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African Bioenergy Investment Workshop

in Southern Africa


Summary of Proceedings



August

20
12















African Bioenergy Investment Workshop

in Southern Africa





Contrat No:
C1
203
3
-
0
39

Project No. WP
1
.
10
.
1
-
2
.0
39



Region:
Southern Africa






By


Mr.
Gavin Maxwell


Team Leader








Submitted by











This document has been produced with the

financial assistance of the European Union. The views expressed

herein can in no way be taken to reflect the official opinion of the

European Union

nor of those of the ACP
Secretariat
.






















































The content of this report is the sole responsibility of the authors

AGORA’2000

and can in no way be
taken to reflect the views of the
NEPAD
, the European Union or the
BizClim

Programme
.


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TABLE OF CONTENTS

I.

EXECUTIVE SUMMARY

................................
................................
.........

4

II.

DAY ONE

................................
................................
............................

6

1.

Host Welcomed Dr Ibrahim Mayaki (Chief Executive, NEPAD)

................

6

2.

Presentation: Bioenergy in Africa, Sectoral Work by Nepad &
Symposium Expectations

................................
................................

6

3.

Introduction: A Definition of Symposium Objectives

..............................

6

4.

Presentation: An Energy
Sector Briefing on Bio
-
Power Investment and
Timetable for Development in Southern Africa v World Markets

..............

9

5.

Presentation: Trand
-
National Investment Conditions f
or Bio and
Renewable Energy Projects

................................
...........................

11

6.

Presentation: Developing Partnerships with European & African
Bioenergy Sectors

................................
................................
.......

13

7.

Presentation: Effective Policy and Certification to Aid Bioenergy
Investment

................................
................................
.................

13

8.

Presentation
: Pan African Spacial Planning


Current Biomass
Feedstock Policy & Analysis

................................
...........................

14

9.

Presentation: African Sugar Industry: Briefing, Current Challenges and
Future Op
portunities

................................
................................
....

14

10.

Presentation: International Investor Incentives, Bioenergy and
Renewable Projects in Africa

................................
.........................

14

11.

Presentation: Outlook for Partnering and Funding Bioenergy Projects

....

15

12.

Panel session: Investment Options for Bioenergy Deployment

..............

16

III.

DAY TWO

................................
................................
.........................

18

1.

Chairman’s Analysis of the Events of Day Two

................................
...

18

2.

Project: Production of
Cellulosic Ethanol from Paper Sludge Waste

.......

18

3.

Project: Multi Regional Project for Torrified Bamboo Biomass to Co
-
Fire

................................
................................
...........................

21

4.

Project: Commercial Scale Biogas Conversion in African Farm Sectors

...

23

5.

Project: Developing Partnershi
ps for Technology Investment in Africa

....

26

6.

Project: A Bioenergy Project Investment in Zambia

............................

28

7.

Project Panel Q&A and Analysis

................................
.....................

29

8.

Presentation: Satellite Facilities for Biosciences at University of
Stellenbosch

................................
................................
..............

34

9.

Presenta
tion: State of Bioenergy Development in SADC and
Incubator Support Opportunities

................................
....................

35

10.

Presentation: UNIDO Bioenergy Initiatives in Southern Africa

................

37


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11.

Presentation: SE4ALL and Bioenergy Investments

...............................

38

12.

Discussion Panel: Agency Support

................................
..................

39

13.

Developing the Fund: Roadmap for Establishment
.............................

40

14.

Closing by Prof Elmissiry

................................
................................

43

15.

Analysis of the Projects Competit
ion

................................
...............

43




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I.

EXECUTIVE SUMMARY

“The deployment of robust and proactive Bioenergy technologies across Africa is
now fundamental to the continents ability to delivery sustainable economic energy,
communications and enterprise in the years to come”.

This was the primary message of the dis
tinguished Agency Leaders, Experts and
Participants at the Bioenergy Investment Symposium in Johannesburg on the 30th
and 31st July 2012. The Symposium was facilitated by NEPAD, the foremost technical
agency of the African Union.

Dr Ibrahim Mayaki, CEO of

NEPAD opened the Symposium calling for a major up
-
shift
in the pace of Bioenergy delivery across Africa and the head of the Energy Division
of NEPAD, Professor Mosad Elmissiry echoed the message of Dr Mayaki and called on
the Symposium delegates to endors
e a programme of enterprise support and
investment to maximise the resources of Green Africa to anchor its place as one of
the most sustainable economies in the world.

Private and Public sector investors were represented at the Symposium and the
proceedin
gs transcribed in this report, indicates a strong desire to facilitate
investment in the Bioenergy Sector, particularly if project risks can be better
mitigated through enterprise incubation. This report recalls in some detail the
presentations, debate a
nd desires of the audience of experts from the Bioenergy,
Renewable and Investment community as well as invited bio
-
sector projects who
were afforded the opportunity to seek funding for new projects across Southern
Africa. All delegates welcomed the oppor
tunity to measure the real world needs of
the 5 projects and responded in weeks following the Symposium with actions that
have resulted in 3 projects receiving crucial advice, funding and or commercial
orders which validates the need for a process that cou
ld formalise the incubation of
projects and respond to their technical and business needs more effectively.

The Symposium programme was driven by a position paper authored by the
Symposium Chairman in which he advocates the implementation of a new structu
re
that would allow Bioenergy developers to accelerate deployment with faster access
to expertise and risk capital earlier in the innovation cycle. The Symposium paper
also set out potential new funding methods to tackle the challenge of attracting
private

and public investment to fill the forward risk gap in the sector.

NEPAD cited Bioenergy is the largest portion of Global Renewables, accounting for
10% of total energy sources at present. In 2010, the global installed capacity of
biomass power generatin
g plants was between 54 and 62 GW. Africa’s share of this is
only 3%, a position that must change if Africa is to avoid consistent energy insecurity
in the years ahead.

In 2008 a World Bank report forecast that over
600,000
,000

people in Africa would still

not have access to electricity by 2050, however other reports suggest that Africa will
be the 2nd largest provider of Biomass resources to the world within the same
timeline. The stark reality is that without power, enterprise cannot be developed and
so t
he cycle of subsistence will continue and deny people access to a sustainable
way of life.


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It is estimated that demand for biofuels will outstrip supply by 2020 and ethanol
demand will exceed supply by 2015 if the IEA forecast price index for carbon fuel
s
continues to increase at the current rate. Globally it is projected that biofuels will
have a 27% share of the total energy market by 2050. Africa could have the largest
potential to produce Bioenergy, provided advanced technologies together with the
rig
ht policies are implemented to harmonise with market need.

Africa has the opportunity to formulate Bioenergy policies and capitalise on its late
entry to the market thus avoiding the mistakes that developed Nations created by
over engineering policies wh
ich have driven private sector investors overseas or
retarded the pace of growth. The objective of the Symposium was to define and
agree the parameters and methodologies to create an incubator process and fund
which can leverage the assets of Africa for th
e benefit of African Nations.

The key driver globally is towards sustainability. It makes economic sense to find
alternative fuels to fossil fuels and to adopt them in a way that is sustainable locally
and effective for the people that need to use them. L
arge producers are looking for
low cost inputs. They want a fuel they can buy cheaply to lower their margins.
Capital will rush into the space that is available if there is a mandatory requirement
to change the habits of industry. Industry has been bashed
by carbon credit
initiatives imposed by governments in the developed world, and policies and
changes in policies are now restricting the ability for the renewable and Bioenergy
sectors to gain traction. As a result there is an agreed opportunity for Africa

to
stimulate confidence by enabling foreign private investment in the supply channels
that benefit African Industry and Consumers.

Symposium Participants agreed that Africa has a great opportunity to move into the
Bioenergy space because it doesn’t have
the complexity of multi strata multi
-
state
policies that have reached a level that distract from projects. Sub Saharan nations
can exploit these opportunities for developing realistic policies and regulation rather
than putting them in front of potential p
rojects before they have the opportunity to
get off the ground.

This Bioenergy Investment Symposium, was recognised as a new direction for
Bioenergy in Africa and the widespread consensus by Delegates to support the
creation and funding of the Bioenergy I
ncubator Business Units under the stewardship
of NEPAD could make a measurable difference to the appetite for early day risk
investment which is the building blocks for commercial scale transition from a
Carbon to a Bioenergy fuelled economy.

The Symposiu
m closed with a broad consensus to continue the initiatives presented
by developing a specific framework for the establishment of a “Business Unit” within
NEPAD to facilitate the incubation of Bioenergy Projects and provide access to
International best pr
actice in Business and Technology. There was also demonstrable
support to launch a Bioenergy Incubation Fund to bridge the risk capital gap in the
Bioenergy market for early adopters in Africa.

Symposium participants were treated to an exceptional stand
ard of presentations
and information from the Bioscience, Bioenergy and Financial sectors. A fact that
was reflected by key business media channels who reported on the event and the
success of its format and outputs.


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II.

DAY ONE

1.

Host Welcome
d

Dr Ibrahim Mayaki (Chief Executive, NEPAD)

Dr Mayaki emphasised the importance of the Bioenergy Investment Symposium and
the role of NEPAD as the Development Agency for the African Union (AU). NEPAD’s
delivery process is divided into 3 elements:



Continental strategies;



Regional coherence;



National policies (incorporating government plans and implementation policies).

The capacity to design proper strategies is based on the mechanisms of partnerships.
Africa does not have a continental strategy in
the domain of energy and needs
concrete content in terms of options and bankable projects and implementation
policies. The Symposium will serve to link the priorities of bioenergy development,
identify bankable projects, design and implement policy.

Bioen
ergy can’t be tackled from an energy sector perspective and NEPAD needs to
look at all the affected sectors, i.e. agriculture, transportation, education, ICT etc.


it
is multi
-
sectoral.

2.

Presentation: Bioenergy in Africa
, Sectoral Work by Nepad & Symposium

Expectations

Presented by Professor Mosad M. Elmissiry, Head of Energy Programmes for NEPAD

Africa needs a radical change towards energy management. Bioenergy is the
largest portion of renewables and accounts for about 10% of total energy sources at
pres
ent. In 2010, the global installed capacity of biomass power generating plants
was between 54 and 62 GW. Africa’s share of this is about 3%.

Internationally, the demand for biofuels will outstrip supply by 2020 and ethanol
demand will exceed supply by 20
15. Globally it is projected that biofuels will have a
27% share of the total energy market by 2050. And by 2050, Africa could have the
largest potential to produce bioenergy, provided advanced technologies together
with the right policies are implemented.

Currently Africa does not have sustainable use of biofuels. Africa makes use of
traditional biomass e.g. firewood and charcoal which is not sustainable. There is very
little in the way of biofuels generated in Africa. Policy and regulations are in the ear
ly
stages of development, with only 2 countries having clear policies. By 2030, SADC

s
energy demand will have doubled and we will need bioenergy as a substitute.

The development of bioenergy in Africa does not need to be at the expense of
food. We can wo
rk towards bioenergy and food security through the enablement of
national and regional policy, the promotion of investment and R&D support. The
region needs investors as much as investors need good opportunities for investment.

3.

Introduction: A Definition o
f Symposium Objectives

(Biofuels & Biomass Power in Southern Africa and
Funding Development

and
Deployment)


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Presented by Mr. Gavin Maxwell, Symposium Chairman, Bioenergy Development &
Investment Options 2012
-
2020

Africa is an important continent with
the opportunity to develop bioenergy policies.
The last person to enter a market often has the opportunity to

avoid

the mistakes of
predecessors. The objective of this Symposium is to form the parameters and
methodologies to create an incubator fund.

Bioe
nergy is about more than just Fuel, it’s a word that can mean everything in the
Renewable Energy and Sustainable Energy sector.

The key driver globally is towards
sustainability. It makes economic sense to find alternative fuels to fossil fuels and to
adop
t them in a way that is sustainable locally and effective for the people that
need to use them. Large producers are looking for low cost inputs. They want a fuel
they can buy cheaply to lower their margins. Capital will rush into the space that is
availabl
e if there is a mandatory requirement to change the habits of industry.
Industry has been bashed by carbon credit initiatives by governments and policies in
the developed world, and policies and changes in policies are now restricting the
ability for the r
enewable and bioenergy sectors to gain traction. As a result those
with the capital to spend are losing confidence.

Africa has a great opportunity to move into the bioenergy space because it doesn’t
have the complexity of multi strata multi
-
state policies

that have reached a level
that distract from projects. We can take advantage of the opportunities for
developing realistic policies and regulation rather than putting them in front of
potential projects before they have the opportunity to get off the grou
nd.

Our world is fragile and the resources in
it are
much

dispersed. Africa is a
continent with a huge area. The gre
en
area is the belt between sub
-
Saharan
Africa down to the tip of Africa. Not all
sources are
in the right place at the
right time.

The w
orld is
also
driven by
commodities. They are also
misaligned
by price

speculation. It is too early in
the process to be speculating about
the natural development price of
bioenergy.

People are comparing the price of fossil
fuel with

the

cost of bioenergy before
bioenergy projects have even been piloted or at a stage where you can see if they
will be a commercial success. We need a reality check on how long it will take for
the development of the industry.

In 2008, the World Bank estimat
ed that 26% of households in Africa have no access
to electricity. This is the lowest electrification charter in the world. By 2050, 547 million
people will be without access to electricity.

One of the main reasons for this is the lack of policies for res
ources and commodities
in Africa.
Huge amounts of money are spent on generation and distribution of these
resources commodities but there is a lack of policies to support their movement and
use.

We need to find a new way to manage resources and we can’t rely on
traditional methods. The process needs traction. The Southern African Power Pool

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5
International Bio
-
Energy

Feedstock to Fuel Potential
Deployment Mode
2050 l by Copernicus Institute
(SAPP) has 12 countries and a grid network. Interconnecting to the electricity grid
needs money and only onc
e you connect can you distribute electricity to the
people.

Over the
2 days
of the Symposium
Delegates
question
ed

why
Africa has
the lowest
electrification

rate globally
and how we might ensure that the
projected .6 billion people without
power can lever
age
Africa’s

projected
position as the second largest provider
of biomass energy by 2050.
Energy
generation

and distribution systems
aren’t working in Africa and we
examine
d

what needs to be done to
change this. We look
ed

at
major
finance issues how the NE
PAD Incubator
Fund could help to close the
Infrastructure and Bioenergy deficit
between Africa and the Rest of the
World.
Then we can set up projects that can be developed in a way that any
project can be measured to make sure it meets the requirements to

obtain funding.




Africa or Green Africa, has the
opportunity to retain value and
margin and promote enterprise
with its resources, if Governments
and Developers work together to
bridge the finance gaps that
currently are retarding the ability
of Bioene
rgy projects in Africa to
achieve its projected place as
the Worlds Number 2 producer
and supplier of sustainable
energy.





The second day of the Symposium focus
ed

on a number of business models for
bioenergy and review
ed

the models and look
ed

at ways they can be funded and
how they can be improved. This
gave

us the framework for the incubator.


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4.

Presentation:
A
n

Energy Sector Briefing on Bio
-
Power Investment and Timetable
for Development in Southern Africa v World Markets

Presented by Mr Brian
Statham (Chairman, South Africa National Energy Association
(SANEA)

Electricity is not a form of primary energy, it is just a carrier. A discussion about
electricity does not equate to a discussion about energy. We need to look at tota
l
societal needs and
these need
s have

to be put into context and energy must be
matched to need. If we presume that we can flatten the demand curve, there will
be too many people without access to energy globally. These people have
legitimate aspirations for access to energy.

Annually the World Energy Council conducts a survey of its members to determine
what
the issues they are most concerned about are
. The results are not static but the
themes and trends are good indicators of where policymakers should be directing
their att
ention. Globally critical uncertainties don’t include bioenergy, and this is not
seen as a priority in Africa. Decision makers have to be convinced that the
development of biofuels needs to be highlighted.




The key drivers for the development of the industry are economic growth,
demographic trends, and urbanisation. The critical uncertainties are government
regulation and co
-
operation and integration between the public and private
sectors, between nations, an
d between businesses.


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We must learn to think of integrated systems using multiple sources of energy. This is
of particular importance in Africa due to low population in rural communities and
distances between the communities are high. This requires a de
centralised energy
supply in the form of bioenergy.

The technologies currently used won’t go away. There has been huge investment in
these technologies and they need to run their course. The challenge is to make the
10% use of bioenergy more effective an
d sustainable. It needs to be sustainable &
sensible. Two transport scenarios were introduced:





Tollway: Regulated, with government intervention





Freeway: Free market

For biofuels the route would need to be “Tollway”, otherwise the risk is too high for
investors. The process must be transparent, with open discussions. Governments and
agencies must give clarity of process and efficiency of purpose.


Assessment of Energy and Climate Policies

While many companies are doing well on societal, developmental an
d economic
issues, this is not true for energy management. It is important to get the balance and
mix right. To balance the pressures, we need to look at national priorities

The Pyramid of Energy: We cannot successfully address higher order issues before
proposing and implementing solutions for more direct needs. If Maslow were in
energy politics: he would argue that access to energy, supply security, energy costs,
environmental issues and social acceptance are not subject to trade
-
off, but to a
hierarchy:

we cannot successfully address higher order issues before proposing and
implementing solutions for more direct needs. Governments and aid agencies enter
the energy policy needs pyramid at the ‘local pollution and immediate nuisances’
level, but miss out o
n putting basics of access and energy security in place. As a
result, sub
-
Saharan Africa has 12% access to electricity.


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Energy policymaking is a complex area with multiple objectives. Successful policies
will build on an open dialogue regarding potential

trade
-
offs, among multiple goals,
multiple time periods and multiple participants. When establishing a policy,
Policymakers must be transparent and explicit about the trade
-
offs involved and why
they are appropriate in order to gain acceptance and investm
ent by relevant
stakeholders.

5.

Presentation:
Trand
-
National Investment Conditions for Bio and Renewable
Energy Projects

Presented by
Mr. Paul Eardley
-
Taylor, Standard Bank Plc
, Head of Energy & Mining
Division

Biofuels is structured within the oil and gas d
ivision within the commercial bank as we
look at output (i.e. for transportation). The bank is in the top 3 financial institutions in
the oil and gas sector when measured by transactions, and hope to move into
biofuels in future.

The trigger for use of bi
ofuels in South Africa will be government’s move to clean fuels
which will initiate the legislation and regulation. It will require upgrades of refineries
(investment and compensation), but who will fund it? What is the risk profile for
investors? Biofuels

must be combined with clean fuel decisions. In South Africa it will
mainly comprise sugar (proven and credit worthy).

Options for funding are corporate funding which is cheaper but the balance sheet
for the whole company is at risk and it is short term (3
-
5 yrs). Project finance is more
popular in South Africa because it has a longer tenure (10
-
17 yrs) but it takes longer
to raise the money.

Questions

Q: Meghan Sapp
: It is interesting that Standard Bank has positioned Bioenergy within
the oil and gas portf
olio. Oil and Gas guys don’t understand farming. How do you
train on agricultural issues so that you can make a holistic decision on funding a
project?

Paul Eardley
-
Taylor
: We work back though the value chain. We must have the right
partners who know the
space. For example, in the sugar industry, we piggy back on

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their expertise. In sorghum, we are not experts so we would need partners who were
the experts.

Q:

At what point in the development of a project would your bank offer finance?
What are your conditions and what sort of return do you look for?

Paul Eardley
-
Taylor
: We get involved in advising at the early stage of a project. For
example, we entered the w
ind farm sector early in 2010 and they are being erected
now. We don’t provide development funding. Our pricing isn’t a secret.
For a decent
project needing a 10 to 12 year loan
all
-
in pricing is about 4%
margin for us over the
base lending or bank rate
Of the 4% it is important to note that a little over half is for
us and the rest goes to financing markets and overhead charges. The normal loan
policy for biofuels is less than for wind farms because in the case of wind farms the

government is essentiall
y the buyer. In the case of biofuels you have a private
company and the credit profile is more risky.

Q: Albrecht Laufer
: When you speak about setting up a project you are speaking
about setting up a production plant. When I’m speaking about a project I
mean
R&D projects. Are there venture capital instruments in Southern Africa which would
go into risk funding of research and development?

Paul Eardley
-
Taylor
: Yes. Africa is one of the easier places to find R&D funding and
the DFIs do this.

Q: Prof Thomson Sinkala
: We are looking at things as the SADC region. Interest rates
differ from country to country, with higher rates in Zambia than in South Africa. We
need a special fund for bioenergy in the SADC region.
If SADC Governments
introduced m
andatory biofuels standards the current market related investment risk
would be reduced. Prices of fuels in the region are high. Secondly, Standard bank is

dealing mainly with medium to large scale operators, but what about small scale
operators. Can we cl
uster arrangements and have a common facility for risk
reduction?

Paul Eardley
-
Taylor
: Commercial banks in each country have different regulations.
The price of money is determined by the economy and banking rules of each
country. We can’t transfer money
from one country to another. We can’t lend from
South Africa to Zambia. DFIs can do this. On the second point our challenge is one of
scale. A project can take 2 to 3 years, and when it is finished we need to know we
can make money from it. So it is sugges
ted that small projects consolidate. The
problem is the country banking rules. We have to do due diligence on each project.
The DFIs are better at this.

Q
; The demand is there and will be growing. Time is against us in terms of coming up
with radical decis
ions. Banks have a risk a
d
verse approach which can take 5 years.
Are banks willing to climb out of the box and meet the demands for investment? If it
takes 4 to 5 years we lose the window of opportunity.

Gavin Maxwell
: That is why we are here. This is not

adequately covered anywhere in
the world. Risk finance has changed globally since 2008. We need to find a
consensus on what we need to do and then encourage the financial institutions to
share the risk and reduce the exposure.

Q: Dwight Rosslee
: Risk adve
rseness by commercial banks. If we took a solar project
to you and asked for finance I don’t think it would qualify because the cost of
producing solar is more expensive than buying electricity.


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Paul Eardley
-
Taylor
: PV Solar is cheaper than reserved margi
n. The economics are
changing. We do look at the economics. Getting the price per barrel for biofuels
down is key. The oil price isn’t coming down any time soon and geographical
location of African landlocked countries isn’t changing. So if you can get the

price
per barrel down you’ve got a great future.

Q
: What do we need to do to get you to give loans to this industry?

Paul Eardley
-
Taylor
: Partnership with existing industry players. They are able to do
structures for smaller players. We do due diligence
on them and they do due
diligence on them.

6.


Presentation: Developing Partnerships with European & African Bioenergy
Sectors


Presented by
Ms
Meghan Sapp, Partners for Euro
-
African Green Energy (Pangea)

Pangea is a trade organisation that fills the gap between industry in Europe and
Africa. They are the only private sector organisation that offers support to the African
bioenergy sector. Europe has a negative perception of Africa in terms of policy and
go
vernance and this keeps investors away from the continent. The challenges
include policy, policy
-
blending, draft policy, and policy under development for
biofuels. There is no cohesion in Africa and Pangea fills this gap. The opportunities for
biofuels in
Africa include reduction in oil imports, improved agricultural production,
improved access to food, improved infrastructure, community development and
increased access to energy.

For Africa to get investment in bioenergy projects, one needs to relook at
the
Brazilian model used. Africa has tens of thousands of farmers with 1 to 2 acres of
land. Biofuels needs to be approached as an agricultural project, not energy. The
focus should be on small scale off
-
grid energy access to households in rural areas
(dec
entralised). Integrated projects could offset the energy risk by co
-
locating with
existing industry. Every international company operating in Africa has energy risk on
their balance sheet. It would be possible to use these existing investors and existing
w
aste streams to offset risk through integrating bioenergy.

7.

Presentation:
Effective
Policy and Certification
to Aid
Bioenergy Investment

Presented by Nick Goodall
, CEO:
Bonsucro Certification

Provable sustainability has become an essential part of a busines
s plan and is
required by law. What is prescribed by EU law is what will drive the regulation of the
industry. These standards will be adopted by governments, customers, NGOs, farmers
etc. This allows for the measuring of sustainability. Bonsucro has devel
oped standards
for pre
-
competitive measurement, and yields, profitability etc. that are realistic.
Standards provide end users with a level of assurance of sustainable practises at mill
and farm level.

The Bonsucro Production Standard contains principles
and criteria for achieving
sustainable production of sugarcane and all sugarcane derived products in respect
of economic, social and environmental respects.

The Bonsucro Chain of Custody Standard contains a set of technical and
administrative requirements
to enable the tracking of claims on the sustainable

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production of Bonsucro sugarcane and all sugarcane derived products along the
entire supply chain after the mill and its cane supply; through conversion, processing,
manufacturing, transformation and trad
e to use of all sugarcane derived products.

EU biofuels policy has targeted a level of 10% blended fuel in the transport sector by
2020.

This is most likely to be biofuels. Imports from Africa will have to meet
mandatory sustainable EU standards. The
potential market for biofuels in the UK is in
the order of 5 billion litres of by 2020, and in the EU this is in the order of 25
-
30 billion
litres of biofuels by 2020.

8.

Presentation:
Pan African Spacial Planning



Current Biomass Feedstock Policy
& Analysis

Presented by
Alexandre Strapasson
,
Energy Centre for Environmental Policy
,
Imperial
College London)

One needs good distribution of land use. In Africa, a large proportion of land is for
pasture. Intensified animal farming would free this land for
biofuels. Africa needs to
follow Brazil‘s model and zone areas for particular use. This should be done within a
legal framework which forbids the planting in the incorrect crops in the inappropriate
zones. This also avoids cultivation of sensitive areas. B
iofuels is not only an energy
issue, it also affect
s agricultural policy. All policies

implemented should be state not
government policies

and the legal framework should protect all stakeholders.
Favourable tax systems and financing can enhance the market
for sustainable
bioenergy.

9.

Presentation:
African
Sugar

Industry:
Briefing, Current Challenges and Future
Opportunities


Presented by
Dr
.

Marilyn Govender
,
Manager

of
External Affairs
:
South African Sugar
Association)

Sugar cane is a sustainable source
of renewable energy. South African sugar industry
has an annual capacity of 420,000 t and mills are located in rural areas. The industry
harvests the fibre for Bagasse to use for electricity production. The industry promotes

best practic
es to international

standards. Lessons from Brazil and India include the
need for government regulation to support investment. Currently sugar industry
supplies energy for own use but is committed to become commercial producers and
plan to invest R18 billion by 2019. They co
uld work with Eskom to provide power in
peak winter demand times and during maintenance periods. Although NERSA has
changed their focus, the IPPP programme will include all renewables. The sugar
industry has the potential to provide is 1000MW of electricit
y.

10.

Presentation: International
Investor Incentives,
Bioenergy and Renewable
P
rojects in Africa

Presented by Mr.
Malcolm McNeil
,
Fox Rothschild LLP
, International Group Chairman


“An incubator driven fund could provide an effective tool to minimise risk effectively
in post start up projects and give equity ho
lders, investors and debt provider
s added
confidence to participate collectively in essential development space”

The incubat
or model was used when
the
computer & software sector

was in its
infancy. Small companies that could raise cash and offered investors some

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cushioning for investment in a new industry when they didn’t know value of IT. If 3
companies crashed, investment cou
ld still survive because the other 7 companies
survived. Minimisation of risk.

With regards to bioenergy and sustainability, the US uses sustainability as corporate
mantra. If we can claim a sustainable energy source, project executives will at least
liste
n.

Real issues facing the funding of bioenergy projects in Africa are no different to
traditional investment:



Is there an emerging technology or process?



How can we make sure technology doesn’t become redundant?



What is the opportunity for success?



What i
s the regional risk for investment (What does the region provide so
investors can make comparisons to other investments?)

Once these

are

answered, it is important to get lawyers involved early:



To consider risk factors;



To define what investors are inves
ting in;



Things take time for proper due diligence and it is important to get all the
relevant issues on the table as soon as possible.

What goes into

an

incubator? Investors should be given a group of different staged
companies which are not too diversif
ied. It would be better to have more than one
fund with carefully selected projects in each. The US investor needs to have a keen
understanding of the projects on offer in order for Africa to compete for finance.
They must be able to define the risk factor
s, one of which is the possibility of being
sued in the USA by foreign companies for on the job injuries.

While biofuels is currently popular, this does not translate into investable dollars. An
incubator offers limited risk for the investor and gives an
opportunity for a better
access to the understanding of geo
-
political and regulatory risks within the context of
where the investment will take place. When the deals are structured, investors will
have a choice and can assess the areas of best rates of ret
urn. The incubator also
accentuates the country and region and gives investors the ability to compare
projects in Africa compared to those in the USA or elsewhere in the world. Th
e
incubator will allow investors to have
access to professionals and experts
to answer
their questions and this should speed up the process.

11.

Presentation: Outlook for Partnering and Funding Bioenergy Projects

Presented by Ms.
Nomfundo Mthembu, DBSA

(Development Bank of Southern Africa)

The DBSA invests in sustainable infrastructure

for economic growth in the region. They
act as both financier and facilitator. Products most relevant for investment in biofuels
projects are: Project Preparation Funding (Technical Assistance Loans), Capacity
Building and Advisory Work.

DBSAs energy sect
or priorities are understanding the supply and demand gaps
(renewables are favoured), and biomass (who is active and what is the investment
strategy?) The technical options for biomass utilisation are funding availability,

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institutional capacity, community

awareness, government support and legal regime.
They focus on how best to optimise investment, and highlight the importance of
community involvement, understanding of the role of community and the benefits of
the project. Projects must be well structures,

sustainable and bankable.

Funding risks include policy and legislative issues, institutional issues, environmental
issues, technical and technological issues, operational issues and financial issues.

DBSAs mission on renewable energy is to: “advance d
evelopment impact in the
region by expanding access to development finance and effectively integrating
and implementing sustainable development solutions.” Their strategy is to:
“Generating investment in assets, and to mobilise, develop, apply and share
kn
owledge in support of greater development effectiveness.”

The DBSA will finance feasibility studies, business plans, tariff reforms and revenue
management, technical solutions, management solutions, and customer
management.

12.

Panel session: Investment Opt
ions for Bioenergy Deployment


Hosting and Supporting Bioenergy Enterprise

Biomass , Bio
-
power, Biogas, Biofuels, Waste to Energy

The objective of the Symposium wa
s to debate and develop a consensus to
facilitate funding to develop and finance pr
ojects in Southern Africa. We want
ed

to
put together a framework for an incubator and incubator fund. This has not been
done before for bioenergy. The approach to biofuels is one of “business as usual”.
Industry as a whole doesn’t believe that there is a c
ogent, intelligent approach to
bioenergy. The distance between our future in bioenergy and delivery is 15 to 20
years away. The social and industrial evolution from research to deployment in many
sectors is 20 years at a huge cost.

Bioenergy projects can’
t find funding and that is because nothing
is happening on
the ground. The

position paper outline
d

the need to create a complete structure to
develop

and

facilitate all renewable energies. Developers have become despairing
about their opportunities for su
ccess.

Who owns this space? No
-
one owns it. The creation of policies is masking what is
actually being done.

Africa is a Land Bank, offering low cost land. Plantations used to be huge and owned
by one person and employing thousands of people. Should we g
ive big corporations
the control of the feedstock? We do need well managed plantations and feedstock
that are appropriate. An incubator would be able to tap into the agronomy
technology available. Farmers don’t know what they will be paid for their crop un
til
the cheque arrives in the post. Transport, processing, value refining are all industrial
processes, but when you put the whole thing together you start getting a trading
flow and this is what needs to be created in southern Africa from the resources an
d
supply chains and materials that are already there. You won’t get finance unless you
have a trading flow. This creates a matrix of demand. Should we remove stimulus
entirely or rely on demand? What about the low carbon bond price? This has caused
grower
contracts to be cancelled. The answer is to look at small local projects. It is
easier to get funding and easier to prove the technology on small projects, and then

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you can cluster them. There is a sustainability weakness, a risk capital gap, a
contractual

weakness, an asset finance gap and competitive risk weakness.




We need to look at aligning funding and a project. How long will it take to deliver?
Time is money so the time line needs to be shortened. Project investment conditions
in this regi
on are important for investors. How do we reduce investor risk?
Government involvement is a risk and this needs to be overcome. Asset structuring
needs the correct structures. Territory and economic factors are also important. If an
incubator fund is set u
p, it has to reconcile the fund in order for it to be sustainable.
Most funds want double digit returns in 3 years. Bioenergy projects take 5 to 10 years.
We need 20 year projects. Small companies need a partner to leverage funding. We
need secure contract
s. Investor risk has to be reduced. An incubator can house
projects, facilitate research and all expertise is housed under one roof. They are
tenants under one roof. This is an economic way to marshal investments and
investors have confidence that the incu
bator can protect their interests. An
incubator is a focal point for funders and developers for all bioenergy.

Questions

Q: Malcolm McNeil
: What is the scope of investment required?

GW: Most funds are set at €3
0
-
5
0

million, and one would have to travel
the
globe to
get over €150 million. There is a lot of competition for funds. The incubator needs €50
-
100 million with a minimum of €3
-
5 million inv
estment pool for the commercial

sector,
€1
-
2 million for philanthropic sector and matching funds from governm
ent and
development groups. There is 26 billion in fund capacity in the US for African projects.
In London there are investment funds for “green” development worth €4
-
5 billion in 8
or more funds. None of this money is going to Africa or to projects that c
an’t turn a
profit within 4 years. What type of investment? What is the maximum debt ceiling for
investment?

Q: Nomfundo Mthembu
: One hundred million, but the DBSA doesn’t have the
mandate.

Q
: What is the exit market?

GM
: This will be a revolving fund with no closing date. This is a Nepad initiative. A
revolving fund will take equity on a convertible stock basis on projects. These
convertible stocks could be carbon bonds, any form of paper that has a value to the
fund tha
t is tradable, convertible or redeemable. A revolving fund to provide the

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ability to, at point of entry to take low value stock which underwrites the primary
investment which is then redeemable by the promoter / operator or convertible by
the fund in the e
vent that there is a restructuring of the project. The premium note on
the equity is low and it stays within the low margins available. The reason for the
liquidity in the market is the prime borrowing rate is very low. The prime margin has to
be within a
certain requirement. All potential investors have different criteria,
according to their mandate. Some investment is outside the comfort zone of
commercial banks. But there is a degree of funding that has been earmarked for this
type of investment. This Sy
mposium needs to measure and discuss finance options.

Q
: Malcolm McNeil: Who is the decision maker?

GM
: The stake holder board, with Nepad as the

chairman, is the decision maker
. The
incubator hub holds the projects. The output from the incubation pr
ocess is the
focus. The Nepad expert panel will have the authority to make decisions. These
experts need to be qualified in business, legal, financial, local etc.

III.

DAY TWO

1.

Chairman’s
Analysis of the Events of

Day Two

Selected bio
-
energy and Renewable pro
ject developers from Southern Africa
were

given the opportunity to present their business case or pitch for investment or Partner
Cooperation. Professional and investment Panels review
ed

how the projects could
be best assisted to achieve their respective g
oals and financial needs.

Four bio
-
energy projects and one market sector project at different but critical
stages on their development and deployment
were

presented. Thereafter delegates
were

given an opportunity to consider each project and lodge questions with
presenters. A simple analysis questionnaire to evaluate the relative business cases
was

available to all delegates.

The aim
was

to raise money for the projects presented. Most projects

were

off
-
starts
from big organisations. Entrepreneurs and developers don’t have access to skills and
funds. The audience
was
asked to consider how an incubator would be able to assist
these project developers. The questions to be addressed would include:
Is the
project bankable? Would you invest personally? Delegates
were

required to select
the project with the best potential, and score it on the score sheet provided.

After the projects
were

presented, there
was

debate around the projects and the
leaders
took

questions.

2.

Project:
Production of Cellulosic Ethanol from
Paper Sludge Waste

Presented by Dr.
Emile Van Zyl
,
Bio
mass
Technologies Pty Ltd

Biomass Technologies is a leader in the development of next generation cellulosic
ethanol in Africa. The p
roject is in its start
-
up phase and Biomass Technologies are
ready to roll out some of the 2nd
-
generation technologies. The composition of
Lingocellulose is: Cellulose (46%), Lignum (28%), Xylon 25% and Arabinan (2%).
Hexoses (extracted from Cellulose) and

Pentoses (extracted from Xylan) is
fermentable. The Cellulose to Bioethanol Process is illustrated below. This is the
classical process, which is costly. However, they have developed technology

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whereby they combine the 2 processes of cellulose and yeast
production, and the
enzymes do the fermentation.



The business model is as follows. They have concentrated on Model 1 so they can
go to commercial roll
-
out.


The key business concepts are:



Currently financed by “sweat capital”;



Aiming for semi
-
commercial projects as the next value inflection, leading to
first commercial plant funded by semi
-
governmental and private sources with
2
-
4 years to completion of first demonstration milestones;



Value extracted by providing technology pac
kages to commercial plants
and having shares in commercial roll
-
out;



Looking for private partner to invest in demonstration/commercial projects.
Owner of production facility, feedstock, off
-
take;



Africa is only utilising 15% of its agricultural capacity

-

-

the project can provide
the world with bio
-
ene
rgy, without negatively affecting

food production.

The project will make use of paper sludge. This contains degraded cellulose fibres
and 15 to 50 dry tons per site lands in the landfill. Landfill costs a
re high and have an
environmental impact in terms of space, water to landfill (60%+ moisture) and
methane release.


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Biomass Technologies have the technology to transform waste into green transport
fuel. This will:



Mitigate environmental impacts with attrac
tive returns;



Convert paper sludge to bio
-
ethanol with CBP (one
-
step conversion);



Avoid high enzyme costs (critical for viability);



Reduce waste to landfill (50%) (GHG, space);



Reduce water content and water to landfill;



Does not impact on food production
;



Ethanol is a green replacement for fossil fuel.

The product (liquid bio
-
fuel) has the following advantages:



Liquid bio
-
fuels critical for a sustainable transport sector;



Bio
-
ethanol is a high octane fuel enhancer;



Well
-
established blending methods;



Mode
rn cars do not require engine adjustment to run on E10 (up till E15
recently accepted in USA);



Mandatory blending recently proposed by South African government.

The roll
-
out of the project will entail 4 on
-
site mobile mills for ethanol production in
partne
rship with the global paper industry and this will allow for the production of 14
million litres of ethanol per annum, with a revenue of R75 million and a 27% rate of
return. Xylose sugar waste streams from biomass processing are in the region of 40
millio
n litres per ethanol per mobile site, and cellulose ethanol from biomass residues,
co
-
located with sugar based ethanol, offer production rates of up to 160 million litres
per annum of ethanol per site. The mobile unit is a 12 metre long container which
can

be transported to site.

Financial Summary:



The selling price of ethanol in South Africa is about R5.50 per litre;



Production Scale: 50 dry tons per day;



Net present value (NPV): R26.8 million (€2.7 million);



Internal Rate of Return (IRR):



Payback: 3 years;



Viable with 50% reductions.

The scale of economies is very important. The total pilot funding required would be
R13.2 million (€1.3 million) over 3 years.

Biomass Technologies have a number of interested parties.

Company 1: Letter of in
tent. Interest in possible commercialisation once
demonstration has proved successful.


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Company 2: Interest in possible commercialisation once demonstration has proved
successful. Project needs to find ways of separating fibre from filler materials.

Com
pany 3: Take
-
off market and wants to expand feedstock for production of
ethanol.

The project is sustainable:



Solution that they will market is bio
-
ethanol from waste product;



Scalable production volume;



Technology adaptable (wastes and residues);



Environm
ental benefits;



Economic sustainability;



Social benefits: Reduced landfill;



Jobs in commercial projects (Construction, operation, transport).

Questions

Q:

Meghan Sapp (Pangea): If a company, not located in South Africa, wanted to
scale up this project, can

DBSA do this internationally?

A:

Nomfundo Mthembu (DBSA): There must be an indigenous component in a
project. If indigenous technology, then DBSA could look at it


depends on the
structure.

Q:

Nomfundo Mthembu (DBSA): For project development we need to
understand
strategy. Are you looking for owners or for investors to take up the technology? Are
you researchers and developers and plan to give the project to entrepreneurs to
commercialise, or do you plan to be part of the commercialisation?

A:

Emile va
n Zyl (Biomass Technologies): We don’t want to sell it off. We are
researchers and would like to be the technical provider right up to
commercialisation and to hold shares in the company. Technology sell off is cheap,
so we will make our money by keeping s
ome investment in the commercial
company.

3.

Project:
Multi Regional Project for Torrified
Bamboo

Biomass to
Co
-
Fire

Presented by
Mr
.

Markus Reichardt
,
Director Biomass Corporation Ltd

The business concept is to use large
-
scale bamboo planting as a feedstock for the
carbonisation processes to produce products for energy and industrial markets. The
BioMass Corporation SA (Pty) Ltd is a privately held SPV who investors have brought
togethe
r bamboo and processing IP, business development experience as well as
seed capital to take project to feasibility study stage. There are 4 investors with funds
and IP to explore the idea, including scientists, engineers and a funder. It has taken
18 month
s to pre
-
feasibility phase and they are in the process of finalising the
feasibility and including pilot tests.

The project looks at the utilisation of bamboo as input for the smelter industry in South
Africa. Bamboo falls in between sugar and forestry.
It has different ecological
requirements, and holds a niche position. Plantation forestry in Southern Africa has

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reached its ecologically sustainable limits. Bamboo, which is the fastest
-
growing
woody plant in the world, can grow in sub
-
optimal agricultur
al land while not
degrading long
-
term soil quality. Giant bamboo can sequester more CO2 than other
plants due to rapid growth rates. Giant bamboo matures within 4 years after which it
can yield 30
-
60 tons/ha per annum over a 40
-
60 year period. Giant bamboo

is an
exotic but legal for nursery grow
-
out. Plantations can be low or high intensity. The
project plans to use out
-
growers and the project will remain low
-
tech. There is no
conflict with forestry or food production, and bamboo is kinder to water resource
s.
Biomass Corporation Ltd has secured 2,500 hectares of suitable land in the Eastern
Cape in partnership with local communities who will be the out
-
growers.
The project
wants to help manage farms with Bamboo but does not need ownership of
plantations.

The

project is as a result of a direct request from a non
-
ferrous smelting group. They
face rising costs for reductants and are currently using anthracite or coke, which
attract green taxes. They are concerned about how these green taxes will affect
cash flow

and so they are looking for alternative fuels. The smelter has specified what
they need, and the project must meet their requirements. Biomass Corporation
needs to do large scale testing and must be able to deliver the required volumes.

The process invo
lves drying (moisture content can be a problem), controlled pyrolysis
process and controlled cooling process (it can be volatile if temperature cools too
quickly). The waste is heat intense and should be able to capture 75% (currently 50%)
to reduce depend
ence on Eskom.

They are at the one ton stage but need to look at a high volume stage. The bamboo
has a 9cm diameter in 4 years and is used in a carbonised process.

The initial client is a non ferrous smelter, and the project has the potential to expand
t
o other smelters / other industries.

Some 2,500 ha of land has been identified, and this will produce 40 tons of bamboo
per ha. They are in the process of negotiating with communities for communal land
use, and for the community to be out
-
growers on plots

of 30
-
100 hectares in size (not
too large because of danger from fires etc). Mondi (a large South African paper
producer and owner of plantations) has an outgrower’s scheme and they are
looking at their model to support the community, develop skills and r
educe delivery
risk. The project needs 80,000 tons for the processing into 20,000 tons of final product.
It will also allow for the development of a substantial transport business.

The prospective client will set the price. Biomass Corporation requires R1
54 million
(€15 million) of funding for the reductant plant. For a steady state of production, the
operating cost is R34 million (€3.4 million). The running costs are about 3% of Capex.
Assuming middle range of prices (before tax), gross revenue is estimat
ed to be R60
million (€6 million) per annum. Some 30 people will be employed to run the plant and
extension services and the project will be spread over 5 separate communities in the
Eastern Cape. The project will also create business value through mainten
ance of
vehicles, wood chipping etc. Overall the project will lead to 150 formal full time jobs
and significant seasonal opportunities. Environmentally, even if it goes wrong, it will
not leave behind a wasteland. The soil will be enhanced in quality, and
the
plantation will be rain dependent.


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The feasibility study has been completed (at a cost of R1 million / €100,000) and the
project carries no debt. They are looking for investors for development (outgrowers
and plantation) and discussion with customers.

Questions

Q: Gavin Maxwell
: Do you have a finite study showing yield of 30 to 60 t per hectare?

A: Markus Reinhardt
: Yes, there have been many studies carried out in the tropics as
well as in Mozambique. In the tropic, the yield can be as high as 100 t/ha
. We don’t
have faith in intensive plantations. We want to develop the plantations within the
communities and work with skills appropriate for rural districts. We must be able to
train the community within 3 to 6 weeks.

Q:
What is the moisture content of t
he bamboo?

A: Markus Reinhardt
: It is 28% (between 20% and 28%) at the point of harvest,
depending on the season. The moisture content is 12
-
14% when it goes into process.

Q
: Do you have a Letter of Intent from the Smelter?

A: Markus Reinhardt
: We have an

open ended agreement for 120,000 t. It is a 3
month contract. The smelter uses 120,000t per annum and they need a firm
commitment for a 5 year period. We plan to outsource logistics in the area and this
will move a small business to a more sizable enterpr
ise. They would also need
funding.

Q:
How much funding is required?

A: Markus Reinhardt
: €25
-
30 million will allow production within 1 year.

Q
: What about waste?

A: Markus Reinhardt
: Off cuts are mulched and put back into the soil. The tar is
volatilise
d and an upscaling process is used and it is contained within the
requirements of South African legislation.

Q
: do you have other clients?

A: Markus Reinhardt
: Production is calculated for one client, but the project can be
upscaled for additional client
s. One client is risky but because it is a multinational, it is
acceptable risk. The project is able to produce 10,000t modular process units and we
will be able to expand to other clients.

Q
: Does investment include social study?

A: Markus Reinhardt
: No.
At this stage it is simply developed to levels required by the
client, but we will engage with the community at a later stage. The permit process is
straightforward according to South African legislation. If we access international
funding, we will look at

social studies.

4.

Project:
Commercial Scale Biogas Conversion in African Farm Sectors


Presented by
Mr
.

Dwight Rosslee
, CEO Biogas Power Technology

This is an investment grade bioenergy project. In order to establish a fund or look for
funding the investor must be able to make a return. Initially it was thought that the
project would make money from CERs and we have had to change this model. The
proje
ct objectives are to produce energy for broiler farms.
Broiler Chickens

are for

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meat in chicken houses which accommodate from 12,000 to 40,000 birds per house.
In the rest of Africa the processing units are smaller at 12,000 to 20,000 birds per
house. The
cycle times are 30 to 40 days to produce a 1.5kg chicken ready for
market. Each chicken consumes 1.7kg to 2kg of feed per kg of meat. This feed
becomes litter and this is the fuel for the project. The average boiler farm produces
840,000 birds per year whi
ch translates into 12,000t of chicken meat and 2,200t
chicken litter (fuel). The energy contained in waste is double that needed by house
to run it.

SADCs broiler litter production is:



3.3 million tons of litter per annum;



43,000GJ of energy potential;



4
08 MW power installed capacity; and



1.5% of SADC’s electricity consumption.

The key challenge is the difficult substrate


the litter is full of ammonia, and lignin is
found in the bedding and needs treatment. Up until now it couldn’t be treated
economica
lly.

The energy that can be produced during a cycle is double that needed to raise
chickens. However one needs to consider the energy balance required. At the
beginning of cycle, the farmer needs to supply heat. As the flock get bigger their
bodies produc
e heat and the farmer has to cool the chicken houses. Proper
temperature control is paramount to the process, and one needs to size generation
of electricity to what can be used. There is a need for supplement energy at
beginning of the process and there i
s excess energy at the end of the cycle.



The process to provide the correct heat balance is best addressed by the use of
biogas, using an Anaerobic Digester tool.


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The broiler model architecture is illustrated below:


The cost of providing this en
ergy solution is R7 (€0.7) per GJ. The project cost for a
large commercial operation is R24 million (€2.4 million) over 4 years (27% IRR). The
project cost for smaller farms is R2.75 million (€275,000) over 5 years:


The low hanging fruit is the large
commercial farms while the smaller farms need
funding and it is estimated that the project would need R300 million (€30 million) in
funding. A headline funder is required.


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Questions

Q: Meghan Sapp
: Tell us about the Pig Farm Project.

A: Dwight Rosslee
:
It is a Trade & Aid (NGO) initiative. Initially we competed with
them on electricity generation. Their programme was funded by ca
rbon credits and
they offered
E
A
U’s

and equipment for free and free electricity and they kept the
carbon credits. We have now l
imited the scale of the project and the farmer gets
real returns. We changed the architecture and the project is paying.

5.

Project: Developing Partnerships for Technology Investment in Africa

Presented by
Dr
.

Albrecht Laufer:
VP
of Ligocellulosic
Product
Technology
, Direvo
Industrial Biotechnology GmbH

Direvo Industrial Biotechnology has expertise in enzymes, strains and bio
-
processes.
They can screen 150 samples per day and need strong assay development for
positive and negative results. The process is ba
sed on microbiology laboratories. The
chart below shows the plan to market for their products and services:


The services can bring in cash and are venture capital based. They want to raise
asset value.

BluZY
-
D is a corn based biofuels, based in the USA.

It uses a dry mill ethanol process
for the conversion of corn to Bioethanol and Distillers Grain (DDGS). BluZy
-
D improves
DDGS replacing expensive corn and soy meal in poultry and hog diets.


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BluCon
-
P is trademarked and registered in Germany. It is a con
solidated process
which delivers cost effective conversion of lignocelluloses to bio
-
fuels and chemicals.
Drivers of industry will lead the gradually replacement of oil with biomass
-
based
sugars.
Digest
ed

sugars

will be converted directly to final products
. The cost
implications will be a reduction from €400 per ton using sugar crops and grain starch
to about €150 per ton using wood and grasses.

First generation fuels used for the conversion to ethanol were corn, sugarcane and
wheat. Second generation fuels

were corn stover, bagasse and wheat straw and the
new frontier will use poplar, miscanthus and algae. The key drivers are cost
(feedstock cost, Capex and Opex); availability (easy storage and logistics, secure
supply all year round, stable pricing), envir
onment (reduced green house gases),
and ethics. SADC is an ideal source for perennial grasses.

BluCon
-
P does not only make ethanol, it also produces lactic acid. The second
generation Ethanol Process Evolution is illustrated below:


Direvo Industrial Bio
technology is a small company and needs to partner and
collaborate to bring the project on
-
line. Their current partners include: Lund
University, Ulm University, Andritz, Biotech Corp. They have a 10 year track record of
technology transfer and of managing

some 30 external projects. The next step is a
pilot plant experiment (contract without investment), and the path to market is:


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Proprietary, novel technology is at laboratory stage, 7 patent applications
have been filed, and 15 novel strains deposited.
Current conversion levels
provide a plausible basis for a high probability of success.



Need to find investors to take the development through to pilot plant stage.
The project requires strategic partner(s),
to license technology and receive
royalties subje
ct to delivery milestones.



With only a limited number of direct technology competitors and a
comparatively huge end market Direvo is well positioned to provide a
competitive technology basis to large companies in the energy or chemical
industries.

The requ
ired investment for pilot stage is €15 million. It will take 2 to 3 years to bring
the project to a stage valued at
100m
-
200m ($ million)

by taking the company to IPO
or selling the company or strategic partnering of a license projects. There will be a
hug
e demand as 500 liquid
-
cellular processing plants are needed in the USA alone.


Questions

Q. Gavin Maxwell
: What is the current funding requirement?

A: Dr Albrecht Laufer
: A net investment of €15 million is required. We need 2
-
3 years to
continue to improv
e strains and pilot plant experiments in 2013. We know the cost of
the pilot plant.

Q.

Competitively, what is your position?

A: Dr Albrecht Laufer
: We have a few competitors such as the Viscoma (USA) yeast
project, TMO Renewables and a few others. We are w
ell positioned relative to the
size of market. There will be space for us.

Q:

What is the return on investment?

A: Dr Albrecht Laufer
: An investor would buy in at today’s value and exit in 3 years.
Initial return, licenses to technology, each factory will

bring income to the investor.

Q. Brian Statham
: What is the context of the project in SADC?

A: Dr Albrecht Laufer
: The use of the technology for feedstock.

Q: Emile van Zyl
: How robust is the technology? Do you see yourselves as technology
providers in
Africa or will you move your plants to Africa?

A: Dr Albrecht Laufer
: The strain is already engineering for increased robustness. We
are looking for a long distance partner in Africa. We will not move operations to
Africa.

6.

Project:
A
Bioenergy
Projec
t Investment
in Zambia

Presented by
Professor Thomson Sinkala
,
Zambia Biofuels Association

The Zambia Biofuels Association works towards food / fuel integration. In 2006 the
Zambian government organised a stakeholder‘s consultative workshop for liquid
biof
uels development, and as a result the Biofuels Association of Zambia was
registered. In 2007, Government approved the Energy Policy (comprising biofuels),
and in December 2007 Government convened a stakeholder workshops to map out
a strategy to roll out th
e National Energy Policy. In April 2008 Government issued a
Statutory Instrument (SI 42) which legalises biofuels. In May 2008 the Energy

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Regulations Board issued liquid biofuels standards ZS E100 (for bioethanol) and ZS
B100 (for biodiesel). Since 2010 th
e Zambia agricultural zoning project has been
underway with the help of Brazil.

Internal Policy Regulations in Zambia include the Draft Biofuels Regulations, Draft
technical guidelines for production, storage, transportation and retailing of biofuels,
Biof
uels incentives and pricing of biofuels. These regulations are based on
international trends and take into consideration funding for R&D, low interest
investment funds for the industry, distribution/consumer infrastructure and consumer
information.

The key players are small and medium producers. Prices for bio
-
energy have not yet
been published so no
-
one can go into production. Small producers are mainly
growing jatropha, but sugar also has great potential. Other projects in the country
are Zampalm w
hich is a palm production project with biofuels potential, and Kaidi
Biomass Zambia Limited which has a US$6 billion investment in Zambia in multiple
fuels. Zambia has ample land and the ratio of number of hectares per person is high.
It is what the land i
s used for that is important and Zambia can comfortably use as
much as 20 million ha for bioenergy. Zambia can learn from the cane industry in
Brazil.

Thomro Biofuels/Food Integrated Project

The project comprises weed management, pollination, pest and dis
ease
management, fertiliser supply, harvest and control and final product. At the moment
production of jatropha oil is expensive, making biodiesel more costly than fossil
diesel. The project is looking at ways to cut costs in the production of the feedstoc
k.
For weed management goats are used because they don’t eat jatropha and
additional income can be made from the sale of goat’s milk, cheese and meat. Bi
products from feedstock can be used as food for the goats and poultry in the dry
season, for example,
sweet sorghum, maize, soy beans, and cassava. Wire fencing
can be replaced by planting spiky plants which can be converted into biofuels.
Pollination is encouraged by keeping bees and excess pollen can be harvested as
honey and beeswax. Termite and insect
management can be managed using
jatropha which gets rid of 70% of insects and poultry can also be used to eat
termites. Fertiliser supply can be produced from poultry and livestock droppings
which have high nutrient content. Droppings can also be used as m
anure to grow
vegetables. The seed yield from jatropha is about 10kg per plant. These savings
make jatropha significantly more competitive.

The Mangeso Modular Biorefinery is a one million litre refinery to be imported from
USA and the project is look
ing for US$2.5 million to fund the purchase of the refinery.
Biofuels has the support of government and Zambia has a conducive agricultural
and investment climate for the industry. Biofuels will contribute to food security and
poverty reduction in the coun
try.

No Questions

7.

Project Panel Q&A and Analysis

Moderated by Gavin Maxwell (Symposium Chairman)

The morning’s enterprise and technology presenters
formed a panel and the merits
of

each project, it’s

expert needs and investment criteria were examined. Delegates

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took into consideration current market conditions and questioned how best to
support the development and investment needs of Bioenergy projects.

Panel Members

AL: Dr Albrecht Laufer

MR: Mark
us Reinhardt

EVZ: Prof Emile van Zyl

TS: Prof Thomson Sinkala

DR: Dwight Rosslee

Introduction

The purpose
was

to look at the key issues for the projects presented. They
were
a
diverse range of projects, chosen because of their diversity or synergies or

missing
c
omponents. All these projects could be incubated and all had

funding
requirements
-

asset or capital or operat
ing capital. All the projects were

well
defined. Research
was a little more difficult as it was

more technical and not directly
translat
able into fuels or products.

The presenters
identified who owned the projects but didn’t mention

who own
ed

the
intellectual property. IP or the ability to control part of it
was

a key focus area. It is the
protection that an investor will look for. The
protection of IP can be too expensive
unless someone actually make
s

a claim, and that is when the costs really start.
Projects may just need to
deploy quickly

to generate cash flow. Not all projects
showed cash flow. If one can’t sho
w cash flow then the pr
oject had

not been
thought through to include incidental costs and they may need to ask for extra
funding at a later stage.

Questions to Project Presenters

Q:

GM: How would each of the projects enter the incubator?

Q
: Prof Elmissiry: You may not get the
finance you want out of the symposium. What
would you like the Fund to do for you when we finish today? What can we do to take
you from where you are to where you want to be?

AL
: I want the incubator to provide capital only. I know my partners and have
id
entified potential partners in Africa.

MR:

We need capital but want to get there in ways that create partnerships to
improve the project. We don’t want to get selective on information. We need a
partner that has the incentive to improve the project with us
. We want critical
feedback. The project can benefit through a partnership with funders.

EVZ:

We want the incubator to provide a go
-
between


from proof of concept to
commercial rollout. Funding required so we can do costings and a business plan
well. We
want funding for the preparation of the final step and to help raise the level
of the project.

TS:

The project funding is needed in two phases. Firstly it is needed for a
demonstration plant. We have secured the technology and 4 years supply of
molasses. W
e are working on the final projection for producer prices. Phase 1 is done
and now we need US$500,000 funding. Phase two is the full scale development. We

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need our own feedstock development. The first phase is in the city but the land for
the full scale pr
oject is 600km away.

AL
: A capital injection would be very useful to have a place to do pilot and
demonstration work and connect to feedstock supply in Africa. We would develop a
feedstock chain and research which biofuels are best for which sites. The incubator
could provide /
nurture project with capital.

DR
: We need money for project finance for our clients. We have done the homework
and have a demo plant for swines which is operational. Pulling the package
together which includes funding and taking it to potential clients wi
ll allow for quicker
rollout. The big players don’t need finance, but for small farmers it is an important
focus otherwise they will get left behind. With a package, we can rollout the
technology quickly.

Q: Malcolm McNeil
: Everyone is vague on IP. There i
s a cost to maintain IP. Legally, as
part of due diligence, from a US standpoint we give a lot of credence to IP and the
value of the IP. Does everyone know what IP you have in the portfolios as part of the
investment package to look for investor suitors?

DR
: We have shown the architecture


this is our IP. But this without tools it is a
problem. We own tools and you can’t get it elsewhere. This is our safeguard.

TS
: My farm is open and anyone can come and see what I am doing. I have been
disappointed becau
se one national corporation showed interest and we presented
proposals to them and then they went quiet. What is shown is straightforward, but I
have worked out the numbers in terms of how many goats are needed per hectare,
how much crop to plant each year
. You can take all this information
-

let it help
others.

EVZ
: The IP has been developed with Mascoma and they own the IP. We intend to
go to next phase and negotiate for paper sludge. We can go to any company who
owns IP. The pitfall is TIA and the Bill f
or IP with public funding. The university will secure
the IP. We need to give investor’s access to IP, but not ownership. We are not totally
linked to one company. We have an MOU with the university and if we are successful
they will secure the IP. The inc
ubator phase then can have good agreements with
university.

MR
: Imitation is the best form of flattery. IP across borders in SADC is difficult to
maintain and very expensive. You can’t patent, but you can adjust the organisation
for higher yields. We know

that and hope it will stay with the original investors. We
can’t patent these technologies, but the modified processes are creating a barrier
to entry. A competitor would have to invest similar amounts of money, and
undertake the same due diligence. This
provides informal IP for optimised plant and
process for this situation. Don’t need to invest much more in this area at this stage.

AL
: We have a 7 patent application for the use of micro organisms and strains
deposited in strains bank. We can process the

know
-
how. We can provide investors
with a good exit strategy and so it’s important to have IP. If we want to license the
process later they need the IP. If we sell to one of the big users, then patents are not
as important, just the technology/ process kn
owhow.

Q: GM
: If the incubator had the ability to provide IP protection, would you want the
protection services to be available?



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MR
: The patent is very specific to the area of the process which has to be new and a
benefit. You can’t easily patent a change. Not everything is patentable.

EVZ
: Once you start to get into the bigger arena it is good to have assistance in this
area.

MR
: P
atents are outward looking and as a business grows it may be overlooked. It is
also important to be inward looking. The original team may fracture and is important
that this doesn’t lead to debilitation competition within the sector. All the little
agreeme
nts within the organisation are as important as IP.

AL: The incubator can offer IP and legal support. How do you exit the incubator? The
incubator will give technology to biotech enterprise at a value. It can be used as a
lever. I need my own IP to negoti
ate with the incubator.

Q: GM

(directed at Dwight Rosslee): If you need more security in Africa, would you
buy equity with customers to secure your position? Could you buy into a client
company, for example a 30% share?

DR:

Yes, we have the opportunity to
buy a share of the parent company. We can
leverage our technology capability to get a good rate to buy into a company. IP is
worth protection, but it needs backup money to protect. Enforcing protection is very
expensive.

Delegate
: IP goes with credibility
. The incubator will give the project developers some
security from unscrupulous investors.

Q: Alexandre Strapasson
: What is the role of the incubator and how will it help
projects to be developed. Perhaps the incubator has 3 main possible areas of work


to support companies, government and R&D. In terms of companies, I am not clear
how it will offer companies funding. Funding from Development Banks, and
European and African Banks is available to support this type of project. Is it necessary
to have anothe
r type of fund? What will be the difference of the incubator funding?
R&D can enhance the power of universities so we rather need a centre of
intelligence. Within Nepad we should have sources of databases, links to
governments, discussions with the private

sector, facilitate with banks, educational
institutions etc.

DR
: Industry needs action not talk. We need projects on the ground.

MR
: I was involved in a mushroom farm in a mine tunnel. We needed a €15,000
business investment. Everything was in place incl
uding the money but the
departments of mining and agriculture could not agree who was responsible. If we
get a project onto the table, then everybody will come on line.

TS
: In Zambia the interest rates are very high. At the beginning we applied for
US$200,
000 at 46% and were expected to start paying back the loan within in 6
months. We need a fund that recognises that this is a new industry. Banks don’t
understand, so an incubator fund is crucial.

Q
: GM (directed at DBSA): The objective of the incubator
is to accelerate the
development of projects by providing risk capital and expertise on an equity basis.
They would be expected to provide equity in way of redeemable stock that can be
bought back from the incubator at a low premium. Would the DBSA invest
in an
incubator fund?


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Nomfundo Mthembu
: The role the DBSA would play is one of developmental
approach and its alliance with Nepad. DBSA would have a critical mass approach.
We wouldn’t necessarily put money into the incubator, but rather play a facilitator

role, which is the gap between these concepts and a feasibility that needs to be
qualified for bankers in order to present the opportunity to the potential funders. The
business plan can be validated and should include a cash flow, good business plan,
and

bankability as well as resource mobilisation to bridge the gap. The projects are
at the conceptualisation stage, so where is the money? The incubator’s role should
be to market the projects to developmental finance institutions and commercial
banks.

GM
:
If DR needed finance for his customers and the project has been audited by the
incubator then the DBSA would provide finance to his customers?

Nomfundo Mthembu
: Yes, it is within our scope.

GM
: We need cogent well
-
structured financial products on the s
helf in the
incubator> A developer will be offered by the incubator a range of financial
products. Not all products will be suitable for each project. But incubator will be
suitable for all types of projects. The incubator is a funnel for the finance solut
ions.

Q: Dr Albrecht Laufer:

Who is funding the incubator?

GM
: The incubator is funded as a consolidated centre. If the industry is fragmented it
is difficult to get integration and economies of scale that come from integration of
the bioenergy systems. T
he projects on show have a wide range of project
developers. An incubator provides a safe pair of hands. It needs a technical agency
with international respect and responsibility credentials to be a leader of the process.
Enterprise development zones can i
ncentivise people to develop the necessary
technologies. We need to take enterprise development capital from NEPAD and will
lead process. Why not use existing Nepad infrastructure? Because they don’t have
the correct skills and knowledge. We need access to

piloting and host locations in
non
-
risk areas. An incubator can facilitate the piloting. The customer needs to be
closer to the investor. The incubator needs to be centre of excellence.

Q: Meghan Sapp
: Using the Basque region of Spain as an example, whereby they
have developed 3 industrial parks as enterprise and technical incubators. One
building has about 30 offices and 15 workshops. Rental is paid out of subsidies and
the interaction with all the ot
her companies in the park is important. We network and
source from one another. The Government agency that runs it offers leverage. They
offer speed dating with investors


financial institutions, good rates for trade fairs,
classes and courses etc. This i
s the key for a model for the incubator


to co locate
with other entrepreneurs.

AL:

This is implicit for such a base, but it is not good to put too much money in one
place. It would be better to make good connections to other places. A pilot could
be loc
ated at Prof Sinkala’s site. You need to network and build facilities where you
earn the money.

GM
: The incubator fund is an enabling fund. It is funded by enabling initiatives from
the EU. Funders have expressed interest because it is centralised. If con
ditions
appear to be right you will get investors. Consolidation is important. The incubator
focuses the attention in a most effective way and most cost effective way. We need
commercial skills to keep traction. These 5 projects need to go through the risk

gap.
Unlocking funds is very difficult without an incubator.


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DR:

The business has taken 5 years to first order. There is no shortage and no
replacement for sweat capital. If you don’t need money the banks will give it to you.
There is no home for people
who develop new ideas. We were lucky to survive, but
lots of projects don’t get there. Development agencies and financial houses


we
need a grouping that can take an educated bet and house a number of projects to
offset the losses. We must structure a num
ber of projects together for risk.

GM:

We can invite financial companies to an incubator review once a month and
present some projects / companies that are already involved, some interested and
they can see that the incubator has done due diligence. The r
isk is not only with
developers but with the whole supply chain. We need to de
-
risk getting the projects
into the field.

TS
:

Zambia will have a problem developing Aviation grade fuels
. The origin to why we
are here is energy security. When EU and US become

self
-
sufficient, who will fund
Africa to keep cheap fuel flowing? We need to look at poverty and energy insecurity
to get projects moving.

EVZ
: The incubator gives credibility and a nest. It helps get projects out there and
gives critical mass.

GM
: We won’t build an energy park initially. First we need the projects to put into an
incubator. Within 1 year we plan for a centre of excellence in order to create critical
mass.

Q: Malcolm McNeil
: Where is the money coming from? The private model is for
a
business development company to put in capital and then look for projects and
take a percentage of each company, and provide management skills and
knowledge. The issue is each project is in a different phase. It is critical for the
incubator hub to deter
mine parameters for projects. There is no shortage of projects.
When they see the terms for giving up a percentage of their company the project
companies many leave because they are too far down the process. To create the
incubator we need a common element

of what is an ideal project.

GM:

The Position Paper is the starting point, and gives three reasons to focus the
development. Now we can launch the incubator and fund. Africa is our major asset.
In 2050, Sub
-
Saharan Africa will be the second largest provi
der of biomass in the
world. This will benefit Africa as well as provide export potential. This is the way to
provide traction.

MR:

It is important for entrepreneurs. Whoever comes along, the majority of projects
won’t fly. If there are people with concer
ns they should look at the trans
-
national
institutions for investment.

8.

Presentation: Satellite Facilities for Biosciences at University of Stellenbosch

Presented by
Dr.
Emile van Zyl
, Biomass Technologies Pty Ltd

Emile van Zyl presented the facilities ava
ilable at their facilities at the University of
Stellenbosch, and suggested these laboratories and the infrastructure could be used
as a satellite for bioenergy in southern Africa. The facilities are multi
-
disciplined, and
are staffed by microbiologists,
chemical engineers, and process engineers. The
laboratories are well equipped with space for 12 students, good infrastructure, a bio
-
reactor laboratory and pre
-
treatment facilities for ethanol (the only one in SADC)
and well equipped 20L to 200L fermentors
. The facility cost about €8 million to build.

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One would need to negotiate with the university authorities with regards to using the
facilities for the proposed incubator. Human resource capital (€4 million) won’t be
needed as it is already part of the exi
sting resources of the facility, and this could be
used as early facilities for the incubator. The university is already working with Nepad
to expand their regional network. Pilot projects don’t have to be housed at these
facilities and can be rolled out t
hroughout the region.





9.

Presentation: State of Bioenergy Development in SADC

and Incubator Support
Opportunities

Presented by Mr
.

Odala Matupa
, Interregional Policy Briefing

SADC is comprised of 15 member states. The power systems of 9 states are
connected on the mainland, and the electrification rate is about 30% for the region.
Over 70% of the population of 250 million rely on biomass. The SADC energy
instruments are as foll
ows:




The SADC Protocol on Energy (dated and in need of review);




SADC Regional Cooperation Policy and Strategy;




Regional Indicative Strategic Development Plan (RISDP), 2005;




Regional Energy Access Strategy and Action Plan (2010);




SADC Biofuel Decision Making Tool (2010);




Framework for Sustainable Biofuels (2010) (under development);




RE Strategy and Action Plan


study on
-
going.

The role of SADC in biofuels development is:




Promoting policies that are compatible across politic
al borders;




Enhancing technological transfer;




Engaging international partners for capacity building work and resource
mobilization;


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Facilitate infrastructure development that enhances trade and regional
cooperation;




Providing a framework for developme
nt and implementation of national
strategies;




Facilitate capacity building;




Facilitate information and experience exchange;




Updating Regional Instruments (Protocol) to include emerging issues.

Programme for Bioenergy (ProBEC)

This is a pilot study that

was conducted on biofuels between 1998 and 2010, to
promote energy efficient technologies and supporting policies. The biofuels projects
established are still continuing and carbon credit programmes are being negotiated.
The key policy objectives for biof
uels in SADC are:




Improve energy security;




Diversification of rural economy;




Creation of huge market for agricultural products;




Job creation;




Rural development;




Import substitution to save hard earned foreign exchange;




Opportunity for choice o
f environmentally friendly fuels;




Utilize soil not suitable for food crops or marginal land.

The region needs to focus on the following in order to move forward:




Further Develop and Contextualise the SADC Sustainability Framework for
Biofuels;




Encourage Biofuel Research and Development and Sharing of Research
Results;




Promote Increased Yields through Optimisation of Agricultural Production;




Adopt a Pro
-
farmer Approach to increase opportunities for small
-
scale,
community
-
based projects to i
mprove local benefits;




Develop National and Regional Biofuel Quality Standards and Certification;




Explore Carbon Market entry points;




Develop Investment Guidelines;




Undertake Agro
-
ecological Land Zoning;




Strengthen National Legislative Frameworks;





Establish National Biofuel Task Forces and other multi
-
sectoral structures;




Develop Nationally Appropriate strategies for Communication.

SADC Fra
mework for Sustainable Biofuels


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The guiding principles of the SADC framework is the development of a biofu
els
industry that throughout the value chain promotes:




respect for, and inclusion of, SADC citizens in the biofuels production;




the protection and sustainable management of biodiversity and natural
resources; and




a sustainable economic approach cont
ributing to overall development and
social well
-
being.

Principles are in the following categories: consultation, land rights and zoning;
production models and rural development; food and energy security; environmental
aspects; and climate change and GHG.

B
iofuels Decision Making Tool


The key challenges for SADC are:



Slow pace of policy development/reforms in the Member States as well as
SADC;



Inadequate capacity to provide regional coordination and oversight of
biofuels and RE development;



Lacking
collaboration and coordination to leverage financial and technical
resources


to match funding and project promoters;



Bioenergy data not readily available for planning purposes;



Policy inconsistencies and lack of stability;



Bioenergy development is percei
ved as an energy sector issue.

“Bioenergy remains the most important energy source in the Region and there is
need for Governments, Investors and other actors to work together to identify
innovative and sustainable solutions.”

10.

Presentation: UNIDO Bioenergy

Initiatives in Southern Africa

Presented by Nokwazi Moyo

UNIDO is based in Pretoria under the Department of Trade and Industry (Dti) and has
regional offices in 10 other SADC member countries. They are involved in a number
of projects in the bioenergy s
ector in Africa.


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The Phambili Energy Biomass Conversion Project

This South African project deals with the poverty cycle. Rural areas export labour and
bring back cash. This money is spent on food and other basic goods and the money
lands up back in the
city. There is a need to locate energy production in the rural
areas so local labour can be used, and which will keep parents in rural areas with
their families. The production process centres round the conversion of logs/wood to
biofuels. It is a R40 mill
ion (€4 million) project that will develop smokeless fuel that can
be used indoors. The Phambili biomass power station plant can supply into the grid or
local distribution network, or into industry.




11.

Presentation: SE4ALL and Bioenergy Investments

Presented by
Mr.
Gregory Woodsworth
, Energy Policy Advisor, UNDP

The UNDP is active in energy for development as part of the Millennium
Development Goals. The SE4ALL was formally launched in 2011. The initiative is
composed of 3 goals, namely energy access
, energy efficiency, and renewables.
The first objective of the initiative is the financial aspect of universal energy access.
Africa alone will have half a billion people with no access to electricity by 2030. This is
unacceptable and the UNDP is at the f
orefront of advocating universal access. The
MDG steering group has estimated the cost of providing 30% of the population
through grid extension is US$40 billion per year from now to 2030, the funding gap at
present being US$26 billion per year. The cost e
fficiency of decentralised energy
solutions is extremely persuasive.

From 1998 to 2008, the region experienced 70% growth in electricity generation or
average annual growth rate of 6% for the region. Growth in the area of renewable
energy has been equally

strong, with total electricity generation from renewable
sources grew by 72% from 1998 to 2008. This means that 66% of all new electricity
generated in sub
-
Saharan Africa after 1998 has come from renewable sources. This
growth in renewable has been almost

exclusively hydro
-
based, which relies on

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climatic conditions. Most of this power is connected to the grid. However the
majority of the African people are not, and instead rely on biofuels for energy.

Investment is still required for grid electricity. But we need to make additional
investment in decentralised systems that address more balanced national priorities. A
recent study has highlighted areas of interest, a number of policy instruments that
are
available and to which the private sector will respond. The most significant are
the introduction of feed
-
in tariffs and the establishment of clear national targets for
renewable energy generation. The establishment of these targets are part of energy
stra
tegies. If properly conceived, developed and internalised by political and policy
systems, they can be the basis for creating confidence in the private and financial
sectors for making the appropriate investments. If governments create the
framework, finan
ciers may follow.

The core of the SE4AL initiative is the importance of setting targets. The global targets
for 2030 need to be translated at the national level. African countries have done a
gap analysis which will be followed by action plans. The framew
ork for SE4ALL is
outlined in the slide below:




12.

Discussion Panel: Agency Support

Panel

ME: Prof Elmissiry

OM: Odala Matupa

NM: Nokwazi Moyo

GW: Gregory Woodsworth

Questions

Q: Meghan Sapp
: Should the targets be voluntary or mandatory?


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GW
: There is n
o obligation to reach targets for the use of biofuels. Governments by
signing onto the process are not obliged to reach these targets. If translated into
regional and national levels and working through RECs and they sign on for the
strategy, it becomes a
legal instrument and obliges the member state to implement
and follow and reach targets. As it gets translated down from global aspirations to
national level, it becomes a more mandatory legal obligation.

GM
: An incubator is the technology for targets to
become mandatory. Demands for
projects will create mandatory requirements.

Q
: GM: How often do you meet as a group to discuss commonality of purpose?

GW
: We meet under different guises. There is no forum for Regional Economic
Communities (RECS) to meet. Ne
pad and the AU take the lead using RECs as
regional sub
-
units for implementation and to support member states. This will be
addressed and provide better coordination in near future.

GM
: Can you agree to a frame of words to put into our report in relation t
o
development to say that the incubator becomes the catalyst to facilitate that
happening.

ME
: It may be possible.

GM
: The projects are what will make the thing happen. Projects enabled will make
for action. Then we can focus demand, need, and cooperatio
n. The incubator is not
reliant on awaiting policy changes but may assist in directing and moving forward
this forward. If you support this initiative please write to Prof ME and give support and
then we can create a proper frame of words.

GW
: We can bring

RECs together to a cooperative forum as a NEPAD led initiative.
This symposium should feed directly into REC Coordination group and become a
sub
-
chapter to a more formal agreement.

ME
: This is the standard way for us to operate. We consult with all RECs t
o get their
support. We try to coordinate our work at a regional and national level to ensure that
continental projects are implemented and there is buy
-
in at regional and national
level.

GM
: The commercial world wants to hear about these levels of co oper
ation. This will
allow them to feel more comfortable. Then it is not just a programme with an end but
a facilitation that is sustainable in long term.

13.

Developing
t
he Fund: Roadmap for Establishment

Presented by Gavin Maxwell

Below is an illustration of what an energy park or Incubator Hub would look like,
having tenants and supporting projects. Not all project developers would want to be
tenants and this hub will not be built for a while, but the Fund will have provision,
part
ly from the public and matching funding process to put this centre in place
because it needs a focus. The fund will drive projects into the hub and will be a
model for the world. This is what can happen when a need and a target come
together in proper trac
tion.

Incubator Project Model


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The incubated project model encapsulates the entire bioenergy market. Green
Energy Services Companies (Gesco) are a fundamental cluster around which
agriculture, industry and supply chains have to get together.


Every as
pect of a natural resource needs to be examined in order for all the
opportunities to be looked at. An incubator, backed by an incubator fund, is the
best way for projects to gain traction. The incubator is a clearing house for projects.
Private investors
will know this is a sustainable process built around a framework and
developmental process. Investment will go directly into an incubator fund which will
be managed by a professional fund manager which will offer lower cost operating
fees. It will be a rev
olving fund that is taking equity in risk projects.

The areas to be supported cover all aspects in terms of due diligence that needs to
be put in place and supported at a capital, contract, supply chain and feedstock
level. Africa’s natural assets will be

protected and revalued for energy for all through
the development of enterprise.


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Biomass is key to the economics of the bioenergy industry. Africa is the key to
biomass energy. By 2050, Africa could be the 3rd largest provider of biofuels globally.



A
Bioenergy

enterprise incubator fund diligence process will include standards,
certification and guidelines so people have the confidence that the incubator hub
will deliver. All the policies will come under scrutiny to ensure they fit the purpose of
the

incubator. The incubator could have 800 projects some tenanted some satellite.
The incubator is the clearing house.


The objective if the incubator is to produce returns. For the fund so it can regenerate
and support as many projects as possible and intr
oduce large scale projects to
maturity for the financial community to get their returns. We need to reduce risk,

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make sure government policies are sound. We will set out roadmap for the fund over
the next 3 to 4 weeks.

14.

Closing by Prof Elmissiry

There is
no doubt that this symposium has been target driven. We want to see things
happening on the ground. Nepad is a result orientated organisation with a particular
interest to see things moving on the ground, so from the beginning of the symposium
we have want
ed to see programmable issues taken forward. We have identified five
projects and we will be moving these projects forward. A certain bank has already
agreed to have a closer look at these projects and advise on how to take the
projects forward. Gavin Maxw
ell, myself and Nepad will meet tomorrow to plan the
way forward from here and we will keep you informed on what we plan to achieve.

Thanks to participants, organisers, and funders.


15.

Analysis of the Projects Competition

The projects presented at the Symposium were judged by the delegates on the
following criteria:



Management Team or Promoter overview
of
the project



A summary of the product or technology at the core of the project



A value proposition and unit economics


Furthermore delegates were asked to consider whether they would invest in the
project. The winner was: Dwight Rosslee of Biogas Power Technology.












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