Beyond Fossil Fuels:

Opportunities for Africa

Washington, 7th october 2008

Energy Security: Energy poses a major problem in sub-Saharan Africa, more so than anywhereelse in the world.

The electrification rate < 16% in AfricaThe primary energy consumption < 5% of the world total consumptionAn increase in oil price $10/barrel = 1.5% drop in GDP & up to 3% for very poor countries

Climate change: The poorest countries that will suffer the climate change earliest and mostHunger, water shortages and coastal floodingThe increase of production and exports of oil and gas cannot be an end in itself

Carbon market: an additional revenue streamKyoto protocol and its local application : European Trading Scheme, CCX (USA),NSW(Australia)…Carbon finance could raise $4 billion by 2012 and up to $14 billion thereafter (10 timesgreater than what is available than Official Development Assistance)

I. Energy ContextI. Energy Context

I. Energy ContextI. Energy Context

World Energy consumption

Source: IEA World Energy Outlook

I. Energy ContextI. Energy Context

Africa Energy consumption

Source: Energy Information Administration, May 2008

Biofuel : available land for Agriculture (69.8 million hectares in West Africa)

Biomass : total of 650 million hectares in Africa (17% of the world’s total forest cover)

Water (hydro power) : 17 major rivers with catchments areas of greater than 100,000 km2

Geothermal : example: on 80 km² of field there is enough steam to produce 200 TWh/year

Wind : 9m/s of average wind speed per 80m

Solar : average sunshine potential in West Africa represents 5 to 6 kWh/m² per day

II. Renewable EnergiesII. Renewable Energies

IV.IV. BiofuelsBiofuels Opportunities in ECOWAS regionOpportunities in ECOWAS region

Superficies : 5 million Km²Population : 260 million habitants

III.III. BiofuelsBiofuels

III.III. BiofuelsBiofuels

III.III. BiofuelsBiofuels

III.III. BiofuelsBiofuels

Energy Balance = (biofuel combustion energy) / (energy requirement for biofuelproduction)

Environmental Benefit = (biofuel CO2 emission ) / (fossil fuel CO2 e 1m 0i ,5ssion)

Maximum matrix substitution = fossil fuel fraction possible for substitution taking allallowable biomass

Source: PNAS, jul 2006

III.III. BiofuelsBiofuels

First Generation (from sugars, grains, or seeds) Biodiesel (fatty acid methyl ester; fatty acid ethyl ester)

Rapeseed (RME), soybeans (SME), sunflowers, jatropha, coconut, palm, recycledcooking oil

Pure plant oils (straight vegetable oil). Alcohols (ethanol, butanol)

From grains or seeds: corn, wheat, potatoFrom sugar crops: sugar beets, sugarcane

Second Generation (from lignocellulose: crop residues, grasses, woody crops) Biological fuels

Ethanol (or butanol) via enzymatic hydrolysis Thermochemicalfuels (most made via “gasification”)

Fischer-Tropschliquids (FTL)Methanol, MTBE, gasolineDimethylether (DME)Mixed alcoholsGreen diesel

III.III. BiofuelsBiofuels

III.III. BiofuelsBiofuels

5

3

2

Other

3

3

Palm oil

3

3

Jatropha

Total

BioethanolProduction

BiodieselProduction

3

3

Cassava

195

115

8

TotalSugarCane

Biofuel projects in the pipe line

III.III. BiofuelsBiofuels

3

Aff /Ref

19

Hydro

4

FossilFuel

9

Biomass

1

Wind

5

E. Eff

1

E.Distr

2

Agri

2

Solar

471

TotalSolideWaste

Other projects in the pipe line

Agri = AgricultureE. Distr = Energy DistributionE. Eff = Energy EfficiencyAff / Ref = Afforestation / Reforestation

FINANCING Strategy :African Biofuel & Renewable Energy Fund

(ABREF)

I. PresentationI. Presentation

In November 2006, the ECOWAS Bank for Investment and Development (EBID) and theUnited Nations Conference on Trade and Development (UNCTAD) organized a regionalconference in Accra, Ghana, on the financing of bio-fuels and Jetropha cultivation inAfrica, and on the development of the carbon market.

During the conference the initiative was launched to establish an African Fund for thedevelopment of bio fuels and other renewable energy.

II. Objectives of the FundII. Objectives of the Fund

The Fund will :

Contribute to the development of the biofuels and renewable energy industry in theAfrican regions, with a particular focus on West African countries

Provide investors with superior returns through investments in biofuels and renewableenergy projects which generate Certified Emission Reductions (CERs).

III. StructureIII. Structure

Africa Biofuels &Renewable Energy

Fund (ABREF)

Equity Investment CERs Purchase

Africa Clean EnergyTechnical Assistance

Facility (ACE TAF)

Feasibility studies Energy audit for potential energy

efficiency projects Project Design Documentation &

Validation Projects preparation costs Capacity building

Africa Biofuels &Renewable EnergyCompany (ABREC)

Project identification Support for Management of

the TAF Liaison & Coordination Support to the Fund Manager

InternationalFund Manager)

Revew & carry out duediligence on projects &recommandation to the Boardof Trustees

Monitor the project postfunding & report backto the Board of Trustees

Prepare an annual budgetfor its activities

IV.IV. SizeSize && SharesShares

ABREF Equity investments : €200 million

€150 million (75%) of the Fund’s capital for equity investments in specific projects€50 million (25%) to purchase CERs

Debt facility : US $ 1 billion

ACE TAF : €10 million

Contributions from governmentsVoluntary contributions from private sector

Fund Size

Private Investors , Share A

Governments, Share B

Category of Shares

IV. Size &IV. Size & SharesShares

V.V. StrategyStrategy ofof FinancingFinancing

Low

High

HighLow

ODA & governmentPERCEIVED

RISK

BANKABILITY

Export credit agencies& Insurance companies

Commercial banks

Institutionalinvestors

Capital market

Development banks

ABREF financing strategy

Use credit enhancementsbased on additional cash flows

Carbonfunding

Revolvefunding

Mezzaninefinance

Debt &leasing

Equity

Advise

&

Arrange

V.V. StrategyStrategy ofof FinancingFinancing

Project

programme

…

CDMportfolio

CDMreviewprocess

Buyer

ABREF Investment Fund Escrow

Advisor/Arranger/

Manager/Financier

Sales realization

carbon creditsissuance

ABREF Carboncredit company

V.V. StrategyStrategy ofof FinancingFinancing

Project

Escrow a/c

Buyer

Option 1

Sale agreement (ERPA)

Sale of carbon credits

Project asset

& assignment ofERPA

Upfrontlending

&

Cofinancing

Sales

realization

Servicing

Project

Escrow a/c

Buyer

Lenders

Sale of Carbon credits

Sales

realization

Upfront

lending

Advisor

/arranger

Project asset

& assignment

of ERPA

Credit wrap

servicing

Sales agreement (ERPA)

Option 2

ABREFABREF

THANKS TOOUR SPONSORS

EcowasEcowas Bank forBank forInvestment & DevelopmentInvestment & Development

United NationsUnited NationsConference On Trade & DevelopmentConference On Trade & Development

World BankWorld BankCarbon Finance AssistCarbon Finance Assist

Economic CommunityEconomic CommunityOf West African StatesOf West African States

ECOBANK GroupECOBANK GroupInternationalInternational

Energy Insurance (Nigeria)Energy Insurance (Nigeria) FondsFonds AfricainAfricain dede GarantieGarantie etetdede CoopCoopéérationration EconomiqueEconomique

OUR PARTNER

ECOSURECOSUR Energy.EnvironmentEnergy.Environment..InnovationInnovation Alien EnergyAlien Energy EmpresaEmpresa BrasileiraBrasileira dede

PesquisaPesquisa AgropecuAgropecuààriaria

FIRST CLIMATEFIRST CLIMATE Agence Nationale dAgence Nationale d’’AppuiAppuiAu DAu Dééveloppement Ruralveloppement Rural CommunautCommunaut éé

ElectriqueElectrique du Bdu BééninninDENTON WILDE SPATEDENTON WILDE SPATEUnionUnion EconomiqueEconomique etet

MonMonéétaire Ouest Africainetaire Ouest Africaine

Head of Project

Mr. Thierno Bocar TALL

Tel : (+228) 221 68 64Fax : (+228) 221 86 84

(+228) 222 81 51

E-mail : infos@faber-abref.org

www.faber-abref.org

THANK YOU FOR YOUR KIND ATTENTION

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