D&L Industries, through its wholly owned subsidiary Chemrez Technologies, Inc. (CTI), said it is looking into building a second biodiesel plant in anticipation of higher demand following government’s plan to raise biodiesel blend requirement.
In a disclosure to the Philippine Stock Exchange, D&L cited the government’s plant to further increase the biodiesel blend from currently 3% (B3) to 4% (B4) by October 1, 2025 and eventually to 5% (B5) by October 1, 2026.
“D&L sees this as a critical juncture in reinforcing and expanding its leadership in the industry,” said D&L adding it is currently in the final stages of evaluating the risks and returns of building a new biodiesel plant. Any expansion plan requiring substantial capital expenditure will also need to be approved by shareholders.
With the Batangas plant now completed and no other major capital expenditures in the pipeline, D&L believes it has the financial flexibility to potentially undertake the construction of a new biodiesel facility, which would require much smaller capex compared to the amount spent on the Batangas plant.
The positive regulatory developments coupled with a greater recognition of the economic and environmental benefits of a higher biodiesel blend presents an opportune time to invest and capitalize on the industry’s potential.
This comes as a continuation of D&L’s pioneering efforts in championing the local biodiesel industry. From 2002-2006, CTI funded the many technical research data on the fuel features of biodiesel from both local and foreign laboratories. In 2006, CTI built Asia’s first continuous coconut biodiesel plant, boosting the feasibility of the Philippines developing its own local biodiesel industry. Today, CTI is the largest biodiesel manufacturer in the country.
D&L maintains a positive long-term outlook on the local biodiesel sector, recognizing the significant benefits that an increased biodiesel blend can offer to the economy, environment, and consumers.
BENEFITS
By developing the industry, D&l cited several facets of the economy are set to benefit. With at least 20% of the Philippine population directly or indirectly benefiting from the coconut industry, the potential for economic value creation in the form of additional investments and jobs in both the agriculture and the manufacturing sectors are significant.
Moreover, the push towards biodiesel translates into greater use of indigenous fuel, which reduces the country’s dependence on imported fossil fuels, supporting energy self-sufficiency. With less reliance on imported fuels, the fluctuations in global oil prices would have a lesser impact on the country’s foreign exchange reserves. This stabilization can lead to a more predictable economic environment for currency management.
From a sustainability perspective, coco-biodiesel offers a meaningful avenue to collectively cut carbon emissions. According to the study done by the University of the Philippines Los Baños, coco-biodiesel emits a whopping 78% less emissions versus petroleum diesel. On top of that, an increase in biodiesel blend from B2 to B5 is estimated to yield an estimated 10% mileage increase, which directly translates to consumer savings.
While the company is cognizant of the risks, D&L believes that the essential nature of biodiesel alongside a favorable regulatory environment ensures consistent and growing demand, mitigating risks associated with economic fluctuations.
