Archive for April, 2009
Nigeria And The Biofuels-Food Crises
April 8th, 2009 | 
Author: Fossil fuels currently constitute the major source of energy for powering the gamut of industrial and domestic processes in the world today and would probably do so for decades to come especially in the transportation sector. The cartel, Organisation of the Petroleum Exporting Countries OPEC, holds at present about seventy-five percent of the world’s proven reserves of crude oil . Nigeria is a member of OPEC. She is also the world’s eighth largest crude oil exporter and the fifth largest supplier to the United States. She is currently embarking on a biofuels program, having become signatory to the 2010 Kyoto Protocol.
The sustained rise in prices of fossil fuels and the quest for a sustainably cleaner environment over the past few years led to the search for alternative energy sources. Just a few years ago, biofuels, specifically bioethanol and biodiesel were held as the most promising especially in the energy-intensive transportation and heating sectors. Environmentalists gloated at the prospects of cheaper and cleaner-burning fuels and Governments around the world enacted laws mandating the use of biofuels in the energy mix. Large-scale agricultural and biotechnology firms geared up for greater crop production and evaluation of high-yield (genetic) crop strains. Even automobile companies cherished the prospects of increased sales.
Today, biofuels are widely blamed for the recent food crises. While the United States biofuels program has fallen far short of expectations, the Brazilian program has been a model of excellence. Brazil has become a net exporter of ethanol and has attained near self-sufficiency in energy.
For a petroleum-producing province like Nigeria, already reeling from from her own food and energy crises of sorts, any intensification arising from a biofuels program could be dire.
Nigeria has a very high import dependency for some food crops. Even with high import duty on rice, for example, imports continued to rise because supply was simply inadequate; the duties only served to breed a thriving smuggling business. According to the Foreign Agricultural Service of the United States Department of Agriculture, in 2006 Nigeria imported only 1.4% of her consumption of sorghum, a common food staple and became the number one market for US wheat exports. In 2006, South Africa produced about ten times more electricity than Nigeria, and that with about a third of Nigeria’s population. In 2006 also, only 40% of Nigerians had access to electricity and industrial capacity utilization was 53.3%. Due to the inadequate power supply and the crippling cost of private power generation, many manufacturing companies have had to close down. A major oil-producing nation, Nigeria depends on imports for a considerable proportion of her refined petroleum products. In 2007 for example, her refineries operated at about an aggregate 12% of installed capacity which meant that about 65% of the nation’s gasoline consumption was imported; and even if all the refineries operated at near full capacity, they would be able to meet only a fraction of the nation’s product requirement. The inability of these refineries to function adequately even after cycles of Turn-Around-Maintenance remains a conundrum.
Nigeria has a very high import dependency for some food crops. Even with high import duty on rice, for example, imports continued to rise because supply was simply inadequate; the duties only served to breed a thriving smuggling business. According to the Foreign Agricultural Service of the United States Department of Agriculture, in 2006 Nigeria imported only 1.4% of her consumption of sorghum, a common food staple and became the number one market for US wheat exports. In 2006, South Africa produced about ten times more electricity than Nigeria, and that with about a third of Nigeria’s population. In 2006 also, only 40% of Nigerians had access to electricity and industrial capacity utilization was 53.3%. Due to the inadequate power supply and the crippling cost of private power generation, many manufacturing companies have had to close down. A major oil-producing nation, Nigeria depends on imports for a considerable proportion of her refined petroleum products. In 2007 for example, her refineries operated at about an aggregate 12% of installed capacity which meant that about 65% of the nation’s gasoline consumption was imported; and even if all the refineries operated at near full capacity, they would be able to meet only a fraction of the nation’s product requirement. The inability of these refineries to function adequately even after cycles of Turn-Around-Maintenance remains a conundrum.
If the nation is to attain her goal of ranking among the top 20 industrialized nation by the year 2020, a mere 11 years away, then these food and energy issues must be effectively addressed.
Challenges and Prospects
Three basic considerations which must be made before others for a viable biofuels program are Feedstock, Land and Production (process).
Three basic considerations which must be made before others for a viable biofuels program are Feedstock, Land and Production (process).
One of the lessons learnt from the United States experience is that the choice of feedstock can make or mar a biofuels program. Sugarcane, sorghum and cassava are currently the much-bandied feedstock. With a sugar production of less than 5% of her consumption, a sugarcane feedstock in Nigeria’s biofuels program would be a herculean task. She would need a 20-fold increase in production just to meet domestic demand. Sorghum, a basic food staple accounted for about 45% of all crop acreage in 2006/7 but yielded less than 2% of consumption. Nigeria is the world’s largest producer of cassava but typically, more than 80% of production goes to meet domestic food requirements for a bustling population of about 140 million people. As reported by Developing 8, the Food and Agricultural Organization’s regional representative for Africa has warned that Nigeria would require a 70 to 80% increase in food supplies to meet her food requirements by the year 2015, a mere 6 years away.
Nigeria consumed 8,414.54 million liters of gasoline in 2007 or about 23.05 million liters per day. The basic E10 ethanol blend for gasoline would then require 2.3 million liters of ethanol per day; this translates to an additional 23% of total cassava production and 77% for sorghum. (View data in original document).
Nigeria consumed 8,414.54 million liters of gasoline in 2007 or about 23.05 million liters per day. The basic E10 ethanol blend for gasoline would then require 2.3 million liters of ethanol per day; this translates to an additional 23% of total cassava production and 77% for sorghum. (View data in original document).
Nigeria’s total landmass is 93 million hectares of which about 64% are non-arable and non-permanent. When current crop acreage data are compared with the balance of arable and permanent landmass, the degree of land constraint becomes obvious. Creeping desertification from the northern fringes as well as environmental problems in the southern reaches only add to the constraint; and when land requirements for food production are added to those for biofuels, the land constraints become even more asphyxiating. The Food and Agricultural Organization, while conceding the doubling of cassava yield from improved varieties, adds that the necessary land increment would come at the expense of a competing crop.
Second generation biofuels production involves the use of lignocellulosic biomass such as miscanthus for feedstock. These tall, woody grasses hold comparative advantages for Nigeria: they have very high ethanol productivity (up to 4 times that of cassava), grow on marginal soils (so would use less resources and not compete with food crops for acreage), are not food crops (so would not impact food inventories) and can add considerable power to the power-starved national grid from the milling residue. For biodiesel blends, the oil palm is a great source of vegetable oil. It yields at least 4 times more oil than any other common African oil crop. Nigeria has many large-scale, state-owned oil palm plantations in various conditions of mismanagement which can be resuscitated or privatized.
A strong institutional support would be necessary and this must include establishment and enforcement of technical standards, initial incentives (such as loan guarantees, assistance with acreage acquisition, power purchase agreements, etc) and commitment.
Adapted from my October 2008 presentation, THE BIOFUELS-FOOD QUAGMIRE:LESSONS FOR NIGERIA.
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The Drugs Policy Debate: Reneging On Duty
As the new international policy for drugs is being set, the clamor is on yet again for legalization of mind-altering drugs such as marijuana, cocaine and herion. Interestingly, erstwhile law enforcement officers and even politicians have joined drugs users to call for legalization. The argument for legalization is, in the main, tripodal:
The first is that the wealth of resources deployed in the enforcement of prohibition for decades now has not returned any appreciable benefits. Essentially, they have failed. According to the Economist, about $40 billion is spent yearly by the United States alone, so many lives have been lost, these drugs are yet to be eradicated and producer-states battling drugs gangs are teetering at the edge of failure.
The second is economic. It proposes strict Government regulation of the trade to ensure proper revenues from taxes. In the State of California in the United States for example, marijuana is the principal cash crop with yearly sales of about $14 billion and a potential tax revenue of about $1.3 billion. The distal second is milk and cream, with yearly sales of about $7.3 billion. The thrust is that when such revenues are added to the colossal sums to be redirected from enforcement of prohibition, adequate funds would be available for greater development.
The third derives from health, personal freedom and judicial issues. It argues that there are more intoxicating drugs legally in use and that some now prominent personalities could have gone to jail for only a casual use in their past. It adds that Government has no business with anyone’s personal liberties.
Crime has been around for almost as long as mankind and organized society has always set up institutions at great cost to fight it. Larceny, murder, prostitution (and if public, anecdotal evidence is acceptable, the oldest) among others. The institutions have failed after all those years to eradicate them. Should such failure then be a valid argument for legalization? Terrorists and gangsters will always utilize whatever facility is available to them to prosecute their agenda.
If it is not opium or piracy in the Middle or Far East, then cocaine and the likes in the Americas or diamonds and crude oil in Africa.
In a rather absurd thesis, proponents of legalization want strict regulation to ensure quality (no doubt for health reasons) and quantity (for accounting purposes – taxes, levies, duties etc). When the producer-gangs (which would most probably cut corners in terms of quality and balk at paying taxes or levies imposed on their produce, even legitimate businesses do) begin to violate regulatory provisions, would not these same “failed” prohibition enforcement regimes be required to bring them to order?
While there may be medical benefits (marijuana is being used for patients with Alzheimer’s disease, cancer and glaucoma), the bulk of users are “fun-seekers” who want a “high”. Unfortunately the medical, social and other risks are overwhelmingly higher. The National Institute on Alcohol Abuse and Alcoholism, NIAAA, estimates that the cost of hazardous alcohol consumption to the US society is about $185 billion annually. Estimates for revenues to the US Government from alcohol sales are substantially lower which means alcohol abuse is a net drain on the US economy. Marijuana could be potentially worse if legalized. But if marijuana were legalized, would not the clamor rise for heroin, cocaine and their derivatives? The scourge of alchohol abuse is still with us. We do not want any additions.
The Ethanol Debate Continues
The ethanol debate has arguably been loudest in the United States where more than a quarter of the world’s oil production is consumed. The biofuels (mainly ethanol and biodiesel) program began as a quest for reduction in cost and volume of fossil fuels, used primarily in the transportation sector. Ethanol is blended with gasoline in different ratios to obtain various grades of ethanol-based gasoline while specially produced vegetable oil is blended with diesel also in different ratios to obtain various grades of biodiesel.
The problem with the US ethanol program was the feedstock, maize. A 2008 World Bank report attributed the global drawdown in wheat and maize inventories and the consequent increase in prices directly to the diversion of wheat and maize to the biofuels program.
Maize has a very poor energy balance (ratio of energy obtained to the energy expended in production) and compared to some other feedstock, poor ethanol production values. Miscanthus, the tall woody grass for example, produces about five times more ethanol per hectare of land than maize. There are also additional production costs that derive from the necessary conversion of maize to sugar before the fermentation process. Not surprisingly, another Report states that about 20% of the 2006/7 harvest in the US was utilized for ethanol production but was only able to displace about 3% of gasoline consumption.
Sugarcane, Brazil’s principal ethanol feedstock has about double the ethanol productivity value of maize. There are many sugarcane milling factories dotting the Central and Southeast regions of the Brazilian landscape. Production (sugar and ethanol) synergies stand them in good stead. The residue (known as bagasse) from sugarcane milling, is also used as feedstock for auxilliary power generation; the result is that these factories have become energy self-sufficient, selling excess power to utilities and raking in millions of dollars.
The minimum ethanol grade for gasoline in Brazil is 25% and there is no longer 100% gasoline. She has also become a net exporter of ethanol.
Estimates for reduction in greenhouse gases range from 86 to 90%.
Second generation biofuels programs are now using miscanthus as feedstock. The oil major, Shell recently stated that biofuels may make up 10% of the global energy mix in a few years.
Using the US biofuels experience as a template for evaluating biofuels programs in general is downright dishonesty, or at best delusory.