SUSTAINABLE Biofuels INDUSTRY in Nigeria

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SUSTAINABLE Biofuels INDUSTRY in Nigeria – A GATEWAY TO ECONOMIC DEVELOPMENT

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SUSTAINABLE Biofuels INDUSTRY in Nigeria

  1. 1. T IO NAL NA P ET N IG E R IA N RO LEUM OR N C P O R A T IOSUSTAINABLE BIofUELS INDUSTRY IN NIgERIA – A gATEWAY To ECoNoMIC DEVELoPMENT BY gRoUP gENERAL MANAgER, RENEWABLE ENERgY DIVISIoN of NNPC AT THE SECoND NIgERIAN ALTERNATIVE ENERgY
  2. 2. T IO NAL NA P ET N IG E R IA N RO LEUM OR N C P O R A T IO OUTLINE INTRODUCTION ENERGY SITUATION SUSTAINABLE BIOFUELS AND ECONOMIC DEVELOPMENT IN NIGERIA BENEFITS OF BIOFUELS PROGRAMME JOURNEY SO FAR CONCLUSION 2
  3. 3. INTRODUCTION: NA T IO NAL P ET N IG E R IA N ROWhat is Biofuels? LEUM OR NBiofuels are fuels derived from recently living organisms (biomass). C P O R A T IOThey can be divided into three categories:a) First-generation Biofuels: produced from energy crops e.g. Sugarcane, Cassava, Corn, Oil Palm, etcb) Second-generation Biofuels: produced from ligno-cellulosic plant materials from organic wastes, food crop wastes and specific biomass cropsc) Third-generation Biofuels: produced from genetically modified energy crops such as algae and microbesExamples of Biofuels include:- Liquid: Fuel-Ethanol and Biodiesel; Solid: wood, sawdust, grass cuttings, domestic refuse, charcoal, agricultural waste, non-food energy crops, dried manure; Gaseous: —Biogas from anaerobic digestion or gasification of biomass 3
  4. 4. T IO NAL NA P INTRODUCTION ET N IG E R IA N RO Historical Sectoral Contributions to GDP Growth: LEUM OR N C P O R A T IO• From pre-independence to mid-70s, Agriculture provided the seed capital for the development of the oil and gas industry in Nigeria• By 2006, Oil and Gas contributed about 37% of GDP, while Agriculture contribution to GDP declined from 54.99% in 1966 to 32%• The major end-product of the Agric re-launch is Biofuels Agric sector Agric sector contribution contribution Oil Industry and GDP Growth to GDP has to GDP has declined declined over the over the years years 60 54.96 54.96 54.96 54.96 54.96 50 42.93 40 40.33 37.82 31.13 32.97 30 24.83 20 18.66 13.8 % G D 10 P u b n o c r ) ( t i 3.8 0 1966 1976 1986 1996 2006 years Agriculture GDP held constant (%) Agriculture Contribution to GDP (%) Oil sector contribution to GDP(%) 4 Source: National Bureau of Statistics
  5. 5. T IO NAL NA P ET N IG E R IA N RO LEUM OR N C P O R A T IO OUTLINE INTRODUCTION ENERGY SITUATION SUSTAINABLE BIOFUELS DEVELOPMENT IN NIGERIA BENEFITS OF BIOFUELS PROGRAMME JOURNEY SO FAR CONCLUSION 5
  6. 6. ENERGY SITUATION: GLOBAL T IO NAL NA P ET N IG E R IA N RONon-Renewable Energy account for about 75% of LEUMEnergy Supplies (Oil, Gas & Coal) in the world OR N C P O R A T IO Nuclear Gas 6% Large Hydro 21% 6% Traditional Biomass 11% Coal Oil Other Gas Renewables 2% Nuclear Large Hydro Traditional Biomass Other Renewables Oil Coal 32% 22% 6
  7. 7. T IO NAL NA P ENERGY SITUATION: NIGERIA ET N IG E R IA N RO LEUM OR N C P O R A T IO The Energy Resources in Nigeria include: Crude Oil, Natural Gas, Coal, Tar Sand and Renewables (Biomass, Hydro, Solar, Wind, etc.) Current Estimated Oil Reserve in Nigeria is 35.9 billion barrels with daily production capacity of 2.7 million barrels of Crude Oil Natural Gas is estimated at 185 trillion cubic feet of proven reserve as at (- OGJ). Coal and Lignite Reserves are estimated at 2.75 billion tons. The 35.9 billion barrels of oil in reserve will be depleted by 30 – 36 years period.  Renewable Energy (Biofuels) will increase fuel pool and address the adverse environmental impact of fossil fuels Source: Oil and Gas Journal 7
  8. 8. T IO NAL ENERGY SITUATION: NA P ET N IG E R IA N RO Non-Renewable Energy sources are depleting at a LEUM fast rate OR N C P O R A T IO 1000 1 EJ = 10 18 J C A 100 DFLUID FOSSIL FUEL PRODUCTION / DEMAND IN EJ/yr 10 E B F 1 LEGEND A : World Fluid Fossil Fuel Production B : Nigerian Fluid Fossil Fuel Production 0.1 C : World Fluid Fossil Fuel Demand Projection D : World Fluid Fossil Fuel Production Projection E : Nigerian Fluid Fossil Fuel Demand Projection F : Nigeria Fluid Fossil Fuel Production Projection Note: 1E = One Exa-juole = 1018 J 0.01 8 1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100 YEAR
  9. 9. ENERGY SITUATION: NA T IO NAL P ET N IG E R IA N RO Non-Renewables cause Global Warming due to CO2 LEUMEmissions OR N C P O R A T IO Years 9 Years
  10. 10. T IO NAL NA P ET N IG E R IA N RO LEUM OR N C P O R A T IO OUTLINE INTRODUCTION ENERGY SITUATIONSUSTAINABLE BIOFUELS DEVELOPMENT IN NIGERIA BENEFITS OF BIOFUELS PROGRAMME JOURNEY SO FAR CONCLUSION 10
  11. 11. Sustainable Biofuels and Economic Development T IO NAL NA P ET N IG E R IA N RO LEUM Biofuels provide a new opportunity to enhance economic OR N C P O R A T IO development in Nigeria. Maximizing the poverty-reducing effects of a Biofuels industry in Nigeria requires engaging and improving the productivity of small-holder farmers. Our Feasibility Study shows that Sugarcane/Cassava/Oil Palm-based Biofuels production is more profitable than other feedstock options. Our findings also indicate that a combination of Out-grower Scheme approach and yield improvements rather than expanded cultivation will address both poverty alleviation and land-use issues 11
  12. 12. T IO NAL NA P ET N IG E R IA N RO LEUM Sustainable Biofuels and Economic Development OR N C P O R A T IO Incorporation of the Biofuels industry into National Development Plans, will contribute to achieving the Country’s overall development objectives. Biofuels industry allows Community participations, including local farmer Biofuels offer Sustainable development option that is full of promise and are developed in ways that protect our planet 12
  13. 13. T IO NAL NA P ET N IG E R IA N RO LEUMSUSTAINABLE BIOFUELS INDUSTRY DEVELOPMENT OR N C P O R A T IO To ensure sustainability the Biofuels programme will employ the use of:  Suitable and more productive crops as feedstock  Local/Indigenous varieties of selected feedstock  Suitable feedstock for different ecological zones  Modern and efficient conversion technology 13
  14. 14. T IO NAL NA P ETSUSTAINABLE BIOFUELS INDUSTRY DEVT. CONT. N IG E R IA N RO LEUM OR N C P O R A T IOUse of suitable and more productive feedstock: Typical Yields of Raw Materials Used in Biofuels Production Crop Yield Ethanol/Biodiesel Ethanol/Biodiesel (ton/ha/yr) yield yield (litres/ton) (litres/ha/yr) Sugarcane 50-90 70-90 3,500-8,000 Sweet sorghum 45-80 60-80 1,750-5,300 Sugar beet 15-50 90 1,350-5,500 Wheat 1.5-2.1 340 510-714 Rice 2.5-5.0 430 1,075-2,150 Maize 1.7-5.4 360 600-1,944 Sorghum 1.0-3.7 350 350-1,295 Cassava 10-65 170 1,700-11,050 Sweet potatoes 8-50 167 1,336-8,350 Oil Palm 16 – 35 136 4760 Jatropha 6 – 10 151.36 1513.6 Castor bean 0.75 – 1.5 753.6 1130.4 14 Suitable feedstock Alternative feedstock Low yield feedstock
  15. 15. T IO NAL NA PSUSTAINABLE BIOFUELS INDUSRTY DEVT. CONT. ET N IG E R IA N RO LEUM OR N C P O R A T IOUse local/indigenous varieties as feedstock: To ensure the use of the best local crop varieties of the Preferred feedstocks, National Research Institutes have been engaged for selection and breeding of local varieties that are:  High yielding;  Disease resistant, and  Pest resistant 15
  16. 16. SUSTAINABLE BIOFUELS INDUSTRY DEVT. CONT. NA T IO NAL P ET N IG E R IA N ROUse of suitable feedstock for different ecological zone: LEUM OR N C P O R A T IO NATIONAL BIOFUELS FEEDSTOCK MAP S ot ok o Katsina Jigawa Zamf ara Yobe Bor no Kebbi Kano i Kaduna Bauchi Gombe Niger Adamawa FCT Plat eau Kwara Oyo N awa asar Taraba Ekiti Kogi Benue OsunOndo Ogun Potential Sugarcane Lagos Edo Enugu Anambra Ebonyi Potential Cassava Abia Delta I mo Cross River Potential Oil Palm Balyesa Rivers A I kwa bom Potential Jathropha • Some States have potentials for more than one crop • By 2020, the projected peak of Biofuels production would require about 500,000ha ~ 2% of the arable land (33million ha) in Nigeria. 16
  17. 17. SUSTAINABLE BIOFUELS IN TRANSFORMATION AGENDA NA T IO NAL P ET N IG E R IA N RO LEUM In Su crea er Oil gar sed ow g OR N C ,A ,S P O R A T IO P n gro tar Prod sed n usi rces ea tio -Ch ch, uct r u em Cru ion Inc era Reso n Ge able Fe icals de P of ed & A alm ew R en nim al pro v ing, r& Fo Susta Se od Sus a High -yield ed & we y m le Po erg cu Creat le Jobs Creat le Jobs rity i ng us in ized Far M ech arge-sca GDP with GDP with En l ings inab i ab re ion o ion of Creati Wealth Impa Wealt Impac H ig h g im n Agric ultu Seed re tion an high L f on t TRANSFORMATION t AGENDA ti o Se S rt a c c ur ur o un cr u rb e Co an nv ells Co ans n iity Co ss a t o c f t h sp ty e Tr g E Fu us nd T g F e st spo iiro //Ble th fri an fr sii dlly t– or n en ne y n o –e rt nm e n y e n Tr try oss ef ta m d ffe ati e ds ive om ti o Education fe tio en s ct on nt- c s t on ica iiv n t- ve ro B e Ec rsif s ve Di Cooperative Transfer of Re Technology & Access to Research Findings
  18. 18. T IO NAL NA P SUSTAINABLE BIOFUELS INDUSTRY DEVT. CONT. ET N IG E R IA N RO LEUM The Biofuels Programme Modality is OR N C P O R A T IO Food & Fuel NOT Food Vs Fuel The National Biofuels Programme excludes staple crops such as: millet, corn, rice, yam and grain sorghum, but plans to use Sugarcane, Cassava, Sweet Sorghum, Palm Oil and Jatropha as feedstock for Biofuels production Proposed Biofuels Projects are all integrated (Plant & Plantation) and as such will not distort current food supply Currently no commercial scale Biofuels production in Nigeria, hence the rising costs of food in Nigeria is due to causes other than Biofuels production The Programme is intended to boost Agriculture and add to food production through improved farming techniques and high-yielding varieties By 2020, the projected peak of Biofuels production would require about 500,000 ha – using less than 2% of the arable land (33million ha) in Nigeria for JV Plantations and Out-growers scheme The Programme is modelled to integrate the Agric sector with the Oil and Gas 18 Industry
  19. 19. T IO NAL NA PSustainable Biofuels and Economic Development ET N IG E R IA N RO LEUM OR N C P O R A T IOThe proposed Biofuels Projects are integrated andmeet three design principles:Integrated Business Model Design Principles:  Sustainability of the industry dictates large-scale mechanized Plantation operations integrated with processing Plants  Out-grower schemes are planned around the core Plantation, using a Service Company Model managed by the Plantation governance structure  Plantation and Plant operations must meet international sustainability standards:  Profitable  Environment-friendly  Socially responsible 19
  20. 20. T IO NAL NA PSUSTAINABLE BIOFUELS INDUSTRY DEVT. CONT. ET N IG E R IA N RO LEUM OR N CModern and efficient conversion technology: P O R A T IO 20
  21. 21. T IO NAL NA P ET N IG E R IA N RO LEUMModern and efficient conversion technology OR N C P O R A T IOcont. BIODIESEL PRODUCTION PROCESS FLOW DIAGRAM 21
  22. 22. T IO NAL NA P ETSUSTAINABLE BIOFUELS AND ECONOMIC DEVELOPMENT N IG E R IA N RO LEUMResource Availability: OR N C P O R A T IO Nigeria has about 33 million Hectares of arable land and only about 10% is under cultivation Favourable agro-climatic and ecological conditions across the country Strong capital base: Financial institutions are willing to participate Enormous skilled and unskilled labour NNPC infrastructural facilities nationwide Research institutions: NCRI, IITA, NRCRI, NIFOR, Universities, etc 22
  23. 23. T IO NAL NA PSUSTAINABLE BIOFUELS AND ECONOMIC DEVELOPMENT ET N IG E R IA N RO LEUM Nigeria’s Biofuels Demand OR N C P O R A T IOBiofuels Type Time Frame Short Medium LongFuel-Ethanol (demand in 1.3 3.4 52.5billion liters/yr) (at 15% blend) (at 50% blend) (at 10% blend)Biodiesel (demand in 0.233 1.951 12.7billion liters/yr) (at 20% blend) (at 50% blend) (at 10% blend)Source: National Energy Master plan 23
  24. 24. T IO NAL NA P ET N IG E R IA N RO LEUM OR N C P O R A T IO OUTLINE INTRODUCTION ENERGY SITUATION IN NIGERIA NIGERIA’S BIOFUELS DEMAND POTENTIALS RESOURCE AVAILABILITY IN NIGERIA FOR BIOFUELS BIOFUELS AND ECONOMIC DEVELOPMENT BENEFITS OF BIOFUEL PROGRAMME JOURNEY SO FAR CONCLUSION 24
  25. 25. T IO NAL NA PThe Biofuels industry presents vast social, economic ET N IG E R IA N RO LEUMand environmental benefits for Nigeria. OR N C P O R A T IO • Good returns on invested capital (high IRRs ~30%) • Revitalization of the agricultural sector • Increased local production of sugar and power complement efforts at filling existing supply gaps in Nigeria (for Economic Benefits sugarcane to ethanol) • Diversification of the country’s energy usage and hence increased ability to hedge supply risk • Carbon credit earnings • Reduction of gasoline imports and foreign currency use Environmental • Environmentally friendly fuels / less pollution Benefits • CO2 emission reduction • Rural wealth and job creation Social Benefits • Sustainable development 25
  26. 26. THE ENERGY – ECONOMY RELATIONSHIP: T IO NAL NA P ET N IG E R IA N ROEnergy touches various aspects of our economy LEUM OR N C P O R A T IO AGRICULTURE INFORMATION & COMMERCE COMMUNICATION & INDUSTRYTRANSPORTATION FINANCE ENERGY DEFENCE & HOUSE HOLD SECURITY & HEALTH EDUCATION, SCIENCE & MINES & POWER TECHNOLOGY THE NIGERIAN ECONOMY 26
  27. 27. T IO NAL NA P ET N IG E R IA N ROBENEFITS OF BIOFUELS PROGRAMME CONT. LEUM OR N C P O R A T IO Diversification Rural Economic Of Energy empowerment Matrix Petroleum & Environment Agric industry Friendly integration Efficient Maximize supplier Chain carbon credit Road/Transport Opportunities Home grown industry Research & Learning Lower cost of production Sustainable Development Rural wealth creation Energy sufficiency & Potential for export
  28. 28. T IO NAL NA P ET N IG E R IA N RO LEUM OR N C P O R A T IO OUTLINE INTRODUCTION ENERGY SITUATION IN NIGERIA NIGERIA’S BIOFUELS DEMAND POTENTIALS RESOURCE AVAILABILITY IN NIGERIA FOR BIOFUELS SUSTAINABLE BIOFUELS INDUSTRY DEVELOPMENT ECONOMIC BENEFITS OF BIOFUEL PROGRAMME JOURNEY SO FAR CONCLUSION 28
  29. 29. T IO NAL NA P JOURNEY SO FAR CONT. ET N IG E R IA N RO LEUM OR N C P O R A T IO NNPC has invested significant resources in the promotion of the Biofuels programme with positive results: POLICYPolicy & Incentives • Biofuels Policy approved by the Federal Executive Council and gazetted Development (Gazette No. 72, June 20th 2007) but is presently being reviewed by Energy Commission of Nigeria OFFTAKE AGREEMENT The off-take agreement contract design concluded to provides guaranteed market to local producers of Biofuels. ETHANOL • Developed 5 bankable feasibility studies for sugarcane & cassava ethanol BIODIESEL Domestic Biofuel • Completed 2 feasibility studies for oil palm to biodiesel projects Programme IJV FORMATION • Credible potential investor groups have shown interest to partner with NNPC for joint development projects (IJV formation) 29
  30. 30. T IO NAL NA P Seven bankable feasibility studies have been completed ET N IG E R IA N RO LEUM in five different states, while engaging various State OR N C P O R A T IO Governments in discussion for Land Sites. S o okot Katsina Jigawa Zamf ara Yobe • Bor Sugarcane 16,000 ha no Kebbi • 3 projects Kano • EtOH: 75 million liters/yr • Sugar:116,000 tonnes / year • Electricity: 64 MW• Cassava:13,500 ha Kaduna Bauchi Gombe • Investment: $322 million• 2 projects Niger• EtOH: 38 million liters/yr Adamawa• Starch:36,000 tonnes / year• Investment: $115 million Kwara Plat eau FCT Oyo N awa asar • Oil Palm 14,000 ha & 8,500 ha Taraba • 2 projects Ekiti Kogi Benue • Palm Oil: 60,000 / 32,000 t/yr Osun Ondo • Biodiesel: 38 / 21 million liters/ year Ogun • Investment: $75 / 44.5 million Lagos Edo Enugu Ebonyi Anambra Sugar cane Abia Delta I mo Cross River Cassava Balyesa Rivers A I kwa bom Oil Palm There is potential for many more projects in other states. 30
  31. 31. Roadmap for a 500,000 ha Integrated Food, NA T IO NAL P ET N IG E R IA N RO Biofuels and Energy Industry LEUM OR N C P O R A T IO Sustain Growth • Seek increasing use of biofuels beyond E10 and B5 • 500,000 ha developed • 250,000 ha (285,000+ ha in developed biofuel (70,000 ha in • >65,000 ha production*) biofuel • 1.2 billion liters of developed (incl. production*) biofuels / year • cassava, • 360 million liters • • Create first JVs >33,000 ha 600+ MW co- developed sugarcane and ethanol/ year) • Obtain bill generation • > 100,000 t palm oil) • 120+ MW co- approval • $6+ billion cassava • 10+ million liters generation COMMENCEMENT • Upgrade invested • Implement policy harvested ethanol/ year • Begin distribution • >3,500 jobs • Begin production production of (off-takes, etc.)_ infrastructure • Launch E10 created of sugarcane palm biodiesel • Sanction 2 or more • Launch B5 • Develop shared private projects (15 million seeding liters/year) ownership with • Expand financing programme relevant MDAs facilities • kick-off billNote:1. There is a lag of 3 to 6 years between land development and Biofuels production depending on the crop used as feedstock2.Project commencement will be determined by provision of equity by the government for IJV formation. 31
  32. 32. T IO NAL NA P ET N IG E R IA N RO LEUM OR N C P O R A T IO OUTLINE INTRODUCTION ENERGY SITUATION IN NIGERIA NIGERIA’S BIOFUELS DEMAND POTENTIALS RESOURCE AVAILABILITY IN NIGERIA FOR BIOFUELS SUSTAINABLE BIOFUELS INDUSTRY DEVELOPMENT ECONOMIC BENEFITS OF BIOFUEL PROGRAMME JOURNEY SO FAR  CONCLUSION 32
  33. 33. T IO NAL NA P ET N IG E R IA N ROCONCLUSION LEUM OR N C P O R A T IO  The Biofuels industry has potential to make a significant impact on the Nigerian economy  Growing oil/energy demand and limited oil resources calls for a complementary sustainable energy source –BIOFUELS –  Awareness creation on the benefits of Biofuels industry and advocacy for the implementation of Biofuels Projects is paramount to the success of the industry  Standardization of policies and incentives will facilitate the realization of a thriving domestic Biofuels industry 33
  34. 34. T IO NAL NA P ETN IG E R IA N RO LEUM OR N C P O R A T IO 34

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