Liquid Biofuels – why now?
There has been a growing interest in liquid biofuels, worldwide over the past few years, mostly due to rising price of fossil fuels, concerns over the rising CO2 and other greenhouse gas emissions, climate change, expected depletion of world oil reserves and the fact that liquid biofuels are blendable with fossil fuels and are compatible with current vehicles and distribution infrastructure. Like most African countries, Tanzania without realistic perspective to meet demand from own fossil fuel sources to address the above concerns, it is crucial to invest in alternative energy sources, liquid biofuels is one of the most promising alternative source of modern energy for rural areas. Liquid biofuels have potential to contribute to MDGs by providing greater energy security, improved quality of life and economic development, opportunities for job creation, and poverty alleviation by fostering agricultural productivity of well-known energy crops and promotes rural livelihoods improvement. Liquid biofuels have potential to provide alternative clean development path by offering a way to reduce GHG emissions while pursuing energy development goals by also taking advantages of the financial incentives offered by the Clean Development Mechanism (CDM).

Development Approach Options
Liquid biofuels development opportunities could be approached in different ways, i.e. small holder farmers organized in associations and cooperatives, these are farmers, each with less than 10 hectares, large -scale farmers through plantation who should essentially be local investors, a combination of a large-scale farmers in partnership with smallholder farmers through contract farming arrangements. Each of these options should be supported by clear policy, strategies and regulatory mechanism for fair and equitable biofuels development and marketing for each specific country conditions. Special emphasis and incentives should be extended to small-scale farmers.
 

Why priority on smallholder farmers
More than 70 percent of the population in Sub-Saharan Africa Region depends on agriculture for their livelihoods, mostly through small-scale farming in rural areas. The economies and population welfare of most countries in the region depend on the performance of smallholder farmers and agricultural sector in particular. Poverty reduction in the region will significantly depend on the vibrant agriculture sector that provides income, employment and affordable staple food and fuels.

Most extension personnel in the region already have ample experience in dealing with small-scale farmers with notable though limited success in some areas. It is important here to make reference and draw lessons from the Asia-green revolution which was government driven with the goal of self- sufficiency in food grains, the green revolution was market mediated, private sector was supported through clear regulations and most important, the green revolution was small-scale farmers based. The Sub-Sahara African Region could
adapt some lessons from Asia to assist in its agricultural development efforts with priority goal on self-sufficiency in food and fuels, this goal should be driven by the already existing threats of food shortages coupled with increasing food and fuel prices.

Pertinent issues for Liquid Biofuels Development
Land ownership: tenure and use
Government policies and regulations should ensure that land in the region is sustainably used for the benefit of its people. Simply allocating large portions of land to multinational investors, displacing villagers could in the long-run create many social and economic problems rather than solve them. The government need to formulate and implement long-term clear policies, regulations and strategies for its land use instead of adopting quick but short lived and marginal net profit from multinational investors. All efforts should be made to avoid large-scale farmers taking over productive land to grow biofuel crops, leaving out- small-scale farmers who, if left alone, cannot compete.

Small-scale farmers are in danger of being evicted from their land by multinationals driven by large profits only. Instead of biofuels, farming resulting in the concentration of land ownership and land access into the fewer hands of “investors”, agro forestry, and intercropping should be encouraged to support current owners of land particularly for non-perennial crops smallholder farmers who could have a possibility of additional harvest and income. Marginalization of small-scale farmers should be avoided through clear supportive regulations. The development and use of degraded land for energy crops could help in the rehabilitation of soil.

Water use
Biofuels production and use, even at small-scale will use water. Care should be exercised not to expand biofuels irrigated lands beyond existing local capacity, although could be developed for rain fed areas especially after a careful assessment of impact of the concerned catchment areas. Also the production of biofuels should not result in degradation, contamination, depletion of water sources and water use conflicts. Perennial crops such as Jatropha in some instance could assist with reducing desertification, as such could help with the overall water conservation in a given area.

Biodiversity
Biodiversity conservation is an important issue for sustainable development, maintaining and protecting regional and global ecosystem are vital for our existence. Every effort should be made to ensure biodiversity conservation. Clearing of large areas of natural forests habitat to give way to biofuels mono crops farming should be avoided. Measures need to be taken to carefully match biofuels crops with local conditions and needs. Since the impact of genetically modified organism (GMO) on the environment and human health is still unknown, use of GMO for biofuels production should be avoided.

Food Security
One of the most debated issues in the biofuels development efforts is the concern on food security. Major concern is on impacts of diversion of crop production away from food and only produce biofuels. This is likely to happen if farmers find it more profitable to sell food crops to biofuel producers. Agricultural development strategy should ensure self-sufficiency in food and fuels for the countries in the region. Large-scale biofuels development strategy need to focus on land that is marginal, under utilized and on crops that do not require food crops arable land or vast tracts of new land to be cleared.

Policies, Strategies Regulations, Taxes and Incentives
For many countries in the region, Tanzania inclusive, there is still a lack of policies, strategies, regulations and incentives to support biofuels development at all levels, including fiscal and financial incentives. Small-scale biofuels producers are especially disadvantaged since where biofuels policies and incentives are being developed; many tend to focus on incentives for large multinational industrial biofuels producers. It is sometimes difficult to develop and establish new industry without incentives, but small-scale farmers will require extra efforts without access to finance for inputs. It will be useful to create special incentives that favour small-scale farmers alongside other forms of tax incentives. The government could also support small-scale farmers activities through special fund, grants and assistance with the establishment of farmers associations and cooperative enterprises. Special funds could be created in ways that support smallholder or farmers’ associations and cooperative enterprises from potential exploitations from some high profit driven multinational investors. Special incentives and tax exemption need to be considered for equipment that rural communities could use to process oil crops to oil and convert it into fuels that could be used to meet local energy needs. Locally accessible micro-financing services could be sensitized and supported to assist small-scale farmers to get financial support for biofuels business development at the local level. Also potential local biofuels users may need affordable credits to access biofuels for their households’ productive activities.

Institutional Framework and Capacity Building
In Tanzania, like in most countries in the region, there is a lack of biofuel development capacity at all levels but in particular in the public sector for the development of effective policies, strategies and regulations for biofuels development. Potential stakeholders, i.e. small-scale farmers, enterprises; NGOs, etc., lack information on the potential advantages and disadvantages of biofuels development. Concerted efforts for capacity building are required to assist countries in the region to formulate and implement pro-poor small-scale producers and users policies, strategies and regulations. Support for the development of local technologies, products, markets and services to meet local energy and related SMEs is essential.

Financing
Finance and investment are crucial for growth and development of biofuel for small-scale production and use. It is important to encourage and facilitate local finance and micro-financial institutions to support small farmers. Involvement of international institutions such as multilateral and bilateral donors in the provision of upstream grants support, debt, equity and long-term financing is important to support small-scale biofuel activities.

Biofuels Potential and Opportunities for Tanzania
Tanzania, like most Sub-Sahara African countries, has no commercial biofuel production at the moment. The current biofuels activities and opportunities in Tanzania can be divided into large-scale and small-scale initiatives. The large-scale biofuels production, such as the production of ethanol from sugar as well as the activities in palm oil and Jatropha would require supportive policies and regulations in place for start- up in order to secure investments and markets. On the other hand, small–scale activities are currently mainly concerned with income earning and supporting creation of rural income and revenue opportunities from oil seed crops, either through the production of plant oils (for food and/or other commodities such as soap production from Jatropha oil).

Biofuels Potential Development in Tanzania
A recent assessment by the Food and Agriculture Organization of the United Nations (FAO) found that Tanzania has 55.2 million hectares (Mha) potential area for rain-fed crop production from the total land area of 93.8 Mha. About 10.8 Mha of this area are in use for crop production, leaving 44.4 Mha of land potentially available for (food and non-food) crop production. While these figures present only a broad picture of land use, they do suggest that land availability is not likely to be a barrier to bio-energy production in Tanzania.

The estimate of the potential for bio-energy production from the “potentially available land” (44.4 Mha) given here can be used to gauge the limits of any real production. Using a range of biomass production of 75-300 GJ per hectare per annum, the limits of bioenergy production in Tanzania would be in the range 3.3 to 13.3 exajoules per annum. This compares with the 2005 total annual primary energy consumption in Tanzania of 0.602 exajoules. For an introduction of a biofuels industry in Tanzania, the following expected energy yields for the production of different biofuels in Tanzania are important, namely biodiesel from palm oil (186 GJ/ha), ethanol from cane juice (173 GJ/ha), biodiesel from Jatropha oil (59 GJ/ha) and ethanol from C-molasses (20 GJ/ha).

Tanzania has more than 30 million hectares of land classified by the FAO as very suitable or suitable for cultivation of energy crops with intermediate levels of input. The corresponding areas for sugar crops, cereals and root crops are 570,000 ha, 24 million ha and 14 million ha, respectively. Sugar crops provide the simplest and most cost-effective feedstock options for bio-ethanol production, and with the area under sugarcane growing from 23,000 to 39,000 hectares in the last five years alone, increasing availability of suitable feedstock for ethanol production is expected. Current production of oil crops is much lower than even current demand, and a biodiesel programme of any real impact would require very much more land planted with oil crops than is currently the case.

In the near future, the level of demand for biofuels is most likely to be set by requirement for blending with petroleum fuels at levels that do not require modifications to vehicles. This may limit blend levels to E10 (10% ethanol by volume) for petrol-fuelled vehicle and B20 (20% biodiesel by volume) for older diesel-fuelled vehicles, though biodiesel can be used straight or in any blend ratio in newer vehicles. The projected requirements in 2010 are for E10 about 27 million litres of ethanol and for B20 about 139 million litres of bio-diesel.

During the year 2004/2005, production of C-molasses by the sugarcane industries in Tanzania was about 90,000 tons which could be converted intomore than 20million litres of ethanol per year or enough for an E10 blend. If all the C-molasses resulting from the Tanzanian sugar industry’s projected production were used for ethanol production, total ethanol produced in 2006/2007 would be over 28 million litres. This would be enough for a nation-wide 12.2%blend by volume, or equivalent to 7.9% of national petrol consumption on an energy basis. The potential national blend percentage would grow to 13.6% in 2008/2009, after which sugarcane production would be surplus to national crystalline sugar requirements and a choice between producing more sugar for export and producing more ethanol would exist. If all the ‘surplus’ sugarcane is used for ethanol production, the potential blend would rise to 28.5% (E28.5 blend; 76million litres; equivalents to 18.4% on energy basis) by 2010. If the ‘surplus’ is used for producing sugar, the potential would still reach 22.1% (E22 blend; 59 million litres; equivalent to 14.3% on energy basis) by 2010.

Oil palm and Jatropha carcus are the two oil crops most likely to be used as feedstock for biodiesel production in Tanzania. Of the oil crops available, oil palm has the highest potential yield of oil per hectare of land harvested. However, there is currently great demand for palm oil for food and other uses, and local production meets less than 5% of this demand.

The other potential crop for feedstock for biodiesel production is Jatropha curcas or physic nut. There is some experience in Tanzania of cultivation of Jatropha for small-scale oil production, and this has been particularly promising in its demonstration of the potential for aiding rural poverty alleviation and empowerment of women from multiple benefits derived from Jatropha system. Cultivation of Jatropha around the world has tended to be on a small-scale production and yield data for plantation scale cultivation is limited. The oil yield from Jatropha plantations is reported to be about 1600 kg of oil per hectare from the fifth year onwards, although some local experience in Tanzania suggests that actual yields in Tanzania may be significantly less than this. On the basis of yields of 1600 kg oil per hectare, 19,700 hectares of Jatropha would have to be harvested each year to produce enough biodiesel for a 5% national blend with petroleum diesel in 2010. For a B20 blend, 78,800 hectares of Jatropha would be required.

Potential Applications from Jatropha Systems

Opportunities for Biofuels Development in Tanzania
Currently, the exploitation of the large resources potential for the production of biofuels in Tanzania is mainly hampered by lack of information at all levels of society (Government departments and institutions, industries, civil society). This fact is one of the reasons for the absence of clear policies and regulations for biofuels production and use in Tanzania. In order to develop an enabling framework there is an urgent need of close cooperation and consultations between several government departments and other stakeholders engaged in the promotion of liquid biofuels in Tanzania. The lack of policies and regulations makes investment in the biofuels sector difficult and risky in Tanzania, as the prospective return-on investment and socio-environmental impacts remain largely unclear. Especially, the rather large investments required in the sugar industry to start the production of fuel ethanol from sugarcane would require an ensured market for the product (e.g. through a mandate for ethanol- gasoline blends) guaranteed ethanol prices, at least for the start up phase, as well as an initial protection of local production and use. With its large potential for biofuels production and the lack of biofuels policies and regulations, Tanzania is a good example for a variety of developing countries worldwide, which currently are in the early stages of investigating the biofuels option for their country as a contribution to a future more sustainable energy supply.

Presently, the Tanzania Government is well aware of the benefits offered by the introduction of biofuels for applications and it is seriously assessing through the biofuel task force, the different options for the development of policies and strategies for an increased use of biofuels.

Conclusions and Recommendations
Liquid biofuels production and its use would soon develop very fast and at a large-scale in Tanzania and in the region in general. This, if not managed well through proper regulations, could be very damaging and lock the region out of these new development opportunities. The development could also be very beneficial and avail huge opportunity for sustainable development and poverty reduction to the region if approached correctly. Liquid biofuels have wide applications from powering stationary engines such as MFPs, powering vehicles as a substitute or blends with petrol and diesel and potential for significant use as household cooking fuel exist.

The most significant benefit to biofuel will be enabling the poor rural majority to have access to modern energy services using their land, labour and local management skills. Access to modern energy services
will enable the marginalized rural to be more productive, have quality social services and in that way contribute to achieving the MDGs. Countries in the region need to be aware and realize the need for urgency in formulating and implementing appropriate policies and regulations. Critical factors for consideration in establishing biofuels production and use policies should include:

• Sustainability criteria for local and national development.

• Pro-poor policies to protect small-scale producers from large-scale multinational investors and agro industries.

• Fair trade practices.

• Integration of biofuels with other development initiatives aiming at self-sufficiency in food and fuels at the national and regional levels.

• Ensuring rural livelihood improvement, national economic growth through the development of biofuels processing industry.

• Avoid becoming feedstock exporter.

For more information:
TaTEDO, P. O. Box 32794, Dar es Salaam. Tanzania.
Tel 255-22-2700438/ 2700771
Email: energy@tatedo.org