Carbon dioxide inventory implications of a biodiesel program in the Philippines are assessed. Biodiesel is assumed to be the methyl ester of coconut oil. Different scenarios for the use of agricultural residues as fuel for heat or power generation are analyzed. Reduction in net CO2 emissions are estimated at 77-104 g/MJ of diesel displaced by biodiesel. These benefits are found to be particularly sensitive to the extent to which residues are utilized. The predicted reductions in CO2 emissions are much greater than values reported in recent studies on biodiesel derived from other vegetable oils, due both to the large amount of potential fuel in the residual biomass and to the low-energy inputs in traditional coconut fanning techniques. However, agricultural productivity constraints suggest that by 2010, the maximum level of biodiesel substitution for the entire country is only 8%. At this level of utilization reductions of 2.85-3.85% in the Philippines' projected 130 x 10(6) tons of carbon dioxide emissions per annum can be realized. (C) 2003 Elsevier Ltd. All rights reserved.