel are not defects of workmanship and/or material as supplied by the two manufacturers would not be covered nor compensated under the warranty.
"Thus, long term effects of CME on diesel should be considered as it would greatly affect the motoring public in terms of engine performance, its compliance to emission regulatory requirements, and the subsequently heavy toll on maintenance.
"We likewise wish to raise our concerns on the volatile price of CME in the country. It is important to note that on a per liter basis, CME is more expensive than diesel. Given its budget constraint, the government may find it not advisable to sustain with subsidy the proposed CME to make such a product as "affordable" as conventional diesel fuel.
"Even if money can be made available to provide such a subsidy, there is the potential danger of encouraging a shift from manufacturing coconut oil to CME rather than to household cooking oil. As such, the price of cooking oil may thus rise to such levels that will be beyond the reach of common housewives."
In view of space limitations, I will present the comments and suggestions that I discussed with Bobby in succeeding columns.
The Philippine Institute of Petroleum (PIP), which represents mostly the interest of the country’s three giant oil companies, is in full gear as debates rage on the proposed government policy on the development and usage of alternative fuels.
In February 2004, the government mandated the use of one percent coconut methyl ester (CME) for its diesel-powered vehicles. In March last year, the Department of Energy (DOE) issued a circular enjoining oil companies to sell coco-biodiesel as additive mix in service stations, but with a very clear view of pursuing the implementation of a national coco-biodiesel program.
Bobby had ready answers to the questions raised. After enthusiastically presenting his case, I promised to print the gist of PIP’s position (there is no free lunch, nowadays!) with the caveat that I may have a differing view. Being a true professional, Bobby Kanapi understood.
I am reprinting below excerpts of PIP position, specifically on the oil companies concerns on product quality, supply security, product liability and supply. Here goes:
"While CME, which is a very old technology, my be incorporated as a diesel blend, there is a need for a more extensive and comprehensive technical evaluation based on internationally accepted tests and procedures, including assessment on product stability; product handling, transportation and storage; long-term suitability, solvency and corrosiveness; and long-term effects on the diesel engine in the Philippine setting.
"Likewise, CME which was given a permit as a fuel additive by the Environmental Management Bureau (EMB) must be able to demonstrate on a sustained usage that it will not contribute to the increase in exhaust gas emissions of the transport vehicles
"There were concerns raised during discussions at the technical level of the proposed testing protocols on whether the handling of CME can be undertaken using the current facilities of the industry players. To date, no conclusions have been formulated so far to address this concern.
"However, the actual performance of the blending component or additive can only be assessed through comprehensive engine testing based on internationally accepted trials and standards. Positive laboratory test data is not a guarantee that CME will perform the same as diesel fuel. The completion of comprehensive engine tests as well as the durability tests are mandatory.
"It will be recalled that the previous coco-diesel program of the government was halted since the product’s moisture content led to bacterial and algae growth in the storage tanks. This contamination, in turn, led to clogging of fuel filters and breakdown of vehicles.
"To date, there have been limited study results and available empirical data on CME. We wish to reiterate our collective concern that the sale of CME in retail stations may subject individual oil companies or retailers to customer complaints and possible legal action.
"Recent tests show that five percent FAME (fatty acid methyl esters where CME is categorized/classified) in diesel has negative effects on engine parts. Engine tests on FAME-diesel blends conducted by the Ministry of Economy, Trade, and Industry (METI) of Japan, which was commissioned by the Fuels and Lubricants Sub-Committee of the Japan Automobile Manufacturers Association (JAMA), indicate negative effects on engine parts.
"Using five percent blend of FAME in diesel fuel resulted in the abrasive wear in fuel injector equipment for both Bosch and Denso, fuel flow reduction which means that the engine may suffer power reduction for insufficient supply of fuel. It also found heavy corrosion in fuel tanks, and leakage in fuel filters.
"Similarly, Cummins and Caterpillar neither approves or prohibits use of biodiesel fuel, but failures caused by the use of biodiesel are not defects of workmanship and/or material as supplied by the two manufacturers would not be covered nor compensated under the warranty.
"Thus, long term effects of CME on diesel should be considered as it would greatly affect the motoring public in terms of engine performance, its compliance to emission regulatory requirements, and the subsequently heavy toll on maintenance.
"Even if money can be made available to provide such a subsidy, there is the potential danger of encouraging a shift from manufacturing coconut oil to CME rather than to household cooking oil. As such, the price of cooking oil may thus rise to such levels that will be beyond the reach of common housewives."
In view of space limitations, I will present the comments and suggestions that I discussed with Bobby in succeeding columns.
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