Study: Many economic zone locators not yet ready for switch to LNG as cleaner fuel

By Alena Mae S. Flores – December 25, 2022, 6:45 pm
from manilastandard.net

A study underscored the role of liquefied natural gas as a cleaner fuel for industrial facilities, but concluded that many special economic zone locators in the country were not yet keen on switching from the more expensive and less environment-friendly diesel and other fuel products.

Results of a research paper on the Market Profiling of Potential Natural Gas Users in Economic Zones found that many SEZ locators using specialized energy-intensive production technology processes were not yet ready for the switch to LNG which is viewed as a cleaner fuel alternative.

“Given the existing technologies among SEZ locators, an investigation on how they can adapt and switch to LNG is critical as the LNG industry is emerging,” it said. The study is meant to update the profile and activities of locators with energy-intensive operations in CALABARZON, Clark, Subic and Bataan.

It found that more locators engaged in manufacturing, information technology, tourism, agro-industrial, medical tourism and logistics services ecozones were not open to switching to LNG.

The study, authored by economists Majah-Leah Ravago, Raul Fabella, Karl Robert Jandoc and Renzi Frias, said electricity is the primary fuel the locator firms use in their production, followed by diesel and liquefied petroleum gas.

SEZ locators using specialized energy-intensive production technology processes are good candidates for direct users of liquefied natural gas, it said. These locators at present use more expensive and less environment-friendly diesel fuel in their heating production process.

The report said while some export locators “are more open to switch to natural gas relative to those who cater to domestic markets only” in order to enhance their competitiveness by replacing more expensive fuels such as diesel in their production processes, others were hesitant because of several factors.

“Hesitancy to switch heavily depends on the intimate knowledge on the properties of natural gas and how natural gas can be integrated with the locator’s present production processes,” the report said.

It said there were gaps in knowledge about high-efficiency equipment that could be retrofitted to optimize natural gas use in the firm’s production processes. “Establishing the market for these types of equipment is necessary for increasing the pace of adoption of natural gas,” the report said.

The study aimed to gauge the exporters’ interest in converting to natural gas and identify challenges restraining their conversion. “Another major consideration for switching is the presence of needed infrastructure on site (regasification facilities inside the ecozones),” the study said.

It said logistical and infrastructure improvements were needed before the natural gas could be widely utilized. “Most firm locators are aware about pressing environmental concerns, especially those that are being affected by their production process,” the report said.