TRADE: Following Oil Boom, Biofuel Eyed In Africa

By IPS Correspondents Reprint | | Print |

Michael Deibert

PARIS, Jul 13 2007 (IPS) - While oil profits have flooded into countries such as Angola and Nigeria in recent decades, some African observers see new potential for the continent in the form of increasingly in-demand biofuels.

Biofuels, loosely defined as liquid or gas fuels derived from biomass, produce significantly less ozone-damaging carbon emissions than fossil fuels such as coal and petroleum. A large swath of southern Africa, including Angola, Mozambique and South Africa, is proving fertile ground for those seeking an alternative to fossil fuels.

It is a development that has not escaped the notice of Europe.

In a 2006 Green Paper &#39A European Strategy for Sustainable, Competitive and Secure Energy&#39, the European Union (EU) affirmed that "the new EU-Africa strategy, envisaging interconnections of energy systems as a priority area, could also help Europe to diversify its oil and gas supply sources." The paper went on to stress Europe&#39s need to diversify its energy resources.

"There is a potential market in Europe in this regard," says Teodsio Bule, a policy officer with the Secretariado Tecnico de Segurana Alimentar e Nutricional (SETSAN, Poverty, Food Security and Nutrition Secretariat) based in Maputo in Mozambique.

"Africa is close to the EU, and the EU is willing to have more biofuel on its continent. As Africa appears as one of the most likely suppliers of biofuel, we want to take advantage of this," he told IPS.

Over a quarter of the investments of the European Union&#39s financing institution, the European Investment Bank (EIB), in sub-Saharan Africa are in the energy, oil and gas sectors, close to 600 million euros since 2000.

One card in Africa&#39s favour that has come to the fore in recent years, some European officials suggest, is the creation of the African Union (AU). The AU is a body of 53 African states formed in 2001 with the ostensible aim of integrating the region&#39s currency and its defence forces, as well as promoting human rights.

The AU is the successor body to the Organisation of African Unity (OAU), established in 1963 and disbanded in 2002. Times have changed, though, and many of Africa&#39s long civil wars have come to an end, with relatively transparent and fair elections held in nations such as Congo and Liberia earlier plagued with widespread corruption.

"This relationship, which was very much a donor-recipient relationship, is evolving into a dialogue on many issues and not just concentration on development," says Marie-Laure de Bergh, a programme officer with the European Centre for Development Policy Management (ECDPM) in Brussels.

One pivotal player in the development of biofuel initiatives in Africa, analysts say, has been Brazil, which in many ways blazed the trail for biofuel development three decades ago when it launched an ethanol motor fuel programme in 1975. According to the Union of Sao Paulo Sugarcane Industries (UNICA), about 56 percent of this year&#39s cane crop is diverted to ethanol production.

By the 1970s, as Brazil was being pummelled by oil prices, the country&#39s military dictatorship launched a national programme to reduce Brazil&#39s dependence on foreign oil by encouraging the construction of ethanol plants and doling out low-interest loans to sugar companies, imposing subsidies to keep the price of the fuel low.

By the mid-1980s, most new cars sold in the country ran exclusively on ethanol, and the share of Brazil&#39s energy needs filled by imported crude fell from around 80 percent in the late 1970s to about 45 percent in 1990.

When gasoline prices fell again in the late 1980s, though, the demand for ethanol stalled. The industry was largely rescued by a late 1990s initiative by former Brazilian president Fernando Henrique Cardosom who ended government subsidies for Brazil&#39s sugar industry, spurring the sector to new competition and innovation.

Now the Brazilian ethanol experience may serve as a model for biofuel in Africa, with the current government of President Luiz Incio Lula da Silva having technical cooperation agreements with regards to agriculture in place with both Angola and Mozambique, which many hope will facilitate the development of biofuels there. Like Brazil, Angola and Mozambique are Portugese-speaking.

"The Portuguese-speaking synergy is likely to yield a ton of biofuel development," says Katherine Constabile, an Africa analyst with the New York-based Eurasia Group, a global political risk consultancy.

Petrobras, the Brazilian national oil company, recently joined forces with the Italian energy firm Eni to seek out avenues for exporting biofuel from Africa to Italy. The move follows the creation in late 2006 of an office in Accra in Ghana by Embrapa, an arm of the Brazilian government tasked with agriculture and biotechnology research. The office has already begun aiding Angola in its development of a soybean-based biofuel industry, and is reaching out to Mozambique as well.

The biofuel movement in Africa has not been without its critics, however.

In South Africa, amidst a strenuous push to create maize-to-ethanol production plants in the country and add 55,000 new jobs in rural areas, some have accused the industry of contributing to rapidly increasing the cost of basic necessities for the country&#39s poorest citizens, driving staple food prices such as maize and sugar up 28 percent and 12.6 percent over the last year.

At a conference on biofuels in Brussels this month, the EU set its sights on having 10 percent of all vehicle fuel in the sector come from biofuels by 2020, a goal that, if met, will come largely from imports from places like Africa.

"Developing nations cannot be allowed to miss this train," Louis Michel, the European commissioner for development and humanitarian aid said at the conference.

"Europe must invest in this promising new market and help these countries to develop a durable production of biofuels that respects the environment, is socially responsible and guarantees fair access to the marketplace," he said.