Biomass Energy in the Philippines: Assessment and Strategy Formulation

JESSIE C. ELAURIA, Ph.D. Associate Professor & Project Leader UP Los Banos

PART I. ENERGY AND ENVIRONMENT

Fossil fuel reserves of the country include: proven oil reserve of 24.2 million m3 proven natural gas reserve of 3 trillion m3, and proven coal reserves of 236 million M tons

Energy Consumption

Total electricity generation capacity in the country - 51.2 billion Kwh in 2003 61.9% thermal 15.8% hydro and 22.2% geothermal Growth rate - 5.9% per annum between 1999 and 2003 Total energy consumption was 1.18 quadrillion Btu

Carbon Emissions

Energy-related carbon dioxide emissions were 64.5 million tonnes (approximately 0.3% of world total) The share of CO2 emissions from fossil fuels was 76.6% from oil, 17.0% from coal, and 6.4% from natural gas in 2002

PART II. BIOMASS ENERGY

Introduction

Biomass energy is projected to play a major role in meeting world energy demand in the future Promoting deployment and diffusion of modern BETs - vital for harnessing the potential of biomass energy in the Philippines

PART II. BIOMASS ENERGY

Introduction

In 2002, the countrys total primary energy consumption was 254.4 million barrels of fuel oil equivalent (MMBFOE) Biomass, solar, and wind resources contributed a total of 31% of the total primary energy consumption

Major Research Activities/Objectives

The present study was carried out within the framework of the Biomass Project of the ARRPEEC Phase III. Major objectives of the study were to:

Characterise and assess selected BETs Identify barriers to their introduction, and strategies for overcoming them Identify and analyse issues affecting transfer of BETs

CHARACTERISATION AND ASSESSMENT OF SELECTED BETS

This study selected three BETs on the basis of numerous factors including: diffusion potential cost effectiveness conformity with national development goals, and feasibility of local manufacturing

CHARACTERISATION AND ASSESSMENT OF SELECTED BETS

For the Philippines study, the selected technologies were: Biomass-Fired Boiler for Power Generation Biogas System for Cooking Application Improved Cooked Stove

Biomass-Fired Boiler for Power Generation

The study considered a 2 MW communal power plant, Rice hull is first gasified and gas is burnt to produce steam for power generation. Thermal efficiency - 12%, a capacity factor - 80%, and a boiler efficiency - 74%.

Biomass-Fired Boiler for Power Generation

The unit's total annual electricity generation is 12,996 MWh 47% of this is allocated to meet the electricity demand of the participating rice mills while excess power will be sold to the grid The payback period is approximately 3.5 years, with 23% internal rate of return

Biomass-Fired Boiler for Power Generation

The estimated technical potential could increase by as much as 52% from 1998 (102 MW) to 2001 (155 MW). Compared to coal based power production as a baseline (with a lower cost per unit of power output), ricehullfired facility is still not comparable.

Benefits and CO2 Mitigation and Emissions: Biomass-Fired Boiler for Power Generation
Benefits CO2 Mitigation and Emissions

reduction in the volume of Compared with conventional waste generation coal based power generation (a reduction of the countrys 600 MW plant with coal dependence on imported fuel consumption amounting reduction of foreign exchange to 34,764 TJ/year), the allocation to imported fuel mitigation potential is 10 reduction of the countrys kt of CO2 equivalent per dependence on imported fuel year.

Biogas System for Cooking Application

The study considered a biogas system with a 6 m3 fixed-dome type digester, a 2 m3 hydraulic tank, a 1.2 m3 mixing tank, and a 3 m3 gasholder. Designed for a 30 head hog farm with annual biogas production of 817 m3, which is equivalent to 16,340 MJ/year.

Biogas System for Cooking Application

Annually, the system needs a total of 832 man-hours. Internal rate of return is 138% giving a payback period of 1 year. Estimated technical potential of biogas production from hog manure is 1.5 PJ in 2002, with a projected potential of 1.9 PJ in 2010.

Benefits and CO2 Mitigation and Emissions: Biogas System Benefits CO2 Mitigation and Emissions
Improved waste disposal Reduced pressure on fuelwood reduction of air, water, and land pollution reduced reliance on fossil fuels
reduce kitchen-related health hazards for women and children

The annual greenhouse gas (GHG) emission mitigation potential of a biogas stove is 1.7 t CO2 equivalent when used to replace an LPG stove or 3.1 t CO2 equivalent when used to replace a kerosene stove

Improved Domestic Stove: FPRDI Charcoal Stove

The study selected a charcoal stove developed by the Forest Product Research and Development Institute (FPRDI). One of the few of the existing stoves in the country that is considered highly efficient. Reported efficiency - 33%, the highest of the available stoves

Improved Domestic Stove: FPRDI Charcoal Stove

The stove consumes 0.6 kg charcoal per hour and operation is simple. It has an annual heat generation of 2.970 GJ, and its cost per unit of heat output is USD 27.06/GJ. The technical potential for the FPRDI stove is 3.314 million units. The FPRDI Stove costs USD 3 which is much lower than the cost of either LPG or kerosene stoves.

Benefits and CO2 Mitigation and Emissions: Improved Domestic Stove

Benefits CO2 Mitigation and Emissions
Address rural poverty alleviation by Annual GHG emission more widespread use of the FPRDI mitigation potential of an Stove FPRDI stove is 534 kg CO2 Reduce the amount of biomass when used to replace an LPG used in cooking leaving it available stove, or 990 kg CO2 for other useful applications equivalent when used to Forest degradation could also be replace a kerosene stove mitigated through more efficient use of fuelwood.

BARRIERS TO SELECTED BETS

There are many barriers to expanding the use of modern BETs. In order to analyse and address these barriers, they were ranked using Analytical Hierarchy Process (AHP) methodology based on the following criteria:

Impact of removal Ease of removal

Responses of researchers, manufacturers, policy personnel, and users were considered in ranking barriers.

Hierarchy for the ranking of barriers to selected BETs

Level 1: GOAL
RANKING OF BARRIERS

Level 2: CRITERIA

IMPACT OF BARRIER REMOVAL

EASE OF BARRIER REMOVAL

Level 3:

B A R R I E R S

BIOMASS-FIRED STEAM BOILERS

1. High initial cost 2. High adoption/ transaction cost 3. Lack of financing/risk coverage mechanism 4. Lack of local expertise (manufacturing, maintenance) 5. Lack of product standards 6. Lack of coordination among government agencies 7. Lack of financial/fiscal incentives 8. Lack of access to information 9. Subsidy to fossil fuel (bias against BETs) 10. Lack of biomass feedstock supply assurance

BIOGAS SYSTEMS
1. High adoption/ transaction cost 2. Lack of financing/risk coverage mechanism 3. Lack of local expertise (manufacturing, maintenance) 4. Lack of product standards 5. Lack of coordination among government agencies 6. Lack of financial/fiscal incentives 7. Lack of access to information 8. Subsidy to fossil fuel (bias against BETs) 9. Lack of biomass feedstock supply assurance

IMPROVED COOKSTOVES
1. High initial cost 2. Lack of micro-credit financing mechanism 3. Lack of assurance/ performance standards 4. Lack of coordination among government agencies 5. Lack of local expertise/skills/know-how 6. Subsidy to fossil fuel 7. Lack of locally available high performance stove

STRATEGIES TO REMOVE BARRIERS AND PROMOTE BETs

The study proposed several policy measures aimed at mitigating or removing the perceived barriers to the adoption of BETs. Policies to address barriers were examined separately for each technology.

BARRIERS AND MEASURES:

Biomass-Fired Boiler

BARRIER MEASURE 1. Lack of product Formulation of effective and standard enforceable standard Conduct testing and labelling of system parts and components 2. High initial cost Local manufacturing of system parts Concessional duty rates for imported units and parts Attractive loan packages for environmentally sound system

BARRIERS AND MEASURES:

Biomass-Fired Boiler
BARRIER 3. High adoption or transaction cost

MEASURE Capacity development of potential investors and developers

4. Lack of access A one-stop-shop for processing to information of project documents, permits, and clearances for easy approval. Formation of a Renewable Energy Information Network (REIN) with renewable energy databases

BARRIERS AND MEASURES:

Biomass-Fired Boiler
BARRIER
5. Lack of financing or risk coverage mechanism

MEASURE
Capacity development of financing institutions related to renewable energy projects. Establishing dedicated fund for renewable energy projects by financing institutions.

BARRIERS AND MEASURES: Biogas System

BARRIER MEASURE
1. Lack of product Formulation of effective and standard enforceable standard Conduct testing and labelling of system parts and components 2. Lack of Capacity development of financing or financing institutions in relation risk coverage to renewable energy projects. mechanism Financing institutions could even establish a dedicated fund for renewable energy projects.

BARRIERS AND MEASURES: Biogas System

BARRIER
3. Lack of access to information

MEASURE
A one-stop-shop for processing of project documents, permits, and clearances to get projects approved easier. A Renewable Energy Information Network (REIN) with renewable energy databases should be formed Capacity development of potential investors and developers Training programmes on design, operation and maintenance aspects need to be developed

4. High adoption or transaction cost 5. Lack of local expertise

BARRIERS AND MEASURES: Improved Cooking Stoves

BARRIER
1. Lack of locally available high performance stoves 2. Lack of product standard

MEASURE
Incentives to manufacturers to encourage mass production Formulation of effective and enforceable standard Conduct testing and labelling of system parts and components

BARRIERS AND MEASURES: Improved Cooking Stoves

BARRIER MEASURE

3. Subsidy to Fossil Fuel (Bias Against BETs)

Subsidies on fossil fuels need to be rationalised against the desire to promote BETs Government may consider providing equivalent subsidies to the renewable energy alternatives.

BARRIERS AND MEASURES: Improved Cooking Stoves

BARRIER 4. High Adoption or Transaction Cost MEASURE Use in income generating activities should be encouraged Use of low cost indigenous materials Incentives to manufacturers to encourage mass production Training programmes in order to disseminate information on design, operation and maintenance

5. Lack of Local Expertise or Skills and Know-How

Key Strategies for Promoting Selected BETs in the Philippines

Government policies and incentives have created a framework favourable to the conventional systems The promotion of BETs needs more than just policies and incentives. It requires a framework of strategies meant not just for energy delivery and access, but which support sustainable development as well. The study recommends the following key programs to address the barriers to the deployment of the selected BETs in Philippines.

Capacity Building Programme

Comprehensive learning and understanding among concerned stakeholders of the sector. The capacity building programme can be in the form of training, seminars, workshops, technical assistance, conferences, consultations, meetings and special activities.

Information Dissemination Programme

Comprehensive information on BETs, including related government policies and incentives, current service providers, potential community and business users. Moreover, aim to encourage the target stakeholders to seek more specialized information about BETs. An effective information dissemination program through an appropriate public awareness campaign.

Renewable Energy Information Network (REIN)

Establishment of the REIN accompanied by an Information Focal Centre (IFC), acting as a hub for the dissemination of information on RETs through the web and other media. It should be a network of information sources and should coordinate all information dissemination tasks.

Financing Mechanism Programme

Accessible credit facilities will be provided to potential borrowers by this programme

Several schemes are recommended including leasing programmes and micro-credit financing.

Institutional Strengthening Programme

Coordination among different institutions and stakeholders can be done by strengthening the existing Renewable Energy Network (REN)
Establishing a onestop window to assist in the processing of documents, permits and clearances for BETs.

Policy Measures

In the form of production incentives such as per-kilowatthour payments or tax credits Guaranteed power purchase agreements at favourable rates

TRANSFER OF SELECTED BETS: Current Assessment

The Philippine Department of Energy's programmes on New and Renewable Energy and Power Development can strongly support the development of NRE resources The DOE pursues continuous development and use of new and renewable energy as a strategy to attain energy self-sufficiency and environmental protection.

TRANSFER OF SELECTED BETS: Current Assessment

One major strategy of the Philippine government under PEP 2003-2012 in ensuring a stable and secure energy supply is to enhance utilisation of renewable energy. It encourages private sector participation including foreign investment in the exploration and utilisation of these energy resources, and in the manufacturing of renewable energy systems and components.

TRANSFER OF SELECTED BETS: Current Assessment

The DOST is geared towards scientific and technological research and development in all areas including RETs. DOSTs R&D institutes, the Forest Products Research and Development Institute (FPRDI), works on efficient utilization of forest-based biomass resources.

TRANSFER OF SELECTED BETS: Current Assessment

The DOSTs Industrial Technology Development Institute (ITDI) is engaged in adaptive R&D on new and advanced energy conversion technologies. Only DOSTs International Technology Cooperation Unit (ITCU) is mandated to carry out international technology transfer activities.

TRANSFER OF SELECTED BETS: Current Assessment

The country has numerous foreign direct investment policies related to the development of renewable technologies. These policies work to make investment attractive to private sector, and to extend fiscal incentives to renewable energy operations.

Barriers and measures to successful transfer of BETs

Barriers

Measures

1. Lack of Access to Enhance dissemination of Information information on modern BETs, including government policies and incentives regarding their transfer

Barriers and measures to successful transfer of BETs

Barriers
2. Insufficient Human and Institutional Capacities

Measures
The country's technology absorption capacity needs to be developed. Existing technology infrastructure should be strengthened by identifying and remedying gaps in its existing capacity.

Barriers and measures to successful transfer of BETs

Barriers Measures
3. Financial The financial system and financial resources and Economic need to be developed. Barriers Pollution charges or taxes on fossil fuel systems would raise the price of fossil-fuel energy making BETs more competitive. Enforcement is key to enabling private companies to switch to greener energy technologies. The government needs to raise both domestic and foreign financial resources such as commercial loans and Official Development Assistance (ODA) in order to direct financial support to BETs.

Barriers and measures to successful transfer of BETs

Barriers Measures
3. Financial Government support can be in the form and Economic of a venture capital and bridging Barriers capital, and long-term loan packages with lower interest rates and flexible amortization schedules. There is also a need to mobilize greater private sector participation in terms of investment.

Barriers and measures to successful transfer of BETs

Barriers Measures
4. Trade and Pollution charges could help promote Policy Barriers technology transfer, as could voluntary agreements between government and private sector, product and performance standards Policy initiatives to attract private investment in clean energy systems are needed, Environmental codes, intellectual property rights protection, and foreign direct investment would also encourage technology transfer.

Barriers and measures to successful transfer of BETs

Barriers Measures 4. Trade and Voluntary agreements between Policy Barriers government and private sector regarding GHG emission reductions should also be pursued. Adopting international standards such as ISO 14000, can substantially promote international technology transfer.

Barriers and measures to successful transfer of BETs

Barriers Measures 5. Institutional Technology transfer opportunities Limitations should be pursued under the Clean Development Mechanism (CDM).

GENERAL CONCLUSIONS

The Biomass Energy Technologies examined have considerable potential to reduce GHG emissions in the Philippines. All bring significant additional benefits in terms of waste reduction, quality of life improvements, and efficient use of existing biomass resources. Barriers do exist, but the long-term benefits more than offset the difficult task of removing these barriers.

GENERAL CONCLUSIONS
Existing policies must be revised or new and more favourable ones be developed to encourage transfer of BETs and help address our dependence on imported fuel, improve the living conditions of our people and mitigate climate change.

Capacity Development and Dissemination Activities

a. Publications The Philippines Recommends for Agricultural Waste Processing and Management. Philippine Council for Agricultural, Forestry, and Natural Resources Research and Development (PCARRD), Los Baos, Laguna. 2004. The Philippines Pitches in to Contain Global Warming. University of the Philippines Los Baos HORIZON. Volume 5. No. 5. April 2003. Experts Discuss Climate Change. University of the Philippines Los Baos HORIZON. Volume 5. No. 4. March 2003.

Papers presented

Sustainable Use of Biomass as Greenhouse Gas Mitigation Option in the Philippines. Paper presented during the Biomass Asia Workshop held on January 19-21, 2005 at Tokyo and Tsukuba, Japan. Potential and Status of Biomass Energy Technologies in the Philippines. Paper presented during Forest Product Research and Development Institute (FPRDI) Planning Workshop held at FPRDI Conference Room, FPRDI, Los Baos, Laguna on June 4-6, 2003. Energy Security: Economic and Policy Implications. Paper presented during the Energy Forum held at UP Diliman on September 24, 2004

Conferences/Workshop/ Seminars Attended:

Nine (9) international and local conferences/workshops attended related to BETs - BiomassAsia Workshop held on January 19-21, 2005 at Tokyo and Tsukuba, Japan.

Fellowship

First Annual Review and Final Annual Review Workshops held at Asian Institute of Technology Bangkok, Thailand. Two project team members attended a total of 4 man-month fellowship at Asian Institute of Technology Bangkok, Thailand.

Networking/linkages with other research institutions

The Project Team continued to push the Biomass Programme through the conduct of joint researches with other national research agencies. The Team Leader worked with PCARRD as member of their Agricultural Engineering RDE Network. Participated in several workshops related to energy and is working with Southern Tagalog Council on Energy and Industry Research and Development as Regional Technical Working Group Coordinator. The team leader also worked with Bureau of Agricultural Research of the Department of Agriculture as AE RDE National