1. Biofuels in Eastern and Southern Africa

2. Outline Overview of energy sector Bio-energy Bio-fuels – Status and Trends –Bioethanol –Biomass cogeneration –Biogas –Biodiesel –Biomass gasification Way Forward

3. Overview of Energy Sector Energy use in eastern and Southern Africa - dominated by biomass (wood, charcoal, bio residues) Low levels of access to modern energy services

4. Biofuels – Key drivers

5. Biofuels – Key Drivers Rising oil costs Lead phase-out programmes in southern Africa Declining biofuel production costs – Ethanol Carbon finance Bio-ethanol and cogeneration well developed in the region Other biofuels at different stages of development

6. Bioethanol – Status and Trends Widely developed in the region Linked mainly to sugar industry and cogeneration Ethanol produced in Zimbabwe, South Africa, Malawi, Kenya, Uganda, Ethiopia and Swaziland Plans to produce ethanol in Sudan and Zambia Ethanol blending practiced in Malawi Blending practiced in Zimbabwe and Kenya in the past Plans to introduce blending in South Africa if legislation is approved

7. * Estimated ethanol potential assuming an average of 70 litres of ethanol produced per tonne of cane crushed and that all cane is used for ethanol production (SEI, 2003; TaTEDO, 2006) Ethanol Potential from Cane in Selected African Countries

8. Case Study – Ethanol in Malawi Ethanol production started in 1982 at Dwangwa Sugar Mill, run by Ethanol Company of Malawi (Ethco) Second ethanol plant was built in 2004 at Nchalo Sugar Mill run by Press Cane Both plants have combined capacity of 30 million litres per year The two plants are located to the countries sugar factories (Nchalo and Dwangwa)

9. Ethanol Production in Malawi (litres) Source: Tembo, 2006 YearEthanolRectifiedPortableTotalTo date 200011,625,036352,019211,31912,188,374199,363,988 200111,167,122546,707271,87911,985,708211,349,696 200210,987,543431,256345,78611,764,585223,114,281 20038,375,761610,399230,66010,222,767233,337,048 20048,375,761751,567275,8379,403,165242,740,213

10. Case study - Ethanol production in Kenya Kenya’s quest for alternative source of fuel sparked off by oil crisis in the 1970s The Agro Chemical & Food Corporation (ACFC) established in 1978 – with the objective of utilizing surplus molasses from sugar industry to produce ethanol ACFC installed capacity of 60,000 liters per day, daily average of 45,000 litres per day ACFC collapsed in the 1990s

11. Case Study - Ethanol production in Kenya Ethanol production revived in 2001 through Kisumu Ethanol Plant in Western Kenya Private entity Energem owns 55% of the company Produces 60,000 lpd of industrial ethanol Other products include: beverage grade, yeast, carbon dioxide, alcohol, portable alcohol for beverages and chemical industries Market for the ethanol: local market, Uganda, Rwanda, and Central Africa

12. Case Study - Ethanol Production in Kenya Source: Ethanol Producer Magazine

13. Ethanol - What worked Building on an existing industry – both the Ethanol Companies in Malawi and Kenya piggybacked on the sugar industry Government and private sector commitment – the Malawian and Kenyan governments created a conducive environment for private sector to invest in production, distribution and marketing of ethanol Long-term commitment - Key players in the Malawian energy sector demonstrated long term commitment to biofuels through the testing of a car that can run on ethanol blended fuel Ready local market – ethanol used in the blending of transport fuel up to 20% thereby reducing fuel imports

14. Biomass Cogeneration – Status and Trends Widely developed in the region - Most sugar industries in eastern and southern Africa currently practicing co- generation for own use Important option as agriculture and agro-industries account for close to 50% of sub-Saharan Africa’s GDP and over 70% of employment Sugar industry directly or indirectly impact on 4-7 million people in Western parts of Kenya Could be replicated across all agro-industries –Wood/timber, pulp and paper –Coffee, sisal, palm oil, tea, cocoa, tobacco, etc

15. Case study - Cogeneration in Mauritius  Successful in sale of power to the grid  Accounts for close to 40% of a 725MW national generation capacity (of which 25% bagasse)  Began with smaller installations (1.5MW - 5MW, now installing 70MW plants)  Grid connected cogeneration operational in Uganda, Kenya, Tanzania, Zimbabwe, and plans underway in Malawi, Ethiopia, Swaziland and South Africa Others Sugar Industry Power Generation – Mauritius 2004

16. Sugar Sector Reform initiatives & Bagasse Energy Year Policy initiatives Emphasis on 1985 Sugar Sector Action Plan Bagasse energy policy evoked 1988 Sugar Industry Efficiency Act -Tax free revenue from sales of bagasse and electricity -Export duty rebate on bagasse savings for firm power production -Capital allowance on investment in bagasse energy 1991 Bagasse Energy Development Programme -Diversify energy base -Reduce reliance on imported fuel -Modernise sugar factories -Enhanced environmental benefits Case study - Cogeneration in Mauritius

17. Sugar Sector Reform initiatives & Bagasse Energy YearPolicy initiatives Emphasis on 1997 Blue Print on the Centralisation of Cane Milling Activities Facilitate closure of small mills with concurrent increase in capacities and investment in bagasse energy 2001 Sugar Sector Strategic Plan -Enhance energy efficiency in milling -Decrease number and increase capacity of mills -Favour investment in cogeneration units 2005 Roadmap for the Mauritius Sugarcane Industry for the 21 st Century -Reduction in the number of mills to 6 with a cogeneration plant annexed to each plant Case study - Cogeneration in Mauritius

18. Energy Pricing Power modePower Plant Price – Rs (us ¢)/kWh YearCharacteristics Intermittent -0.16 (0.6)1982Price frozen since 1982 Continuous Medine0.55 (1.9)1982No change in price since 1982 –no changes brought to the plant Continuous 6 PPs1.05 (3.7)199744% of kWh price indexed to changes in oil price and the other 56% is fixed 1.40 (4.9)2000 Firm FUELcoal - 1.63 (5.7) bag. - 1.56 (5.5) 1985Invested in new equipment Indexed to coal price FirmDRBCcoal - 1.53 (5.4) bag. - 1.46 (5.1) 1998Invested in second hand equipment Indexed to coal price FirmCTBVboth - 1.72 (6.0)2000Indexed to coal price, cost of living in Mauritius, foreign exchange rate fluctuations Case Study - Cogeneration in Mauritius

19. Case Study - Share Ownership Of Cogen Plants Firm –Corporate sector 51% –Strategic Partner 27% –SIT (Small planters/workers) 14% –State Investment Corporation 8% Continuous –Corporate sector 80% –SIT (Sugar Investment Trust)20% Equitable sharing of ownership of and revenue from cogeneration ensures even smallest low-income farmer gets a portion of revenue In turn, leads to exceptionally strong & consistent policy support

20. Cogeneration in Mauritius - Key Lessons Pre-determined feed-in tariff for cogen power which reduced investment risk Higher prices offered for firm power/utility level cogen electricity generation, which encouraged higher investments in cogen from sugar industry Government played “honest broker” key role in power purchase agreements and setting feed-in tariff (key factor) – reduced the lengthy and sometimes acrimonious tariff negotiations Centralization of sugar factories to capture the benefits of economies of scale Revenue sharing with even the smallest sugarcane farmers, which ensured long-term commitment

21. Biogas – Status and Trends Some experience in the region with mixed results Institutional digesters more successful than domestic units Tanzania has registered good progress - more than 4,000 domestic-size biogas plants have been in Tanzania during the past 20 years An estimated 256 biogas digesters installed in Zimbabwe Pilot biogas projects implemented in Kenya, Uganda, Ethiopia and Sudan Large scale biogas plant (10 MW) planned in South Africa using landfill gas Source The Republic of Uganda,2007

22. Biodiesel – Status and Trends Production of biodiesel drawing a lot of attention in the region Technology still to be applied on a wide scale A number of crops already grown in the region suited for biodiesel production i.e. palm oil, sunflower, soyabean, maize and Jatropha Zimbabwe has ambitious Jatropha biodiesel programme A private South African company running Jatropha oil initiatives in Malawi, Zambia and Madagascar In Zambia, biodiesel trials conducted on a small scale using Jatropha Individual farmers running biodiesel plants in South Africa Pilot biodiesel projects in Kenya (Vanilla/Jatropha Foundation), Uganda and Tanzania (Tatedo)

23. Biomass Gasification – Status and Trends Largely embryonic- no commercial bio- gasification projects running in the region A few donor funded demonstration projects implemented Experimental systems reported at universities in South Africa Demonstration projects implemented in Tanzania (Tanzania Wood Industry Corporation) Biomass gasifiers implemented in Ethiopia, Sudan – faced operational challenges

24. Way Forward Short Term –Focus on proven options that build on existing agro- industries that use available agro-wastes (such as bio- ethanol and cogeneration) –Implement proven policy measures Pre-determined prices for biofuels (feed-in tariff for cogen power & attractive price for liquid biofuels) Standard power purchase agreement for cogen power Compulsory blending ratios for transport fuels –Use model examples such as Mauritius to develop regional replication programmes & focal points of regional networks

25. Way Forward Medium to Long Term –Research and Development on embryonic options (Biomass Gasification) –Demonstration projects for embryonic options –Regional and International networks for sharing of experiences, skills and information