A landmark piece of legislation that mandates a five percent ethanol blend in gasoline now under consideration by the House of Representatives.

Proponents say the bioethanol bill is supported by the local farming sector, environmental groups, and the government, which is worried about the soaring prices of imported fuel.

The bill is approved by the House committee on energy mandates the use of bioethanol fuel as an alternative transport fuel by requiring a minimum blend of five percent within the first two years of the measure’s effectivity, increasing to 10 percent by the end of the fourth year.

Bioethanol fuel is produced from biomass or organic matter such as trees, crops, plant fibers, poultry litter and other animal wastes, industrial waste and the biodegradable component of municipal solid waste. In the Philippines, the biggest sources of ethanol include sugarcane, corn, and cassava.

Only about 74 percent of the gasoline produced locally can be blended with ethanol, or specifically those with RON (research ‘octane number) of 87 and higher. Under the bill, the Department of Energy will adopt a National Bioethanol Fuel Program under which the blending of bioethanol fuel with gasoline will be implemented.

The DOE is also directed to gradually phase out “harmful gasoline additives and oxygenates” within six months of the measure’s effectivity.

Gasoline that will contain these additives or oxygenates and gasohol (the gasoline bioethanol blend) that do not follow the mandated mixture will be confiscated by the DOE.

The bill also provides fiscal incentives to encourage private enterprises to engage in bioethanol fuel production. These include exemption from paying tariff and duties on imports of inputs, machinery and equipment for 10 years, and a tax rating of bioethanol fuel equivalent to unleaded gasoline that shall remain for 10 years.

Producers of biomass sources such as sugarcane, cassava, sweet sorghum and corn will also be accorded priority when they access financing from government financial institutions such as the Land Bank of the Philippines, Development Bank of the Philippines and the Quedan and Rural Credit Guarantee Corp.

The bioethanol fuel bill has the support of the Department of Energy, Malacañang, and some if the leading gasoline manufacturers, like Petron.

With world oil reserves nearing depletion, ethanol is seen as one of the answers to the impending fuel crisis because it can be produced on continuing basis.

Aside from foreign exchange savings that will be generated from reduced dependence on imported crude, use of ethanol will reduce the harmful effects of burning fossil fuel and abate greenhouse gas emissions.

Ethanol production will also mean rural reconstruction through increased investments in the countryside and diversification in agriculture. Production of ethanol will result in the production of other useful products like liquid CO2 and high-protein livestock feeds, and will provide increased farm income and purchasing power.

Right now, Brazil, whose ethanol is sugarcane-based, is the leading producer and user with mandated minimum use of 23 percent blend with petroleum.

The US is the second biggest producer of ethanol, which is corn-based, with a 10 percent blend mandated in Minnesota and Hawaii. Twenty other states are using it under a reformulated gasoline standard, he said.

Nina sugar-producing states in India have mandated five percent blend to be increased to 10 percent on a national scale in the future.

Canada plans to have 35 percent of its petrol to contain 10 percent ethanol, which is grain-based, by 2010.

Thailand (cassava and sugarcane-based) has implemented 10 percent blend for premium gasoline in Bangkok, which will be expanded to the rest of the country by 2008. Already, 37 sugar mills have been licensed to put pup distilleries as of Sept. last year.

Australia (grain-based), particularly in Queensland, now has 50 filling stations that offer 20 percent gasoline blend. The country is expanding the use of the alternative fuel through its massive program to promote ethanol use and possibly, a national mandate in the near future, he said.

All these countries are expanding their production capacities while China, Japan and South Korea, traditionally imported oil dependents, are also expected to provide a huge market for ethanol once their fuel ethanol programs are implemented.

Practically, any country that is largely dependent on imported fuel for its energy source, or is concerned about health and environmental degradation due to fossil fuel burning, or mindful to its economic progress and has the agriculture base or potential to produce sugarcane, cassava, grains, and other carbohydrate products, should seriously consider the development and use of ethanol as fuel, Rep. Miguel Zubiri, a staunch supporter of the bioethanol bill and one of its proponents, said.