Department of Chemical Engineering

EASTERN VISAYAS STATE UNIVERSITY

Main Campus-Tacloban City

PRODUCTION OF BIODIESEL FROM MICROALGAE

CHLORELLA PROTOTHECOIDES

By

CONDES, PHILIP JOHN V. AND OREVILLO, RHEA C.

BSChE-5A

A PROGRESS REPORT for

A Conceptual Undergraduate Plant Design (ChE 523) submitted to

JUVYNEIL ECHON CARTEL, MEngg ChE
Adviser

In partial fulfillment of the requirements for the degree of

Bachelor of Science in Chemical Engineering

October 21 , 2016

CHAPTER 3
MARKETING
The renewable energy industry remains one of the most vibrant, fast-changing, and
transformative sectors of the global economy. Technology improvements, cost declines, and the
catalytic influence of new financing structures, have turned the sector into a driver of economic
growth around the world.
Biodiesel can be manufactured as a high quality fuel for compression ignition engines
and is widely accepted, particularly when blended into conventional diesel fuel. It has a lower
energy content and a volumetric fuel consumption rate increase of about 6%1.
Commercial biodiesel production technology is available with plants of up to 100,000
tonnes per year. The process technology is well understood although there are some variants on
the technologies used.
The full capital cost of a feedstock capacity of 70,000 tonne per year is likely to cost $2030 million. About 120,000 tonnes of tallow (animal fat) are exported annually at the global
market. The unit capital cost of smaller plants, with capacities less than 10,000 tonnes per year,
and the capability to be associated with sources of tallow or oil production, are likely to be 2 to 4
times higher2.
During the period 1992 to 2000 the net cost of biodiesel production from tallow in a large
plant, including income from glycerol, had been significantly more than the price of
conventional diesel in each year, except only in 2000 that had reached an average rate of about
52 cents per litre. The high cost of vegetable oils would likely push the biodiesel cost to over
$1.00 per litre. Costs in a small plant would be about 10 cents per litre higher than the tallow
cost3.

1 Cost of Biodiesel Production, John Duncan for Energy Efficiency and Conservation
Authority, May 2003
2 Biodiesel from Tallow, Barry Judd for EECA, November 2002
3 Alternative Fuels Data Centre, US DOE, April 2003

Based on the analysis of Renewable Fuels Top Market Reports published in 2014 and
2015, the rankings of 74 different markets for the biofuels and biomass wood pellet exports are
stated as well as their subsector specific projections4.
3.1 Market Area
Global biodiesel production is expected to expand to reach, almost 134.5 and 39 billion
litres by 2024. First Generation and Second Generation feedstocks are still expected to continue
to dominate biodiesel production over the world arena. The European Union is expected to be by
far the major producer of biodiesel. Other significant players are Indonesia, the United States,
Brazil, and Argentina. Incentives based on national biofuel policies will continue to influence
biodiesel production patterns5.
Policies targeting the biofuels sector have been introduced in several countries since 2005
to achieve improvements in energy security, to reduce greenhouse gas (GHG) emission, to
enhance export opportunities for high value added products as well as to foster rural
development. They include support measures and also targets or mandates for biofuel use.
The Biofuels Act or Republic Act (RA) 9367 was signed in January 2007 making the
Philippines the first country in Southeast Asia to have biofuels legislation in place. RA 9367
mandated that by February 2009, the annual total volume of gasoline sold and distributed by oil
companies in the country shall comprise at least a minimum one percent biodiesel blend in all
diesel fuels by February 2007, to increase to a two percent blend after 2 years6.
Mainly due to the expanding population and continued growth of the Philippine
economy, overall fuel consumption is expected to continue increasing through 2025. According
to the Philippine Department of Energy (DOE), local biodiesel demand reached 190 million litres from
4 Top Markets Report: Renewable Energy. Market Assessment Tool for U.S Exporters,
April 2016
5 Biofuel Use in International Markets: The Importance of Trade, Jayson Beckman.
September 2015
6 GAIN Report: Philippines Biofuels Situation and Outlook, Perfecto Corpuz, 2015

172 million litres in 2014, and is expected to grow by an average of 5 percent annually in the

near future7.
Due to this concern, the said company will the first manufacturing plant to be setting for
the third generation feedstock for biodiesel production. With this, the company has chosen the
national arena as its potential market area. The Philippines will the pioneering country and first
in ASEAN Community to establish algal biofuel industry.
3.2 Market Share
3.2.1 Demand
On the demand side, there are an estimated 8 million road transport vehicles in the
Philippines. Gas-electric hybrid vehicle, as well as those that run on natural gas, comprise an
estimated of 1-2 percent of total motor vehicles. Rising incomes of the growing middle class
have resulted in increased motor vehicle sales. According to a joint statement by the Chamber of
Automotive Manufacturers of the Philippines Inc. and Truck Manufacturers Association, sales in
the first half of 2015 reached 131,465 units from 108,957 units last year for a record 21 percent
increase. The current composition of the existing vehicle fleet, however, is not so encouraging.
The number of flexi-fuel vehicles account for only a minor segment (estimated at 10-20 percent)
of Philippine road transport vehicles, according to contacts from an oil company.
The lead agency responsible for the Philippine Biofuels Program is the DOE. The
countrys biofuels strategy is expressed in the National Biofuels Plan (NBP) which is based on
the Philippine Energy Plan (PEP). The PEP reflects the Philippine governments (GPH) mission
to ensure the delivery of secure, sustainable, sufficient, affordable and environment-friendly
energy to all economic sectors.
The Biofuels Act was signed in January 2007 making the Philippines the first country in
Southeast Asia to have legislation mandating that biofuels be blended into local gasoline and
petroleum diesel. Section 2 of RA 9367 cites the law as a measure to:

7 GAIN Report: Philippines Biofuels Situation and Outlook, Perfecto Corpuz , 2015

Develop and utilize indigenous renewable and sustainable-sources clean energy to

reduce dependence on imported oil.

Mitigate toxic and greenhouse gas (GSG) emissions;
Increase rural employment and income
Ensure the availability of alternative and renewable clean energy without any
detriment to the natural ecosystem, biodiversity and food reserves of the country.

The Biofuels Act mandates that all liquid fuels for motors and engines sold in the
Philippines shall contain locally-sourced biofuels components. The law requires that by February
2009, at least 2 percent minimum biodiesel shall comprise the annual total volume of diesel sold
and distributed by oil companies in the country, increasing to a 5 percent blend by 2015. The
current 5 percent blend is to be raised to 10 percent by 2020, according to the RA 9367.

By 2020, the aspirational goal is to raise the mandate to 10 percent, and the biodiesel
increase to 20 percent by 2030. However, existing production capacity will only support
marginal increases in blending that fall far short of targets, and delivery infrastructure is entirely
inadequate for such large increases. Furthermore, a move the E20 without a major shift to a new
vehicle fleet able to accommodate higher blends presents risks. For biodiesel, a local expert
believes algal biodiesel would be necessary to augment feedstock supply in order to comply with
the B20 blend by 2030.

3.2.2 Supply
The only published estimates of detailed biodiesel production costs in New Zealand were
Produced by the Liquid Fuels Trust Board in 1983. These were adjusted by Barry Judd (Judd,
2002), in his report for EECA on the production of biodiesel from tallow, using time based cost
indices provided by the New Zealand statistics services. Most estimates of unit costs of
production of biodiesel available in the literature include unspecified costs of feedstock and
therefore give little or no insight into the capital and operating costs of the plant itself.
Energea, the Austrian company building the biodiesel from tallow plant in Western
Australia, have provided cost data. However, this company supplies the processing plant only,
which is provided in modular form, and leaves the provision of tankage, services, infrastructure
and buildings to its clients8.

According to the Department of Energy (DOE), there were 11 registered and operational
biodiesel refineries in 2014, unchanged from the previous year, with an aggregate annual
capacity of 585 million Litres. Seven (7) CME producers operate in the island of Luzon, (3) in
Mindanao, and (1) plant in the Visayas islands. In 2012, the same number of refineries was
registered but only nine (9) were operational. Total capacity increased to 48 percent from 393
million Litres in 2013 to 585 million Litres in 2014.
8 Personal Communication, Herbert Prischink, Energea, April 2003

Based on DOE data, except for 2010, biodiesel production has been increasing since the
implementation of the Biofuels Act. Capacity utilization has, so far, been below half of total
capacity through 2014. CME production and capacity utilization in 2015 are expected to increase
from the previous years level as producers build up stocks, before surging in 2016 to comply
with the programmed increase in the blend mandate. From 33 percent in 2015, capacity
utilization is expected to increase to 60 percent in 2016.

Source: GAIN Report: Philippines Biofuels Situation and Outlook, Perfecto Corpuz, 2015

To encourage investments, fiscal incentives are provided by RA 9367. Entities engaged in

the plantation of biofuels feedstocks are entitled to duty-free importation and value added tax
(VAT) exemption on all types of agricultural inputs and machinery. Priority is also given to
potential biofuels investors by government financing agencies.

3.2.3 Demand-Supply Gap

In a number of emerging economies, ambitious biofuel production targets had been

envisaged in recent years. Many of them are reassessed in light of the actual development in their
domestic sectors and also against possible export opportunities in the future.
Global biodiesel production is expected to reach 39 Billion Litres by 2024 corresponding
to a 27% increase from 2014 (Figure 3.2.3A). The European Union is expected to be by far the
major producer of biodiesel (Figure 3.2.3B). Other significant players are Indonesia, the United
States, Brazil, and Argentina. Policy rather than market forces will continue to influence
production patterns in almost all countries.
Biodiesel trade is projected to remain stable over the next ten years, with Argentina
remaining the major exporter followed by Indonesia. The export growth potential of both
countries is expected to be limited due to domestic biodiesel targets and mandates as well as
sustainability requirements in the European Union.
The United States is expected to be a net importer of biodiesel over the projection period
with the biodiesel tax credit assumed not to be reinstated and the increase in domestic biodiesel
use to meet the total and advanced mandates. Argentina is expected to supply most of the imports
given the EPAs decision in early 2015 to allow Argentinean biodiesel producers to fulfil the
record keeping requirements.
Figure 3.2.3A Development of the World Biodiesel Market

Source: OECD/FAO (2015), OECD-FAO Agricultural Outlook, OECD Agriculture statistics

(database),
http://dx.doi.org/10.1787/agr-outl-data-en

Figure 3.3.2B Regional distributions of world biodiesel production and use in 2024

Source: OECD/FAO (2015), OECD-FAO Agricultural Outlook, OECD Agriculture statistics (database),
http://dx.doi.org/10.1787/agr-outl-data-en.

The Association of Southeast Asia Nations Free Trade Agreement (AFTA) promotes
intra-regional trade by lower tariffs applicable to products of ASEAN-members. Tariff rates on
all products (with a few exemptions such as Philippine rice) in the ASEAN region fell to between
zero and 5 percent in 2011 under the framework of the ASEAN Trade in Goods Agreement
(ATIGA). Executive Order 61 (EO 61) was issued on October 17, 2011 (and took effect in
January 2012), providing the updated tariff structure for the period 2011-2015. Duties for ethanol
from the region are at 5 percent through 2015. This compares to the Most Favoured Nation tariff
of 10 percent from WTO-member countries including the United States. An additional one
percent duty is imposed if to be used for fuel-blending purposes under the Philippine Fuel
Ethanol Program.
Of more serious concern, according to experts, is the widening gap between petroleum
gas and local ethanol prices. From roughly P51 ($1.13) per liter in June 2014, local ethanol
prices increased 10 percent to over P56 ($1.25) per liter in June 2015, the highest in about 4
years. Local gasoline (RON 95) pump prices, on the other hand, have declined by roughly 25
percent from around P51 ($1.13) price per liter in June 2014, to roughly P45 ($1.0) per liter in
June 2015. Local petroleum companies have already reduced prices of fuel products around 15
times since the start of 2015 reflecting the continued downward movements in oil prices in the
world market. Consumers, however, are not likely to experience the full price decline of RON95
as a result of increasing ethanol prices. Already there have been critics of the biofuels program
claiming it has effectively increased local gasoline prices.
Philippine biodiesel consumption in 2015 is expected to increase by roughly 5 percent
from the 2014 level due to the improving economy, before increasing significantly (more than
double or 111 percent) as the CME blend is raised to 5 percent compared to the 2014 level of 2.5
percent.
By 2020, the required biodiesel blend will be raised to 10 percent, per RA 9367. At this level,
roughly 900 million litres of CME would be required.
3.2.4 Projected Market Share
The market share of the COOR BIODIESEL CORPORATION as a pioneer of the third
generation feedstock in producing the said product in the country, will be able to have a domestic

share of 29% of the entire Philippine demand in the year 2018 to 2019. A 5% increase annually
will be done consistently based on the DOE projected average growth rate of gasoline, diesel and
jet fuel use.
3.3 Marketing Strategies
3.3.1 Packaging Design
Robertson (2005) stated that packaging is one of the most important factors in marketing
a product. Its purpose is to protect the product during handling, transport, and storage units. It is
therefore needed to have a packaging strategy as it is most economical but efficient and safe
level.
The fuel product will be distributed through gasoline refilling stations. It will distributed
by means of gas tankers or by small tanks for consumption purposes. The container of the
biodiesel will be tightly sealed and the product will be labelled with the products company logo.
The capacity of the vessels will be indicated and other its pre-cautionary measurements for
transportation safety as well.

Fig. 3.3.1 Product Packaging

3.3.2 Company & Product Logo

The Company name was designed based on the first two letters of each of the proponents
family name while company logo shows a green based fuel.
The basis of the design of the company logo is on the effect of the biodiesel after its
consumption in the market. This type of fuel is environmental friendly product and produces less
greenhouse gases and its primary raw material requires large amount of CO2 in its growth.
Making it a two-way environmental solution.
The product logo represents in figure 3.3.2B, its design is based on the company name.

Figure 3.3.2A Company Logo

Figure 3.3.2B Product Logo

3.3.3 Advertising & Sales Promotion

Advertisement is very important in terms of marketing for it will led to product launching
and its distribution towards the targeted market area. The company has its options in advertising
its product. (1) Through its sales representatives and (2) though mass media.
In mass media, the press releases on announcement of the opening of the plant and
national radio broadcasts. The product will also be promoted through television and magazine
entities.
Another approach is through its sale representatives. As part of the companys
organization, its primary job is to promote the product through field reporting and information
dissemination though flyers and other cheaper advertisement.

Also, the creation of companys own website for sales promotion. This website further
help customers to know more about the companys product, goals and related activities that
greatly imparts the community advancement and environmental aspect.
3.3.4 Other Potential Marketing Strategies
The company will also cooperate with local community through supporting some social
activities and founding scholars guild. And also, the company will take part on the community
and household development through rural advancement and job offering.