Background Paper on Biofuels Industry Development in Africa at the AU/Brazil/UNIDO HIGH LEVEL SEMINAR ON BIOFUELS IN A

1. Background Paper on Biofuels Industry Development in Africaatthe AU/Brazil/UNIDOHIGH LEVEL SEMINAR ON BIOFUELS IN AFRICA30th July – 1st August, 2007 PRESENTE PAR PHILIPPE NIYONGABO, CHEF DE DIVISION ENERGIE COMMISSION DE L’UNION AFRICAINE

2. INTRODUCTION/BACKGROUND Petroleum fuel faces acute peaking problems due to : ever increasing demand in the face of dwindling production rate instabilities in the centres of petroleum production, Results = Huge swings in crude oil price affecting national and global economies. Renewed interest in biofuel as an alternate sustainable fuel to augment energy-security and avert the associated environmental issues. Biofuels are used for lighting and powering engines.

3. Production and consumption of liquid biofuels for transport accounts for <4% of road transport fuels worldwide but growth rates and future potentials are significant. • Biofuels promotion in developing countries can assist achieve the Millennium Development Goals (MDGs) through poverty reduction, health impact and climate change. • Africa, having vast land, varieties of biofuels feedstocks, favourable climate for growing many of the energy crops and low labour cost ought to take advantage of this emerging industry and market.

4. PROPOSED VISION STATEMENT FOR BIOFUELS IN AFRICA Enhancing rural economy through integrated bioenergy and agro-industrial development • decrease energy-security risks associated with crude oil importation by local production and consumption of biofuels; • Creation of numerous jobs from the farming to the marketing/exportation of products; • Sustainable and environmentally friendly pack of biofuels production methods; • improvement on the existing agricultural and forestry policies and practices; • Large scale mechanised farming through cooperatives; • Well-directed R&D and other support systems with a focus on developing new and good farming methods; • see biofuels development as an agricultural promotion with an energy-benefit; • avoid becoming raw material producer for the biofuels industry; • Successful pathways chartered by nations such as Brazil, USA, India, etc.

5. Challenges Ahead • Environmental Sustanability • Forest Depletion & Biodiversity Theat • Pollution • Land Utilisation • Social Sustainability • Job Creation • Rural Development • Food Security • Labour Issues • Land and Water Acces • Health • Fuel Burden • Economic Sustainability • Objectives of Proposed Biofuels Development Programme in Africa

6. Objectives of the First High-Level AUBrazil/UNIDOBiofules Seminar in Africa • To brief policy makers, the private sector and regional institutions on the development of bio-fuels and their importance to Africa • To explore the possibilities of Biofuels in Africa while ensuring a balance between the potentials, risks and trade-offs of Biofuels • To bring together stakeholders in the Biofuel sector to develop a common strategic plan for the development of this new source of energy in Africa; and • To facilitate the development of viable policies and strategies on the Biofuels Industry in Africa

7. Broad areas for assessment and development include the following: • Current Status and Plans in Africa for each of the sector sub-groups (e.g. biogas, biodiesel, bioethanol, gel fuels and gasification) • Trade and consumption issues, sustainability, potential risks and trade-offs • Costs and benefits of biofuels development • Policy frameworks (Regulation, Investment and Financing, Technology Transfer, Environment, etc) • Roles of national governments, regional economic communities, development partners and local as well as foreign private sector

8. EXPECTED OUTCOMES Deliberations are to aid in formulating sets strategic guidelines and policies in developing biofuels in Africa. Discussion of the challenges & benefits covers: Trade and Consumption Benefits • Biofuels trade is deemed modest currently but is growing rapidly with the increasing mandate usage in USA and the EU. • Increasing Chinese demand for energy. • Exportation of finished products considered cheaper than bulky biomass. • Win-win opportunity to exporting & importing countries/regions. • Tariffs and non-tariff measures – Distortion of international biofuels markets. • Total biofuels use in Africa - Expected to remain small • Policies targets - Domestic and the growing international biofuels market.

9. Poverty Reduction Biofuels industry has a huge employment potential & can increase the incomes of Africans thereby lifting them from the poverty trap. Resources available for these are: • the vast land resources and • varied nature of the feedstocks • favourable climate • human resources • Biofuels market can aid farmers to earn better incomes for their produce due to the expanded market. However, tendency to start a vicious cycle of soaring prices of food and food products must be carefully analysed and avoided.

10. Environmental Benefits • It is accepted that at least 13% per kilometre savings can be obtained using biofuels against fossil fuel (IEA, 2006). • Certificates and eco-labelling of biofuels and products based on robust internationally acceptable sustainable criteria could be good instruments. • The potential of reducing climate change via decrease in greenhouse gases (GHG) has to be assessed on the full life-cycle of the biofuel feedstocks.

11. PROPOSED INSTITUTIONAL FRAMEWORK • Common Policy for Africa coordinated by the AU, should be implemented and use RECs as mediums. • Initiatives that could boost development of the sector and advocated for establishment are: • African Biofuel Board, • Centres of Excellence and • Biofuel Fund for Africa. • Encourage African oil producing countries to invest in biofuels in non-oil producing countries for mutual benefit. • Investigate & implement policies on Stabilization Fund to relieve the pressure of high oil prices on ongoing development projects.

12. Policy Options and Priorities • Comprehensive policy integrating R&D, investment, production, land use, land ownership, loss of biodiversity, use of GMOs, GHG, soil erosion and other soil degradation, water use and water contamination, human health impacts and labour conditions has to be implemented at continental level. • Translation of formulated policies into long-term development space available for the production of a large variety of feedstock species. • Policies to settle land acquisition issues in order to facilitate private investment to be formulated. • Mechanised farming appears to be a key component in the development of this industry. But large-scale models run the risk of squeezing out small-scale producers and the associated sustainable development benefits.

13. Policy Objectives • Objectives to be targeted include: • Food and energy security - diversification and progressive substitution of oil; • Reduction of oil import bill; • Wealth creation and poverty reduction; • Employment creation; • Foreign exchange generation; • Significant climate change mitigation impacts; • Uptake of clean cooking technologies using ethanol gel fuels and vegetable oil.

14. Policy Guidelines • Policy guidelines to be listed as short term, medium term and long term and recommended to member states for adoption. List below could be incorporated in the discussions: • Harmonization of National Policies at Continent level • National Policies Development and Implementation • Environment, Social, Health and Safety Certification Systems • Statistics and Information • Research and Development Programmes • African Biofuel and International Trade • Capacity Building, Education and Public Awareness • Land Tenure and Ownership • Creation of a Common Fund for Biofuels • Rural Labour • Innovative Financing Mechanisms • Rural Labour • Ownership Structure • Mandatory Blending Percentage Accompanied by Sustainability Measures

15. CONCLUSIONS & RECOMMENDATIONS • The impact of integrated biofuels system on rural/industrial development is envisaged to be enormous in increasing access to power and improving her economy. • Following the success stories of biofuels implementation and concerns for global demand and possible problems, the following recommendations have been made: • Policy Support:Biofuels strategy devised would have to have a strong government policy framework to ensure availability of market through : • increased awareness creation via workshops/seminars on the advantages of using biofuels over petroleum fuels. • provision of incentives. Fiscal incentives are necessary to create a viable and successful industry for manufacturing biofuels and such incentives could be linked to carbon savings. The public acceptance of biofuels as a visible and important industry will be based on manifestation of continental, REC and national governments’ commitment.

16. Poverty Reduction: This industry can generate enormous number of jobs and can also raise the local economy. The sustainability to the rural areas could be ensured if the farmer is cited as the pinnacle of the crop production and oil processing systems, in the short to medium terms. • Standing on the shoulders of giants: Lessons learnt from other nations and regional blocks could be used to carve Africa out to become a successful biofuel centre. • Great potential exist for developing innovative small companies and clusters innovation through well-directed R&D and other support systems. Many other benefits and added-value can arise from enhanced biodiversity to new products and crops. • Not withstanding the above, Africa should avoid becoming raw material producers for the biofuels industry.

17. THANK YOU !