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African bioenergy fund in the works

Incubator aims to get biofuel projects to market

African researchers stand to gain from a planned fund to help biofuel projects reach a commercial stage.

The New Partnership for Africa’s Development (NEPAD), an agency of the African Union, is driving the development of the African bioenergy incubator, which could be up and running in less than a year.

The incubator was discussed during two recent bioenergy meetings—one in Johannesburg, South Africa, in July and the other in Dakar, Senegal, at the end of August.

The incubator would provide early-stage bioenergy projects with money and know-how to help projects reach the point at which they can attract their own investment.

Biofuels are derived from biological materials such as wood, crops, organic waste and manure. They currently provide about 10 per cent of the world’s energy production.

But demand is expected to exceed supply by 2020, according to Global Biofuels Outlook 2010-2020, a report published by Hart Energy Consulting last year.

NEPAD officials hope the incubator will come into existence within months. Five projects in southern Africa and 15 in west Africa have already been identified for support.

“We are developing the structure of the fund. Then we’ll approach the investors. I hope we are talking months, not years,” says Mosad Elmissiry, who heads NEPAD’s energy programme.

NEPAD has approached regional development banks as well as private banks for finance. The initial target is US$50 million.

Over time, however, NEPAD would like to raise many times that amount in order to provide sufficient support to technology developers.

Filling a gap

The incubator will fill a funding gap in Africa, says Elmissiry.

“The usage of bioenergy in the Southern African Development Community is 2 per cent of its potential”, he says. The continent could be the largest producer of bioenergy in the world by 2050, he adds, but a lack of finance hampers projects.

Emile van Zyl, a professor leading work on bioefuels at Stellenbosch University in South Africa, says that people underestimate the cost of taking biofuels projects through to a stage where technologies can be commercialised.

“While it costs a few hundred thousand rand to develop a technology to proof-of-concept phase, it can take several million rand to take it through the demonstration phase before commercial partners are willing to take up the technology”, says van Zyl, who worked with NEPAD on developing the initiative.

But though an incubator fund could help budding African bioenergy projects reach a marketable stage, it might not boost energy security for the continent’s poor, says Karsten Bechtel, a bioenergy expert at Uganda’s Makerere University.

Most poor Africans tend to rely on biomass, such as wood, for fuel. But wood is rarely sustainably harvested, and deforestation is reaching crisis levels in many parts of the continent.

Bechtel says biofuels could help plug the fuel shortage but he worries that the energy produced by these commercial projects will be too expensive for the poor. “Will they address the real demand? No,” he says.