Energy

PPPRA policy review vs enabling environment for biofuels

By Samuel Ibiyemi

 INTRODUCTION

The announcement by the management of Petroleum Products Pricing Regulatory Authority (PPPRA) to fast track the review of the National Biofuels Policy in line with the directive of the Minister of State for Petroleum Dr Ibe Kachikwu marks the beginning of a serious commitment by the administration of President Muhammadu Buharri   to  create gainful employment for the youths in Nigeria. This new  initiative by PPPRA  with emphasis the government on domestic production is   believed to be another positive step towards achieving self sufficiency in petroleum products supply in-country and promotion of ‘Made in Nigeria’ products. This will therefore improve the ranking of Nigeria as a nation dedicated to utilization of environmental friendly liquid fuels and boost compliance with Kyoto Protocol which obliges member countries to reduce green gas emission by 2012. It will be recalled that the National Biofuels Policy and Incentive Document   for the Biofuels Industry to thrive in Nigeria was initiated in 2007 but the implementation suffered a setback  as a result of stakeholders’ dissatisfaction with the Gazette on Biofuel Policy.

The Acting Executive Secretary of PPPRA Mr Victor Shidok at a meeting with the media in Abuja said the  Gazette which is import-dependent led to complete rejection  by stakeholders. This, he said necessitated a policy review with inputs from all stakeholders which is now on-going and being coordinated by the PPPRA.

DEFINITION & PURPOSE OF BIOFUELS

Biofuels are combustible fuels created from biomass. In other words, fuels created from recently living plant matter as opposed to ancient plant matter in hydrocarbons.  The term biofuel is usually used as referencet o liquid fuels, such as ethanol and biodiesel that are used as replacements for transportation fuels like petroleum, diesel and jet fuel. Biofuels can also include solid fuels like wood pellets and biogas or syngas – however in this summary we will focus on liquid fuels.

There are two main types of biofuels – ethanol and biodiesel.  The simplest way to distinguish between the two is to remember ethanol is an ‘alcohol’ and biodiesel is an ‘oil’.  Ethanol is an alcohol formed by fermentation and can be used as a replacement for, or additive to gasoline whereas biodiesel is produced by extracting naturally occurring oils from plants and seeds in a process called transesterification. Biodiesel can be combusted in diesel engines.

coverr pixIn the conduct of investigation by Nigerian NewsDirect on categories of biofuels which can be grouped into first generation, second generation, and third generation – based on the type of feedstock (the input material) used to produce them.

First generation biofuels are produced from food crops.  For ethanol, feedstocks include sugar cane, corn, maize, etc.  For biodiesel, feedstocks are naturally occurring vegetable oils such as soybean and canola.

Second generation biofuels are produced from cellulosic material such as wood, grasses, and inedible parts of plants.  This material is more difficult to break down through fermentation and therefore requires pre-treatment before it can be processed.

Third generation biofuels are produced using the lipid production from algae.

In addition, the term “Advanced Biofuels” is used to describe the relatively new technological field of biofuel production that uses waste such as garbage, animal fats, and spent cooking oil to produce liquid fuels.

In  summary, biofuels simply comprise of Bioethanol and biodesel which are blends of petroleum products and agricultural products.

Concerns about biofuels are usually centered around the fact that they are an agriculture product. One key concern about biofuels is that crops grown for fuel production compete with other natural resources, particularly food and water.

 SUCCESS STORIES FROM OTHER COUNTRIES

The following key policy issues have resulted in some major international countries investing funds and resources in the development of biofuels sector

These include  concerns about global warming

Concerns about global warming, reliability about the reliability of petroleum products supply, greenhouse gas emissions and low incomes in the agriculture sector.

Brazil produces biofuels from Sugar cane.

Brazil is a case study of how bio-fuels development has led to not only reduction in oil imports but several ethanol-based downstream chemical industries were established as a result. As at today, about 5 million vehicles in Brazil are using bio-ethanol while 9 million others are using a combination of ethanol and petrol. The United States itself is producing about 9000 MW of electricity more than  Nigeria’s installed  capacity of 5,900MW from biomass.

 FOCUS & BENEFITS

In Nigeria, the  Biofuels  of interest include Bioethanol E-10 which is a blend of 90 per cent gasoline (PMS) and 10 per cent ethanol. While in the case of Biodesel in line with the global standard Biodesel E-20 to be adopted for utilization is a blend of 80 per cent diesel and 20 per cent from jathropa and used  palm oil.

This harmony  according to the PPPRA will lead to more job creation in the petroleum and agriculture sectors of Nigerian economy at a time that  more than 55 per cent youths in Nigeria are either unemployed or underemployed according to Fitch International, a rating agency. A sharp fall in price of oil in the international market, leading to a recession was also identified for the rise in stunted growth of the economy and a rise in poverty level of an average citizen, who now lives on $.05 per day from $1.1 in the past five years.

Other countries in the same parity with Nigeria before now, were growing from $2.2 per day to about $3.

The initiative of the Buhari administration  on Biofuels will therefore help to empower farmers in the rural areas  and reverse the  steady rise  in the level of poverty (productivity index) in Nigeria which   has maintained a constant rise, reaching its all-time high of 72 percent by August 2016. This is as  contained in the latest Fitch evaluation report on economic performance of some countries in Africa, Asia and the Middle East.

Whereas other countries in the same parity with Nigeria before now were growing from $2.2 per day to about $3.

Biofuels are not also as energy dense as conventional transportation fuels and therefore  the only viable replacement to hydrocarbon transportation fuels.

UTILIZATION

From investigation and research carried out  by Nigerian NewsDirect, the categories of Bioethanol E-10 and Bio-diesel B-20 can be used in existing combustion engines,  Minimal changes to infrastructure  would also be  required for their implementation.  This is their most prominent advantage as concerns about the environmental impacts of fossil fuels continue to rise.

IMPACTS OF FOREX

As the challenges of foreign exchange continues to bite harder on fuel importation and petroleum marketing companies, embracing this initiative of PPPRA will help to conserve  additional 10 per cent  from the existing  billions of Dollars being utilized  on importation of PMS. At the same time, another  20 per cent forex will be saved out of the total sum of forex on diesel importation with the implementation of Biofuels policy being reviewed. These savings if properly monitored would be directed at providing incentives for farmers and infrastructures in the country.

 Nigeria would  therefore be richer by $150million  annually when the bio-fuel initiative come into being. ’This was contained in a lecture delivered a decade ago entitled “Energizing Agriculture through Gross Sectorial Linkages with the oil and Gas Industry”  by the former  Group Managing Director of NNPC, Engr. Funsho Kopolokum at the Convocation ceremony of the Federal University of Agriculture, Makurdi.

 CONCLUSION

However,  stakeholders at the enlightment workshop of PPPRA  are expected to  discuss incentives that will ensure the success of new Biofuels policy in Nigeria.

These incentives will  be similar to the initiatives in countries with successful Biofuels policies such as  Brazil, United States of America (USA) and India.

In Brazil, the government offers financial support to  biofuels stakeholders with tax incentives ranging from 32 to 100 per cent depending on the fuel source and use.

In US, the government offers tax credits to producers of biofuels

In Kenya, the farmers received an estimate of $30,000 from the World Bank in 2001.

In USA ethanol is mainly produced from Maize and in Europe 8% of the world biodiesel is produced from rapeseed. Other countries such as China, India and Kenya are investing their resources in the production of Jatropha, a non edible plant to produce fuel

Existing fuel distribution network  of NNPC can also  be used to get them across to the states.

While there is some dispute over just how “renewable” biofuels are, it is generally accepted that the crops used to produce them can be replenished much faster than fossil fuels.

 Bio-fuels are not only a renewable and sustainable energy resource but are toxic-free, unlike the conventional petroleum based fuels. Bio-fuels are also bio-degradable and their use helps reduce the emission of carbon dioxide into the atmosphere.

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