B I OMASS E N E RGY C O N S UMPTION PAT T ERNS I N C A MBODIA: C H ALLENGES A N D O P P O RTUNITIES

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1 APRIL 23 RD 2015 RAFFLES HOTEL PHNOM PENH B I OMASS E N E RGY C O N S UMPTION PAT T ERNS I N C A MBODIA: C H ALLENGES A N D O P P O RTUNITIES R o m a i n J OYA G E R E S

2 Outline Objective: to set the context of Biomass Energy in Cambodia and to provide you with some needed background before we actually get into more in-depth discussions later in this break-out session. 1. Main concepts & Significance of Biomass Energy in Cambodia 2. Current Biomass Consumption Patterns & Challenges 3. Sustainable solutions & related business opportunities Nota: All the results shared in this presentation come from 2 years of research work undertaken by GERES to bring new evidences to decision makers and projects implementers.

3 KEY definitions (source: FAO) Biomass energy: material of biological origin excluding material embedded in geological formations and transformed to fossil. Woodfuels: woodfuel refers to all types of biofuels derived directly and indirectly from trees and shrubs grown on forest and non-forest lands, from silvicultural activities, harvesting and logging, as well as industrial by-products. BIOMASS ENERGY Woodfuels Firewood or Fuelwood Charcoal Saw dust Agricultural byproducts - Rice husk - Corn cob

4 % toe/capita Cambodia: One of the highest reliance on biomass energy in SEA 80% 70% 60% 50% 40% 30% 20% 10% 0% Share of biomass energy in the total energy consumption (Source: IEA energy balances) Primary Energy Supply per capita (Source: IEA energy balances) Cambodia and Myanmar have the lowest energy consumption per capita in Southeast Asia. The significance of biomass energy in the national energy balance is similar in Cambodia, Vietnam and Myanmar. Context of Cambodia: unreliable electricity grid with limited coverage and high prices, low enforcement of the forest laws, tremendous land conversions undergoing wood is by far the cheapest source of energy than you can find in Cambodia with easy and nearly free accessibility.

5 Biomass Energy: the 1 st energy source in Cambodia Total final energy consumption in Cambodia, in 2012 (Source: IEA) Final biomass energy consumption in Cambodia, in 2013 Source: The FloWood project, GERES % 70% 75.4% 4730 ktoe 3324 ktoe 16.4% 6% 7.5% 0.4% 0.1% 0.2% Oil products Electricity Biomass energy Firewood Rice husk Sawdust Garment wastes Leaves Charcoal Biomass energy accounts for 70% of the energy mix. Woodfuels (firewood + charcoal + sawdust) account for more than 90% of the final biomass energy demand. Primary wood demand = 4.3 million tons annually = 2 million ton oil equivalent 3 times the energy needs of the transport sector. Wood energy = major market for Cambodia (> 350 million USD/yr).

6 TITLE The FloWood project, GERES 2014 Processing: GERES, All rights reserved. Domestic cooking drives more than 70% of the final biomass energy demand. Traditional charcoal consumes about one million ton oil equivalent of forest wood annually! but forest wood demand from industries is on the rise, driven by economic growth. Alternative biomass energies (agricultural residues) contribute to only 7 % of the biomass energy mix although they could potentially replace a significant share of the wood energy burned if converted in denser materials.

7 SMEs & Industry consume 660 thousand tons of wood annually. Wood energy consumption in SMEs / Industries Source: The FloWood project, GERES Cookstove firing 0.4% Gasification for ice making (bars & cubes) 7.0% Brick manufacturing 27.8% Garment factories 45.1% RSS & ADS rubber processing 1.6% Fish smoking 6.2% Tobacco curing 5.4% Small scale food processing 6.6% Rice husk final consumption in SMEs / Industries Source: The FloWood project, GERES Salt refining 9% Small scale food processing 17% Gasification in rice milling 34% Brick manufacturin g 36% Gasification for ice making (bars & cubes) 1% Cookstove firing 3% Wood energy is often the main cost in the business models of the sector studied but also the most reducible if EE measures are taken (contrary to labor cost). Existing processes are inefficient, threatening the long term growth, financial viability and competitiveness of key sectors such as rubber processing, bricks for construction and garment. Wood scarcity threatens small scale businesses who cannot afford the current price increase or cannot travel to the wood collection areas anymore (small scale food processing. Biomass energy users face an abyssal lack of technical assistance that hampers energy efficiency and innovation.

8 hectares Impact of woodfuels on forests Last GERES estimates: 88% of woodfuels are coming from natural forest (only 12% from farming lands, plantations, orchards, hedges; etc.). The impact of woodfuel collection on forests is very heterogeneous throughout the country, either being a direct driver of degradation/deforestation or an opportunistic activity depending on other drivers such as forest conversion to agricultural land (e.g. ELCs) Industrial activities being more concentrated in geographically restricted areas, they locally drive drastic amounts of wood from Cambodian forests. Hectares of ELCs granted in the last 20 years (LICADHO, 2015) RGC s moratorium 500, , , , , The wood energy sector is currently benefiting from the tremendous forest area being recently clear-cut through ELC granting (prices are artificially low!) but this cheap sourcing might come to an end in the coming years.

9 3 main levers of action Need to address the biomass energy value chain as a whole, from forest and field to end users: 1: energy efficiency Provide technical assistance for better process management Improved technologies (multi-layer rubber dryers, VSBK brick kilns, ICS, etc. See coming presentation from NCPO-C... 2: Improved conversions Improved charcoal kilns Improved wood gasifiers or switch to RH gasifiers (for ice factories) to generate cleaner captive power 3: Fuel switch to renewable sources Woodfuels from sustainably managed forests Agroforestry / Wood plantations on already degraded lands or public areas. Development of Waste Agricultural Biomass Energy See coming presentation from SGFE.

10 USD/m 3 of wood TJ Annual change in firewood price Focus on fuel switch: what about Agricultural by-products? 100,000 80,000 60,000 40,000 20,000 Current biomass energy supply vs alternative potential from Agri by-product in 2013) Sources: The FloWood project, GERES NCPO-C, Wood Cassava residues Rice straw Saw dust Potential of WAB Corn cobs Rice husk Current biomass energy supply Bagasse from sugar can processing Average price of firewood in Kampong Cham province % Increase from year to year Firewood price (USD/m3) 20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% 6% of the Agri by-product potential being used. 14% of the national rice husk production being tapped. Wood prices are soaring Agricultural by products might become competitive. Agri. by-products are bulky (e.g. low density of rice husk), high transportation cost. BUT high potential if converted into a denser material. Careful: Potential accessibility Competition with feedstock WAB can contribute to maintain soil fertility and limit erosion

11 Focus on Rice husk: a largely untapped resource despite a significant potential. A heap of rice husk next to a rice mill in Bantey Manchey Rice husk pellets Rice husk Briquettes Contrary to non-properly managed forests, agricultural biomass is carbon neutral and renewable. Rice mills concentrate rice husk from hundreds of farms and are widesread throughout the country Rice husk is well valorized in some countries (e.g. India).

12 Engagement of the private sector Engagement of the private sector will be crucial in ensuring the long-term viability of some key sectors in Cambodia. Private sector interventions should focus on the following: Financial Institution Engagement: engage with commercial banks, specialized banks, and MFIs and provide incentives for the development of tailored loan products to facilitate access to suitable technologies such as improved kilns & stoves, efficient gasification and biomass briquetting technologies. Business-to-business (B2B) services: to bridge the existing information asymmetry associated with adoption of improved technologies (e.g., availability of technologies (off-theshelf solutions or new technologies), manufacturing information, quality, lifespan etc.) and associated cost analyses (e.g. return on investment, etc.). Development of sustainable, community charcoal businesses: follow-on projects undertaken by GERES. Refinement of the business model of community charcoal businesses, support in business planning, technical training on kiln technologies and sustainable fuel sourcing, and downstream activities to raise awareness and effectively market sustainable charcoal. Tax incentives/ deductions: Design and extend tax incentives/ deductions to encourage adoption of improved technologies and alternative fuels, and to support the ongoing development, strengthening, and competitiveness of green enterprises.

13 THANK YOU Questions? Romain JOYA - r.joya@geres.eu This publication has been produced with the assistance of the European Union. The contents of this publication are the sole responsibility of Eurocham Cambodia and can in no way be taken to reflect the views of the European Union.

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