Rules for 1% Coconut Methyl Ester in Govt Diesel

Legal basis and mandate

Memorandum Circular No. 55 issued by the Office of the President on February 9, 2004 directs all departments, bureaus, offices, agencies, instrumentalities of government, including government-owned and controlled corporations, to incorporate the use of one percent (1%) by volume Coconut Methyl Ester in their diesel requirements.
The Circular implements the mandate by providing rules and regulations to guide implementation of Memorandum Circular No. 55.
The Circular uses Republic Act No. 8479 (Downstream Oil Industry Deregulation Law of 1998) and Republic Act No. 8749 (Philippine Clean Air Act of 1999) for product registration and fuel-additive requirements.
The Circular relies on the framework of the DOE as created under Republic Act No. 7638 and recognizes related constitutional and statutory implementing structures across government.

Policy objective and purpose

The Circular is issued to provide guidelines on implementation of Memorandum Circular No. 55.

Scope and coverage of affected vehicles

The Circular applies to all land transport diesel vehicles owned or registered in the name of departments, bureaus, offices, agencies and instrumentalities of the government, including government-owned and controlled corporations and local government units.
The mandate covers the diesel fuel requirements of these government entities, through the required 1% CME-diesel blending.
The program is operational for one (1) year starting from effectivity.

Key definitions and technical concepts

“Coconut Methyl Ester or CME” refers to fatty ester derived from coconut oil whose alkyl groups range in varying percentage from C8 to C18, suitable for compression ignition engines and similar engines, as defined by PNS 2020:2003.
“CME-Diesel” means diesel fuel with a 1% blend of CME, defined as 1% CME and 99% diesel fuel by volume.
“Product Registration” means the fuel additive registration requirement under Section 12 of Republic Act No. 8479 and Section 27 of Republic Act No. 8749.
“Accreditation” means the certification issued to a CME manufacturer/supplier that has complied with prescribed technical criteria (including capability to manufacture PNS-compliant CME and distribution network) required by the DOE.
“PNS” refers to the Philippine National Standard established by the inter-agency committee, Technical Committee on Petroleum Products and Additives (TCPPA), created under Republic Act No. 8749, on quality parameters, values, and limits of petroleum products including CME.
“Diesel requirements” means the diesel fuel consumption of all land transport diesel vehicles as defined in Section 3 of the Circular.

Government roles in CME program

The Department of Energy (DOE) is the lead implementing agency for the CME Program in petroleum applications beginning with CME-Diesel, and it must coordinate with government agencies and private entities, provide policy direction, register CME products, accredit CME manufacturers/suppliers, and monitor the quality of CME.
The DOE must prepare a strategic plan outlining national goals for development, utilization, and promotion of CME.
The Department of Environment and Natural Resources (DENR) must coordinate with the DOE and DOTC for data generation from emission testing using CME to serve as inputs in setting emission standards to maintain air quality.
The Department of Science and Technology (DOST), through PCIERD and ITDI, must coordinate and provide support on research and development on the production and application of CME undertaken by the academe, research institutions, and others.
The Department of Transportation and Communications (DOTC) must monitor and test emissions of CME-Diesel-run vehicles, and must provide DOE with annual statistics and an inventory of land transport diesel vehicles owned and registered in the names of covered government entities (including GOCCs and LGUs).
The Department of Trade and Industry (DTI), through BOI, may provide incentives for investments in CME production in conjunction with coconut processing, provided the resulting CME product conforms to PNS 2020:2003 promulgated by BPS.
The Department of Finance (DOF) must develop and recommend fiscal and nonfiscal incentives it deems appropriate for participating petroleum and oleochemical companies to promote sustainable development of the program.
The Philippine Coconut Authority (PCA) must ensure coconut oil supply security by conducting planting, replanting, fertilization, agricultural research and development, and rehabilitation of the coconut industry, and must formulate a program encouraging investment and technology for CME production meeting domestic market needs.

CME supply, distribution, and procurement rules

Each government agency is solely responsible for the blending of CME for its diesel fuel requirements.
CME suppliers must ensure sufficient supply and efficient distribution of CME based on each government agency’s specific requirements, including storage, mode of procurement, and existing logistics and infrastructure.
CME suppliers must provide CME in small packages for government agencies that have no storage tanks/dispensing pumps, using recyclable/refillable containers.
Government agencies, including government-owned and controlled corporations and their subsidiaries, must procure their CME requirements only from DOE-accredited suppliers of DOE-registered CME products.
The DOE Energy Utilization Management Bureau (EUMB) issues accreditation to CME manufacturers/suppliers based on the applicant’s submission of an effective distribution scheme, IEC, and after-sales support program, among others.
The DOE must provide all government agencies with lists of accredited CME manufacturers/suppliers and registered CME products.

Blending mechanics and mixing formula

CME may be blended directly in the diesel fuel tank or may be pre-blended with diesel fuel using the blending table provided.
The table sets the guide for 1% CME blending by volume, specifying the corresponding CME volume for specified diesel volumes.
The guide uses the following matching levels (Diesel in litres / CME in milliliters): 5 / 50, 10 / 100, 15 / 150, 20 / 200, 25 / 250, 30 / 300, 35 / 350, 40 / 400, and 50 / 500.
For simplicity in implementation, CME volume values in milliliters are rounded off as reflected in the table.

CME quality monitoring and testing

Government agencies must procure CME only from suppliers accredited by DOE-EUMB whose CME has been duly registered by DOE Oil Industry Management Bureau (OIMB) under Republic Act No. 8479 and Republic Act No. 8749.
CME products must be properly labeled, including the DOE registration number, supplier and accreditation number, and batch information such as manufacture and expiry date.
CME products must be accompanied by a Quality Certificate indicating the level for properties including flash point, water and sediment, kinematic viscosity, copper strip corrosion, cloud point, acid number, and free and total glycerine.
The DOE OIMB and ERTLS must conduct random spot sampling and laboratory testing and analysis of CME products at manufacturing and distribution/marketing levels to determine compliance with PNS.
The DOE Visayas and Mindanao Field Offices (VFO/MFO) must conduct sampling in their respective areas and forward samples to ERTLS.
A monthly summary report must be submitted to the Policy Advisory Group.

Reporting, database, and advisory structure

All government agencies must submit monthly reports to the DOE EUMB.
Reports from the Visayas and Mindanao must be coordinated and collated by the DOE VFO/MFO and submitted to EUMB.
The EUMB must submit a monthly summary to the Policy Advisory Group.
Monthly reports must include: (a) source of CME and diesel, (b) purchase price, (c) volume of CME and diesel fuel consumption, (d) mileage, and (e) general observations (including emissions and engine performance).
The DOE must develop a database (in coordination with DOTC, DOST, DENR, PCA and other concerned entities) on vehicle information and CME-diesel fuel source and volume requirements of government agencies and related data.
The database must be accessible to the public consistent with the guidelines under rules implementing Republic Act No. 6713 (Code of Conduct and Ethical Standards for Public Officials and Employees).
The DOE must conduct audit on the data gathered and determine the integrity and accuracy of the data.
A Policy Advisory Group is created to provide policy guidance, headed by a DOE Undersecretary assisted by second-ranking officials of DENR, DOST, DOTC, DTI, DOF, PCA, a representative of the Office of the President, and representatives of CME manufacturers/suppliers.

Working group functions and implementation outputs

A Working Group, chaired by DOE and composed of DENR, DOST-PCIERD/ITDI, DOTC, DTI-BOI/BPS, DOF, PCA, DBM, DILG, DND, academe/research institutions (including Technological University of the Philippines, Asian Institute of Petroleum Studies, Inc., Philippine National Oil Company - Energy Research and Development Center), oil companies, CME producers/suppliers, CAMPI, transport groups, and other concerned entities, must be created.
The Working Group must: formulate a strategic plan outlining national goals in the development of CME; conduct field tests and evaluate CME-related research/activities; evaluate effects of CME on engines and fuel systems including engine performance, emissions, safety (storage, transport/handling, and use), and economics (cost-benefit); formulate procedures for monitoring emissions and operational performance; formulate safety standards in storage, transport/handling, packaging, and use of CME products.
The Working Group must conduct IEC activities to induce public awareness and identify and address stakeholders’ concerns including product liability and supply sustainability.
The Working Group must submit quarterly assessment reports and recommendations to the Policy Advisory Group and perform other CME-related functions assigned by the Policy Advisory Group.

Budget, procurement compliance, sanctions

Budget for implementation must be chargeable to the available funds of the respective agencies subject to usual accounting and auditing rules and regulations.
Procurement and supply of CME and diesel must be done in accordance with Republic Act No. 9184 (Government Procurement Reform Act) and its implementing rules and regulations.
Any person who violates any provision of the Circular must be imposed the corresponding criminal, civil and/or administrative sanctions under existing applicable laws, rules, and regulations.

Final provisions and repealing effect

All DOE department orders, rules and regulations inconsistent with or contrary to the Circular are repealed and modified accordingly.
If any provision of the Circular or its application to any person or circumstances is declared unconstitutional, the remainder of the Circular or its application to other persons or circumstances remains effective.