Going (Coco)nuts!

I distinctly remember that my primary school geography textbooks, always described coconut tree as 'Tree of Life.' One that is useful to us humans, in hundred ways. Besides the obvious uses of coconut water for drinking and the pulp known as Copra in Indian cooking, the textbooks described other uses for almost all the parts of this tree of life. Copra, yields oil, which is used for cooking as well as industrial and cosmetic purposes. The coconut husks are used to make coir, which is used in making ropes, carpets and beds. The branches are commonly used to cover the thatched roofing. The list is almost endless. Starting from use of coconut shells as fuel, coconut trunks, leaves, spathe, guinit and even roots are used in some way or other.

I am very much reminded of my primary school textbooks after I came across a news item about a new and novel use for the coconut oil derived from Copra, discovered by scientists in Philippines. This island archipelago faces Pacific ocean on east and South China Sea on west and is spread between 5 Deg. North to about 18 Deg. North Latitude. The weather is typically tropical, like most of the countries in south east Asia. Naturally, coconut trees are found in abundance in Philippines. It is therefore no wonder that Philippines is the world’s largest producer and exporter country of coconuts.

Philippine Coconut Authority pioneered research and experiments on the use of coconut biodiesel as fuel in 1983 itself, when a project was launched. Philippines became the first country in southeast Asia to enact the Biofuels Act in 2007, to have a law promoting the use of biofuels, created by blending of coconut oil and ethanol from sugar cane to Diesel and Gasolene. PCA is making a push now to mix in, more refined coconut oil with diesel. This should make diesel sold in the country, cheaper and better for health and the environment.

As per the 2007 Biofuels act, it is permissible for the oil companies to mix up to 2% of coco methyl ester, derived from coconut oil, in Diesel, to create a Diesel blend that can be sold to the public. It is also stipulated by law that by 2015, the Diesel sold to public can be blended with up to 5% of coco methyl ester. However, Philippine Coconut Authority wants to reach the 5% mark by this year itself (2013). They feel that this should create a 19.60 billion Philippine Peso (PHP) market for refined coconut oil and save as much as PHP 15.5 billion on imported fuel. To prove their point, Philippines government launched a 25-day study this week, which it hopes will convince transport groups and a national board to increase the amount of refined coconut oil that is blended in with diesel.

Blended Diesel is the fuel used by public buses and transports presently in Philippines. Besides public transport buses, the most popular mode of transport in Philippines is known as a “Jeepney.” It is actually a most gaudily decorated vechicle modeled after the U.S. Army jeeps used during World War II. In the present 25 days test, seven jeepneys will use a 2% blend for first five days, the level right now allowed by law, followed by a 5% blend for the next 20 days. The jeepneys will be tested for fuel economy, power efficiency and smoke emission levels. PAC feels that this test will convince the national board to immediately recommend a transition to the 5% coconut oil blend.

According to PAC, with use of 5% blend, the visible cloud of black smoke emitted by vehicles, which mainly consists of carbon and sulfur particulates, would reduce by as much as 80%. Also every liter of fossil diesel displaced by coconut biodiesel, would represent a carbon dioxide reduction of 3.5 kilogram per liter of fuel used.

This is all fine. But what about the economics? At present, things appear lucrative because the price of coco methyl ester has been lower than diesel in Philippines, which means that increasing the blend to 5% would lower the cost of the fuel for the transport sector there. But as demand increases for coconut oil, what is the guarantee that coconut oil prices would remain stable. Even if they remain stable, perhaps blended Diesel may remain an alternative for Philippines alone. In India for example, bulk coconut oil prices are around 62 Rupees per Kilogram. Diesel blending with refined coconut oil may not therefore work out to be profitable for the oil companies. Besides, if use of refined coconut oil in blending Diesel become popular in other countries, the international prices are bound to harden, which would make the whole exercise quite futile.

1 August 2013

Living under a shadow

If I have to comment about the India-ASEAN summit that took place on 20-21^st December 2012, in New Delhi, I can easily say without any doubt, that it is a summit clearly under a shadow. No ASEAN leader mentioned it in his speech, but it is obvious that everyone was acutely aware of the elephant in the room. In speeches, the Philippines and Vietnam referred to tensions in their region. Philippines Vice President Jejomar Binay said “At this time of rising concerns about maritime issues, the need to maintain a high level of maritime security and freedom of navigation offers us... an opportunity for enhanced cooperation.” Indonesian President Susilo Bambang Yudhoyono was perhaps more explicit when he told the summit that closer maritime cooperation with India was needed because 70 percent of the world’s traffic in petroleum products passes through the Indian Ocean from the Middle East to East Asia. He said further: “While the center of the global economy is shifting eastward, the Indian and Pacific Oceans have been and will become even more important in providing the vital sea routes for trade and commerce.”

India is hosting this ASEAN-India Commemorative Summit in New Delhi to mark the 20th anniversary of the ASEAN-India dialogue partnership and the 10th anniversary of ASEAN-India Summit-level meetings. The theme of the summit is 'ASEAN-India Partnership for Peace and Shared Prosperity'. And it aims at strengthening ties across diverse areas like trade, energy, security and cultural connectivity. The prime ministers of Singapore, Cambodia, Malaysia and Vietnam, the presidents of Myanmar and Indonesian, and the vice president of the Philippines are attending the summit along with representatives of Thailand, Laos, and Brunei.

Someone may ask; why this sudden anxiety about the maritime security? The answer is not too difficult to find. The South China Sea has become Asia’s biggest potential military flashpoint. The core of the problem is the possibility of huge oil reserves in the region, which are being explored in their territorial waters by Vietnam and the Philippines at present. China claims a huge looping area out of the South China Sea as its own. This claim conflicts directly against sovereignty claims by Vietnam and the Philippines as well as Malaysia, Brunei and Taiwan. In November 2012, China announced a plan to board and search ships that illegally enter what it considers its territory in the South China Sea. A dangerous proposition that could lead to naval clashes.

China also managed to breach the unity of ASEAN over this issue by using Cambodia, which was promised a largesse including a $100 million loan to set up Cambodia's largest cement plant. As a result, the ASEAN summit ended in acrimony in November 2012 over China’s assertiveness in the South China Sea, with its leaders failing to agree on a concluding joint statement.

India is obviously relishing this moment, as countries of South East Asia are looking to India now for maritime security. India has no territorial claim in the region, yet it has interests. It is exploring for oil and gas with Vietnam in an area contested by China. Also there is also a plan to ship liquefied natural gas from Russia through the Malacca Straits in future. It is interesting to note that few weeks ago, India’s navy chief made a statement that he was ready to deploy vessels to the South China Sea to protect exploration interests there, if needed.

In the vision statement agreed at this New Delhi summit, India and the 10-member Association of Southeast Asian Nations (ASEAN) have set their sights on a new “strategic partnership” that would bring closer political, security and economic cooperation, with special importance for the need for freedom of navigation, a contentious issue because of competing claims with Beijing over parts of the South China Sea.

It is obvious that ASEAN considers the presence of naval ships of few major powers in south China sea as a guarantee for their safety. They have already convinced US, which has started stationing a larger force of marines in south east Asia. Presence of India in Southeast Asia would provide them greater additional safety against being dominated by China.

India has great plans for improving connectivity with south east Asia. It is pushing for quick implementation of the India-Myanmar-Thailand Trilateral Highway and its extension to Laos and Cambodia. It is also planning to launch a second route that would run from India through Myanmar, Laos and Cambodia to Vietnam. These plans may take time to fructify. Since annual trade between ASEAN and India has nearly doubled in four years and India’s growing economic clout makes it appealing as a balance to other Asian powers. The emphasis on maritime security gains importance.

As China scare looms large over south east Asia, India may find that it's twenty year old, Look east policy, is finally beginning to gain traction. The New Delhi summit underscores India’s growing role in one of the world’s fastest-growing regions, South East Asia.

22 December 2012