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An Economic and Environmental Analysis of the Impact of Higher-Blended Biodiesel on the Philippine Economy


  • Alonzo, Ruperto


The Biofuels Act of 2006 (RA 9367) was legislated to reduce the Philippines’ dependence on imported fuels and to protect public health and the environment. Under the Act, the Department of Energy (DOE) is authorized to increase the proportion of biodiesel blend upon the recommendation of the National Biofuels Board (NBB) and upon consideration of the domestic supply and availability of the locally produced biodiesel component. Beginning at 1% blend, the mandate was raised to 2% in February 2009. In June 2013, the NBB recommended an increase in the biodiesel blend to 5%. Results of the numerical analysis indicate that the proposed policy will lead to a rise in the price of biodiesel, inducing users to reduce consumption. The total loss to consumers due to the price increase is estimated at P3,767.47 million for 2016. This negative economic impact far outweighs the positive environmental effects in terms of reduced greenhouse gas emissions and health benefits due to reduced morbidity and mortality, with the net loss amounting to P3.26 billion for 2016 alone. These projections, along with the observed upward trend in relative world prices for coconut oil and crude oil prices plus the bleak scenario for domestic coconut production scenario, augur well for a postponement of raising the blend, at least in the short run.

Suggested Citation

  • Alonzo, Ruperto, 2016. "An Economic and Environmental Analysis of the Impact of Higher-Blended Biodiesel on the Philippine Economy," MPRA Paper 87717, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:87717

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    References listed on IDEAS

    1. Tol, Richard S.J., 2013. "Targets for global climate policy: An overview," Journal of Economic Dynamics and Control, Elsevier, vol. 37(5), pages 911-928.
    2. Ravago, Majah-Leah & Fabella, Raul & Alonzo, Ruperto & Danao, Rolando & Mapa, Dennis, 2016. "Filipino 2040 Energy: Power Security and Competitiveness," MPRA Paper 87721, University Library of Munich, Germany, revised Jan 2018.
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    More about this item


    Philippines; biodiesel; biodiesel blend;

    JEL classification:

    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy

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