johnny francois memorial forestry lectures maiden … · extensive cutting-volta poor...
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CSIR – FORESTRY RESEARCH INSTITUTE OF GHANA
Existing Financial Mechanisms & Opportunities
for Sustainable Wood Energy Value Chains in West
Africa
Beatrice Darko Obiri
FOREST PRODUCTS AND MARKETING DIVISION
CSIR-FORIG,GHANA
ECREE Workshop 9-11/05/16, Cotounu, Benin
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CONTENTS
1. Context for financing-what are the key issues?
2. Analysis of selected wood energy financing
mechanisms for cases in west African states
3. Financing opportunities for enhancing wood
energy value chains
4. Lessons or Key messages
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MY TASK
Analyze existing finance mechanisms and opportunities
for sustainable wood energy value chains in West Africa
OBJECTIVE
Identify best practice/ innovative financing mechanisms that can be harnessed for sustainable development of wood energy value chains in West Africa
Identify opportunties for financing sustainable wood energy value
chains
20 May 2016
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HOW ANALYSIS WAS DONE
Desk review of project cases
Information from documents on donor,
company and other websites
Criteria for analysis Financing goal
Fund sources and values
Partners, contribution and partnership arrangements
Key activities financed
Linkage with communities
Sustainability
Any challenges
Any impacts
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Why need for sustainable wood energy financing?
Percent share of total energy consumption
650 million people expected to use biomass (charcoal and firewood) in
cooking in 2040 in Africa
Wood energy will still play a key role in WA economy over next
one and half decade
IEA energy outlook-Africa 2014
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Financing enhancement of wood energy value chain so far
Efforts concentrated on development and promotion of more
efficient end use devices through various financing arrangements including
grants
improved end-use devices for clean cooking to conserve
wood, reduce emissions and health hazards in rural
communities
others
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BUT
Every aspect of the value chain needs financing
intervention for improvement
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CONTEXT OF FINANCING: ISSUES NEEDING ATTENTION
8
98% of domestic producers
extract wood for fuel from
natural stands
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Increased pressure on the natural feed stock
All year round production
Uncoordinated inter-sectoral efforts for resource management
Extensive cutting-Volta Poor management-Central
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DECLINING VOLUME OF PREFERRED WOODFUEL
SPECIES
70 species reported by producers being extracted for fuel
Most frequently extracted are native hard wood species
High wood density with high calorific values
Anogeissus
Ptericarpus
Mangroves
Celtis
Albizia
Vitellaria paradoxa
Khaya
Etc.
Obiri et al 2014 and 2015
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Climate threats from drought on crop production
Declining agricultural incomes
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Increased dependency on wood energy resources as Major
alternative and supplementary income source in most farming
areas
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RUDIMENTARY TECHNOLOGIES: CHARCOAL
20 May 2016
Earth Mound
95%
Mud brick kiln
2%
Metal kiln
3%
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RUDIMENTARYTECHNOLOGY
Drudgery and health hazards
Smoke, heat and dust traditional
earth mound charcoal production
Smoke from firewood for cooking
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RUDIMENTARYTECHNOLOGY
No secondary processing of firewood to preserve in storage
Wood left in the open
Termite and fungal decay common
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Key segments of wood energy value chain & needs for
financing
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Feedstock
Wood
Conversion- product development Firewood & charcoal
Packaging
&
distribution
Marketing Consumption
Resource
availability &
Regulation
Technology for efficient conversion
for higher end-use product
Technology for quality packaging,
Product standardization
Distribution mechanisms
Regulation
Pricing
Certification
Supply statistics
Efficient end-use
devices
Demand stats
Waste reduction-value for money processes
Accessibility, Affordability, Sustainability
Wide range of stakeholder engagement: institutions-
policy/ regulatory, financial, health, engineering, research
and academia, communities, market associations,
development, etc.
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CASES OF FINANCIAL MECHANISMS
REVIEWED
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Case 1: Ghana: Efficiency Enhancement and Entrepreneurship Development in
Sustainable Biomass Charcoaling
Focus: sustainable forestry together with energy-efficient charcoal production & marketing
20 May 2016
Efficient Charcoal
Kilns
Feed stock
- 19 energy wood
plantations
Charcoal Local market
Traditional land owners
Nordic Partner:
-Pöyry Management Consulting
NORDIC DEVELOPMENT FUND
Climate Finance
EUR 500,000
Finish private investor
African Plantations for Sustainable
Development (APSD), Ghana-system
managers
Local Partner
WWF West Africa Forest Programme
Office (WAFPO)-Liason
Private-Private-NGO-Community Partnership Duration: 24 Months
Total Project Cost: EUR 848,000
Improved packaging
training
Improved transport
training Charcoal artisans
training
Local communities-
plantation workers
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Case 2: Senegal
Sustainable and Participatory Energy Management Project (PROGEDE II)
20 May 2016
Efficient
carbonization
Feed stock
-community
managed forests charcoal Local market
Senegal
Ministry of Energy
Partner:
World Bank/IDA
Project period: 2010–2015
Project value: EUR 11.1 million
NORDIC DEVELOPMENT FUND
Climate Finance
EUR 3 million
Sustainable wood fuel supply
Promotion and diversification of
modern household energy
Local communities Charcoal artisans
Public Private Partnership ??
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Case 3: Ghana
-Biomass Green Briquette Fuel (GBF) Production (BidiePa) under Kitchen
Efficiency Programme https://youtu.be/wOJwXGQmPI8
Aim : Climate mitigation through conversion of forestry and agricultural bio-waste to briquette fuel to save
forests and emission of Green House Gases
20 May 2016
Briquette plant Feed stock
-Maize cobs, Millet stalks
-Sawdust
Briquette Local market
Local associations -Churches, women’s groups for demonstration
Local Gov’t & NGO
Nordic Partner:
C. F. Nielsen A/S (Briquette
machine manufacturer)
NORDIC DEVELOPMENT FUND
Climate Finance
EUR 494,790
Local Partner
CookClean Ghana Limited
Other Partners
S.m.b.a.
(Business to Africa)
Total Project Cost: EUR 923,403
Duration: 24 Months
Private-Private-Private
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Case 4: Benin
Increased access to modern energy:
Sub-Component B 2: modernizing biomass energy services
Goal: improve reliability and access to modern energy services
20 May 2016
Efficient
carbonization
Feed stock
-community managed
forests charcoal Local market
Benin
Ministry of Energy and Water
WORLD BANK/IDA : USD1.3m -Community based wood fuel
management of 300,000 ha forest
Project period: 2010–2014
:
Africa Renewable Energy
Access Trust Fund (AFREA)
USD 2 m
Artisan training in high efficient
carbonization
NORDIC DEVELOPMENT FUND
Climate Finance
EUR 1.5 m
-strengthening community-based
sustainable wood fuel production and
market management systems
Parallel funding
Charcoal
artisans
training
Local
communities
PPP??
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Case5 : Ghana: Eucalyptus to electricity
Goal: contribute to availability of national power supply, socio-economic
development of local communities
20 May 2016
600 MW
Co-generation Plant Feed stock
- Eucalypt plantations Bioenergy National grid
Traditional land owners
Norwegian power generation business
African Plantations for Sustainable
Development (APSD), Ghana
Private-Private-Community Partnership
Local communities-
plantation workers
Local partner:
JAK Foundation
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Any OPPORTUNITIES for sustainable wood energy value chain
financing? (YES)
Private sector investment in wood energy value chain is increasing
Need to put in place appropriate and stable policy and enabling environment
Loans/Grants from development partners still vital World bank /IBRD
World bank/ GEF
African Development Bank
International Tropical Timber Organization
NDF climate finance
Sustainable Energy Fund for Africa (SEFA)
African Renewable Energy Fund
ECOWAS Renewable Energy Investment Initiative (EREII)
National governments and agencies fund sourcing still vital
Potential to network to pool funds for financing wood energy value
chains 20 May 2016
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KEY MESSAGES
For sustainability, every segment of the chain needs financing for
higher efficiency and value
Financial mechanisms for wood energy value chain
Public Private Partnership
Private Private Partnership
Public Private community partnerships
External capital from development partners still key to enhancing value
chain
local commercial banks tend to be risk-averse
Green financing mainly grants provides leverage for capitalizing on topical
issues related to climate mitigation and adaption (forest landscape
restoration, emission reduction, climate vulnerability reduction
Forest for Security window
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KEY MESSAGES
Need for innovative financial mechanism to implement sustainable
wood energy projects in West Africa
Possibility of pooling financial resources for wood energy value chain
development fund for financing with local and external energy sector
stakeholders including private sector
Support with favourable policy environment and institutional framework
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COUNTRY LEVEL: SECTOR DEVELOPMENT FUND TO FINANCE WOOD
ENERGY VALUE CHAINS
20 May 2016
WOOD
ENERGY
SECTOR VC
DEVELOPMENT
FUND????
NATIONAL GOV’T
FUNDS • Sector budgetary allocation
• DP support projects
• Pooling internal revenue from
wood energy transactions
-Charcoal liscence
-DA revenue from wood fuel
-FC permit for wood collection, etc.
GRANTS
Climate finance, ETC.
Multilateral and bilateral
NDF, EU, UNFCC- REDD+, ITTO,
FAO-FLEGT, AREF, AU,
ECOWAS, ETC
LOANS & GRANTS
-World Bank
-AfDB
-ETC
VENTURE
CAPITAL (SME)
Local
communities
Green growth development & research
Private sector & institutions -Value for money projects
Feedstock Conversion- product development Firewood, charcoal, briquette &
electicity Packaging & distribution Marketing
End use devices
Consumption
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CONCLUSION: Why need innovative finance for sustainable
wood energy value chains in West Africa?
Wood energy is key to sustainable development in the sub-region Primary fuel source for domestic and industrial use
Renewable and reliable even if all other sources of energy fail we can grow
wood and use for energy possibly at a cheaper cost
For wealth creation
Ensure availability and affordability for enterprise/industry development
to increase local economy growth to reduce poverty
Modernization Reduce DRUDGERY in acquisition and use
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CONCLUSION: Why need innovative finance for
sustainable wood energy value chains in West Africa?
Ensure efficiency in resource use (incl. safe
use)
Profit maximization along the value chain with
low transaction costs
Ensure environmental and livelihood
sustainability
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