Technical and Economic Implications of Higher-Blend Coconut Biodiesel Production in the Philippines, 2025-2027

Date

6-2025

Degree

Bachelor of Science in Agricultural Economics

College

College of Economics and Management (CEM)

Adviser/Committee Chair

Arvin B. Vista

Committee Member

Geny F. Lapiña, Maria Angeles O. Catelo

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Abstract

The study examined the technical and economic implications of higher-blend coconut biodiesel production in the Philippines from 2025 to 2027, in light of recent policy shifts mandating progressive increases in coco methyl ester (CME) blending—from B3 in October 2024 to B5 in October 2026. Coconuts, copra, and coconut oil, the primary feedstocks for CME, are widely available and locally sourced agricultural products in the Philippines, but concerns over declining yields, price volatility, and supply sufficiency raise questions about the feasibility of scaling up CME production. The study sought to determine whether the domestic production of coconuts, copra, coconut oil, and CME will be technically sufficient to support the policy-mandated B3, B4, and B5 blends, and whether these higher blends are economically viable within the study period.

The study utilized secondary data from 2007 to 2024 from reputable government sources, including the Philippine Coconut Authority (PCA), Department of Energy (DOE), United Coconut Association of the Philippines (UCAP), among others. To describe the status of coconut biodiesel production in the Philippines from 2007 to 2024, the annual production of coconuts, copra, coconut oil, coco methyl ester, and coconut biodiesel from 2007 to 2024 was presented in a time series line chart. Descriptive analysis was used to describe and provide an overview of the state of the coconut industry in the Philippines. Descriptive statistics was computed to summarize the data, including the mean, median, and range (minimum and maximum). Time series forecasting, specifically the Holt- Winters exponential smoothing method, was applied to project feedstock supply—coconuts, copra, and coconut oil—from 2025 to 2027. Meanwhile, the CME production was projected using growth rates. The economic viability of each blend was then assessed using a benefit-cost analysis with a benefit-cost ratio (BCR) and net present value (NPV), taking into account the revenue from domestic CME sales, foreign exchange earnings, greenhouse gas reduction, production costs, and trade-offs in coconut oil diversion from being refined, bleached, and deodorized (RBD) and exported.

Findings have revealed that while the supply of coconut, copra, and coconut oil is technically sufficient to support the B3 to B5 blending targets, the actual CME production falls short of the required volumes due to underutilization of existing biodiesel plant capacities. For instance, the CME demand for B5 in 2027 is projected at over 712 million liters, yet production is projected to only reach 350 million liters. The study highlights the production gap as a critical barrier to achieving full policy compliance. Furthermore, along with these technical constraints, the BCR for B3, B4, and B5 are all less than one, and the NPVs and net benefits are negative and declining throughout the blends, indicating that the economic returns and benefits from higher-blend biodiesel implementation are currently insufficient to outweigh the combined costs of production and trade-offs.

The study concludes that the Philippines cannot feasibly pursue higher blends of coconut biodiesel unless biodiesel capacities are reached, and the targeted interventions for economic viability are carried out. These interventions can include increased investment in CME production infrastructure, lower taxes for CME production, enhanced coconut replanting efforts with high-yield varieties, price support mechanisms, and improved policy monitoring and coordination among stakeholders. Without these measures, the country risks CME supply shortages, opportunity cost losses in export earnings, and potential CME market and policy disruptions. This research contributes to the limited literature on higher-blend biodiesel in the country, and provides actionable insights for policymakers, industry stakeholders, and researchers who are working toward energy independence and sustainable agriculture in the Philippines.

Language

English

LC Subject

Coconut products, Biodiesel fuels industry, Biodiesel fuels—Environmental aspects

Location

UPLB College of Economics and Management (CEM)

Call Number

LG 993.5 2025 A14 F73

Notes

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Document Type

Thesis

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