Biomass based bio-energy program in Madagascar Mainstreaming bio ethanol energy generation into environment and other sectors Bienvenu RAJAONSON Senior Environmental Specialist WORLD BANK November 27, 2010

Presentation overview Background Key concept of the project ◦ Links to poverty and natural resources Overall constraints Institutional framework Key baselines Biomass program (ethanol) ◦ Components ◦ Value chain analysis Where we stand? Per component Projections, environmental and poverty reduction expected impacts Conclusions

Background Madagascar is one of the poorest countries worldwide, Madagascar is one of the Hotspot countries in terms of biodiversity Madagascar is one of the most exposed countries worldwide in terms of natural disaster These issues pose problems for economic stability. We started this bio ethanol program in 2001

The key concept which drives the project Links to poverty and natural resources use Poverty rate NR Exploitation

How to reverse the trend for the benefit of the growth? The following three models are appropriate Model 1: development for conservation Model 2: Conservation for development Model 3: Merging the two BECAUSE Prevention measures are more important than cure approach

Overall constraints Speed of degradation, Cost of recovery, Time to substitute the expected loss is challenging as change of social patterns has to be considered and takes time, Institutional framework often doesn’t exist and Scale up is a big challenge

Institutional framework Sectoral Policies exist Administration capacity weak Coordination among project not enough Decentralization of NR management is not fully effective Legislation exist but law enforcement is lacking Natural resources governance weak

Some Key baselines Some Key baselines

Vulnerability of coral reefs Over 2000 km reefs for 5,000 km coasts Pressures: anthropic activity ( fishery; taking materials; sedimentation ); Absence of functional cartography A monitoring program for reefs is in place ( regional context) I. Context

Vulnerability of mangrove areas I. Context Current total area : 404,000 ha ( CI. 2001) Degradation is 6% per year Pressures are due to wood exploitation and to concentrated activities : salt production; aquaculture; tourism…

Vegetation fire MAP The country is devastated by fires, at least one third per year ( 1/3);

Vulnerability of soils : - ). -70% of territory is made up of relief -200 T/ha/year is the average erosion rate - Degradation costs about US$ 150 to 300 million (WB review 1988 ). I. Context

Socioeconomic Vulnerability Poverty affects 74% of population with a daily income of $ 0,42 ( 2001) MAP objective is to reduce poverty rate by 50% in 2015 CAS recommends promoting policies favorable to income increase among poor people in the concentration sector, which will also express in GDP increase ( Pro-poor Policy )

Modelling Climate Change Impacts in Volta Basin 25 th April, 2007 Direction Générale de la Météorologie Temperature increases to 0.5 degree in 22 meteorological stations out of 27 over 40 years Climate Change

Energy Source: 80% from wood Fuel wood Other sources

Energy Consumption: 95% of population use wood as cooking fuel Fuel wood or mixed Gas-electricity

Proposed solution: substitution of biomass source with sugar cane Existing plantation, related to cultural tradition Easy to grow, fast growing and alcohol processing is existing nationwide Space to grow exist and forest areas to conserve are critical Resistant to cyclone

Sugar cane commodities chart It is a market based program with: ◦ 1 million ha plantation to be developed with landscape consideration ◦ 1 billion liters p.a. of cooking ethanol ◦ Plus carbon offset market ◦ And biomass waste conversion activities

S&M éthanol processing plant unit : $20- $5,000 Industrial Unit Sugar cane juice Any local alcohol processed Bagasse Molasses from processing Rough sugar cane Large scale sugar cane plantation

Ethanol cooking stove models Three models of ethanol cooking stoves have been tested and potentially available for manufacturing and promotion to local consumers These models are innovative as using a range of ethanol going from 50% to 90% of alcohol

Where we stand? Per component Component 1: Clean cooking fuel aiming at reducing the use of fuel wood and kerosene: studies and testing are completed and implementation of the programme has started such as manufacturing of stoves and setting up of micro distilleries. Component 2: reducing the use of fossil gasoline: the first ethanol plant has started its construction Component 3: contributing to electricity generation from biomass: new technologies and implementation plan have been completed

Expected Impact on Forest management Illegal logging Number of stoves With respect to greenhouse gas emissions over a period of 15 years the ethanol program will allow to avoid greenhouse gas emissions of 7.5 million tons CO2 equivalent which is more than US$ 27.5 millions based on a market price of US$ 3.5/t of CO2. (WB study 2010 for households)

Expected Impact on Protected Area Pressure rate Number of stoves If 10% of the urban households are using ethanol stoves this would allow substituting a total natural forest area of about 187,424 Ha (over a period of 15 years). (WB study 2010 for households)

Expected Impact on biomass energy saving Use of fuel wood Number of stoves If 10% of the urban households are using ethanol stoves this would allow substituting a total charcoal consumption of about 892,139 tons (over a period of 15 years). (WB study 2010 for households)

Impact on household health People affected by pulmonary infection Number of stoves The development of an ethanol program on 10% of the urban households using ethanol stoves will avoid costs of reduced working capacity and savings on health expenses for about 12 million US$, whereas the introduction of improved charcoal stoves will save approximately 9 million US$. (WB study 2010 for households)

Impact on job creation Number of stoves Number of job created It is expected that the entire value chain will create more than 3 millions jobs within 4 years of implementation mostly in rural area. (WB study 2005)

Impact on new state fiscal item Number of stoves Rate of fiscal collection The State at different level will benefit from this initiative for about 10% of fiscal revenue within the entire value chain.

Scale up approach to poverty reduction Some activities generated by the entire value chain:  Raw material cultivation?  Processing ethanol?  Packing finished product?  Collecting ?  Transporting?  Whole selling?  Retailing activities to consumers?  Supply of equipment and various materials?...  Set up engineering Simulation impact by 2015 (MDG)

Poverty reduction simulation WB/Min of Economy and Planning (WB toolkit database reference 2008) Base case without the project 2014 Poverty rate is reduced from 70% to 62% With the project 2015 MDG Poverty rate is reduced from 70% to 40%

Conclusions Important investment is not necessarily required to reverse the degradation trend of natural resources Full participation of the majority of the population in poverty reduction activities would significantly slow down pressure on PAs and common public goods. Scaling up such activities impacts on wealth creation and thus economical growth and would contribute to reach MDG’s goals for the country.

Thank you