Transcript Slide 1

African Union/Brazil/UNIDO Bio-Fuels
Seminar in Africa
30th July – 1st August 2007
Addis Ababa, Ethiopia
The Promise of Biofuels in Africa
Status, Challenges and
Opportunities
Stephen Karekezi,
Waeni Kithyoma & Samwel Leyian
AFREPREN/FWD
Nairobi, Kenya
Outline
• Quick background brief on energy
sector
• Overview of Biofuels in Africa
–
–
–
–
Key Drivers
Principal Stakeholders
Status & Prospects
Challenges
• Options for addressing challenges
African Energy Sector
– 3 distinct regions
Energy Consumption - North Africa
Gas
18%
Coal
1%
Biomass
4%
Electricity
15%
Petroleum
62%
Energy consumption - Sub-Saharan
Africa
Electricity
3%
Gas
1%
Coal
0%
Energy Consumption - South Africa
Petroleum
15%
Biomass
16%
Coal
27%
Biomass
81%
Gas
2%
Coal-based
Electricity
26%
Petroleum
29%
Bio-energy in Africa
Three Categories
• Traditional Biomass Energy Technologies (TBTs)
– Inefficient use of wood, charcoal, leaves, agricultural
residues, animal/human waste & urban waste
• Improved Biomass Energy Technologies (IBTs)
– Improved and efficient technologies for direct
combustion of biomass such as improved
cooking/heating stoves and improved biofuel kilns
• Modern Biomass Energy Technologies
(MBTs) –Conversion of biomass energy to
advanced fuels/forms namely liquid fuels, gas and
electricity
TBTs
IBTs
MBTs
Bio-fuels in Africa – Key drivers
1. Energy security & diversification: Reduced
dependence on imported fossil fuels and increasing
energy security
2. Higher convertible currency revenue: Potential
lucrative biofuel export market particularly to EU
3. New revenue stream for agro-industries &
farmers: Can realize a new & substantial revenue stream
to agro-industries & farmers especially if using byproducts of existing crops + strengthen backward
linkages to agriculture.
4. Carbon finance: Cleaner options that reduce fossil fuels
use & reduce greenhouse gas emissions thus attract
carbon concessional finance
5. Jobs: Energy crops for bio-fuels production can create
job opportunities for rural communities in Africa arising
from labor-intensive biofuels agriculture
6. Local rural energy needs: Can assist in providing
modern energy services (motive power & lighting)
1. Energy Security & Diversification
Percentage Share of Export Earnings Spent on Petroleum Products,
2000
25
% of export earnings
20
15
10
5
0
Rwanda
Uganda
Kenya
Tanzania
Zimbabwe
1. Energy Security & Diversification
• On average, oil-importing developing countries
use more than twice as much oil to produce a
unit of economic output as do OECD countries
• In 26 African countries, oil imports account for
10-20% of merchandized imports (growing
portion of oil imports used for power generation)
• Global prices recently peaked again to $75 per
barrel
• According to African Development Bank, at such
high prices, debt relief to 14 of 19 African HIPC
oil-importing countries smaller than increase in
oil import bill
• 39 Net oil importers in Africa
• 13 Net oil exporters (expected to increase by 2)
Sudan
Ghana
Côte d'Ivoire
Eq. Guinea
Sao Tomé
Tunisia
Egypt
Angola
Cameroon
Congo
DRC
Chad
70
Algeria
Gabon
Mauritania
Nigeria
Libya
Number of years
1. Energy Security & Diversification
80
2004 OIL EXTRACTION RATE
Source: AfDB, 2006 - Computed using IEA data
60
50
40
30
20
10
0
2. Higher Convertible Currency Exports
Recent Trends in Ethanol Production
20
16
95% growth
Mtoe
12
8
4
0
2000
Brazil
2001
United States
2002
2003
European Union
2004
China
2005
India
Other
Ethanol production has almost doubled in 5 years, with the bulk of the
increase coming form Brazil & the United States
2.5
2. Higher Convertible Currency Exports
Recent Trends in Biodiesel Production
2.0
Mtoe
1.5
295% growth
1.0
0.5
0
2000
Germany
2001
France
2002
Italy
2003
Rest of Europe
2004
United States
2005
Other
Biodiesel production has almost quadrupled since 2000, with European
countries – notably Germany – contributing most of the growth
2. Higher Convertible Currency
Exports
• Global biodiesel production
projected to increase to more than
20 billion litres by 2020 mainly in
EU
• Over the next 15-20 years, biofuels
could meet close to 25% of world
energy needs
• Key driver is the EU biofuels target
3. Increased Revenue to AgroIndustries and Farmers
• In Kenya, close to 20% of population
directly or indirectly dependent on
sugar industry
• Mauritian sugar companies’ revenue
from biofuel-based electricity sales
national grid higher than sugar sales
• Significant benefits from optimizing
revenues from sugar, electricity sales
and ethanol
• In Mauritius, sugar farmers (even small
scale farmers) share in revenue from
sale of biofuel-based electricity sales to
power utility
4. Carbon Finance
5. Jobs
Job creation potential of bio-fuels compared
to other conventional fuels
Fuel
Jobs per TWh
Biodiesel
16,318
Bioethanol
3,770
Biogas
1,341
Gas
130
Nuclear
80
Coal
700
Source: Earthlife Africa/SECCP report 2003
6. Local Rural Energy Needs
Access to electricity – bottom 40% (mainly rural)
0%
Zimbabwe
0%
0%
0%
0%
0%
Zimbabwe
Senegal
0%
Zambia
Nigeria
0%
Zambia
Namibia
6%
Uganda
0%
Uganda
1%
Tanzania
0%
Tanzania
0%
South
Africa
0%
Kenya
0%
Ethiopia
5%
Cote
d'ivore
0%
Cameroon
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Ghana
1st Quintile - Poorest Population
2nd Quintile - 2nd Poorest Population
35%
33%
Kenya
Namibia
1%
South
Africa
2%
Senegal
0%
Nigeria
0%
Ghana
Cote
d'ivore
Source: Estache, 2005
0%
Ethiopia
15%
8%
Cameroon
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Bio-fuels in Africa - Key Stakeholders
1.
Energy security &
diversification
2.
Higher convertible
currency exports
3.
New revenue
stream for agroindustries &
farmers
4.
Carbon finance
5.
Jobs
6.
Local rural energy
needs
Private
sector
Commercial
Banks
NGOs
Civil
Society
Gov
Development
Banks
Development
Partners
Sub-regional,
Regional. &
International
Institutions
Research
Biofuels in Africa
Focus on
– Biomass Cogeneration
– Bio-ethanol
– Biogas
– Bio-diesel
– Biomass Gasification
Biomass Cogeneration – Status
and Trends
• Cogeneration: Simultaneous production of
electricity and process heat from a single
dynamic plant.
• Largely produced from sugarcane bagasse
byproduct
• A number of countries in the Africa region have
successfully deployed cogeneration e.g.
Mauritius, South Africa, Kenya,Swaziland, Malawi
and Uganda.
• Attractive potential for scale-up as most sugar
factories already practice cogeneration using low
pressure systems – require modest investment to
generate excess power
Cogeneration in Mauritius
Lessons for Africa
 Successful in sale of power to
the grid
 Accounts for close to 40% of a
725MW national generation
capacity (of which 25%
bagasse)
 Began with smaller installations
(1.5MW - 5MW, now installing
70MW plants)
Power Generation – Mauritius 2004
Others
Sugar Industry
Cogeneration potential in the sugar
industry in selected African countries
Country
Installed national
power generation
capacity from all
sources, 2004
(MW)
Cogen potential
Cogen potential as
using high pressure percentage of total
systems (MW)
installed national power
generation – capacity
from all sources (%)
Ethiopia
Kenya
Malawi
Sudan
Swaziland
726
1143
238
755
128
30.9
159.2
56.5
156.9
185
4.30%
13.90%
23.70%
20.80%
144.50%
Tanzania
Uganda
Total
881
303
4174
97.8
46
732.4
11.10%
15.20%
17.50%
Biomass Cogeneration
Key Challenges
• Feed-in-tariff (or price paid to
cogenerators by utilities) not predetermined and often set too low
• Negotiations of power purchase
agreement (PPA) can be too
lengthy (took over 10 years to
negotiate cogeneration PPA in
Uganda),
• Two key policy measures:
• Pre-defined Feed in tariff
• Standard PPA
Cogen for Africa Initiative
• UNEP/GEF (Global Environment
Facility) and African
Development Bank initiative.
AFREPREN/FWD is Executing
Agency
• Objective is to promote
cogeneration (biomass-based
mainly) in eastern and southern
Africa
• Initial focus on biomass-based
agro-industries – sugar sector
Cogen for Africa project
• To build on success of Mauritius &
relevant elements of EC-supported
Cogen Asia initiative
• Initial phase to cover 7 countries which
have endorsed project (Kenya, Uganda,
Tanzania, Sudan, Ethiopia, Malawi and
Swaziland) – later phases could expand
to other regions of Africa
• Partnership with African Development
Bank likely to address key financial
challenges of cogen investments
• Implementation begun in mid 2007.
• Implementation phase – 6years
Cogen for Africa
40 MW
additional
installed
capacity of
cogeneration
promotion
projects
200+ MW additional
cogeneration capacity
20 MW
pipeline
projects
6 year project period
Beyond 6 years
Bio-ethanol – Status &Trends
Bio-ethanol – Status &Trends
• One of the most developed bio-fuel option
in the region
• Ethanol production in Africa is mostly
concentrated in Southern Africa
• Linked mainly to the sugar industry –
molasses
• Other feedstock include maize, cassava and
sweet sorghum
Bio-ethanol – Status &Trends
• Proven technology - Medium to large scale
projects implemented in:
– Swaziland ; South Africa; Uganda; Zimbabwe; Kenya;
Egypt; Malawi ; Nigeria.
• Successful blending program in Malawi – has
been in place for long. Also perceived as option
for removing lead in transport fuel
• Growing interest from sugar factories to expand
bio-ethanol production to generate extra revenue
stream – generates some of the highest internal
rates of return for sugar factories
Ethanol Production in Selected African Countries
2005
Country
Millions of gallons,
all grades
South Africa
Zimbabwe
Kenya
Swaziland
Egypt
Nigeria
Others
Source: Renewable Fuels Association, Industry Statistics,
http://www.ethanolrfa.org/industry/statistics/#E
103
5
4
3
30
30
92
Bio-ethanol – Key Challenges
• Need predetermined price for bioethanol
• Compulsory requirement for
blending
• Key policy measures
 Set attractive price for bio-ethanol
 Establish requirement for blending
 Protection and ring-fence away influence of
fossil oil companies
Biogas – Status and Trends
Source The Republic of Uganda,2007
Biogas – Status and Trends
• Fairly well developed in the region
• Proven technology - A number of nation-wide
biogas projects implemented in a number of
countries
• Significant potential in the region
• Encouraging biogas initiatives in Ghana, North
Africa (landfill) and South Africa (landfill)
• Success appears to be most encouraging in
institutional sector
Biogas – estimated no. of installed
units in selected African countries
Country
Units
Eritrea
5
Ethiopia
1,000
Kenya
500
Tanzania
> 1,000
Burkina Faso
20
Botswana
215
Burundi
279
Lesotho
40
Uganda
600
Zimbabwe
200
Source The Republic of Uganda,2007
Source: AFREPREN/FWD
Source: Winrock, 2007
Countries
Nigeria
Tanzania
Sudan
Kenya
Uganda
Egypt
Mali
Burkina Faso
South Africa
Madagascar
Senegal
Cameroon
Angola
Zambia
Algeria
Ghana
Niger
Benin
Guinea
Rwanda
Chad
Mauritania
Biogas Units (thousands)
Potential of Biogas digesters in Africa 2007
2500
2000
1500
1000
500
0
Biogas - Challenges
• Substantial water requirements
of biogas under-estimated
• High-up front costs that require
credit system – principal reason
for better performance at
institutional level
• For small scale systems,
important to limit scope of initial
dissemination efforts to minimize
maintenance cost
Source The Republic of Uganda,2007
Bio-diesel - Status and Trends
Bio-diesel - Status and Trends
• Bio-diesel term here inclusive of Pure Plant Oil
(PPO)
• Embryonic technology in the region but with
significant potential
• Main interest in use of Jatropha as feedstock
• Pilot projects implemented in large number of
African countries with Mali and Ghana recording
some encouraging results
Bio-diesel - Challenges
• Well proven at small scale but jury still out on large scale
trials being initiated in various countries
• At large scale, requires significant applied R&D to
establishment of new agricultural system
• High costs associated with technology transfer &
adaptation
• Possible competition for land between biodiesel feedstock
and food crops but can grow in relatively arid areas where
access to land is probably less contentious
• Local financiers still uncertain due to unfamiliarity with
this option
Biomass Gasification
• Least developed option in the region
• Experimental and pilot projects implemented
in some countries in the region but more
encouraging results in other developing
countries such as India
• Pilot initiatives underway in North Africa and
Southern Africa
• Appears to be promising in medium to longterm
Gasification - Barriers
• Limited technical expertise on biomass
gasification in the region
• High risk perception from potential project
implementers and financiers due to
unfamiliarity with option
• Need to increase awareness, enhance
skills and initiate additional pilot test
plants
Gasification - Barriers
• Limited technical expertise on biomass
gasification in the region
• High risk perception from potential project
implementers and financiers due to
unfamiliarity with option
• Need to increase awareness, enhance
skills and initiate additional pilot test
plants
Key Sustainability Issues
• Equity: Will the poor benefit?
– Mauritius revenue sharing mechanism
– Case of West Kenya sugar factory where cane farmers
get 51% of ex-factory sugar price
• Meet energy needs of the poor?
– Primarily through increased incomes subject to
existence of adequate revenue sharing mechanism
– Modern biofuels cleaner with lower indoor emissions
but cost still an issue
• Is there sufficient land?
– Most land requirement projections for meeting internal
biofuel demand in the near term appear to be
manageable
– Less certain if one takes account of biofuel export
markets – need additional assessments
Key Sustainability Issues
• Adversely affect food security?
– Experience in sugar growing areas indicate increased
food security as a result of increased incomes – subject
to regular payments for sugar cane delivery and
adequate revenue sharing mechanism
• Biodiversity and natural resource
management
– Biofuels development tends to lead to mono-crop
culture and intensive use of fertilzier and pesticides
– Needs additional detailed assessments
• Key role for agencies such as UNIDO and/or
UNEP/AU/ECA and sub-regional agencies to
take lead on the sustainability issue
Priority Options
Will Vary According to Country’s Specific
Characteristics
• Drylands (Arid and Semi Arid Areas)
– Short Term Options
• Biodiesel
• Bioethanol
• Cogeneration
– Medium to Long Term options
• Biogas
• Biomass Gasification
Priority Options
Will Vary According to Country’s Specific
Characteristics
• Wetlands (Moist and rainland areas)
– Short Term Options
• Bioethanol
• Cogeneration
– Medium to Long Term options
• Biodiesel
• Biogas
• Biomass Gasification
Way Forward
• Short Term
– Focus on proven options that build on
existing agro-industries that use
available agro-wastes (such as
bioethanol in existing sugar industries)
to minimize start-up costs and reduce
risk
– Undertake regularly updated detailed
resource assessments
Way Forward
• Short Term
– Set pre-determined prices for bioenergy options
– Establish supportive regulatory and policy
measures such as standard PPAs and blending
requirements
– Concentrate on investment analysis and
preparation of “bankable” investment proposals
– Encourage national, regional and international
exchange of experience, skills and technologies
(regional bioenergy network)
Way Forward
• Medium to Long Term
– Finance resource assessments
– Support R&D and local adaptation
– Initiate pilot and demonstration investments
– Strengthen national, regional and global
technical exchange of skills, experience and
information
Thanks for your
attention
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&
www.unido.org