Business opportunities in the Philippine air pollution control equipment market are currently limited due to the uneven enforcement of point and mobile source emissions control regulations. To date, air pollution control has not received as much attention as the water and wastewater sector. The best current prospects for U.S. companies lie with donor-funded initiatives for Metro Manila, including a potential World Bank credit facility for industrial source emissions control and a loan from the Asian Development Bank (ADB) to the Department of Environment and Natural Resources (DENR) for mobile source emissions control in Metro Manila. The market may pick up after the passage of the new Environment Code, which envisions a gradual tightening of emissions standards, where technically and economically feasible.
Point Sources
Although the regulations governing point source emissions control are comprehensive, compliance is generally low throughout the country. Because air pollution control equipment is expensive, private companies are reluctant to invest unless they are under extreme pressure (i.e., a Cease and Desist Order (CDO) from the Pollution Adjudication Board (PAB)) to do so. Of the 79 companies with outstanding CDOs as of March 1997, only 10 cases involve air violations, while 62 involve water violations, and 7 involve both water and air violations. The firms with closure orders for air standards violations include:
* A sugar refinery in Mandaluyong, National Capital Region (NCR);
* An industrial gases manufacturer in Pasig, NCR;
* A fertilizer plant in Region I;
* A steel smelting plant in San Simon, Pampanga,
Region III;
* Six sugar mills (known as sugar centrals) in Iloilo, Region VI;
* A furniture manufacturer in Cebu, Region VII;
* A sugar mill in Danao City, Cebu, Region VII;
* A banana chips plant in Region XI; and
* A wood workshop in Region XI.
Business opportunities may exist in supplying these types of firms, along with cement plants and petrochemicals facilities (a sector recently opened to private investors), with air pollution control equipment such as: fabric/filter systems, electrostatic precipitators, cyclone dust collectors, and wet collectors.
The Environmental Management Board (EMB) of DENR keeps records of compliance, by region, based on reports from the regional offices. Information from these records for 1990-95 was presented in the Philippine Environmental Quality Report 1990-1995. However, the number of firms complying with air pollution regulations seems a bit inflated. Out of 991 potentially air polluting industries in Region II, for example, 970 were reported to have air pollution control devices installed.
Some of the most polluting sectors have been ignored altogether. The National Power Corporation's thermal power plants, for example, were grandfathered out of compliance with the source standards of DENR's Administrative Order 14. To date, a few thermal power plants (mostly those developed by independent power producers) in the country have installed electrostatic precipitators, and none have scrubbers for sulphur dioxide and nitrogen oxide. Under the current restructuring of the Philippine electricity sector, all of the National Power Corporation's thermal generating units will be auctioned to private bidders over the next few years. It is not clear at this time whether or not the new owners will be required to retrofit old plants with air pollution control equipment.
Many industries complain that the standards are too strict and that compliance will force firms into bankruptcy. The ADB is currently sponsoring a study to reevaluate point source air (and water) quality standards for the power, sugar, and cement industries. The study is also providing support to DENR/EMB in strengthening its computerized compliance database.
Another donor agency, the U.S. Trade Development Agency, is funding a feasibility study for the Industrial Air Emissions Project in Manila. The study is being conducted by Ecology and Environment (U.S.) and aims to quantify emissions from industrial sources in Metro Manila, rank sources based on severity of health risk, and develop investment proposals for marketing to local and foreign sources of funding, including a potential line of credit through the World Bank's Industrial Efficiency and Pollution Control Project. The study involves 50 site-level inspections, including source sampling and sample analysis. A handful of seminars and technology demonstrations of air pollution control equipment will also be conducted under the project. Once completed, this study will be a valuable source of information on sales prospects in Metro Manila for U.S. air pollution control equipment.
Mobile Sources
Mobile sources (particularly diesel jeepneys, buses, taxis, and utility vehicles) are the largest contributors of air pollution in Metro Manila, the worst affected region of the country (and one of the worst in the world) in terms of air quality. Mobile sources are responsible for 93 percent of the total volatile organics, 99 percent of carbon monoxide, and 83 percent of the nitrogen oxide spewed into the Metro Manila airshed.
The DENR's current priorities for mobile source emissions control include:
* Reduction of sulfur in diesel fuel;
* Reduction of lead in gasoline;
* More stringent standards for new motor vehicles;
* Implementation of scheduled mandatory inspection of motor vehicles based on gross vehicle mass and intended use;
* Strengthening of the Anti-Smoke Belching Campaign in cooperation with local government units (LGUs); and
* Capability building for LGUs under the Blue Sky Project, including training for personnel of LGUs and the Metro Manila Development Authority in emissions testing and monitoring.
The World Bank is providing assistance to DENR's efforts in the Metro Manila area through the URBAIR Project described in section 3.3.
The Environment Code bill currently awaiting passage in Congress calls for the reduction in lead content of gasoline to 0.15 grams per liter and the sulfur content of diesel to 0.5 percent within a specified time frame after passage of the code. It places responsibility for regulating the manufacture and use of fuel and fuel additives with the Department of Energy. Additionally, the code as currently drafted calls for a mandatory emissions inspection program for all mobile sources (including trains, ships, and airplanes) to be enforced by the Department of Transport and Communications. Further-more, it mandates this department and DENR to jointly oversee the installation of catalytic converters and other mobile source emissions control devices, and to coordinate the establishment and operation of emissions inspections and maintenance testing centers.
In 1993, the ADB funded a feasibility study for a mobile source emissions control loan project for Metro Manila. The project earmarked several hundred million dollars for the establishment of a city-wide vehicular inspection and testing system. The loan was postponed, however, because of problems with the intended counterpart agency, the Land Transportation Office. The ADB has recently revived the loan proposal and is considering DENR as the counterpart agency. Although it will be several months before the loan is approved by the bank and negotiations begin with DENR, the project may offer significant opportunities to U.S. firms specializing in the design and construction of vehicle emissions testing centers, as well as emissions testing equipment.
