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Africa – non-food based biofuels

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The announcement by the European Commission at the end of 2012 that the use of food-based biofuels to meet the EU 10% renewable energy target will be limited to only 5% of the total consumption for transport purposes, has generated morosity in the sector. Yet, perspectives are not so bad for African producers of non-food based biofuels.

bio2The EU decision is the consequence of a strong lobbying from NGOs and by the UN Rapporteur on the Right to Food, Olivier De Schutter who claims that biofuels mandates have been a major factor in rising food prices. In February 2012, the EU was even accused by the EuropAfrica coalition of NGOs of “bio-fuelling injustice and hunger in Africa”, and of “exacerbating land grabs in Africa”. By that time, a number scientists also urged the EU Commission to recognize the alleged negative impact of “indirect land-use change” (ILUC) caused by biofuels such as widespread deforestation.

In such context, unsurprisingly, the biofuels industry members fear that the capping of crop based biofuels at 5 % of the renewable energy sources (RES) transport target, “would impact investors’ confidence and hamper future market developments not only of biofuels but also biogas and solid biomass sectors”. Against this background, the Hong-Kong based company Petrotrans Co Ltd, is showing nevertheless some optimism. The company has strong ambitions in Ethiopia. Its biofuels manager, Negi Glyesus Medape told SouthWorld, that Petrotrans plans indeed to produce 20,000 tons of ethanol from sweet sorghum stalks before the end of this year and that it is investing US $ 20 million in the project. The feedstock would be provided by local farmers and by the company’s 5,000 ha estate. There is a large potential since the government has set a E20 target for 2017 (which means that 20% of the gasoline has to be ethanol instead of the current E10 blend of ethanol in gasoline) and the company is also keen to export ethanol to Asia, says Negi who stresses that this project not only does not reduce food insecurity by on the contrary would rather contribute to increase it because the company will provide seeds, fertilizers and technical assistance to the farmers who will continue to consume and sell the grains. Petrotrans is sharing the view of the Nimbkar Agricultural Research Institute (NARI) of Maharashtra (India), which found that sweet sorghum is well-suited for ethanol production and can be a viable alternative to fossil fuels, especially for petroleum products as a cooking, lighting and automotive fuel. Also, it has several advantages over sugarcane, such as the ability to withstand dry conditions.

bio3Other players like the London and Lagos-based trader Abiodun Agoro, chairman of the Abbey Import & Export company, are looking at the Chinese market. He has started exporting 40 tons of cassava chips per month from to China, from the Ireti farms in the Kwara State of Nigeria where the Shonga Farms Holdings produce the chips in partnership with the Australian company Austravia. The first batch of 6,000 tons of chips was shipped in July 2012 accordingly. The Kwara State retains a 25 percent stake in the project. According to Abiodun Agoro, the dry chips will be transformed into ethanol. Shonga’s plans are to export up to 500,000 tons of cassava per annum to China where the demand is literally soaring. That quantity should allow for the production of 100 million liters of ethanol.  The Nigerian government expects that cassava chips exports will amount to more than one million tons in 2013.

But the biofuels industry is also facing the hostility of anti-land grabbing campaigners who are criticizing the Makeni project in Sierra-Leone, one of Africa’s largest which is being developed by the Swiss company Addax Bioenergy. It represents an investment of € 267 million for the establishment of 14,300 ha of sugarcane plantations, an ethanol refinery which should produce 90,000 cubic meters per annum and a 30 MW biomass power plant that is supposed to feed 15 MW to the country’s national grid. The project which should be operational in 2014 has been attacked recently in a report published in October 2012 by the Barcelona-based NGO Grain titled “who’s behind the land grabs ?”. The report mentioned that local farmers had been evicted from their farmland without compensation. The Swiss charity Brot für Alle also blamed the economics of the project and calculated that Addax would take home an annual return of US$53 million, about 98% of the value added by the project But Addax’s owner Jean–Claude Gandur does not feel guilty of doing anything immoral. He tells anybody hat his project complies with the social and  environmental standards set by the African Development Bank, the World Bank’s International Finance Corporation and the European Union.

bio4For the time being, this kind of controversy has not affected the producers of jatropha curcas, a non-edible plant, that can grow on marginal land which represents one of Africa’s more important potential sources of biodiesel, except for one case. Indeed, the Italian company Tozzi Green is accused of developing a biodiesel from jatropha project on the Ihorombe highlands in the centre-south of Madagascar over 100,000 ha, against the will of the local population. On the last 16 November, representatives of nine villages of the area came to the capital, Antananarivo to express their dismay during a press conference that was organized to protest against the forced expulsion of peasants and cattle herders by armed people. Besides, local people accuse the Tozzi staff to have destroyed the graves of their ancestors and other sacred places

Sriram Srinivasan, Chief financial officer of the Singapore-based JOIL company Jatropha which develops tissue culture technology, produces and sells elite jatropha seedlings and provides consulting services for Jatropha plantations is confident about the future. The company which is a joint venture incorporated by Temasek Life sciences Laboratory of Singapore, Tata Chemicals and Toyota, has one of the best knowledge in the world of the plant and of its market. It  owns test plants and test fields in Indonesia, in the Philippines, in India, in Singapore and in Kenya, at Magadi and Kajiado and has opened one laboratory in Nairobi. Accordingly, jatropha has the potential to evolve into a useful commercial feedstock for the biofuels sector on condition that adapted genetics of the crop are planted in suitable areas and are managed professionally towards productive cultivation.  

This prudent approach has not been always followed in the past, analyses Sriram. “Some mistakes have been done over the last years” he admits. “The crop was taken up on large scale without domestication. There has been little varietal development and a lack of good understanding of the crop and a poor knowledge of its growing conditions)”. As a result, there have been too high expectations at early stages of crop development namely in terms of yields, says Sriram. But a renewed potential is emerging, even if perspectives look less euphoric than four years ago. The conclusions of the 2008 German based GEXSI Capital Partners study of the jatropha have been revisited in a more realistic way. Compared with the world production projections of the GEXSI study in 2008, the findings of the Leuphana study of Lüneburg University published in 2011, show a slower market progression than expected.

bio5Concerning Africa, the Gexsi recorded a total of 97 projects totalling 119,000 ha across the continent in 2008 and predicted that the total surface of jatropha crops in Africa would reach over 2 million hectares by 2015, behind after Asia (9.2 million ha) and ahead of Latin America (1.6 million ha). But the Lünerburg study estimated that in 2011 the total surface covered by jatropha in Africa was only 96,000 ha and it anticipated a more modest growth of up to 765,000 ha by 2015. Similar trends were announced for Asia which would still lead the market but only with an acreage of 2.5 m. ha and for Latin America (330,000 ha. The global market potential for 2020 is estimated somewhere between 2.6 million and 4.8 million tons of jatropha oil, but to reach these volumes a minimum US $ 2 bn investment is needed before 2015 for the extension of the farms, warns Sriram.

Sriram is definitely optimistic. Research made by JOIL has shown that there is a large potential to increase the seed yields (from 3.25 tons/ha to 8t/ha between now and 2020), to increase also the oil content per seed (from 27% now to 40%), allowing a oil yield of 3.2 tons/ha in 2020 as against 0.9 ha at present. The “miracle” would occur through breeding, genetically modified techniques GM and scientifically developed package of practices, explains Sriram. Finally, the  economic viability of the supply chain is also increased because of the additional use of the seed cakes (fertilizers and briquettes for power production). The methane content from these briquettes is 60-65% compared with 55% for cowdung. Another reason for optimism is the expected rise of crude oil prices while the jatropha based biodiesel cost will decrease over time, predicts Sriram. From 113 $/barrel in 2010 as against 81$/barrel for diesel, it is expected to fall to 45 $ in 2016 and even 26 $ after 2020, whereas the cost of fossile-based diesel is expected to rise up to 118$/barrel by 2020. According to Sriram, the company is looking at becoming an oil producer within the next two or three years.

François Misser

 

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