LBP President Gilda E. Pico told a press briefing that Agumill Phils. Inc. (API) just held a groundbreaking for the construction of the palm oil plant. The plant will begin producing palm oil by the last quarter of 2008.

"It will be the first of such palm oil plant that will be registered with CDM (Clean Development Mechanism)," she said.

The plant will have an initial capacity of 30 MT and is expandable to 90 MT of fresh fruit bunches per hour. Oil recovery rate is at 14 to 21 percent for one MT of FFB, depending on the age of the tree. This can displace as much as 45,360 MT of palm oil import yearly.

The bank extended a P213 million loan for the project while API puts in the P87 million equity.

LBP Executive Vice President Wilfredo C. Maldia said a separate P200-million loan will be allocated for the project’s CDM registration. That will also involve acquisition of equipment for the capture of methane which will be used to generate as much as five megawatts of electricity. This power will be used to run its palm oil plant while any excess may be sold to the national grid.

While still a novel idea in the Philippines, LBP Vice President Jed Reyes said a CDM-eligible palm oil plant is now existing in Thailand.

A palm oil operation generally has two types of waste—methane and biomass.

During oil crushing, biological waste is produced and goes through a lagoon which eventually emits polluting methane once the waste decomposes. Biomass comes from the fruit bunches which is currently being burned to produce the electricity.

But the methane has yet to be captured, so the CDM loan is needed to finance this operation. API will also replicate the methane capture in its other palm oil plants in Agusan and Bohol.

Reyes said Mitsubishi of Japan has been tapped to develop the CDM component of the Maguindanao plant. This includes estimation of the equivalent methane emission reduction of the plant which is the basis for certificate of emission reduction (CER).

CER, also called carbon credits, are traded in the worldwide carbon market under the CDM of the Kyoto Protocol which gives incentives to projects that cut GHG emission.

With the Philippines’ dependence on palm oil, API has been expanding palm oil plantation in Palawan where harvest may start in the next three to four years.

"Good about this crop is it can be planted in marginal lands. It’s really turning nothing into something," Maldia said.