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Beyond Fossil Fuels: Biofuel Opportunities for Africa
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Beyond Fossil Fuels: Biofuel Opportunities for Africa

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Beyond Fossil Fuels: Biofuel Opportunities for Africa …

Beyond Fossil Fuels: Biofuel Opportunities for Africa

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  • 1. Beyond Fossil Fuels:Opportunities for Africa Washington, 7th october 2008
  • 2. I. Energy Context Energy Security: Energy poses a major problem in sub-Saharan Africa, more so than anywhereelse in the world.  electrification rate < 16% in Africa The  primary energy consumption < 5% of the world total consumption The An increase in oil price $10/barrel = 1.5% drop in GDP & up to 3% for very poor countries Climate change: The poorest countries that will suffer the climate change earliest and most  Hunger, water shortages and coastal flooding  increase of production and exports of oil and gas cannot be an end in itself The Carbon market: an additional revenue stream  Kyoto protocol and its local application : European Trading Scheme, CCX (USA),NSW (Australia)…  Carbon finance could raise $4 billion by 2012 and up to $14 billion thereafter (10 times greater than what is available than Official Development Assistance)
  • 3. I. Energy Context World Energy consumptionSource: IEA World Energy Outlook
  • 4. I. Energy Context Africa Energy consumptionSource: Energy Information Administration, May 2008
  • 5. II. Renewable Energies Biofuel : available land for Agriculture (69.8 million hectares in West Africa) Biomass : total of 650 million hectares in Africa (17% of the world’s total forest cover) Water (hydro power) : 17 major rivers with catchments areas of greater than 100,000 km2 Geothermal : example: on 80 km² of field there is enough steam to produce 200 TWh/year Wind : 9m/s of average wind speed per 80m Solar : average sunshine potential in West Africa represents 5 to 6 kWh/m² per day
  • 6. IV. Biofuels Opportunities in ECOWAS region Superficies : 5 million Km² Population : 260 million habitants
  • 7. III. Biofuels
  • 8. III. Biofuels
  • 9. III. Biofuels
  • 10. III. Biofuels
  • 11. III. BiofuelsEnergy Balance = (biofuel combustion energy) / (energy requirement for biofuel production)Environmental Benefit = (biofuel CO2 emission ) / (fossil fuel CO2 e 1m 0i ,5ssion)Maximum matrix substitution = fossil fuel fraction possible for substitution taking all allowable biomassSource: PNAS, jul 2006
  • 12. III. BiofuelsFirst Generation (from sugars, grains, or seeds) Biodiesel (fatty acid methyl ester; fatty acid ethyl ester) Rapeseed (RME), soybeans (SME), sunflowers, jatropha, coconut, palm, recycled cooking oil Pure plant oils (straight vegetable oil). Alcohols (ethanol, butanol) From grains or seeds: corn, wheat, potato From sugar crops: sugar beets, sugarcaneSecond Generation (from lignocellulose: crop residues, grasses, woody crops) Biological fuels Ethanol (or butanol) via enzymatic hydrolysis Thermochemicalfuels (most made via “gasification”) Fischer-Tropschliquids (FTL) Methanol, MTBE, gasoline Dimethylether (DME) Mixed alcohols Green diesel
  • 13. III. Biofuels Biofuel projects in the pipe line Sugar Jatropha Palm oil Cassava Other Total Cane Biodiesel 3 3 2 8ProductionBioethanol 3 5 3 11Production Total 3 3 3 5 5 19
  • 14. III. Biofuels Other projects in the pipe line E. Fossil Aff / SolideAgri Biomass E. Eff Hydro Solar Wind Total Distr Fuel Ref Waste 2 9 1 5 4 19 3 2 1 1 47Agri = AgricultureE. Distr = Energy DistributionE. Eff = Energy EfficiencyAff / Ref = Afforestation / Reforestation
  • 15. FINANCING Strategy :African Biofuel & Renewable Energy Fund (ABREF)
  • 16. I. PresentationIn November 2006, the ECOWAS Bank for Investment and Development (EBID) and theUnited Nations Conference on Trade and Development (UNCTAD) organized a regionalconference in Accra, Ghana, on the financing of bio-fuels and Jetropha cultivation inAfrica, and on the development of the carbon market.During the conference the initiative was launched to establish an African Fund for thedevelopment of bio fuels and other renewable energy.
  • 17. II. Objectives of the Fund The Fund will : Contribute to the development of the biofuels and renewable energy industry in the African regions, with a particular focus on West African countries Provide investors with superior returns through investments in biofuels and renewable energy projects which generate Certified Emission Reductions (CERs).
  • 18. III. Structure Africa Biofuels & Renewable Energy Fund (ABREF) Africa Clean Energy Technical Assistance Equity Investment Facility (ACE TAF) Africa Biofuels & CERs Purchase Renewable Energy  Feasibility studies  Energy audit for potential energy Company (ABREC) International efficiency projects Fund Manager)  Project Design Documentation &  Project identification Validation  Support for Management of  Revew & carry out due  Projects preparation costs the TAF diligence on projects &  Capacity building  Liaison & Coordination recommandation to the Board  Support to the Fund Manager of Trustees  Monitor the project post funding & report back to the Board of Trustees  Prepare an annual budget for its activities
  • 19. IV. Size & Shares Fund Size ABREF Equity investments : € million 200 € million (75%) of the Fund’s capital for equity investments in specific projects 150 € million (25%) to purchase CERs 50 Debt facility : US $ 1 billion ACE TAF : € million 10 Contributions from governments Voluntary contributions from private sector
  • 20. IV. Size & Shares Category of SharesPrivate Investors , Share AGovernments, Share B
  • 21. V. Strategy of Financing ABREF financing strategy Use credit enhancementsHigh based on additional cash flows ODA & governmentP Carbon AE d fundingR vC Development banks iE Revolve sI e fundingV Export credit agenciesE &D & Insurance companies Debt & A leasing rR Commercial banks rI aS Institutional Mezzanine nK investors finance g eLow Capital market Equity Low High BANKABILITY
  • 22. V. Strategy of Financing ABREF Carbon Project credit company CDMprogramme CDM review portfolio process … carbon credits Advisor/ issuance Arranger/ Manager/ Financier Buyer Sales realization ABREF Investment Fund Escrow
  • 23. V. Strategy of Financing Option 1 Option 2 Sales agreement (ERPA) Sale agreement (ERPA) Upfront Project Project Buyer lending Sale of Carbon credits Sale of carbon credits Buyer Upfront Project asset lending Project asset Sales Advisor & assignment & & assignment of realization Lenders of ERPA /arranger Sales ERPACofinancing realization Escrow a/c Escrow a/c Credit wrap ABREF Servicing ABREF servicing
  • 24. Ecowas Bank for Bank for United Nations World Bank World Bank Economic Community Investment & Development Conference On Trade & Development Carbon Finance Assist Of West African States OUR SPONSORS THANKS TO International International Energy Insurance (Nigeria) Fonds Africain de Garantie et Africain Garantie et ECOBANK Group de Coopération Economique de Coopé ration Economique OUR PARTNER Energy.Environment . Energy.Environment Empresa Brasileira de ECOSUR ECOSUR Alien Energy Alien Energy Innovation Innovation Pesquisa AgropecuàriaFIRST CLIMATEFIRST CLIMATE Agence Nationale d’Appui d’Appui Union Economique et Union Economique Communauté Communauté DENTON WILDE SPATE DENTON WILDE SPATE Au Développement Rural Développement Monétaire Ouest Africaine Moné Electrique du Bénin Electrique Bé nin
  • 25. Contact Head of Project Mr. Thierno Bocar TALL Tel : (+228) 221 68 64 Fax : (+228) 221 86 84 (+228) 222 81 51 E-mail : infos@faber-abref.org www.faber-abref.orgTHANK YOU FOR YOUR KIND ATTENTION