Biofuels • What are biofuels: • Biofuels are a type of renewable fuel produced from grains, vegetable oils and animal fats. The 2 best known biofuels are bioethanol and biodiesel. • Why Biofuels: • Biofuels can help diversify the fuel supply for transport, and thus decrease the transport sector’s dependence on oil. • Biofuels offer the potential to deliver lower overall greenhouse gas (GHG) emissions compared with conventional fuels (gasoline and diesel or LPG and CNG). • Biofuels reduce GHG emissions entering the atmosphere on a total well-to-wheels or crop-to-car basis. That is, the carbon dioxide (CO2) emitted when the biofuel is burnt in the vehicle is offset by the CO2 absorbed during the growth of the crop.
Global Biofuel DemandStrong growth in biofuel consumption WORLD AND REGIONAL BIOFUEL PRODUCTION WORLD BIODIESEL PRODUCTION SHARE IN 2006 • Source: IEA World Energy Outlook, 2006 • Source: IEA World Energy Outlook, 2006 WORLD BIOFUEL CONSUMPTION WORLD BIODIESEL CAPACITY VS PRODUCTION (MILLION MT/YR) • Source: Biodiesel 2020 • Source: IEA World Energy Outlook, 2006
Brent Crude Oil Price Movement Higher oil prices will provide additional support for development of clean energy technologies like biofuel BRENT CRUDE OIL PRICE MOVEMENTS (US$/BBL) • Source: EIA July 2009, Weekly All Countries Spot Price FOB Weighted by Estimated Export Volume In 2008 Oil prices had crossed the US$ 100/bbl mark. Medium term view is above US$ 65/bbl
Biofuel Market SizeNascent industry poised for fast growth KEY GROWTH POTENTIAL AND CHALLENGES WORLD BIOFUEL MARKET SIZE IN US$ BILLION • Source: Biofuels for transportation, New energy management report 2006 • POTENTIAL CHALLENGES • Higher Fuel Production Costs • Arable Land and Labour Availability • Higher Food Prices: Fuel Vs. Food debate • POTENTIAL BENEFITS • Reductions in oil imports and improved energy security • Lower GHG Emissions • Reduced Air Pollution • Improved Vehicle Performance • Agricultural /rural jobs, income • Reduction in solid wastes (biomass, grease etc.) 74 23 • Apart from energy security and green house reduction the development of biofuel as a source of energy when grown on a large scale, could represent a paradigm shift in agricultural development. If mechanisms are introduced to ensure that much of the increase in food prices accrues to the farmers, both biofuel and increased food prices can stimulate rural economic growth through additional capital inflows, create demand for goods and services that provide employment, reduce rural-urban migration, and create linkages and multipliers
Global Biofuel ScenarioBiofuel initiatives launched with many countries recently announcing various incentives and targets
Biofuel TradeIncreasing global trade flows , capacity expansion and entry of non-agri players in the market – opportunities unlimited….
Global demand for biofuel crops outpacing supply Arable land availability constraint and slower growth in global feedstock oil production is adding pressures on biodiesel price BIODIESEL B-20 HISTORICAL PRICES 2001-08 (US$/GALLON) WORLD FEEDSTOCK OIL PRODCUTION 2006-08 (MILLION MT) • Source: US Department of Energy 2008, B-20 prices • Source: Oil World Annual Report (1999-2008) & Oil World Weekly (12 Dec, 2008) 125 130 136
Biodiesel Feedstock OptionsWith high productivity and lower production costs, palm is a more suitable for development of biofuels in the region with arable land and labour • Source: Fulton et al, Gardner, US DOE, EIA; ICRISAT WORLD FEEDSTOCK OIL USE (MILLION LBS) • Source: Oilseeds Workshop, Dec 2008
Oil Palm as feedstock • Choice of Oil Palm as Feedstock • High oil yield: 5-6 t/ha • Lower cost of production: 0.4 to 0.6 USD/litre • Attractive local market. • Large export market for crude palm oil and derivatives. • Suitable land and climatic conditions of the region. • Approachability of a sea port near the proposed project area. • Optional choice for Palm oil to be sold as • Crude Palm oil • Refined palm oil • Palm oil based Biodiesel
Oil Palm VarietiesHigh yielding varieties suitable for Africa • Source: www.asd-cr.com, Costs Rica DELI X LA ME (STANDARD VARIETY) • The Deli x LaMe lines were developed in the Ivory Coast by the former IHRO. Some of these lines, including palms derived from L2T, were introduced to Costa Rica in 1980 • Tolerant to vascular wilt a prominent disease found in Africa • Grows to 2 meters with a FFB yielding capacity of 5 t/ha increasing to 15 t/ha during later years
Palm Oil Producing NationsMalaysia and Indonesia account for 85% of the global palm oil supply, but are constrained on arable land given deforestation concerns • Currently Malaysia dedicates 5 million Ha to oil palm plantations, while not more than 6 million can be dedicated to this crop, an increase of 20%, allowing for a only a few years of market growth
Safflower – An Additional source of income for the initial years. • Oil crop with a duration of 125-130 days • Can be grown throughout the year under favourable climatic conditions. • Adaptable to climatic conditions prevailing in the African region. Temperatures ranging from 25-320 C found to be the most conducive. • Seeds have an oil content ranging from 26-30%. • Yields as high as 4 tonnes/ha/yr can be realized with 2 crops per year. • Dried seeds can be stored for long and hence can be used round the year. • Staggered sowing and harvesting will help in longer availability of raw material for the biodiesel plant. • Crop is drought tolerant with lower requirements of nutrients comparatively. • The cost of cultivation of 2 crops per hectare per year is $ 416 with a gross income of $ 684 per ha/yr. • Safflower can be source of raw material for the biodiesel plant to be set up in the 2nd year • Cultivation of 2000 ha of safflower will ensure a raw material of an average of 8000 t/yr.
Biofuel Development Potential in Sub-Saharan AfricaSub-Saharan Africa has plenty of uncultivated irrigated land with no need to deforest. Biodiesel production is estimated to create up to 1.1 million jobs in Sub-Saharan Africa – FAO 2005
Land Usage and Population Density in Sub-Saharan AfricaLand availability with low population density is driving foreign investment in this region LAND USE DATA IN SELECTED COUNTRIES (2006) POPULATION DENSITY DATA IN SELECTED COUNTRIES (2006) • Source: FAO Report “Land Grab or Opportunity”2008 • Source: FAO Report “Land Grab or Opportunity”2008 FOREIGN INVESTMENT STOCK IN SELECTED COUNTRIES • Source: UNCTAD 2008
Land Under Investor Claim for Biofuel (Approved Projects)Production of liquid biofuels is a key driver of much recent land acquisition KEY BIOFUEL PROJECTS IN MADAGASCAR • Source: WWF Report, 2008
Madagascar Country Fact Sheet • Source: US Department of State, * - Mo Ibhrahim index
Investment SupportThe Government of Madagascar has has begun to implement a regulatory framework favourable to investment. • Liberalisation of the economy through the privatisation of state-owned companies and of financial transfers by resident and non-resident foreigners and abolition of export taxes. • Regional integration through membership of the Common Market of Eastern and Southern Africa (COMESA), and participation in the Cross Border Initiative (CB), the Indian Ocean Commission and the Indian Ocean Rim Association for Regional Cooperation (IOR-ARC). • Promotion of the Export Processing Zone (EPZ) regime, granting various incentives (including tax) to export-oriented investment. • Madagascar is a member of the Multilateral Investment Guarantee Agency (MIGA) and of the African Trade Insurance Agency (ATI) to cover investors against political risks and to guarantee international financial or trade transactions. The free movement of capital is ensured by the conventions signed with the IMF. • State-owned land can be allocated to foreign companies through a 99-year lease. Moreover, the 99-year real estate lease gives the leaseholder a mortgage right which can be transferred or seized in the prescribed forms for foreclosure. Surveys have been carried out to identify state-owned land that can be reserved for industrial development or tourism. • A Companies Information Office (BIPE) has been established to assist private companies in the registration and search for market information. A 'one-stop-shop' for private investment (GUIDE) is operational and aims to facilitate and reduce the administrative procedures related to the creation, investment and operation of a company (administrative formalities, tax system, long stay visa, etc). • Madagascar is speeding up its legal reforms, including the business regulatory framework. New corporate laws and collection procedures have been adopted. • Government has adopted steps like; Abolition of VAT collection for exports and EPZ firms, up to the amount of their VAT credit; Abolition of deposit payment and facilitation of income payment; Suppression or suspension of import taxes on goods such as cement, yarns and fabric, iron, steel and other needed for items for construction, agricultural material and equipment.
Trade Agreements for MadagascarAgreements have been put in force to give eligible Sub-Saharan African (SSA) countries and the least development countries (LDCs) quota free/duty free access to United States and EU Markets • Madagascar has significantly liberalized its trade regime in recent years. Its present trade policy framework is essentially based on tariffs. Export restrictions have been eliminated, as have foreign exchange controls. The Government has placed emphasis on export promotion, but limited capacity has constrained any significant export-led growth • Madagascar has increasingly participated in regional trade agreements. Madagascar's main trading partners are the European Union (EBA), the United States (AGOA), and Japan • Madagascar has made considerable efforts to create an environment conducive to private investment, both domestic and foreign. With a few exceptions (including in real estate and areas still under State control), 100% foreign ownership is permitted in most economic activities • Madagascar, has significantly liberalized its trade regime in recent years. Its present trade policy framework is essentially based on tariffs. Customs tariff rates have been organized into four bands ranging from zero to 30%
Project plan Land acquisition Market Seeds purchase Land Development Nursery Development Refined Oil Biodiesel Plantation Biodiesel Unit Refining Unit Harvesting FFB’s FFB Crushing Unit Crude Palm Oil Palm kernel crushing unit
Brief overview of the project • The project aims at development of palm plantations on 10,000 ha of land on the eastern coast of Madagascar. • The project involves the following: • Land development: • Felling, Land clearing, Leveling, preparation of irrigation & Drainage channels. • Roads, Lining and Layout. • Installation of Boreholes and irrigation systems. • Seed procurement: • Import of high quality seeds/ sprouted seeds from PalmElit SAS - France • Nursery Development: (14 Months) • Development of 106 ha of land for Nursery. • The seeds/sprouted seeds would be grown pre-nursery for 3-4 months and then planted into bigger pots/polybags for 8-10 months for complete maturity to transplant. • Polybags/pots are arranged at 70 x 60 cm spacing, in an equilateral triangle arrangement.
Brief overview of the project (Contd..) • Plantation Development: ( 4 Months) • Pit digging, Manure and Fertiliser application • Transplanting from the nursery at a spacing of 9 x 8 m: 138 Plants per hectare • 114 ha plantation per day with 3 labours/ha/day. • Harvesting : (4 Months/year) • Maturity for 1st Harvest after 4 years of plantation development. • Yield of FFB(Fresh fruit bunches) vary from 5t/ha in the 4th Year to 15-18t/ha in the 10th year • Harvesting done by labours manually with the help of Chisel/Harvesting Knife. • 114 ha harvested daily with an average yield of 5-6t/ha. • Transportation: • The harvested FFB’s are collected and transported to the crushing unit with the help of tipper trucks.
Brief overview of the project (Contd..) • FFB Crushing Unit: ( Capacity 40t/hr) • Sterilization of FFB’s, Threshing of FFB’s for fruit separation, Digestion of the fruits in a Digester, Pulp Pressing and Oil Extraction • Oil Clarification, Oil filtering, Oil Drying to reduce moisture. • Crude Storage • Running 90 days. • Palm Kernel Crushing Unit: ( Capacity 1t/hr) • Nut recovery, Pericarping, Nut cracking, Kernel separation and drying • Kernel oil extraction • Running 180 days • Refining Unit ( Capacity 175 KLPD) • Crude Palm oil to Refined to a higher grade. • Storage for longer use • Running 180 days.
Brief overview of the project (Contd..) • Transesterification Unit/ Biodiesel Unit: ( Capacity 100 KLPD) • Semi-continuous Batch Process BD unit ( Eastern Biodiesel technologies, India) • Both Crude and Refined palm oil can be used for producing biodiesel. • BD plant running for 300 days. • Products for Offtake: • Crude Palm Oil • Refined Palm oil and derivatives • Biodiesel • Glycerine • Other activities related to the project: • Community development activity like Drinking water wells for the local community, Job opportunities in the project, help in construction of houses, and other related activities.
Yield Fruit Vs Palm Oil Yield per Ha Crude, Refined and Biodiesel Yield per Ha