Biofuels: ACP s response to fossil fuel dependence

Transcription

1 Biofuels: ACP s response to fossil fuel dependence The role of Science, Technology and Innovation in Supporting a sustainable biofuel sector Written by: Jan Cloin, Raymond Rivalland, Dr. Maureen Wilson and Prof. Francis Yamba; edited by Judith Francis. francis@cta.int This policy brief outlines various opportunities for using local biomass resources to reduce ACP countries dependence on fossil fuels and to improve the competitiveness of traditional agricultural-based industries. 1. INTRODUCTION ACP countries with their biomass resource potential are well positioned to effectively deploy biofuel in partially meeting their energy needs. The continued increase in the cost of fossil fuels coupled with the cut in prices paid for sugar exported to the EU have forced many ACP countries to seek innovative ways of diversifying agricultural production and meeting energy demands. Biofuels are products from biological origin that have been converted into liquid, solid or gas form, depending on the raw material and the technology employed, for energy generation. Liquid biofuels can be used for heating, cooking and lighting, transport and power generation. Raw materials include renewable plant matter e.g. trees, grasses or agricultural crops and also animal waste. Bioethanol, bio-diesel and pure plant oils are the most common forms of liquid biofuels. Solid biofuels are plant matter such as wood chips, and other solid or woody biomass, that can directly be used as a fuel. The most widely used form of solid biofuels is bagasse, the fibre remaining when sugar cane is crushed to remove the cane juice for sugar production. It has been used for centuries for electricity generation at sugar mills and the excess can be sold to the national grid. Gaseous biofuels include biogas, which is produced by digesting organic waste and can be used for cooking, lighting and power generation at the village level. 2. WHY BIOFUELS? Figure 1: Farmer harvesting cane for sugar and biofuel utilisation (Source: Associated Press) Biofuels provides an opportunity for ACP countries to utilise their own natural resources and attract the necessary foreign and domestic investment to achieve sustainable development goals. Promoting widespread use of biofuels would provide greater energy security, improved quality of life for rural and urban populations, economic development, opportunities for job creation and poverty alleviation, especially in rural areas. For example, the sugar cane plant which grows well in most ACP countries, is considered the most efficient species of the plant kingdom in terms of biomass production and can be further engineered to produce increased amounts of sugars and higher percentages of fibre. Sugar cane juice and molasses can be page 1 of 9

2 fermented to produce ethanol as is happening on a large scale in Brazil. Vegetable oil sources such as palm, coconut and jatropha can be used in their direct form (pure plant oils) or converted into biodiesel, and serve as alternatives to diesel imports. The production of biofuels using existing agricultural resources will not only provide alternative fuels for local consumption but can also be used to respond to increasing demands on export markets. However, the scientific and technological challenges that must be overcome to produce these commodities at competitive prices require the concerted effort of governments, scientific community, engineers and society. Production of liquid biofuels from ligno-cellulosic sources such as wood, grass and bagasse are promising, however conversion technologies are currently uncompetitive, while the feedstock are in abundance. IF ACP scientists and engineers can contribute to the global knowledge system that is working to make the conversion technologies competitive in the medium term, the conflict of food versus fuel would be lessened. The biofuel sector has strong links and synergies with other agricultural industries through provision of raw material base in the form of agricultural by-product streams from livestock and fisheries. At the same time, many biofuel by-products can provide feedstock for these same agricultural sectors. 3. CHALLENGES 3.1 Economics Market prices of both agricultural feedstocks and fossil fuels are the main determinants of biofuel competitiveness. Given that both these commodities are highly volatile in nature, the very nature of biofuel competitiveness is a risky business and requires investors to look at the long term. Economics of scale in production is crucial for successful implementation of any biofuel development programme. In this regard it is important that knowledge and capacity are available to select the appropriate technology and feedstocks to produce biofuels, which are competitive with fossil fuel. For example, lessons can be learned from economic analysis undertaken for selected feedstocks in various countries (Figure 2: Ethanol; Figure 3: Biodiesel, from selected feedstocks). On the other hand, biofuels from woody biomass and bagasse are highly competitive with the current price of fossil fuels and are increasingly applied in co-generation of steam and power. Figure 2 and 3: Production cost of ethanol (left) and biodiesel (right) in selected countries (Source IEA 2004 Energy Outlook, CEEEZ 2006) page 2 of 9

3 A recent study by Woodruff (2006) showed that while there are economic benefits to import substitution of fossil fuels in Pacific island countries, this reduces exports of copra, coconut oil and sugar. Most ACP countries import more than they export, by replacing about 10% of the imported petrol, 20% of the exported products might have to be used. Therefore, the trade balance actually worsens. It is thus important that countries consider the total impact of a growing biofuel industry on their economy, including economic resilience, job generation, ruralurban drift and support for local agricultural commodities. There is a strong case for increased economic resilience; Levantis (2007) found that an increase in price of US$10 per barrel of oil on the world market corresponds to a 2% decrease in the average economic growth in the Pacific. 3.2 Feedstock Despite the existence of a range of conversion technologies, the biggest challenge hindering viability of the biofuel industry in many ACP countries is the availability of feedstocks in sufficient quantities at reasonable cost. Although there is often a wide range of feedstocks available, economics of transformation are rarely competitive with current prices of fossil fuel. In some cases, national feedstocks are not sufficient to satisfy technically acceptable blending ratios, such as 10% ethanol in petrol (E10) or 20% biodiesel in diesel (B20). Biofuels to be produced in ACP countries should preferably be obtained from locally grown crops that are well adapted to the local conditions. Thus, in sugar producing countries, bio-ethanol will be obtainable from the sugar cane. In oil exporting countries, pure plant oil or biodiesel can be produced from coconut, palm and jatropha oil. With the emergence of bio-refineries, a more diverse feedstock, including ligno-cellulosic feedstock will be the input for a larger range of biofuels. For ACP countries to benefit from new developments they need to make investments in science and technology infrastructure and human resources. 3.3 Industry Restructuring With the implementation of the new EU sugar regime ( ), industries started restructuring in an attempt to stay competitive. The common theme among all the restructuring plans is to satisfy industry demand in the first instance for energy through using bagasse more efficiently and diversifying into ethanol production. Other options include the production of ethanol from molasses for the local or export fuel markets Standards In most ACP states, biofuels have not been standardised as a recognised fuel or fuel blend, neither have national standards been developed. This has its impact on the acceptability of biofuels by customers and car guarantees. On the other hand, most countries in the EU have established standards for the addition of both bio-ethanol and bio-diesel, which could easily be transferred or modified into ACP national standards, based on the EU experiences. Attempts to establish standards for the quality of pure plant oils in adapted engines can also build on the existing German standard for vegetable oils as a fuel in transport and power generation. Fuel standards for biofuels also exist in for example Brazil, Philippines, Malaysia, from which the ACP region can draw lessons. page 3 of 9

4 3.3.3 Fuel Blending Biofuels can completely displace the fossil fuels in cars, trucks or generators, if they are adapted to accommodate the new fuel, for example in 100% ethanol flex cars. To avoid the costs of switching or having to make engine adaptations, it is generally simpler to blend the proposed biofuel with the existing fossil fuel in proportions which will not require any modifications to the engine, such as E10, or B10 for diesel vehicles. Policies, for example based on the experiences in the EU as to the acceptable level of biofuel blending are thus a good start for market introduction of biofuels. To ensure that the correct infrastructure is in place to accommodate these blends, oil distribution companies need to invest, for which nationally appropriate incentives are required. 3.4 Trade International trade in biofuels and biofuel feedstocks has increased rapidly over the past years and is expected to increase further in the coming decade (FAO 2007). Figure 5 below shows the major areas for biofuel production (around the equator), but these are not the immediate potential markets, which comprise of countries with Kyoto Protocol Annex-I signatories and the US with an active strategy to become less dependent on fossil fuel imports. Through increasing demand for vegetable oil, under pressure of the EU biofuel mandate, for example, Figure 4: Vegetable Oil prices (source OilWorld, May 2007) vegetable oil prices have increased rapidly, (Figure 4) which decreases the viability of local oil sources for biofuel in ACP countries. Figure 5: FAO world wide estimation on biofuels potential (Source: Global Bioenergy partnership) page 4 of 9

5 Other ways of financially securing the industrial viability would be to increase the production capacity to satisfy the local needs and also to compete with similar biofuels on the export market. Right sizing of the industrial complex is thus important to the long term success of the industry. In addition, export taxes, transport charges as well as import duties in the targeted countries must be closely examined to guarantee price competitiveness at the delivery site. 3.5 Policies Most of the countries of the Caribbean have updated their energy policy to include renewable energy and through the regional body CARICOM have created the Caribbean Renewable Energy Development Programme, CREDP. Even though many other ACP states have an energy policy, some are outdated and for example do not actively support the application of renewable energy. To support rural communities, many countries subsidise the use of kerosene for lighting, cooking and other diesel for power generation and transport in remote areas. In addition, some ACP countries still have support mechanisms to stabilise the prices of farmer produce. These price mechanisms do not necessarily take into account the role that biofuels can play in remote places, substituting fossil fuels and therefore outdated energy and rural support policies pose a barrier on the more widespread use of biofuels. The absence of policies supporting blending of biofuels and the absence of tax benefits to promote biofuels leads to stagnation in the development of the biofuel sector. New agro-energy policies need to address these issues in a more holistic way, so as to optimise on the total net benefits on a national level. For example, the copra subsidies that Kiribati, an island nation in the Pacific uses to ensure income of outer island farmers, combined with fossil fuel subsidies to outer islands completely rule out the viability of a local biofuels production. 3.6 Socio Environmental Issues There is a potential conflict between using land and water for growing livestock feed, aquaculture ponds, food for human consumption and biofuels. In addition, large-scale palm plantations in the tropical regions of the world result in loss of biodiversity. The production of crops for biofuels requires improved efficiencies in land management practices. Likewise, the harvesting and management of available water is equally important for optimum production of the crops. Removal of crop residues, such as leaves and stalks, for use in co-generation, can negatively impact on soil structure and promote erosion, thus affecting the eco-system. Therefore strategies for managing crop residues must be developed for sustainability. Consideration can be given to using marginal lands e.g. to grow Jatropha. Stringent management must be carried out to achieve high productivity for maximum yield. Agronomic factors, e.g. the rapidly increasing price of fertilisers can negatively impact on the optimum application at small budget operations which will prevent the proper growth and development of the plant. Likewise, the harvesting and management of available water is equally important for optimum production of the crops. The potential of biofuels in poverty reduction is large, but also fragile: it will be reduced where feedstock production tends to be large scale, or causes pressure on lands access, and its success can be undermined by many of the same policy, regulatory or investment shortcomings as impede agriculture. (ODI, 2007) page 5 of 9

6 3.7 The role of Science Technology and Innovation To improve on the availability and quality of suitable feedstock under local conditions, more data is required on the feedstock characterisation and optimisation of feedstock life cycle. In addition, economic analysis on feedstock suitability and appropriate technologies for conversion should provide direction towards cost-effective solutions. Figure 5: GIS Coconut Resource Assessment for Samoa (Source: SOPAC) As an alternative to biodiesel esterification, requiring imports of extra-acp methanol, pure plant oil applications in adapted engines should be investigated further, as well as other alternatives to esterification. The prospect of joint ventures using methanol from ACP sources should also be considered. Also, appropriate biofuel logistics and transport issues need addressing to ensure compatibility with the existing infrastructure, equipment capacity and capability. The use of GIS technology (Figure 5) for resource assessment provides opportunities to identify feedstock availability in a comprehensive way. Harvesting and storage of the feedstock raw material requires improvement to compaction/dehydration techniques to increase the energy density. Additionally, national biofuel quality standards may require adaptation to suit local requirements. To answer such questions, research and human and financial capacity is required, however this is often lacking in ACP countries. 4. OPTIONS 4.1 Power Generation The largest contribution by biofuels in the energy mix can be obtained through industrial heat and power generation. Figure 6: CTSAV Bagasse / Coal Power Plant in Mauritius (Source: Raymond Rivalland) Industrial Power Generation Burning solid biomass releases a considerable amount of energy, which is used to fire a high pressure steam boiler, to produce electricity with a steam turbine. New page 6 of 9

7 high pressure technology is now available with higher efficiencies of electricity generated per unit of biomass, thus allowing excess electricity to be sold to the national grid. In addition, other biofuels such as woody biomass short rotation crops e.g. willow, eucalypts, poplar and agricultural waste may also be used during the out of crop season, to ensure power generation all year round and thus a good return on investment. 4.2 Bioenergy for household and village applications Apart from energy production on an industrial scale, biofuels also have a large role to play in improving quality of life and reducing fossil fuel demand at a household level in ACP countries Liquid Biofuels Remote areas in ACP countries can competitively use locally available raw material such as palm, jatropha and coconut to produce liquid biofuels for village power generation. Generators that have been adapted for the purpose and agricultural conversion equipment such as mills and filters are needed to complement existing rural electrification programmes, which usually only feature diesel generators Biogas Biogas can be produced from domestic and agricultural waste through anaerobic biogas digesters. The gas thus obtained can be used for cooking, heating both for households and light industrial applications and power generation. This requires cultural sensitivity analysis to ascertain its acceptability for use in the local context BioGel BioGel is made from low-grade ethanol and mixed with a gelling agent and has the potential to replace wood for cooking, lighting and heating. Its solid form makes it easy and safe to distribute and the widespread use of this fuel will contribute to reduction of forest depletion caused by firewood use. 4.3 Promotion Policies The use of biofuel can be made fiscally attractive based on the rationale of improving the balance of payments, decreasing dependence on fossil fuels and improving the local air quality by including these externalities into the price of fossil fuels through taxation. In addition, duties on biofuel-related equipment, partial duty exemption for biofuel blends and investment subsidies have been Box 1: Success story: Mauritius cane hub Facing a most severe price reduction of 36% of its raw sugar, traditionally sold to the EU, the Mauritius sugar industry restructured its activities in order to add value to every product related to crystal sugar manufacture. Cane biomass utilization bagasse from the milling activities, and cane trash originally left over in the fields are thus burnt in most efficient boilers in order to generate high pressure steam used in cogeneration to satisfy the factory requirements, and to produce electricity exported to the local grid. Cane biomass presently satisfies 50% of the country s electricity requirements during the crop season. Molasses, the residue from the crystallization process, - traditionally exported for cattle feeding mainly is now fermented and distilled to bio ethanol. Bio ethanol may be blended, as it is currently done in Brazil, up to 20% to gasoline for the transport industry. This brings substantial savings to the country s foreign exchange balance, avoiding the import of ever increasing petroleum products. Raw sugar, traditionally exported to the EU for refining will now be refined locally in state of the art refineries working all year round and fuelled from the cogeneration power plant installed nearby on the cane hub complex. The country will thus benefit from the refined sugar higher selling price as a partial compensation of the 36% raw sugar price drop. In line with the success of the cane hub, the local research station (MSIRI), is currently breeding new high fibre canes which will ultimately practically set Mauritius as a self-sufficient energy producer all year round! page 7 of 9

8 shown to boost biofuel sectors in EU countries. Governments can set a target such as meeting national fuel needs from 5.75% biofuels in This strategy has shown its merits in the EU and could be replicated in ACP countries. 4.4 Biofuels for Transport Blending ratios are determined by technical, economic and market considerations. For ethanol up to 10% and biodiesel up to 20% blending is possible without engine modifications. However, the final blending ratios are influenced by the market for conventional fossil fuels and availability of feedstocks. To obtain optimal national blending ratios requires research in feedstock characteristics vis-à-vis environmental and socio-economic considerations. In order to support market development, national quality standards are imperative. Locally appropriate standards for a dedicated fleet with adapted engines operating on pure plant oils can also be considered. 5. CONCLUSIONS Figure 7: Coconut Oil Retail in Vanuatu (Source Tony Deamer) ACP countries can play an important role in biofuel production, because of their natural endowment climate, arable land and water resources (Figure 8). National strategies can ensure biofuel benefits will not only go towards importers of biofuels such as the EU and the US but also to the producer countries in the ACP region. This requires ACP governments to take action now, investing in a competitive agricultural sector, taking into account the linkages between biofuels, livestock and fisheries. ACP Governments must act and increase investment for sustaining science, technology and innovation infrastructure with emphasis on building human resource capacity and physical infrastructure to support the product development and technological breakthroughs that are relevant to a competitive agricultural sector, that can sustain biofuel production. Scientists must be mindful of the linkages between biofuels, livestock and fisheries and societal goals of food and nutrition security and economic prosperity. 6. POLICY RECOMMENDATIONS The observations and analysis in this paper lead to the following recommendations. Implement National Biofuel Strategies ACP Governments in consultation with scientists, engineers and the general public should formulate strategies aimed at addressing critical issues such as promoting and sustaining local demand for biofuels. Targets should be set so that biofuels account for a share of the fossil fuel market. In addition, they should determine blending ratios; establish biofuel standards, recommend production modalities and consider environmental and social concerns and providing appropriate investment and consumption incentives. Institute Legal and regulatory framework ACP Governments in consultation with scientists, engineers and the general public must set up a legal and regulatory framework aimed at guiding and page 8 of 9

9 regulating the biofuel industry and avoid negative environmental impact of the biofuel industry. There is a need to find a balance between biofuel commodity export and national consumption. Promote integrated agro-energy farming policies ACP Governments in consultation with scientists, engineers and the general public to take into account the interconnectedness of the biofuel industries with livestock, farming, fisheries, and the conservation of forests and watershed areas to ensure maximising national benefits and sustainable development. This integrated approach is also important for coherent and sustainable water and land management. Support ACP Biofuel Research ACP Governments in consultation with scientists, engineers and the general public and international partners such as the EU should support local and regional research into evaluating and producing suitable feedstocks; process and logistics optimisation; economic analysis for cost effective solutions; adapting and transfer of technologies, such as ligno-cellulosic conversion; searching locally appropriate alternatives to existing biofuels; resource assessment, including the use of GIS and support laboratory capacity for the analysis of biofuel produced to ensure compliance with quality standards. References Cloin, J. (2007) Capacity Building for a Sustainable Biofuel Sector in the Pacific, CTA Workshop Paper, CTA, Wageningen, The Netherlands. Dufey, A. (2007) International trade in biofuels: good for development? And good for environment? Levantis, T. (2007) The consequences of surging oil prices for Pacific island countries, AusAID, Canberra, Australia. FAO Presentation during EU International Conference on Biofuels, July, 2007, Brussels, Belgium. Overseas Development Institute (ODI) (20007) Biofuels, Agriculture and Poverty Reduction, Natural Resource Perspectives, ODI/SIDA, United Kingdom. Rivalland, R. (2007) Meeting National Energy Needs from Cane Fibre / Cogeneration as an Option CTA Workshop Paper, CTA, Wageningen, The Netherlands. Steenhuijsen, B. (2007) How sustainable are biofuels? Between common curiosity and confronting interests Wilson, M. R., Caribbean: Status of Biofuels Research and Capacity Building CTA Workshop Paper, CTA, Wageningen, The Netherlands. Wilson, M. R., (2007) Biofuels S&T strategic options for ACP countries, CTA Workshop Paper, CTA, Wageningen, The Netherlands. Woodruff, A. (2006) The Case for Import-substitution through Biofuel Production in the Pacific, SOPAC, Fiji Islands. Yamba, F.D., (2007) Research Needs and Capacity to Support Opportunities and Challenges for Biofuels Development Southern Africa Perspective, CTA Workshop Paper, CTA, Wageningen, The Netherlands. *Draft not for citation Comments can be sent to J. Francis, CTA. page 9 of 9