Existing Financial Mechanisms & Opportunities for Sustainable Wood Energy Value Chains in West Africa CSIR-FORIG,GHANA

Transcription

1 CSIR FORESTRY RESEARCH INSTITUTE OF GHANA Existing Financial Mechanisms & Opportunities for Sustainable Wood Energy Value Chains in West Africa Beatrice Darko Obiri FOREST PRODUCTS AND MARKETING DIVISION CSIR-FORIG,GHANA ECREE Workshop 9-11/05/16, Cotounu, Benin

2 CONTENTS 1. Context for financing-what are the key issues? 2. Analysis of selected wood energy financing mechanisms for cases in west African states 3. Financing opportunities for enhancing wood energy value chains 4. Lessons or Key messages

3 MY TASK Analyze existing finance mechanisms and opportunities for sustainable wood energy value chains in West Africa OBJECTIVE Identify best practice/ innovative financing mechanisms that can be harnessed for sustainable development of wood energy value chains in West Africa Identify opportunties for financing sustainable wood energy value chains

4 HOW ANALYSIS WAS DONE Desk review of project cases Information from documents on donor, company and other websites Criteria for analysis Financing goal Fund sources and values Partners, contribution and partnership arrangements Key activities financed Linkage with communities Sustainability Any challenges Any impacts

5 Why need for sustainable wood energy financing? Percent share of total energy consumption 650 million people expected to use biomass (charcoal and firewood) in cooking in 2040 in Africa Wood energy will still play a key role in WA economy over next one and half decade IEA energy outlook-africa 2014

6 Financing enhancement of wood energy value chain so far Efforts concentrated on development and promotion of more efficient end use devices through various financing arrangements including grants improved end-use devices for clean cooking to conserve wood, reduce emissions and health hazards in rural communities others

7 BUT Every aspect of the value chain needs financing intervention for improvement

8 CONTEXT OF FINANCING: ISSUES NEEDING ATTENTION 98% of domestic producers extract wood for fuel from natural stands 8

9 Increased pressure on the natural feed stock All year round production Uncoordinated inter-sectoral efforts for resource management Extensive cutting-volta Poor managemen

10 DECLINING VOLUME OF PREFERRED WOODFUEL SPECIES 70 species reported by producers being extracted for fuel Most frequently extracted are native hard wood species High wood density with high calorific values Anogeissus Ptericarpus Mangroves Celtis Albizia Vitellaria paradoxa Khaya Etc. Obiri et al 2014 and 2015

11 Climate threats from drought on crop production Declining agricultural incomes

12 Increased dependency on wood energy resources as Major alternative and supplementary income source in most farming areas

13 RUDIMENTARY TECHNOLOGIES: CHARCOAL Metal kiln 3% Mud brick kiln 2% Earth Mound 95%

14 RUDIMENTARYTECHNOLOGY Drudgery and health hazards Smoke, heat and dust traditional earth mound charcoal production Smoke from firewood for cooking

15 RUDIMENTARYTECHNOLOGY No secondary processing of firewood to preserve in storage Wood left in the open Termite and fungal decay common

16 Key segments of wood energy value chain & needs for financing Feedstock Wood Conversion- product development Firewood & charcoal Packaging & distribution Marketing Consumption Resource availability & Regulation Regulation Technology for efficient conversion Technology for quality packaging, Pricing for higher end-use product Product standardization Certification Distribution mechanisms Supply statistics Efficient end-use devices Demand stats Waste reduction-value for money processes Accessibility, Affordability, Sustainability Wide range of stakeholder engagement: institutionspolicy/ regulatory, financial, health, engineering, research and academia, communities, market associations, development, etc.

17 CASES OF FINANCIAL MECHANISMS REVIEWED

18 Case 1: Ghana: Efficiency Enhancement and Entrepreneurship Development in Sustainable Biomass Charcoaling Focus: sustainable forestry together with energy-efficient charcoal production & marketing Duration: 24 Months Total Project Cost: EUR 848,000 Private-Private-NGO-Community Partnershi NORDIC DEVELOPMENT FUND Climate Finance EUR 500,000 Local Partner WWF West Africa Forest Programme Office (WAFPO)-Liason Nordic Partner: -Pöyry Management Consulting Traditional land owners Finish private investor African Plantations for Sustainable Development (APSD), Ghana-system managers Feed stock - 19 energy wood plantations Efficient Charcoal Kilns Charcoal Local market Local communitiesplantation workers Charcoal artisans training Improved packaging training Improved transport training

19 Case 2: Senegal Sustainable and Participatory Energy Management Project (PROGEDE II) Project period: Project value: EUR 11.1 million Public Private Partnership?? NORDIC DEVELOPMENT FUND Climate Finance EUR 3 million Sustainable wood fuel supply Promotion and diversification of modern household energy Partner: World Bank/IDA Senegal Ministry of Energy Feed stock -community managed forests Efficient carbonization charcoal Local market Local communities Charcoal artisans

20 Total Project Cost: EUR 923,403 Duration: 24 Months Case 3: Ghana -Biomass Green Briquette Fuel (GBF) Production (BidiePa) under Kitchen Efficiency Programme Aim : Climate mitigation through conversion of forestry and agricultural bio-waste to briquette fuel to save forests and emission of Green House Gases Private-Private-Private NORDIC DEVELOPMENT FUND Climate Finance EUR 494,790 Nordic Partner: C. F. Nielsen A/S (Briquette machine manufacturer) Local Partner CookClean Ghana Limited Other Partners S.m.b.a. (Business to Africa) Local associations -Churches, women s groups for demonstration Feed stock -Maize cobs, Millet stalks -Sawdust Briquette plant Briquette Local market Local Gov t & NGO

21 Case 4: Benin Increased access to modern energy: Sub-Component B 2: modernizing biomass energy services Goal: improve reliability and access to modern energy services Project period: Parallel funding PPP?? NORDIC DEVELOPMENT FUND Climate Finance EUR 1.5 m -strengthening community-based sustainable wood fuel production and market management systems WORLD BANK/IDA : USD1.3m -Community based wood fuel management of 300,000 ha forest : Africa Renewable Energy Access Trust Fund (AFREA) USD 2 m Artisan training in high efficient carbonization Benin Ministry of Energy and Water Feed stock -community managed forests Efficient carbonization charcoal Local market Local communities Charcoal artisans training

22 Case5 : Ghana: Eucalyptus to electricity Goal: contribute to availability of national power supply, socio-economic development of local communities Private-Private-Community Partnership Norwegian power generation business African Plantations for Sustainable Development (APSD), Ghana Local partner: JAK Foundation Traditional land owners Feed stock - Eucalypt plantations 600 MW Co-generation Plant Bioenergy National grid Local communitiesplantation workers

23 Any OPPORTUNITIES for sustainable wood energy value chain financing? (YES) Private sector investment in wood energy value chain is increasing Need to put in place appropriate and stable policy and enabling environment Loans/Grants from development partners still vital World bank /IBRD World bank/ GEF African Development Bank International Tropical Timber Organization NDF climate finance Sustainable Energy Fund for Africa (SEFA) African Renewable Energy Fund ECOWAS Renewable Energy Investment Initiative (EREII) National governments and agencies fund sourcing still vital Potential to network to pool funds for financing wood energy value chains

24 KEY MESSAGES For sustainability, every segment of the chain needs financing for higher efficiency and value Financial mechanisms for wood energy value chain Public Private Partnership Private Private Partnership Public Private community partnerships External capital from development partners still key to enhancing value chain local commercial banks tend to be risk-averse Green financing mainly grants provides leverage for capitalizing on topical issues related to climate mitigation and adaption (forest landscape restoration, emission reduction, climate vulnerability reduction Forest for Security window

25 KEY MESSAGES Need for innovative financial mechanism to implement sustainable wood energy projects in West Africa Possibility of pooling financial resources for wood energy value chain development fund for financing with local and external energy sector stakeholders including private sector Support with favourable policy environment and institutional framework

26 COUNTRY LEVEL: SECTOR DEVELOPMENT FUND TO FINANCE WOOD ENERGY VALUE CHAINS Feedstock Conversion- product development Firewood, charcoal, briquette & electicity Packaging & distribution Marketing End use devices Consumption GRANTS Climate finance, ETC. Multilateral and bilateral NDF, EU, UNFCC- REDD+, ITTO, FAO-FLEGT, AREF, AU, ECOWAS, ETC LOANS & GRANTS -World Bank -AfDB -ETC VENTURE CAPITAL (SME) WOOD ENERGY SECTOR VC DEVELOPMENT FUND???? NATIONAL GOV T FUNDS Sector budgetary allocation DP support projects Pooling internal revenue from wood energy transactions -Charcoal liscence -DA revenue from wood fuel -FC permit for wood collection, etc. Local communities Green growth development & research Private sector & institutions -Value for money projects

27 CONCLUSION: Why need innovative finance for sustainable wood energy value chains in West Africa? Wood energy is key to sustainable development in the sub-region Primary fuel source for domestic and industrial use Renewable and reliable even if all other sources of energy fail we can grow wood and use for energy possibly at a cheaper cost For wealth creation Ensure availability and affordability for enterprise/industry development to increase local economy growth to reduce poverty Modernization Reduce DRUDGERY in acquisition and use

28 CONCLUSION: Why need innovative finance for sustainable wood energy value chains in West Africa? Ensure efficiency in resource use (incl. safe use) Profit maximization along the value chain with low transaction costs Ensure environmental and livelihood sustainability