Civil G8 2006

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Africa to benefit as world shifts from petrol to biofuels


Special Correspondent

Under pressure from soaring oil prices and growing environmental constraints, momentum is gathering for a major international switch from fossil fuels to renewable bioenergy sources such as sugar cane or sunflower seeds, according to the Food and Agriculture Organization.

"The gradual move away from oil has begun. Over the next 15 to 20 years, we may see biofuels providing a full 25 per cent of the worlds energy needs," says Alexander Muller, assistant director-general of FAO's sustainable development department.

"Ministries of energy and agriculture must quickly find new ways of collaborating to exploit the potential presented by biofuels and biodiesel," says Peter Kegode, a sugar industry and ethanol specialist in Kenya. This, he adds, is an opportunity to address the poverty experienced by maize and sugar producers in the country.

The surge in price of crude oil beyond $70 per barrel is responsible for renewed global interest in alternative energy sources.

"The disruption of the Nigerian crude oil supplies, the nuclear standoff between Iran and the US and the high demand for energy to support China's industrial growth have exacerbated the crisis," said Mr Kegode. This is a clear indication that the renewable energy options for biofuels and biodiesel will be driven by agribusiness and increased production of agricultural raw materials to support the increasing global energy demand.

"Locally, we have seen venture capital investment companies, including Actis positioning themselves to tap into the biofuel supply chain," said Mr Kegode.

Last week, Actis allocated $100 million for investment in agri-business. Actis is a private equity fund and will be investing this money in agricultural companies in sub-Saharan Africa. Kenyan companies can access up to 50 per cent of total funding.

Kenya is poised to tap into the biofuel supply chain using commodities such as sugarcane, maize and sorghum. It is important, says Mr Kegode, that producers position themselves by forming energy companies that can negotiate better prices and enhanced compensation from their investments.

Currently, there are two existing stand-alone ethanol plants Kisumu Molasses and Agrochemical. For Kenya to build up adequate supply of ethanol either for domestic blending purposes or export market, says Mr Kegode, it requires five plants two in maize-producing regions and three in sugar-producing zones.

FAOs interest in bioenergy stems from the positive impact that energy crops are expected to have on rural economies and the opportunity offered countries to diversify their energy sources.

"At the very least, it could mean a new lease of life for commodities such as sugar, whose international prices have plummeted," FAOs senior energy co-ordinator Gustavo Best, noted.

Factors pushing for such a momentous change in the world energy market include environmental constraints such as increased global warming and the Kyoto Protocols curbs on emissions of carbon dioxide and other greenhouse gasses as well as a growing perception by governments of the risks of dependence on oil.

The Kyoto Protocol, which is mainly responsible for addressing reduction of carbon emissions and preservation of the environmental balance, will determine alternative energy options that are friendly to the environment and can be sustainably harnessed.

"Oil costing more than $70 a barrel makes bio-energy potentially more competitive," Mr Muller said. Also, in the past decade, global environmental concerns and energy consumption patterns have built up pressure to introduce more renewable energy into national energy plans and to reduce reliance on fossil fuels.

FAO highlighted Brazil as an example for the rest of the world. Latin Americas largest country is the worlds biggest producer of bio-ethanol and one million Brazilian cars already run on fuel made from sugarcane. Introduced three years ago, they use either gasoline or bioethanol.

Europe lags behind Brazil in bio-ethanol production and consumption, but the European Union (EU) has set itself the target of increasing the share of biofuels in transport to 8 per cent by 2015. However, if oil prices stay high, things could move even faster, FAO noted. Europe is already the worlds largest producer of biodiesel, made from soya or sunflower seeds.

"The beauty of bio-energy is that production can be tailored to local environments and energy needs," Mr Best said. Where there is land, farmers and interest, bio-energy may be the best option. And if we add some sound analysis and good business models, we will get that option right.

Expert opinion

Halter Marek


Halter Marek
Le College de France
Olivier Giscard dEstaing


Olivier Giscard dEstaing
COPAM, France
Mika Ohbayashi


Mika Ohbayashi
Institute for Sustainable Energy Poliy
Bill Pace


Bill Pace
World Federalist Movement - Institute for Global Policy
Peter I. Hajnal


Peter I. Hajnal
Toronto University, G8 Research Group

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