Bioenergy in Africa - Opportunities and Risks of Jatropha and Related Crops

Agricultural exports are a crucial source of growth and employment in many developing countries, and make an important contribution to poverty reduction and rural development. Indeed, agriculture is the main area of comparative advantage for most sub-Saharan African countries, keen to see an expansion in the market for their agricultural exports. Increased demand for biofuels globally may mean an increase in related foodstuffs; this may benefit some agricultural exporters, but it could also disadvantage net food importers. Biofuels development in the South was initially met with optimism, but by the end of the first quarter of 2008 had met scepticism, with calls for a rethink on strategies to promote biofuels production. It is generally recognised that the production of biofuels to meet targets set in North America and the EU contributed to the price spike in prices of staple foods on international markets (ODI 2008a; 2008b; Mitchell 2008; Rosegrant 2008). Despite the public perception of biofuels production as competing with food crops, it is important to distinguish between crops, countries and food production systems. Moreover, it needs to be considered that households typically grow both, food and biofuels, and that biofuel production could provide a stimulus to agricultural productivity. Biofuels have the potential to raise export revenues, create new jobs and to develop industries in developing countries, in addition to reduce dependency on oil imports. The main objectives of the research project and consortium are to: provide an enhanced information and knowledge basis upon which sustainable and pro-poor bioenergy development strategies and policies can be designed and implemented by developing country policy makers, development partners and governments. The program of works will comprise of four components: Work Program 1: Analysis of technical aspects and feasibility of bioenergy production with Jatropha; Work Program 2: Analysis of socio-economic and environmental impacts of bioenergy production; Work Program 3: Analysis of global trade and policies on bioenergy production; and Work Program 4: Regional assessment of bioenergy potentials in the ESA region in a multi-objective decision-support system for the elaboration of development strategies and the definition of policies in relation to the production of bioenergy. ODI will coordinate and lead Work Program 3. The main objectives of which are to inform developing country policy makers within the ESA region and more widely, as to the available opportunities and limitations of biofuel trade in international, regional and national markets. As a result of concerns over the Green House Gas (GHG) pathways of biofuels (due to fears of land being cleared to produce biofuels), the EU adopted sustainability criteria; the full requirements of a 'sustainability scheme' for biomass energy will be made available by 31 December, 2010. Assuming, in the future, developing countries are both able to adhere and audit against sustainability criterion, certification may encourage exports from these countries. But other producers may find it preferable to produce for domestic or regional markets that are less restrictive and more accessible (both in terms of the cost of compliance of biofuels certification and geographical location in terms of distance). By working with the Roundtable on Sustainable Biofuel and Southern-based research institutes it is expected that Work Program 3 will not only better inform ESA governments as to the opportunities and limigtations of biofuesl trade, but will also draw on new thinking on the issue of standards and certification; in order to highlight ways to enhance the developmental impact of certified biofuel products, and reduce the potential of certification to exclude developing country producers.

Work Program 3 will comprise of three main sub-components: Task 3.1: Global discourse on biofuels: Analysis of the global discourse on biofuels and its reflection in national biofuels policy (in the EU and selected East African countries). Task 3.1.1: Values: Identification of dominant values. Task 3.1.2: Basis of values: Understanding of basis of values. Task 3.1.3: Power relations: Assessment of power relations. Task 3.1.4: Developing country biofuels policy: Global discourse as reflected in National policies. Task 3.2: Analysis of global trade in biofuels: Analysis of global trade in biofuels and potential opportunities and limitations for ESA producers in international, regional and national markets; including the implications of the EU Sugar Market Reform for East and Southern African (ESA) countries. 3.2.1: Potential of biofuels trade in the ESA region: Analysis of global trade flows in biofuels and related products; identification of potential export opportunities for biofuels in SSA and competitive threats. 3.2.2: Constraints and challenges in biofuels production in ESA: Identification of supply-side and market access constraints in biofuel production in the ESA region. 3.2.3: Potential of intra-regional trade in biofuels: Analysis of regional trade flows in biofuels and related products. 3.2.4: Implications of EU sugar market reform on bioethanol production in the ESA region: Analysis of policy change on ESA sugar and bioethanol exports within a partial equilibrium framework; use of GTAP model, where possible. Task 3.3: Analysis of biofuels certification: Analysis of biofuels certification across products and markets; emphasis on the ESA region. 3.3.1: Review of existing biofuels certification schemes, across products and markets. 3.3.2: Review of compliance costs and enforcement mechanisms of biofuels standards. 3.3.3: Upgrading and value addition opportunities of certification schemes (posited and actual).

The research is intended to contribute to the achievement of low carbon growth and poverty reduction strategies, by empowering developing country policy makers through making market access and opportunities in biofuels trade information available. A particular emphasis of all three sub-components of Work Program 3 will be in relation to the selected East African countries and consortium member countries. A preliminary summary of expected impacts is presented below. Work Program 3: To inform developing country policy makers within the East African region and more widely, as to the available opportunities and limitations of biofuel trade in international, regional and national markets. Outputs: Three policy orientated documents: 1. Analysis of Global discourse as reflected in National policies; 2. Analysis of global trade in biofuels and impact of EU sugar market reforms; 3. Biofuels certification and associated producer upgrading opportunities. Purpose: To inform ESA and developing country policy makers and development partners of the opportunities and challenges in biofuels trade across products and markets. To provide an enhanced information and knowledge basis upon which sustainable and pro-poor bioenergy development strategies and policies can be designed and implemented; which can be used by the project stakeholders, partners, target groups and beneficiaries. Benefit: Future policy design may be better informed. Drawback: Cannot change existing policy/ legislation. Goal: To contribute to the design of bioenergy policy that has an improved pro-poor and developmental impact. Task 3.1: Analysis of the global discourse on biofuels and its reflection in national biofuels policy. Output: Policy brief with summary of global discourse and National policy statements and objectives. Purpose: To inform ESA policy makers on the global policy discourse and national policies and objectives; ability to learn from replicable models. Benefit: Future policy design may be better informed. Drawback: Cannot change existing policy/ legislation. Goal: To contribute to the design of bioenergy policy that has an improved pro-poor and developmental impact. Task 3.2: Analysis of global trade in biofuels and potential opportunities and limitations for ESA producers in international, regional and national markets; including the implications of the EU Sugar Market Reform for ESA countries. Output: Results documented and information on opportunities and limitations for ESA countries in biofuels trade. Purpose: To inform policy makers, as well as potential investors, on potential opportunities and threats that may arise from increased biofuels trade and reform of EU sugar market; to incentivize policy changes to create an enabling environment. Benefit: Benefit: Detailed analysis on which an enabling policy environment for biofuels industry growth may develop. Drawback: Drawback: More challenges for selected ESA countries may arise than opportunities; various assumptions used in extrapolating potential market opportunities. Goal: To inform policy makers and investors of biofuel market opportunities at an international, regional and national level. Task 3.3: Analysis of biofuels certification across products and markets; emphasis on the ESA region. Output: Policy brief including analysis of biofuels certification across products and markets; emphasis on the ESA region. Purpose: To assist producers and respective governments and regional bodies as to the implications of compliance costs and enforcement mechanisms of biofuel certification schemes for different markets and products, and the associated upgrading opportunities for biofuel producers in ESA countries. Benefit: Enable producers to maximize upgrading opportunities. Drawback: Inability to change dominant schemes. Goal: To contribute to the design of bioenergy and trade policy that has an improved pro-poor and developmental impact.