The Economics of Biodiesel Derived From Waste Cooking Oil in the Philippines

Abstract

This article examines the economic aspects for the production and utilization of a sustainable form of biodiesel derived from waste cooking oil (WCO) in Marikina City, Philippines. An estimated 35,000 liters of WCO per month can be recovered from the household and commercial sectors of the city. The WCO from the household sector can be recovered using a combination of disincentives via appropriate legislation, and moral and remunerative incentives that target the lower socio-economic classes. Remunerative incentives for the household sector need not be tantamount to the market value of WCO. In contrast, the commercial sector will require remunerative incentives against the competitive market value of WCO. Assuming the household sector as the only source of WCO, the cost-benefit analysis shows positive economic returns. However, external capitalization should be secured if the expected WCO recovery level is 80% or lower, unless the disbursement of remunerative incentives is deferred for at least one year.

Keywords:

• biodiesel
• biofuels policy
• waste cooking oil

Notes

¹A barangay is the smallest unit of local governance in the Philippines, which is composed of smaller clusters of communities.

²Information was obtained from a personal communication with TNS Philippines. Class AB is defined as the affluent cohort of society while class E is the impoverished.

³0.32 liters per month per household multiplied by the approximate number of households (100,000) in Marikina City (Marikina City Government, 2006).

⁴The conversion is based on a 90% yield. The yield in large scale production varies with the type of process and the quality of waste cooking oil, which can be in the range of 84% and 97% (Rice et al., 1998).

⁵Public Utility Jeepneys are local public transport vehicles that run on diesel.

⁶Based on a currency exchange rate of 1 USD to 41 PhP.

⁷B1 is a blend of fuel with 1% biodiesel and 99% mineral diesel.

^a This includes cost of chemicals, water, electricity, manpower, WCO collection rate, laboratory consumables, and maintenance and upkeep of facilities.

^b This includes cost of conversion plant, fuelling and blending facility, feedstock and product storage, equipment outfits for the collection truck, and basic laboratory.

^c Maximum savings and revenues incurred when revenues from surplus fuel are not channelled for community incentives.

^d Maximum savings and revenues incurred when 100% of revenues from surplus fuel are channeled back to the community as incentives.