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Concept note

  1. 1. Programme for the Development of Alternative Biofuel Crops Concept Note Enabling the rural poor to overcome poverty
  2. 2. Programme for the Development of Alternative Biofuel Crops _________________________________________________________________________________ Table of contents Acronyms and abbreviations 3 Executive Summary 4 1. Background 6 2. IFAD’s programme for mainstreaming biofuel development 7 3. Rationale for a Programme for alternative biofuel crop development 7 4. Goal and objectives of the Programme 8 5. Programme components and activities 9 6. Outputs 11 7. Governance and implementation plan 12 8. Monitoring, supervision, evaluation and reporting 13 9. Financing 13 ANNEX 1: Findings of the Consultations 16 ANNEX 2: Summary of Round Tables 17 ANNEX 3: Local Energy Provision to Enhance Food Security 18 ANNEX 4: Implementation Plan 33 ANNEX 5: Logical Framework 34 2
  3. 3. Programme for the Development of Alternative Biofuel Crops _________________________________________________________________________________ Acronyms and abbreviations COE Centre of excellence ENI Ente Nazionale Idrocarburi (National Hydrocarbons Agency) FAO Food and Agriculture Organization ICRISAT International Crops Research Institute for Semi-Arid Tropics IEA International Energy Agency IFAD International Fund for Agricultural Development IFI International Financing Institution IPRs Intellectual Property Rights GAEF Global Alternative Energy Foundation M&E Monitoring and Evaluation Mb/d Millions of barrels per day MOU Memory of Understanding NGO Non governmental organization NRM Natural Resource Management PO Professional Officer PRG Policy Reference Group Q&A Questions and Answers R&D Research and Development RFP Request For Proposal SC Steering Committee STA Senior Technical Adviser TOE Tonnes of oil equivalent TSB Tropical sugar beet UN United Nations UNF United Nations Foundation UNEP United Nations Environment Programme 3
  4. 4. Programme for the Development of Alternative Biofuel Crops _________________________________________________________________________________ Executive Summary IFAD’s interest in biofuels stems from a single concern - to expand the income earning opportunities for the poor. Out of a total global population of 6.7 billion, 1.3 billion people are directly employed in agriculture and they jointly account for only 4% of the global GDP. This virtually translates to one person engaged in agriculture for every five consumers. It is not surprising, therefore, that most of the poor - some three-quarters of the world’s one billion - live in rural areas and depend on agriculture and related activities for their livelihoods. Over the past 40 years the conditions of many of the poor small producers have worsened as many faced declining profitability due to falling commodity prices and rising input prices. While the recent increase in commodity prices - which have since, once again, declined - may have offered some temporary relief to the small producers, many poor small holder farmers continue to face bleak long- term prospects. This is because the traditional agricultural basket of products (food, animal food and other industrial crops) is not large enough to provide meaningful income for such a large number of people dependent on agriculture. Many are moving out, and the slums in many cities attest to the emigration from rural areas. Some economists argue that if agriculture is not remunerative, people should pursue other vocations. While this may be a valid approach for some industrialized countries, it is difficult to foresee how the many developing economies that are mostly agriculture-dependent will be able to provide meaningful employment to so many. Sadly, many small producers will have to continue to depend on agriculture where they face bleak prospects unless the opportunities in rural areas improve by linking the smaller traditional agricultural markets to the much larger energy markets. However, such linkages to energy markets face many challenges and legitimate concerns, such as those about food security, meeting small farmers’ needs for animal feed while ensuring sustainable management of natural resources. Many developed countries have resorted to using food crops as feedstock and the resultant diversion of food crops to producing biofuels partially contributed to sharp increases in food prices, setting up a backlash that sometimes unfairly blamed rising food prices on biofuels while ignoring the fact that there are many alternatives crops that can be used in producing biofuels and these need to be developed further to meet the growing energy needs of an increasingly affluent world. Provided biofuels are developed responsibly, avoiding conflict between food and fuel needs, they can provide a strong strategic opportunity for assisting the poor. Biofuels also offer the opportunity of localizing fuel production from renewable energy sources which has the potential of creating greater food and fuel security and independence at regional, national, and rural community levels. IFAD early on recognized the potential of biofuels in assisting the poor and is promoting a Programme to finance research and development in alternative biofuels crops. The overall goal of this Programme is to finance coordinated research along the entire value chain to develop a market ready product that will enable the poor to take advantage of this emerging opportunity. The funds would be used to: (a) finance research and development along the entire value chain; (b) supervise and monitor the sub-projects financed; (c) advise governments on the development of suitable biofuels policies and disseminate knowledge, especially on issues of critical public concern that enhance, or inhibit, the development of opportunities for the poor; and (d) publish relevant materials to present a balanced view on the potential of biofuels to assist the poor without compromising food security. 4
  5. 5. Programme for the Development of Alternative Biofuel Crops _________________________________________________________________________________ To this end, the Programme would finance the following components: (1) R&D, supervision, and M&E; (2) Local energy provision to enhance food security; and (3) Knowledge sharing, capacity building, policy studies and advocacy, and information and awareness campaign. Research will be conducted by pre-qualified Centers of Excellence, and will focus on non food and multiple-use crops that can grow on marginal lands - currently not used for food production or pasture -, that require less water, and that are saline tolerant. These alternative crops are: jatropha and pongamia. The possible multiple use crops are: cassava and sweet sorghum. Saline tolerant crops include: tropical sugar beet, algae, seashore mallow, camelina, and arundo donax. Supervision and M&E will specifically focus on the agricultural production and processing sustainability indicators. Reports would be distributed to the Steering Committee members and posted on the websites. Knowledge sharing activities will disseminate research outputs, information, communication materials to all stakeholders through UNEP, FAO, and IFAD websites. The documents will be translated in different languages, if required. The Programme will also assist governments of member states to develop suitable policies that strike an acceptable balance between land use, food security, fuel self-sufficiency or reduction in fuel imports to an acceptable level, and to rationalize the apportionment of water resources between food and fuel crops while ensuring a pro-poor focus. Policy advocacy will be linked to the Poverty Reduction Strategy Papers to ensure that biofuels development has a pro-poor focus and, where appropriate, energy policies would be revisited to ensure consistency in governments’ policies and programs in assisting the poor. The combination of policy studies and research would provide the necessary impetus to co-finance projects from IFAD’s own resources, which will hopefully be in partnership with the private sector. Information and awareness campaigns will aim at disseminating materials on the potential of biofuels to reduce poverty whilst promoting food security, and will focus on successful examples, research outputs and articles to counter-balance misinformation. The four-year programme is expected to cost USD 12.0 million. Some commitments have been received from UN agencies, private companies, Foundations, and NGOs. These include Praj Industries, OFID, UNIDO, UN Foundation, GAEF, EU Facility and Syngenta Foundation for Sustainable Agriculture (Switzerland). 5
  6. 6. Programme for the Development of Alternative Biofuel Crops _________________________________________________________________________________ 1. Background 1. Driven by the unprecedented pace of economic development of China and India, global energy needs are expected to grow. According to the International Energy Agency (IEA), energy needs are projected to grow by 55 percent rising from 11.4 billion tonnes of oil equivalent (TOE) at present to about 17.7 billion TOE by 2030. About half of the increase in global demand will be needed for power generation and one fifth for transportation – mostly in the form of liquid biofuels. Global oil demand is also projected to grow, reaching 116 million barrels per day (mb/d) in 2030 from the current consumption of about 82 mb/d. The rising demand for energy linked to stagnant or possibly declining production of crude oil are expected to contribute to the increase in oil prices. 2. At these higher price levels, biofuels are increasingly emerging as economically viable and environmentally friendly substitutes to fossil fuels that could also provide local energy and other income-generation options to rural communities. Many countries are either formulating policies (or have already done so) for mandatory blending of fossil fuels with bio-ethanol and bio-diesel, resulting in considerable demand for raw material feedstock. In pursuit of energy security, many developed countries resorted to using food crops as feedstocks. The diversion of food crops to producing biofuels linked to drought in some major food producing countries and rising demand in others led to sharp increases in prices of food crops, setting up a backlash and a media coverage that unfairly blamed rising food prices on biofuels in general, rather than distinguishing between biofuel crops that compete with food production and other alternatives that do not. In the ensuing food-versus-fuel debate, biofuels have often been portrayed as anti-poor as rising food prices cut into the limited purchasing power of the poor, especially the landless, the poor urban consumers and small farmers who are net food purchasers. 3. Often ignored in these statements is the plight of the small producer who has faced declining farm profitability over the past 40 years due to decreasing commodity prices and rising input prices. Under these conditions, there has been little or no incentive to invest in agriculture, pushing many rural people living out of the agricultural sector. For these people, higher commodity prices are a welcome relief. Equally, biofuels, with their wide demand, could be the latest cash crop opportunity for them. 4. Agricultural productivity, however, cannot be seriously intensified without availability of energy in rural areas, most of which – being remote - are not connected to national electricity grids, or face higher energy costs for transportation than their urban counterparts. Production of local bioenergy has many other benefits. These include opportunities to: (a) intensify agriculture and related to it, alleviation of poverty; (b) savings in women’s time in processing; and (c) fewer health related issues as cleaner fuel is burned for domestic needs. 5. Many governments, especially in countries that are both net importers of food and fuel, are woefully short of foreign exchange are looking for support for addressing these issues. Others are looking for policy advice to address to strike an appropriate balance between the many issues that are an integral part of the biofuels debate: food security, environmentally sound development of biofuels while ensuring that biofuel development does not take place at the expense of food production by diverting land and water resources. 6. While biofuels are not new and technology is well known for selected crops, such as sugar cane or some food based crops, there is relatively less knowledge on the profitability of biofuel production from alternative biofuel crops (Jatropha and pongamia) or indeed from those that can have multiple uses (food, animal feed and fuel), such as sweet sorghum and cassava. 6
  7. 7. Programme for the Development of Alternative Biofuel Crops _________________________________________________________________________________ 2. IFAD’s programme for mainstreaming biofuel development 7. IFAD’s Strategic Framework (2007-2010) recognizes the importance of biofuels as a major emerging market opportunity for the poor. In this context, IFAD is currently undertaking several activities to mainstream biofuel development in its operations. These include a large global grant and two regional grants, the latter two being confined to the Asia region. 8. In order to mainstream biofuels in IFAD’s operations, an initial seminar was held in November 2006 to share knowledge about biofuels and bring out awareness within IFAD on their potential for reducing poverty. This initiative was followed by IFAD’s Executive Board decision to finance a US$ 1.5 million grant to support research in selected alternative or multiple use biofuel crops that can be grown in poor agro-climatic conditions. The crops include sweet sorghum and cassava (for food, animal feed, bio-ethanol production); and Jatropha Curcas (for bio-diesel production, fertilizers and local energy) and Pongamia Pinnata (for bio-diesel production and improvement in soil fertility). With a view to giving direction to the research grant and ensuring timely delivery of results, IFAD has already held two international consultations (one on sweet sorghum that was jointly organized with FAO and the International Crops Research Institute for the Semi-Arid Tropics – ICRISAT, and the other on pro-poor Jatropha development, which was organized jointly with UN Foundation and FAO) in November 2007 and April 2008 respectively. Both the consultations provided an overview of the potential of the two crops for biofuel production, identifying opportunities and challenges in terms of agronomy, breeding, economics, post-harvest technologies and public-private sector partnerships. The main findings of the Consultations are summarized in Annex 1. A third consultation on cassava is also planned for October 2010. 9. Action research is also planned in countries in Asia, Africa and Latin America to assess adaptability of these crops to different agro-ecological zones, study the economics of rural electrification at small-scale level, evaluate its impact on poverty, and develop value chains. The grant also envisages activities for training, technology transfer and capacity building of all the stakeholders involved in biofuel development. 10. In addition, there was a Round Table discussion on biofuels at the 2008 IFAD Governing Council, which provided a forum for various stakeholders – amongst which Governments, Farmers Organizations, NGOs and other invitees -- to express their views on biofuels. The conclusions of the discussion are summarized in Annex 2. 3. Rationale for a Programme for alternative biofuel crop development 11. Both consultations cited above and the Round Table discussion stressed that partnerships between research institutions, United Nations (UN) agencies, International Financing Institutions (IFIs), Governments, and the private sector are needed to undertake a coordinated and commercially- oriented research activity to promote pro-poor biofuel development along the entire value chain. To this end, IFAD has taken many initiatives to build linkages with private sector companies, especially Syngenta in Switzerland, Praj Industries in India, ENI in Italy, to develop ideas on building partnerships. Moreover, linkages to bring the best knowledge and expertise to the table without duplication of effort are being developed with other UN organizations that include UNEP and FAO. These consultations, which suggested the need for initiating a Programme to support research and development along the entire value chain, have resulted in the drafting of this Concept Note. 12. IFAD early on recognized the need for the specific research and was the first IFI to process such a research grant on the development of alternative biofuel crops.. Indeed, research is being undertaken by a number of centers, many of which are undertaking some very interesting work on various aspects of breeding, agronomy and post-harvest technology. In reality, the core issue is not research, but coordinated research along the entire value chain so that a product can be brought into 7
  8. 8. Programme for the Development of Alternative Biofuel Crops _________________________________________________________________________________ the market addressing all constraints (breeding, agronomy to post-harvest technology and the environment), to ensure that the processing plant can operate on a year-round basis. This issue exists with a number of crops, including sugar cane, sweet sorghum, Jatropha and tropical sugar beet (TSB). 13. Equally there is need to ensure that the poor can participate in this emerging opportunity in partnership with the private sector in a win-win situation. The large companies have management, capital and marketing skills, but little access to land, the acquisition of which in large holdings can be a serious political impediment. The poor have land, albeit in small holdings, but little access to capital, management and marketing. There could be mutual benefits and such partnerships could be facilitated by Governments and donors. 14. For small farmers to adopt biofuels, their fundamental needs for food and feed have to be met. In this context, both food, feed and energy security are intertwined. This grant attempts to meet these needs, to effectively mainstream biofuels in IFADs’ operations. 15. As mentioned above, IFAD has committed USD 1.5 million grant implemented by ICRISAT, with the focus on sustainable development of biofuels crops such as Jatropha, pongamia, sweet sorghum and cassava that can grow under adverse agro-ecological conditions prevalent in remote areas. IFAD has also committed an additional USD 2.2 million in regional grants in Latin America and producing and processing biofuels. However, additional resources are foreseen to complement research activities and disseminate research findings rapidly (see para 9). This would enable poor rural people to take advantage of this promising market. 16. At the same time, in order to build on research activities, an information and education programme on biofuel potential for poverty reduction is needed to counter-balance the somewhat misleading messages that are increasingly emerging from the international media, NGOs and other pressure/vested groups. In such messages, biofuels are generally blamed for damaging the global economy, rising food prices and reducing food supply, worsening poverty and hunger in developing countries, causing environmental problems and destroying the world’s forests. In other instances, the public statements on biofuels are quoted out of context. This mis-information campaign against biofuels is negatively influencing public opinion and the commitment by Governments and international institutions/donors to engage in biofuel development, depriving many of the poor from benefiting from this emerging opportunity. As a result of these developments, many Governments are looking for policy advice to strike the appropriate balance between food and fuel security in a price stable environment and yet meet the needs of the urban and rural populations while alleviating poverty. 4. Goal and objectives of the Programme 17. The overall goal of the Programme is to finance coordinated research and development (R&D) in alternative or multiple-use biofuel crops along the entire value chain to develop a market ready product that will enable the poor, including women, to take advantage of this emerging opportunity. All research will aim at sustainable development of natural resources. The Programme will also play a catalytic role in strengthening cooperation and partnerships between IFIs, development organizations, foundations and the private sector. The specific objectives are to: Conduct coordinated research in a time-bound action plan on alternative or multiple use biofuel crops along the entire value chain through selected Centers of Excellence (COE) to ensure that products can be brought to the market following sustainable NRM practices. The criteria for selecting COEs will be jointly developed by the Steering Committee (SC), with membership drawn from the largest contributing members, and the Secretariat, which will then pre-qualify potential partners based on criteria developed. 8
  9. 9. Programme for the Development of Alternative Biofuel Crops _________________________________________________________________________________ Finance and pilot community-based projects for local energy provision to enhance local food and energy security1. Collect and disseminate information, research findings and successful experiences as examples of pro-poor biofuel development. Facilitate and strengthen R&D networking and knowledge sharing Counter the mis-information campaign against biofuels and support the legitimate concerns of the Governments to enable them to promote the pro-poor potential of selected alternative/multi-use crops. Advise Governments to develop and establish a suitable renewable energy policy. Subject to availability of confirmed technology, mainstream biofuels in IFAD’s operations by co-financing projects with the private sector. 5. Programme components and activities 18. The proposed four-year programme would comprise three inter-related components, namely: (1) R&D, supervision, monitoring and evaluation (M&E); (2) Local energy provision to enhance food security; and (3) Knowledge sharing, capacity building, policy studies and advocacy, and information and awareness campaign. 19. The work undertaken under this Programme will serve as the basis for up-scaling investments, specifically to benefit the poor, in a sustainable manner. This will include financing of SMEs where appropriate and the transfer of technology as and when the R&D work has been suitably developed. Component 1. R&D, supervision, M&E 20. Research activity would be conducted by selected COEs with focus on: (a) non- food and/or multi-use biofuel crops that can be grown under adverse agro-ecological conditions; (b) development of the biofuel value chain (breeding, agronomy, processing and post-harvest technologies/engineering, rural electrification, marketing); and (c) where it does not overlap with other research efforts or affect animal feed supply, research on second generation technologies adapted to developing countries. 21. The approach would be to pre-qualify COEs, whether private or public, to conduct research on the crops. Each COE would be invited to submit a bid in response to the Request For Proposal (RFP) to conduct and lead research along the value chain. They would be responsible for identifying the partners that would conduct the coordinated research along the chain to ensure the delivery of results within the framework of a time-bound action plan. Research would be conducted in first generation technologies that can grow in marginal lands, which can provide – depending on the crop - food, animal feed, fuel, and/or value-added by-products (such as fertilizers and repellents). In addition, the research would focus on introducing crop rotations with crops developed by the private sector, (TSB by Syngenta, non-edible safflower promoted by Praj Industries Ltd), to improve the efficiency of the value chain, including post-harvest value addition at the community level, both to create employment and to avoid oversupply at peak production periods. 22. Crop-based research would focus in particular on: increasing plant yields; recommendations of best agronomic practices; field-testing of crops to document their potential and constraints as well as small-scale processing for increasing local energy supply. 23. Research would also focus on data provision activities, and their respective use to improve GHG life-cycle analyses, including carbon and energy balances at the field level to ensure environmentally sound development and, where necessary, minimize effects of toxicity on soils. 24. Supervision and M&E will specifically focus on the agricultural production and processing sustainability indicators. 1 Component 2, details provided in Annex 3. 9
  10. 10. Programme for the Development of Alternative Biofuel Crops _________________________________________________________________________________ 25. This component would finance the recruitment of specialized senior consultants to draft the RFPs, evaluate the bids and shortlist the candidates for selection by the SC. Expertise would be required in plant breeding, agronomy, processing and post-harvest technologies/engineering, marketing and value chain development. Component 2. Local energy provision to enhance food security 26. This initiative will develop seven pilot projects aimed at alleviating poverty by enhancing food security through provision of local energy in rural areas. This would be achieved by financing rural energy schemes from biofuel crop production, and other approaches such as agricultural and urban waste. The projects would test and compare alternative models for local energy provision and conduct research to increase the efficiency of the most promising technologies.. The energy produced would be used to meet household needs, local level processing and power for irrigation. This would not only increase food security but also be beneficial for the environment as women will no longer travel distances to collect fire wood (which is not an environmentally sound practice) or water. Fuel for domestic use would also be cleaner leading to better health for the family. 27. The three sub-components would include: (a) community organization and capacity building; (b) investment infrastructure and equipment; (c) project management and M&E. More details are included in the ‘Local Energy Provision to Enhance Food Security’ design document -- see Annex 3. Component 3. Knowledge sharing, capacity building, policy studies and advocacy, information and awareness campaign 28. Workshops for knowledge sharing and dissemination of research results would be organized in each year of programme implementation, possibly in different countries and regions, with participation of various stakeholders and other research. Information and communication materials and technical reports on research findings would be produced and disseminated on the website of UNEP, FAO and IFAD. The documents would also be translated in different languages, if required. 29. Policy advice on the development of a suitable renewable energy policy. The objective is to assist the governments of member states to develop suitable policies that strike an acceptable balance between land use, food security, fuel self-sufficiency or reduction in fuel imports to an acceptable level, and to rationalize the apportionment of water resources between food and fuel crops while ensuring a pro-poor focus. As and when requests are received from the member states, the Secretariat will seek to mobilize funds from potential donors, including SC members, and even from IFAD’s grant funds to finance the studies. Special allocation for funding of policy studies in Africa will be mobilized as and when requested by member states. 30. The results of the policy studies as well as the research would provide the necessary impetus to co-finance projects from IFAD’s own resources, which will hopefully be in partnership with the private sector. Policy advocacy will be linked to the Poverty Reduction Strategy Papers (PRSP) to ensure that biofuels development has a pro-poor focus and, where appropriate, energy policies would be revisited to ensure consistency in governments’ policies and programs in assisting the poor. 31. Information materials on the potential of biofuels to reduce poverty whilst promoting food security would be developed and the results of the findings made available. Special focus would be placed on disseminating information on successful examples where biofuels have actually contributed to food security rather than affecting it. Special emphasis would be placed on identifying people of considerable repute and international standing to write articles and publish reports on the benefits of achieving both energy and food security for developing countries, including research and release of articles to counter-balance mis-information. 10
  11. 11. Programme for the Development of Alternative Biofuel Crops _________________________________________________________________________________ 6. Outputs 32. Since IFAD is a public institution, it is anticipated that research outputs would be made available to all stakeholders. The expected outputs by component, include: Component 1 33. Research & Development A list of pre-qualified COEs, to the extent possible, in different countries and regions. Research contracted to the COEs for projects approved by the SC. The outputs would include testing and validation of: - Location-specific, high yielding, high oil content, early maturing, non-toxic, drought tolerant varieties of Jatropha. - Location-specific sweet sorghum varieties with high cane, grain and stalk sugar yields, resistant to shoot pests, foliar diseases, and abiotic stresses, including phosphorous acquisition efficiency. - Location-specific early duration, high biomass and/or high carbohydrate cassava varieties. - Improved productivity of other crops selected by the SC. - Cropping trails to ensure higher capacity utilization using multiple feedstocks to enhance the efficiency of the processing plant to develop an efficient value chain and ensure sustainable development. - Improved technologies to reduce the volume of feedstocks for ease of transportation and storage systems to ensure year-round supply. - By-products use in animal feeding and/or crop fertilization and/or pesticides. - Technology transfer to SMEs. Seeds of promising varieties identified and supplied to approved entities for onward multiplication and distribution. Models for rural electrification using Jatropha and pongamia (or other non-edible) oil developed, tested and validated. 34. Supervision, M&E Serving this purpose, experts will be contracted to monitor the projects at different stages. Monitoring sustainability indicators on the agricultural production and processing. Supervision and M&E reports would be prepared and distributed to the SC members. These would also be posted on the websites. Component 2 35. Community organization and capacity building Selection of local NGOs. Mobilization of village communities. Formation of community organizations. Needs assessment. Capacity building. Delivery of O&M training. Technical support. 36. Investment in infrastructure and equipment Testing and validation of energy systems. Establishment of nurseries and demonstration plots. Land identification. Procurement and installation of processing plants. Establishment of water harvesting infrastructure. O&M. 11
  12. 12. Programme for the Development of Alternative Biofuel Crops _________________________________________________________________________________ 37. Project management and M&E Baseline surveys. Monitoring. Annual evaluation. Final project evaluation. Component 3 38. Knowledge sharing (technology dissemination) and capacity building One workshop per year will be organized by the Secretariat in collaboration with the COEs. Annual progress technical reports prepared by the COE; workshops proceedings; toolkits/agronomic handbooks to inform and train small farmers and producers as well as extension agents and government officials; a website built on or linked to the Bio-energy wiki website and developed in cooperation with FAO and UNEP, to disseminate information on selected biofuel crops and research activities and results, including a space for the information and awareness campaign. 39. Policy studies and project co-financing Policy studies will be conducted in partnership with FAO. These studies will focus on multiple use crops to ensure that no adverse impact on food prices occurs, especially in cases where products (sorghum and cassava) are also used as food crops. Projects co-financed by IFAD. 40. Information and awareness campaign Fact sheets/information materials providing basic information on biofuels and their potential for poverty reduction. The information could be in the form of reports, Questions and Answers (Q&A) leaflets, especially on the most debated and controversial issues; and examples of successful stories and experiences. Information will include transfer of appropriate technology. An ad-hoc space will be created in the website for posting materials of the campaign and extend messages pertaining to sound NRM practices. All reports will be made available to member states and partners. These will be posted on IFAD and FAO websites, and provided upon request. 7. Governance and implementation plan 41. The programme would be of four-year duration and implementation would commence as soon as the funds are received (the implementation plan is given in Annex 4). During the first three months, a Secretariat (comprising IFAD staff) and a Steering Committee (SC) would be established. The Secretariat would be responsible for the overall coordination of programme activities, administrative, financial and technical aspects of the Programme, including logistics of meetings and information dissemination. 42. The SC would be responsible for approving the pre-qualified COEs from a list prepared by the Secretariat. The SC would meet annually at IFAD’s Headquarters and via teleconference any time that is needed. A first launch meeting involving the Secretariat and the SC would be organized within three months of the inception of the Programme to discuss the modalities of bidding, the details required in the RFP, the modalities of evaluating bids, awards of contracts and supervision. It would also discuss policy issues such as Intellectual Property Rights (IPRs) and measures to ensure that findings of the research conducted by private sector COEs remain part of the public domain. Key indicators would be identified that would provide the basis to undertake progress review, and monitor and evaluate the Programme. 12
  13. 13. Programme for the Development of Alternative Biofuel Crops _________________________________________________________________________________ 43. It is anticipated that within the first six months of the establishment of the Programme, the bidding process would start and the RFP would be posted on the IFAD website and announced to the pre-qualified COEs. The bids would be evaluated by the Secretariat or a select Committee of the SC. The proposals would be awarded based on their consistency with research needs and priorities, fulfillment of requirements, proven capacity and credibility of the institution, and geographical distribution of both the institution and proposed research sites. 44. IFAD would hold veto power of any proposal that it deems would result in any reputational risk for the Fund or is not consistent with its mandate. The COEs would be responsible for choosing their research partners. Details about agreements between IFAD and the contracted parties, funds disbursement and any other implementation arrangements would be established based on IFAD’s rules and procedures. 45. Once all formalities have been completed, programme activities would commence. 8. Monitoring, supervision, evaluation and reporting 46. The Secretariat would also act as the implementing body of the programme and would establish appropriate arrangements for the supervising and monitoring progress. Senior consultants with expertise in agronomy, breeding, post-harvest technologies/engineering and other relevant research areas would be recruited to undertake supervision, and M&E, through review of progress reports and field visits to research sites. Based on IFAD’s rules and procedures and subject to specific arrangements that would be established, the Secretariat would be also responsible for ensuring that: (a) each contracted COE submits annual work plan and budget, annual progress reports and annual audit reports; (b) workshops proceedings are consolidated; and (c) technical and financial reports and workshops proceedings are made available to the SC and the donors. The findings of the missions would be sent to all members of the SC and discussed at its annual meeting. 47. The programme would be implemented by the Secretariat as a time-bound facility that would expire once all available funds received are disbursed. If the Programme receives strong support and willingness on the part of donors and other stakeholders to continue, IFAD would likely be willing to maintain the Programme and make appropriate adjustments to its framework, scope and governance, subject to availability of adequate resources. 9. Financing 48. As noted in the Table below (Table 1), the Programme is expected to cost USD 12.0 million over four years. This includes component 2, ‘Local Energy Provision to Enhance Food Security’, which would be financed by OFID (90%) and by the project beneficiaries (10%). IFAD would finance USD 1.5 million (this would be over and above the USD 1.5 million already committed), while other donors, foundations and the private sector would finance the balance. Some commitments (see para 50) have been received from UN agencies, private companies, Foundations and NGOs. These include OFID, UNIDO, UN Foundation, GAEF, Praj Industries Ltd (India), and Syngenta Foundation for Sustainable Agriculture (Switzerland). 49. Total anticipated commitments to date amount to about USD 6.5 million. Amounts committed to date by each co-financier are as follow: IFAD, $ 1.5 million; Praj Industries Ltd, $ 1.0 million; Syngenta Foundation for Sustainable Agriculture, $ 0.6 million; UNIDO, $ 0.5 million; OFID, $ 1.4 million; EU Facility, $ 1.5 million. In addition AfDB, UN Foundation and GAEF have expressed an interest in participating in the Programme, but the MOUs have yet to be signed. 50. Out of the Programme total cost, USD 5.0 million will especially be earmarked for Africa. This amount would add up in the following way: EU Facility, $ 1.5 million; OFID, $1 million; AfDB, 2.5 million. 13
  14. 14. Programme for the Development of Alternative Biofuel Crops _________________________________________________________________________________ 51. The details of the annual estimated costs by component are indicated in the Table below: Table 1: Cost of the Programme (USD ‘000)Error! Not a valid link. Item Year 1 Year 2 Year 3 Year 4 Total Component 12 2 187 2 187 2 188 2 188 8 750 Component 23 370 369 370 369 1 478 Component 34 293 293 293 293 1 172 Sub-total 2 850 2 850 2 850 2 850 11 400 Contingency (5%) 150 150 150 150 600 Total 3 000 3 000 3 000 3 000 12 000 52. IFAD would welcome, on an untied grant basis, additional contributions to the Programme from bilateral, multilateral, and individual sources, including private companies, Governments and foundations. These contributions would be effected through standardized forms and agreements as per IFAD rules and procedures. They would be made in the form of cash in a freely convertible currency. Contributions would be deposited into a United States dollar interest-bearing account to be specified by IFAD (an account for the Programme would be opened). For contributions received in currencies other than US dollars, IFAD would, upon receipt of the funds, convert them into US dollars and transfer them to the Programme account. IFAD would make withdrawals from the account as necessary to meet the expenditure of programme activities approved by the SC. 53. The table below (Table 2) provides a detailed cost breakdown for each component. 2 Component 1: R&D, Supervision, M&E. 3 Component 2: ‘Local Energy Provision to Enhance Food Security’, financed by OFID (90%) and project beneficiaries (10%). 4 Component 3: Knowledge sharing, capacity building, policy studies and advocacy, information and awareness campaign. 14
  15. 15. Programme for the Development of Alternative Biofuel Crops _________________________________________________________________________________ Table 2: Cost of the Programme for each component (USD ‘000) Component Item/Sub- Year 1 Year 2 Year 3 Year 4 Total component 1. R&D5 Research 900 900 900 900 3 600 scientist Research 318 317 319 317 1 271 assistant Purchase of 684 684 684 684 2 736 specialized equipment Travel 120 120 120 120 480 Institutional 65 65 66 66 264 coordination and planning 1. Supervision, M&E Consultancy fees 100 101 99 101 396 Sub-total 2 187 2 187 2 188 2 188 8 750 Component 1 2. Local Energy Community 104 103 104 103 414 Provision to organization and Enhance Food capacity building Security Investment 241 241 241 241 964 infrastructure and equipment Project 25 25 25 25 100 management and M&E Sub-total 370 369 370 369 1 478 Component 2 3. Knowledge Sub-total 293 293 293 293 1 172 sharing, capacity Component 3 building, etc6 Sub-Total 2 850 2 850 2 850 2 850 11 400 Contingency 150 150 150 150 600 (5%) Total 3 000 3 000 3 000 3 000 12 000 5 Under the R&D sub-component, a total of 7 sub-projects will be undertaken. The activities should include: (a) germplasm collection; (b) comparative trials of local and global germplasm; (c) oil content assessment; (d) germplasm molecular analysis; (e) contract for studying plant characteristics; (f) identification of various varieties; (g) cross- breeding of plants to develop desirable traits; (h) contracts for studying molecular structure for developing suitable hybrids; (i) analysis of agronomic performance; (j) improvement of agronomic practices; (k) disease control and pest management; (l) post-harvest handling technology; (m) developing processing with private companies; (n) environmental impact assessment (impact on soils, LCA, impact on underground water). 6 Component 3 finances other sub-components (see par. 39, 40, 41) 15
  16. 16. Annex 1 __________________________________________________________________________________ ANNEX 1: Findings of the Consultations The main findings of the two consultations are as follows: On sweet sorghum: The crop has a considerable potential as a pro-poor energy and multipurpose crop: its grain can be used for food, the leaves for animal feed, the fiber either as mulch or animal feed and - with second generation technologies - even for fuel, the stalk contains sugar that can be converted into bio-ethanol. It is at a relatively early stage of development, therefore research is needed to obtain better genetic material and develop varieties that match different local agro-economic conditions. Significant variations in yields were found between varieties in China (100 mt/ha biomass) and India (50 mt/ha). Increasing the yields and improving bio-mass content of plants are needed as a matter of priority; Improved feedstock supply duration is needed to ensure regular supply to the processors. Research activities have to be highly location-specific. As the window for harvesting is short, post-harvest technologies still pose problems for transportation, crushing and processing of feedstock in a central processing facility, as these can still cause a decline in the quality of the crop and its sugar content, and require elaborate logistical arrangements with high capital investment. Research should focus on developing and validating models with decentralized units, and/or using in-field fermentation and increasing the harvest period. As sweet sorghum can met the needs of plants for only 8 months a year, its intercropping with other suitable crops, such as sugar cane or even TSB, needs to be explored in order to improve the efficiency of the processing plant. On Jatropha: Plant performance needs to be optimized by developing high oil yield, oil quality, drought tolerant, pest resistant, and early maturing varieties. Desirable characteristics for both local and biodiesel use need to be identified and cross-bred varieties developed. Agronomic and agricultural options, practices and requirements for Jatropha cultivation in terms of rainfall, temperature, inputs, and pest occurrences are not systematically documented. Seed quality needs to be improved constantly and access to seed breeding has to be provided for Jatropha growers. Issues around toxicity of Jatropha and impact of using toxic wastes on soils and under ground water need to be understood and in case of problems, solved. Alternative models for the use of main by-products as well as technology and business cases for oil extraction and transformation need to be documented and/or developed. 16
  17. 17. Annex 2 __________________________________________________________________________________ ANNEX 2: Summary of Round Tables in Conjunction with the Thirty‐First Session of IFAD’s Governing Council Palazzo dei Congressi, 14 February 2008 Round Table 2 – Biofuels expansion: Challenges, risks and opportunities for rural poor people Biofuels touches on diverse issues at local, national and global levels, including food security, the effect of increasing food prices on the poor, international trade, and domestic agricultural policies to protect the poor, especially issues pertaining to land tenure security and land rights. Development of biofuels can present opportunities for poor rural people, provided that development embraces the following conditions: - investment in research and appropriate technologies to develop competitive value chains - provision of services for transferring the technology - implementation of policies that would ensure that smallholders receive appropriate prices for their products - Provision of credit and other financial services such as insurance to protect smallholders from natural disasters and other unforeseen events. Recommendation for IFAD: Biofuels represent an opportunity for some poor rural people. In order for IFAD to help enable them seize these opportunities, all of its strategic priorities should be pro‐poor, pro‐nature, pro‐livelihoods and pro‐women as well as ensure food security. 17
  18. 18. Annex 3: Local Energy Provision to Enhance Food Security __________________________________________________________________________________ ANNEX 3: Local Energy Provision to Enhance Food Security Summary Sheet Initiative Local Energy Provision to Enhance Food Security, under the Programme for Alternative Biofuel Crop Development. Countries Malawi, Mali, Burundi, Gambia, Honduras, Peru, and Bolivia. Goal To alleviate poverty by enhancing food security through provision of local energy. Objectives The objective is to enhance agricultural productivity through local energy provision, which in turn would enhance food security. This would be achieved by financing rural energy schemes from biofuel crop production, and other approaches such as agricultural and urban waste. The project would test and compare alternative models for local energy provision, and conduct research to increase the efficiency of the most promising technologies. Project beneficiaries The primary target group would include the poor rural communities, particularly small-scale farmers, landless poor and women in remote and ecologically fragile areas. The criteria for community selection will be: (a) remote and ecologically fragile villages with no access to electricity; (b) villages with the potential for in situ water conservation; (c) large concentration of the poor; and (d) villages where soil conditions have deteriorated or have been affected by salinity. Components 1. Community organization and capacity building. 2. Investment in infrastructure and equipment. 3. Project management and M&E. Benefits The projects would demonstrate the use of energy provision technologies under different agro-ecological conditions, in seven communities. The direct benefits from project activities will consist in enhancing food and energy security in remote rural areas, through rural electrification schemes and biofuel production. The aggregate benefits of the pilot projects would be economic and social development, saving in women’s time, improvement of health conditions, climate change mitigation, improvement of the environment, and food security. Duration Four years. Estimated total project cost USD 1,555,000 Cofinancier OFID Contribution of cofinanciers USD 1,400,000 Contribution of beneficiaries USD 155,000 18
  19. 19. Annex 3: Local Energy Provision to Enhance Food Security __________________________________________________________________________________ Executive Summary IFAD’s interest in biofuels stems from a single concern - to expand the income earning opportunities for the poor without compromising their food security situation. Out of a total global population of 6.7 billion, 1.3 billion people are directly employed in agriculture and they jointly account for only 4% of the global GDP. This virtually translates to one person engaged in agriculture for every five consumers. It is not surprising, therefore, that most of the poor - some three-quarters of the world’s one billion - live in rural areas and depend on agriculture and related activities for their livelihoods. Sadly, many small producers will have to continue to depend on agriculture where they face bleak prospects unless the opportunities in rural areas improve by linking the smaller traditional agricultural markets to the much larger energy markets. However, such linkages to energy markets face many challenges and legitimate concerns, such as those about food security, meeting small farmers’ needs for animal feed while ensuring sustainable management of natural resources. Many developed and developing countries have resorted to using food crops as feedstock and the resultant diversion of food crops to producing biofuels partially contributed to sharp increases in food prices, setting up a backlash that sometimes blamed rising food prices on biofuels in general, rather than distinguishing between biofuel crops that compete with food production and those that do not. In the ensuing food-versus-fuel debate, biofuels have often been portrayed as anti-poor as rising food prices cut into the limited purchasing power of the poor. Provided biofuels are developed responsibly, avoiding conflict between food and fuel needs, they can provide a strong strategic opportunity for assisting the poor. Biofuels also offer the opportunity of localizing fuel production from renewable energy sources which has the potential of creating greater fuel security and independence at regional, national, and rural community levels. IFAD is promoting a Programme for Alternative Biofuel Crop Development, to finance R&D in alternative biofuel crops in a coordinated manner along the chain. Local Energy Provision to Enhance Food Security would constitute the Programme’s Action Research, and will develop seven pilot projects under different agro-ecological conditions. The pilot projects will be designed to build upon the existing experience in biogas production through fermentation processes developed during the ‘90s by developing countries such as India, China, and Malaysia, while expanding into biological fermentation processes from oil plants and other feedstocks. The Action Research’s outputs should enable the Programme to: (a) assist governments of member states to develop suitable policies that strike an acceptable balance between land use, food security, fuel self-sufficiency or reduction in fuel imports to an acceptable level; and (b) rationalize the apportionment of water resources between food and fuel crops while ensuring a pro-poor focus. The combination of research and policy studies would provide the necessary impetus to build the pipeline of full-scale investment projects from stakeholders’ financial resources, which will hopefully be in partnership with the private sector. The four-year pilot projects under the Programme’s Action Research component are expected to cost USD 1.5 million. The larger initiative of which the pilot phase is part, the Programme, is expected to cost USD 12.0 million, for which commitments have been received from the private sector, including oil companies, as well as private foundations. IFAD will contribute USD 1.5 million; in addition to 19
  20. 20. Annex 3: Local Energy Provision to Enhance Food Security __________________________________________________________________________________ this contribution, IFAD has already financed USD 1.5 million towards a research grant on sustainable biofuels development. Each partner will have responsibilities and roles to play within the Programme, according to their expertise. IFAD will act as the Secretariat to the SC, mobilize funds, and be involved in knowledge sharing. FAO will provide technical support in R&D, conduct policy studies, and be involved in knowledge sharing. OFID will provide financing for the ‘Local energy provision to enhance food security’ initiative, under component 2 of the Programme. UNIDO will assist in the selection and development of appropriate processing technologies, conduct capacity building, and be involved in policy advocacy for small scale biofuel producers. UNEP will conduct environmental impact assessment, LCA, and be involved in knowledge sharing. Syngenta Foundation for Sustainable Agriculture will be responsible for the plant production technology. Praj Industries Ltd will develop the processing technology, and encourage the value chain development. The programme will be involved in knowledge sharing, provide financing and mobilize additional resources for the electrification facilities, and for financing the R&D component. UN Foundation will finance the cassava workshop and possibly provide financing towards the Programme. 20
  21. 21. Annex 3: Local Energy Provision to Enhance Food Security __________________________________________________________________________________ 1. Introduction 1. IFAD would welcome, on an untied grant basis, additional contributions to the Programme from bilateral, multilateral, and individual sources, including private companies and foundations. These contributions would be effected through standardized forms and agreements as per IFAD rules and procedures. They would be made in the form of cash in a freely convertible currency. Contributions would be deposited into a United States dollar interest-bearing account to be specified by IFAD (an account for the Programme would be opened). For contributions received in currencies other than US dollars, IFAD would, upon receipt of the funds, convert them into US dollars and transfer them to the Programme account. IFAD would make withdrawals from the account as necessary to meet the expenditure of programme activities approved by the SC. 2. IFAD early on recognized the potential of biofuels in assisting the poor and is promoting a Programme to finance R&D in alternative biofuel crops. Local Energy Provision to Enhance Food Security is part of the Programme’s broader agenda of securing energy production, and constitutes one of the main components, Action Research, to enhance food security through the development of alternative energies. Seven pilot projects will be financed to generate energy in rural communities, and will help generate the necessary knowledge and outputs for the main Programme to assist developing countries in meeting their energy needs, and to enhance feed and food security. 3. Energy provision is strongly linked to poverty alleviation, and is fundamental for agriculture intensification and food security enhancement. This implies that an efficient energy infrastructure is a precondition for economic development as demonstrated by the chart below, in which China (with 1% of the total population without access to electricity) has a lower poverty level than India (57%). In sub-Saharan Africa more than 500 million people do not have electricity in their homes, and rely on solid biomass to meet their basic needs; most schools and clinics do no have electric light and businesses suffer from severe power interruptions. Two thirds of the low-income food-deficit countries are in energy deficit, and 25 out of 47 of the poorest countries are totally dependent on imported fuels. This implies that much of the countries’ available funds are used to import oil with little left to support economic growth. 4. The proposed pilot projects under the Action Research component would demonstrate the potential of using local resources, such as agricultural and urban waste and alternative biofuel crops, to provide local energy, intensify crop production and enhance food security. 5. The challenge is to ensure that the rural poor can take advantage of the emerging opportunities provided by biofuels development by: (a) integrating the production of biofuel crops in their farming 21
  22. 22. Annex 3: Local Energy Provision to Enhance Food Security __________________________________________________________________________________ systems, without compromising food security; (b) intensifying the production of biofuel crops so that more land is available for alternative uses; (c) meeting local energy demand through biofuel production to intensify agricultural production. This would in turn serve as a means to develop local micro-enterprises and to provide alternative sources of income and employment for the rural poor. 6. The development of local energy provision will be used to demonstrate that energy can be developed locally without compromising food security. This will also pave the way for meeting the broader objective of meeting national energy needs without compromising food security by using alternative biofuel crops. Pilot projects will be based upon the existing knowledge and experiences gained, for instance, during the ‘90s in developing countries such as China, India and Malaysia, related to biogas production through fermentation. These existing technologies will be tested in different agro-ecological environments. 7. The broader initiative, the Programme, will employ its funds to: (a) finance research and development through pilot projects along the entire value chain; (b) conduct action research; (c) supervise and monitor the sub-projects financed; (d) advise governments on the development of suitable biofuels policies and disseminate knowledge, especially on issues of critical public concern that enhance, or inhibit, the development of opportunities for the poor; and (e) publish relevant materials to present a balanced view on the potential of biofuels to assist the poor without compromising food security. 8. Research will focus on alternative crops that can grow on marginal lands – currently not used for food production or pasture -, that require less water, and that are saline tolerant, such as Jatropha and non-edible safflower. It will also focus on urban and agricultural waste. Multiple-use crops shall include cassava and sweet sorghum. Saline tolerant crops encompass tropical sugar beet, algae, seashore mallow, camelina, and arundo donax. 9. Supervision and M&E will specifically focus on agricultural production and processing sustainability indicators. Reports would be distributed to the Steering Committee (SC) members and posted on the websites. Knowledge sharing activities will consist in disseminating research outputs, information, and communication materials to all stakeholders through UNEP, FAO, and IFAD websites. The documents will be translated in different languages, if requested. 10. The Programme will also assist governments of member states to develop suitable policies that strike an acceptable balance between land use, food security, fuel self-sufficiency or reduction in fuel imports to an acceptable level, and to rationalize the apportionment of water resources between food and fuel crops while ensuring a pro-poor focus. Policy advocacy will be linked to the Poverty Reduction Strategy Papers (PRSP) to ensure that biofuels development has a pro-poor focus and, where appropriate, energy policies would be revisited to ensure consistency in governments’ policies and programs in assisting the poor. 11. The combination of policy research and studies would provide the necessary impetus to build the pipeline of full-scale investment projects from stakeholders’ financial resources, which will hopefully be in partnership with the private sector. 22
  23. 23. Annex 3: Local Energy Provision to Enhance Food Security __________________________________________________________________________________ 2. The problematic 12. The proposed pilot projects are very much in support and in congruence with the initiative announced by King Abdallah of Saudi Arabia in June 2008, Energy for the Poor. Both initiatives, in fact, aim at strengthening social safety nets in developing countries, to protect the poor against the impact of high and volatile fuel prices. Pilot projects will be designed to expand the rural poor people’s access to sustainable energy services, to deploy alternative energy systems within their communities, and to develop energy efficiency interventions. 13. Over the past 40 years the conditions of many of the poor small producers have worsened as many faced declining profitability due to falling commodity prices and rising input prices. While the recent increase in commodity prices - which have since, once again, declined - may have offered some temporary relief to the small producers, many poor smallholder farmers continue to face bleak long- term prospects. This is because the traditional agricultural basket of products7 is not large enough to provide meaningful income for such a large number of people dependent on agriculture. Many are moving out, and the slums in many cities attest to the emigration from rural areas. Some economists argue that if agriculture is not remunerative, people should pursue other vocations. While this may be a valid approach for some industrialized countries, it is difficult to foresee how the many developing economies that are mostly agriculture-dependent will be able to provide meaningful employment to so many. 14. Linkages between energy and agriculture are stronger than thought. Although energy issues are not explicitly addressed in the MDG, it is widely recognized that energy provision at the local level can contribute towards poverty alleviation through increased agricultural and labor productivity. While energy required for production, processing, and transport represent direct costs, fossil-based inputs like fertilizers and insecticides are examples of indirect energy costs. 15. Ensuring food security through increased agricultural production from increased access to energy is especially important when data expects the global population to reach 9 billion people by 2050. Farmers should be encouraged to produce higher yields on existing farmlands, while preventing further loss of fertile soil erosion, and adopting innovative ways to make use of marginal lands. Erosion of fertile soil, increasing fragmentation of land holding, and lack of knowledge on advanced agronomic practices are amongst the causes of migration of farmers from villages to cities. Energy provision through biofuels development would mitigate this situation, provided it is carried out in a responsible manner. 16. Rural people living in remote areas are mostly dependent on biomass-based energy to meet their needs, but this is at a considerable cost to the environment arising from accelerated deforestation, soil erosion, desertification, and increased risk of flooding and biodiversity loss. It also has negative repercussions on human’s health, due to indoor air pollution caused by direct combustion of bio-mass. Modern technologies that convert bio-mass into energy in a sustainable manner and increased utilization of biofuels can be valuable alternatives to such practices and patterns. Local energy provision can also contribute to save women’s time in food processing, water and fuel wood collection, thereby enabling them to undertake economic activities more productively. 7 Food, animal food and other industrial crops. 23
  24. 24. Annex 3: Local Energy Provision to Enhance Food Security __________________________________________________________________________________ 3. Strategic Approach 17. The four-year “Local Energy Provision to Enhance Food Security” pilot project is part of a broader initiative, the “Programme for Alternative Biofuel Crop Development”, established with the goal of conducting coordinated R&D in alternative or multiple-use biofuel crops along the entire value chain to develop a market ready product that will enable the poor, including women, to take advantage of the emerging opportunity provided by biofuel development. 18. The pilot projects will be premised on the notion that energy production and food security are inextricably inter-linked to the growth engine of the local economy, and constitute the means to capitalize poorer smallholders, raise women’s economic role, and improve households’ food security and living conditions. 19. Goal. The main goal is in line with that of the Programme, and aims at alleviating poverty by enhancing food security through provision of local energy in rural areas. 20. Objectives. The objective is to enhance agricultural productivity through local energy provision, which in turn would enhance food security. This would be achieved by financing rural energy schemes from biofuel crop production, and other approaches such as agricultural and urban waste. The project would test and compare alternative models for local energy provision, and conduct research to increase the efficiency of the most promising technologies. 21. To ensure that the initiative’s overall goal and objectives are achieved in a sustainable manner by the end of each pilot project, all undertaken activities will be subject to approval by the communities, which will be sought after all pros and cons have been explained, specifically including the following aspects: management of natural resources, protection of the environment, and operation and maintenance (O&M) of the facilities, including charges for covering such costs either through the sale of water or energy. 22. Targeting. The targeting principle will be poverty incidence and distress. This will be used through geographic targeting, which will include the selection of villages with poor resource endowments, adverse weather conditions, and uncertain crop prospects that deny a dependable income flow necessary to sustain lives. The criteria for community selection will include: (a) remote and ecologically fragile villages with no access to electricity; (b) villages with the potential for in situ water conservation; (c) large concentration of the poor; and (d) villages where soil conditions have deteriorated or have been affected by salinity, and are under rain-fed conditions. 23. These locations8 will be selected in Africa and Latin America, in landlocked developing countries, where the energy costs of fossil-based fuels are the highest. Project beneficiaries will be selected in a participatory manner, and will be primarily targeted to the poor rural communities, particularly: (a) small-scale farmers; (b) landless poor; and (c) women. An inclusive approach would be implemented to ensure the active involvement of targeted communities in project activities, and to ensure the projects’ success. 8 To ensure that planting in the waste lands does not interfere with the livelihoods of the pastoralists, sites will be selected after careful study of: (a) the land use pattern; (b) the present available species which can be used; (c) the way the sites are being utilized; and (d) the sites’ potential and need to introduce new species. Final decisions will be taken with local communities in a participatory manner. 24
  25. 25. Annex 3: Local Energy Provision to Enhance Food Security __________________________________________________________________________________ 24. Sustainability and exit strategy. The projects will likely be more sustainable if local communities are actively involved in the planning process, if all required inputs are made available and secured, and if all new income generating opportunities are effectively used. The exit strategy would consist in developing local energy production systems, with operating costs covered through sale of water for irrigation and sale of energy for domestic use. 4. Prototype of pilot projects 25. Action Research. This initiative will be based upon seven pilot projects that will begin to mainstream biofuel development as a pro-poor strategy in the programs of selected countries. In this context, attempts will be made to ensure that development of biofuels will be part of the PRSP strategy and, based on available technologies, the action research would be initiated. Action research will serve to integrate feedstock production in smallholder farming systems and validate the development of community-based rural energy supply to provide power for irrigation and other uses under field conditions. Uses would include water supply for agricultural and domestic use, fuel for domestic consumption, energy for processing, and for other uses. 26. The pilot projects would comprise three major components, namely: (1) Community organization and capacity building; (2) investment infrastructure and equipment; and (3) project management and M&E. Component 1: Community organization and capacity building. 27. Local NGOs will encourage the formation of community organizations with the capacity to pool, aggregate and disseminate knowledge and information. The NGOs will play a major role in motivating and mobilizing village communities, organizing them to develop community-based schemes, assisting them in articulating their needs, facilitating training and providing technical support. In this way, farmers will be mobilized to produce energy either by processing waste, or by developing non-edible biofuel plants. 28. The project will provide training to involved actors within rural communities upon appropriate techniques to grow seeds, operate and manage processing plants and distillers, and to press oil. Technical assistance will be provided to train local trainers, install equipment and processing plants, and backstopping. 29. Activities under component 1. This component would include the following activities: (a) bids preparation; (b) NGO selection; (c) village community’s mobilization; (d) constitution of community organizations; (e) need assessment; (f) capacity building; (g) training on O&M of infrastructure and equipment for energy production; and (h) technical support. Component 2: Investment infrastructure and equipment. 30. Sustainable and replicable models of pro-poor biofuel-based energy systems will be tested and validated with the communities’ participation. Existing technologies will be adopted under different agro-ecological and socio-economic settings. To this end, nurseries and demonstration plots would be established to provide improved varieties and to evaluate performance and yields of different biofuels cultivars and technologies. Where appropriate, research and field trials will aim at intensifying biofuel crop production and bio-energy conversion technologies. In case where communities opt for waste- based systems, advice will be provided on collection of feed material, and its subsequent applications. 31. Technological options. Technology will be provided to farmers to produce and process non- edible oil seeds into bio-diesel. Depending on the availability at community level, the alternative crops to this end would be Jatropha, or non-edible safflower (having the advantage of an average three- 25
  26. 26. Annex 3: Local Energy Provision to Enhance Food Security __________________________________________________________________________________ month growing period). The project would cover the costs of procuring, and installing a transesterification9 unit, which would convert the extracted oils into bio-diesel and by-products. 32. Farmers will also be assisted in producing energy in the form of biogas, through urban and agricultural waste. Technological options available to this end consist in recycling and treating waste through anaerobic digestion10, and converting agricultural residues11 into bio-ethanol by using microbial isolates from insects and other environmental sources. These technologies would allow processing operations to be run and owned locally. 33. Water harvesting infrastructure. In order to intensify agricultural production, the project would ensure water security. For this purpose the project would cover the costs of a water harvesting infrastructure, where the bio-diesel produced would be used to pump the water to the irrigated area by gravity via a system of canals or closed conduits. This infrastructure would involve digging a pond for water collection, and piping systems to distribute water to cultivated areas for irrigation and to communities for domestic use. 34. Activities under component 2. This component would include the following activities: (a) testing and validation of energy systems; (b) nurseries and demonstration plots establishment; (c) land identification; (d) processing plant procurement; (e) processing plant installation; (f) establishment of water harvesting infrastructure; and (g) O&M. Component 3: Project management and M&E. 35. Monitoring will be conducted, with annual evaluation at the end of each year. It will assess the impact of biofuel-based energy: (a) in reducing poverty and increasing food security; (b) in rehabilitating the degraded land; and (c) on soil productivity and biodiversity (including conversion of natural ecosystems such as natural forests and natural grasslands), crop productivity, and land degradation. At the end of the pilot phase, a comprehensive evaluation will cover the four years’ activities, and based upon the recommendations given, the pilot will be up-scaled. 36. Up-scaling of good practices and successful projects will occur within the institutional and geographic dimensions. With the goal of improving rural livelihoods, the final objective will be that of increasing the impact of project activities by reaching a larger target group. The successful outcomes, in terms of technologies and adaptation to agro-ecological and socio-economic contexts, should serve as the basis for involved stakeholders to develop a pipeline of investment projects in rural areas. 37. Activities under component 3. This component would include the following activities: (a) baseline surveys; (b) monitoring; (c) annual evaluation; and (d) final evaluation. 38. Implementation arrangements. In each village, farmers – including women – would be organized to cultivate alternative biofuel crops. The seeds would be sold to a community-operated processing facility. Farmers would be encouraged to form integrated community-based initiatives for electricity generation, with part of the energy being used for irrigation and the balance for domestic needs and local processing facilities. 39. Pilot projects will be implemented by the local communities through the assistance provided by the Programme’s SC. Bids would be received from selected NGOs in these countries and evaluated by 9 Transesterification technology is a downstream processing of glycerine removal from vegetable oils. 10 Through fermentation, anaerobic digestion converts organic material into biogas. Gas derived from anaerobic digestion can be burned directly for cooking and heating, after appropriate treatment. 11 An example of a suitable agricultural crop is cassava. Cassava processing for food generates about 20 to 35% of waste, mainly in the form of peels, especially where cassava tubers are peeled by hand. Cassava waste contains high starch content of up to 60% on dry basis which causes serious environmental problems for disposal. This waste could however be utilized as cheap substrate for production of bio-fuels at the rural community level through hydrolysis of starch and cellulose into simple sugars that can be fermented into bio-ethanol for local energy and income generation. 26
  27. 27. Annex 3: Local Energy Provision to Enhance Food Security __________________________________________________________________________________ a Technical Committee (TC) based on a series of criteria12. The SC would provide overall guidance, would select local NGOs, and would approve pilot project areas. Field work will be sub-contracted to local NGOs, which would work closely with the Programme to test and use the cultivars developed and to follow the recommended farming systems promoted by the research institutions. Initial baseline surveys would be carried out to identify available bio-resources, their utilization patterns, and communities’ challenges in implementing the pilot projects. The implementation plan is given in Appendix 1. 40. Financing. The project would cover 90% of total costs, while beneficiaries would cover the remaining 10%. 12 Selection criteria will include aspects such as: (a) 20-30 years experience in energy sector; (b) experience in community mobilization and provision of energy; (c) know-how on water infrastructure development; (d) technical capability in crop productivity; (e) ability in assisting beneficiaries in developing off-farm enterprises; (f) audited financial statements; and (g) good and solid business reputation. 27
  28. 28. Annex 3: Local Energy Provision to Enhance Food Security __________________________________________________________________________________ 5. Costs 41. The table below provides a cost estimate for pilot projects in rural villages. Seven pilot projects would be developed, amounting to a total of $ 1,555,000. Table 1: Cost for each component (USD ‘000) Component Cost Category Estimate Donors’ Beneficiaries’ total contribution contribution cost (90%) (10%) 1. Community 1.1. Local NGO 350 315 35 organization and 1.2. Training activities 64 58 6 capacity building Sub-total 414 373 41 Component 1 2. Investment 2.1. Expeller machine 17 15 2 infrastructure and 2.2. Storage tanks 16 14 2 equipment 2.3. Diesel generators 17 15 2 2.4. Working capital 49 44 5 2.5. Soil and water 109 98 11 conservation works 2.6. Planting material 213 192 21 and overheads 2.7. Manure and 81 73 8 fertilizers 2.8. Labor and other 132 119 13 2.9. Irrigation and 103 93 10 weeding 2.10. Transesterification 163 147 16 plant (70,000 liters capacity) 2.11. Building and 64 58 6 installation of transesterification plant Sub-total 964 868 96 Component 2 3. Project 3.1. Travel, 68 61 7 management and transportation M&E 3.2. Surveys 15 14 1 3.3. Report preparation 17 15 2 Sub-total 100 90 10 Component 3 Sub-Total 1 478 1 330 148 Contingency (5%) 77 70 7 TOTAL 1 555 1 400 155 42. Self-sustaining systems will be developed and communities will be encouraged to recover operational costs, including capital recovery as proxy for credit charges, in the prices charged for the water or for the electricity produced and sold. 28
  29. 29. Annex 3: Local Energy Provision to Enhance Food Security __________________________________________________________________________________ 6. Expected results and benefits 43. The expected outcomes will consist in the generation of successful implementation models in different kinds of devices or systems. Proven results will be mainstreamed in IFAD’s operations and disseminated on the UNEP, FAO, and IFAD websites to benefit the poor. 44. The aggregate benefits of all these pilot projects will include the following: a) Economic and social development. These will mainly consist in income generation and employment opportunities. Energy production should ultimately result in import reduction of fossil fuels, with positive impacts on the socio-economic condition at community, village, regional or country level. Lower energy provision from biofuels development should result in a decrease in the cost of productive inputs, and an additional benefit to food producers (increase in profits, and/or decrease in food prices). Rural applications may include off-grid electrification, small machinery power, irrigation pumping, and food production equipment. Cookstoves can also be used by local shop keepers and vendors to generate income. b) Gender and health. The majority of food staples in developing countries must be cooked. Traditional cook-stoves, powered by fuelwood and dung, yield negative health impacts. Use of bio-based feedstock could benefit women and children in particular from time savings through reduced need to search for and collect fuelwood and dung13, from reduced safety and security risks of traveling long distances, from improved health14, and from cleaner, more reliable and easily accessible forms of energy. c) Climate change mitigation. Small-scale biofuel production could contribute to a reduction in greenhouse gas emissions (GHG) if use of fossil fuels is displaced. d) Food security. Food security will be ensured through combined new income streams for farmers, generated through biofuels development, and use of alternative crops that can be planted and grown on arable and marginal lands that are not under cultivation, or used for pastoral activities. Biofuels grown in interstitial spaces would compete little with food production, while increasing and diversifying sources of income. e) Biodiversity, water, soil and forestry. Use of water efficient crops, of degraded or marginal lands, and strategies for environment preservation and sustainable development, will serve to maximize positive impacts on the environment. Rotation cycles, soil recovery, re-establishment of nutrients, can help to improve and regenerate land. Reduced soil erosion and soil enrichment would result from retaining crop residues, wood and dung in agro-systems. Biofuel production, if incorporated in a well-designed landscape mosaic, can provide benefits such as windbreaks, restoration of degraded production areas, habitat for native species and a range of ecosystem services. f) Biofuel trade. Biofuel trade has the potential to increase foreign income earnings and reduce foreign trade balances. Developing countries have the opportunity to satisfy the expected increase for biofuels demand internationally, especially from industrialized countries. 13 Collection of fuelwood and dung can account for up to one-third of women’s and children’s productive time. 14 Indoor air pollution is responsible for more deaths of women and children than malaria and tuberculosis combined, and is blamed to cause around 1.6 million deaths per year. 29
  30. 30. Annex 3: Local Energy Provision to Enhance Food Security __________________________________________________________________________________ Appendix 1: Implementation Plan Component Activity Year 1 Year 2 Year 3 Year 4 Trim Trim Trim Trim Trim Trim Trim Trim Trim Trim Trim Trim Trim Trim Trim Trim 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1. Community Bids preparation organization NGOs selection and capacity building Village communities’ mobilization Constitution of community organizations Needs assessment Capacity building O&M training Technical support 2. Investment Testing and infrastructure validation of and energy systems equipment Nurseries and demonstration plots establishment Land identification Processing plant procurement Processing plant installation Establishment of water harvesting infrastructure O&M 3. Project Baseline surveys management Monitoring and M&E Annual evaluation Final evaluation 30
  31. 31. Annex 3: Local Energy Provision to Enhance Food Security __________________________________________________________________________________ Appendix 2: Logical Framework Local Energy Provision to Enhance Food Security Goal The main goal is in line with that of the Programme, and aims at alleviating poverty by enhancing food security through provision of local energy in rural areas. Objectives The objective is to enhance agricultural productivity through local energy provision, which in turn would enhance food security. This would be achieved by financing rural energy schemes from biofuel crop production, and other approaches such as agricultural and urban waste. The project would test and compare alternative models for local energy provision, and conduct research to increase the efficiency of the most promising technologies. Target The targeting principle will be poverty incidence and distress. This will be used through geographic targeting, which will include selection of villages with poor resource endowments, adverse weather conditions, and uncertain crop prospects that deny a dependable income flow necessary to sustain lives. The criteria for community selection will be: (a) remote and ecologically fragile villages with no access to electricity; (b) villages with the potential for in situ water conservation; (c) large concentration of the poor; and (d) villages where soil conditions have deteriorated or have been affected by salinity, and are under rain-fed conditions. These locations will be selected in Africa and Latin America, in landlocked developing countries, where the energy costs of fossil-based fuels are the highest. Project beneficiaries will be selected in a participatory manner, and will be primarily targeted to the poor rural communities, particularly: (a) small-scale farmers; (b) landless poor; and (c) women. An inclusive approach would be implemented to ensure the active involvement of targeted communities in project activities, and to ensure the projects’ success. Project area Sites will be selected within the following countries: Malawi, Mali, Burundi, Gambia, Honduras, Peru, and Bolivia. 31

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