GENEVA, March 20 (Reuters) - Africa has potential to become a major exporter of biofuels, but investors must factor in a need for costly new infrastructure and overcome red tape before the sector takes off, a biofuels expert said on Thursday.
Meghan Sapp, managing director of Brussels-based HG Consulting, told a conference that southern Africa, Kenya and Nigeria were among countries with potential to produce sugarcane- and cassava-based ethanol biofuel for export.
"Biofuel production on a commercial scale in Africa is a fairly new idea but one that opens a lot of opportunities for both investment and local economic development," said Sapp.
Europe was likely to become the main market for African ethanol exports because of Africa's preferential trade agreements with the European Union.
Investors are looking for cheap sustainable forms of energy, such as ethanol, to respond to persistent high oil prices.
Sapp said that Africa was well-suited to biofuel production because it has plenty of available land, many climates fit for different biofuel feedstocks, and low labour costs.
However, she said poor infrastructure, under-developed legislation and a loose regulatory framework would hamper biofuel investments in Africa.
New biofuel plants will need good roads connecting to ports, and schools and clinics to serve the families of local workforces, such as sugarcane growers.
Later, Sapp told Reuters it could take at least 10 years before biofuel production achieves critical mass in Africa.
"Several ethanol projects are under way in a number of African countries which could be onstream before 2010," she said, referring to Mozambique, Nigeria and Sudan among others.
Africa is currently a marginal biofuel producer with an ageing vehicle fleet largely run on diesel, ill-adapted for conversion to biofuel use.
However, some countries like Malawi have been producing sugarcane-based ethanol for more than 30 years.
Early potential in biofuels is seen mainly in exports, although domestic sales to new vehicle fleets would help reduce reliance on fossil fuel imports.
A handful of countries including Ethiopia, Uganda and Nigeria are already developing biofuel blending policies for their domestic vehicle fleets.
Some African countries are also researching new applications for biofuels, for example cooking fuel that could be used to replace fire wood.
Sapp, whose consultancy focuses on EU and African biofuel policy and project development, was a keynote speaker at the two-day Sugaronline conference which ended on Thursday. (Editing by Peter Blackburn)
TRADE: Following Oil Boom, Biofuel Eyed In Africa
By Michael Deibert
PARIS, Jul 13 (IPS) - While oil profits have flooded into countries such as Angola and Nigeria in recent decades, some African observers see new potential for the continent in the form of increasingly in-demand biofuels.
Biofuels, loosely defined as liquid or gas fuels derived from biomass, produce significantly less ozone-damaging carbon emissions than fossil fuels such as coal and petroleum. A large swath of southern Africa, including Angola, Mozambique and South Africa, is proving fertile ground for those seeking an alternative to fossil fuels.
It is a development that has not escaped the notice of Europe.
In a 2006 Green Paper 'A European Strategy for Sustainable, Competitive and Secure Energy', the European Union (EU) affirmed that "the new EU-Africa strategy, envisaging interconnections of energy systems as a priority area, could also help Europe to diversify its oil and gas supply sources." The paper went on to stress Europe's need to diversify its energy resources.
"There is a potential market in Europe in this regard," says Teodsio Bule, a policy officer with the Secretariado Tecnico de Segurana Alimentar e Nutricional (SETSAN, Poverty, Food Security and Nutrition Secretariat) based in Maputo in Mozambique.
"Africa is close to the EU, and the EU is willing to have more biofuel on its continent. As Africa appears as one of the most likely suppliers of biofuel, we want to take advantage of this," he told IPS.
Over a quarter of the investments of the European Union's financing institution, the European Investment Bank (EIB), in sub-Saharan Africa are in the energy, oil and gas sectors, close to 600 million euros since 2000.
One card in Africa's favour that has come to the fore in recent years, some European officials suggest, is the creation of the African Union (AU). The AU is a body of 53 African states formed in 2001 with the ostensible aim of integrating the region's currency and its defence forces, as well as promoting human rights.
The AU is the successor body to the Organisation of African Unity (OAU), established in 1963 and disbanded in 2002. Times have changed, though, and many of Africa's long civil wars have come to an end, with relatively transparent and fair elections held in nations such as Congo and Liberia earlier plagued with widespread corruption.
"This relationship, which was very much a donor-recipient relationship, is evolving into a dialogue on many issues and not just concentration on development," says Marie-Laure de Bergh, a programme officer with the European Centre for Development Policy Management (ECDPM) in Brussels.
One pivotal player in the development of biofuel initiatives in Africa, analysts say, has been Brazil, which in many ways blazed the trail for biofuel development three decades ago when it launched an ethanol motor fuel programme in 1975. According to the Union of Sao Paulo Sugarcane Industries (UNICA), about 56 percent of this year's cane crop is diverted to ethanol production.
By the 1970s, as Brazil was being pummelled by oil prices, the country's military dictatorship launched a national programme to reduce Brazil's dependence on foreign oil by encouraging the construction of ethanol plants and doling out low-interest loans to sugar companies, imposing subsidies to keep the price of the fuel low.
By the mid-1980s, most new cars sold in the country ran exclusively on ethanol, and the share of Brazil's energy needs filled by imported crude fell from around 80 percent in the late 1970s to about 45 percent in 1990.
When gasoline prices fell again in the late 1980s, though, the demand for ethanol stalled. The industry was largely rescued by a late 1990s initiative by former Brazilian president Fernando Henrique Cardosom who ended government subsidies for Brazil's sugar industry, spurring the sector to new competition and innovation.
Now the Brazilian ethanol experience may serve as a model for biofuel in Africa, with the current government of President Luiz Incio Lula da Silva having technical cooperation agreements with regards to agriculture in place with both Angola and Mozambique, which many hope will facilitate the development of biofuels there. Like Brazil, Angola and Mozambique are Portugese-speaking.
"The Portuguese-speaking synergy is likely to yield a ton of biofuel development," says Katherine Constabile, an Africa analyst with the New York-based Eurasia Group, a global political risk consultancy.
Petrobras, the Brazilian national oil company, recently joined forces with the Italian energy firm Eni to seek out avenues for exporting biofuel from Africa to Italy. The move follows the creation in late 2006 of an office in Accra in Ghana by Embrapa, an arm of the Brazilian government tasked with agriculture and biotechnology research. The office has already begun aiding Angola in its development of a soybean-based biofuel industry, and is reaching out to Mozambique as well.
The biofuel movement in Africa has not been without its critics, however.
In South Africa, amidst a strenuous push to create maize-to-ethanol production plants in the country and add 55,000 new jobs in rural areas, some have accused the industry of contributing to rapidly increasing the cost of basic necessities for the country's poorest citizens, driving staple food prices such as maize and sugar up 28 percent and 12.6 percent over the last year.
At a conference on biofuels in Brussels this month, the EU set its sights on having 10 percent of all vehicle fuel in the sector come from biofuels by 2020, a goal that, if met, will come largely from imports from places like Africa.
"Developing nations cannot be allowed to miss this train," Louis Michel, the European commissioner for development and humanitarian aid said at the conference.
"Europe must invest in this promising new market and help these countries to develop a durable production of biofuels that respects the environment, is socially responsible and guarantees fair access to the marketplace," he said. (END/2007)
