Biofuel business in developing countries.
A personal perspective.
by Hakan Falk at Energy Saving Now. (energysavingnow.com)
"The use of vegetable oils for engine fuels may seem insignificant
today. But such oils may become, in the course of time, as important as
petroleum and coal tar products of the present time."
Rudolph Diesel, German Engineer - 1912
To implement and introduce biofuels in the market for a developing country should be both easier and give larger benefits than for a developed country. It is certain that any country's development is to the greatest extent dependent on the availability of energy resources. Without energy it is not possible to develop the country. This document is not only aimed at helping prospective biofuel producers, but does also include information and suggestions for leaders, politicians and governmental programs. Feel free to use it, if you need it. We would of course appreciate if you keep references to "Energy Saving Now" and "Journey to Forever".
North America alone, uses close to 2 times of the total fossil fuel use in all the developing countries. The average annual discoveries of new oil reserves is now only 30% of current use. If the current suggested mixes of biofuel in fossil fuel (E10 and B20) are fully implemented in the developed countries, the saving will be the same as the developing countries total use, but only cover 15 years of expected growth in the developed countries. It is no space to develop for the developing countries, with energy from fossil fuels, it only reinforce the poverty trap.
Energy is key for food, housing, production and transportation. There is nothing more important for a developing country than a good energy plan, that can be economically feasible and sustainable with growth of the activities in the country. The plan must be aimed to supply affordable energy for all aspects of society, if not, the country has no chance to escape the poverty trap. The energy supply must be resistant to disturbances of different kind. The best model will have a diversified supply of energy sources and energy production. Central energy production and distribution, will be sensitive to social disturbances, price fixing and monopoly rule.
To describe and evaluate the biofuel business opportunities in developing countries, I felt that a thorough explanation of the technologies behind it would be helpful and necessary. For preparation
of this document, I enjoyed the strong support from Keith Addison's and Midori Hiraga's web site Journey to Forever (JTF), which is the most interesting and comprehensive site for Biofuels we have found. It is the only site that in depth connects sustainable agriculture and living in developing countries, with sustainable energy production. You will find many link references in this document and we are grateful for their cooperation and dedication to the issues.
Availability of Fossil Fuels.
This is estimated in several ways, depending on who is doing the estimates. The most usual value is Known Oil Reserves divided by Yearly Oil Production or consumption (R/P), which theoretically should give you the number of years that you can continue to produce oil. In this case there is no considerations given to new discoveries of oil or the cost (price) to recover the oil. The value today is around 40 years. The yearly consumption today is around 30 gigabarrels and the known oil reserves around 1,000+ gigabarrels.
Reserves can also include an estimate on the undiscovered oil reserves, based on geological conditions and past experiences. This is of course much more difficult. If we look at the last 7 years, the new discoveries have
been 10 gigabarrels a year. Assuming that this continue, the R/P is around 80 years.
The Middle East has the largest oil reserves. Iraq and Saudi Arabia have more than half of those. According to Professor Hubbert's calculations for production from finite resources, Middle East is at the moment at the peak of production capacity and will not have the capacity to meet the future demands. Professor Hubbert's methods have proven to be quite accurate during the last 35 years of experience with them.
There is no relief for the world and there is no escape from the dependence upon Middle East oil reserves. North America which is taking around a third of the current oil production, or half of the industrialized countries use
of oil, is already at a difficult junction. They have to choose if they are going to secure the oil supplies by force and occupation or trust democratic and peaceful means.
Links for more info:
Perspective on Oil Dependencies at ESN
BP statistic 2002
What is going to happen to the oil producing countries?
Some are speculating in what will happen to oil producing areas, when they totally depleted their oil reserves. This will probably never happen. Their production will of course go down, since a large part of the oil reserves are still there, but today not economically retrievable. Oil will be very expensive and also all the products around it, many that will be very hard to find competitive substitutes for. The area will export less, but get much more money for the oil. The concerns should instead be focused on what will happen to the consuming industrialized countries of today and especially the US. They would be like very big buses that suddenly lost their engines in the middle of the desert. The people in the industrialized countries are not used to the
hardships that exist in other parts of the world and will maybe go to war in trying to get what is available. So the question should not be what happens to the producers, it should be what happens to today's large consumers?
What is going to happen to the large oil consuming countries?
There are several possible scenarios, all of them will be difficult for future generations. "Ready to use" technologies in the short term are many. Ethanol, Biodiesel, SVO, WVO, Synthetic fuels and LPG from coal, Biogas
from trash and waste, Wood, Waste from agriculture (that are not needed for fertilization), Active and passive solar, Wind, Hydropower, Energy conservation, etc. The whole portfolio has to come into play, but the most important will be energy conservation. On longer term (50-100 years) hydrogen might be something, if they find cheap catalysts which are readily available and to sort out the processes. Active solar that now can produce electricity with 30% efficiency and is probably the most efficient energy converter to date, it is very promising but does not solve all the problems. Hydropower as energy storage is already in use and will probably escalate. Many of the technologies like hydrogen and fuel cells, will however require the technology base of advanced and developed countries and in the beginning large coal reserves, it is not much that could support developing countries.
In the industrial nations, a key element is the replacement cycles of
equipment for distribution and use of energy. Examples of this is the
automobile sector that replaces a major part of the fleet in 10 years,
transportation in 15 to 20 years, equipment use in building
constructions 15 to 25 years and the buildings themselves in 50 to 100
years. This is a major problem and disqualifies most of the solutions
that are still in the research phase as immediate "ready for use", it
does not matter how interesting they are. In this matter it seems that
the EU is well ahead of the US and the EU understand the social implications
much better. One very telling example is that all vehicles produced in
EU after 1996, are prepared for use with biofuel mixes.
Are biofuels unique opportunities for developing countries?
Yes, they are nearly the only opportunity for development on the
country's own terms and in time. For emerging industrial nations and
developing countries, there is no space in the oil equation. The current
developed countries will take it all. It does not take much
mathematical and political knowledge to come to this conclusion.
The only road to continuing development is aggressive energy
conservation and alternative energy sources. Developing countries do not
have an existing high level of energy use and will be able to grow
sustainable energy resources in phase with growing demands, their
dependence on replacement cycles are much less than the industrialized
countries. Considering this situation, the emerging economies have a
golden opportunity to proceed with less upheaval than the industrialized
countries. The successes are going to be measured in how fast and far
they can develop without oil dependence.
In medium and long term, it is a need to diversify and a one source
solution can put future generations into the same situation as we have
today. To get the time to develop solutions, we need key "ready for use"
technologies for rapid implementation. In my opinion Ethanol,
biodiesel/SVO and diesel technology belongs to them.
- Biofuels are usable in almost all current critical needs for agriculture,
food processing, industry, housing, transport, water supplies,
waste management, electricity and heating.
- Biofuels has low startup costs and are scalable.
- Biofuels are local economy solutions and therefore not sensitive to world
market prices, trade balances and international pricing. Biofuels will
follow the relative and local models for food and labor costs.
Development of a sustainable agriculture and growing energy will
help each other and provide for sustainability and security.
- Biofuels are cost-efficient, "ready for use" technologies that, together
with energy saving, solar energy and electricity from wind
generators, can give rapid relief to the mounting energy problem
and the power to get out of the poverty trap.
- Biofuels provides for very large reduction in pollution. The pollution
for fossil fuels or wood burning are significant today and biofuels will
provide for rapid improvements.
- If a solution can be simple and implemented by many small
producers with profits and employment opportunities, it is almost
a crime against humanity not to do it as fast as possible in
The reality is that there are no other sustainable technologies available
that fit the need for developing countries and can lift them out of the
poverty trap. Biofuels are independent of trade balances and independent
of world prices, it is a completely local affair. It could and will open
up export opportunities in the future, all elements of success are
there. It also opens up possibilities of better food production and
implementation of technologies that lessen the risks for famine
situations. Energy is the key for development and stability.
"Developing countries" is a very wide definition and each country
has very different circumstances. All are energy users and some of them
are also oil producers. It is however possible to find a few business
models that can be implemented in most of them.
Link for more info:
- Since the developed industrialized countries take 80% of produced
fossil fuels today and only represent less than 20% of the worlds
population, the current energy use in the developing countries is
very low. If the current trend in developed countries of biofuel
mixes in fossil fuel (Gasoline E10 and Diesel B20) is followed
through, the savings in the industrialized world would be at
parity with the whole consumption in the developing countries.
This trend will not lower the total consumption, only cover the
need of growth in the developed countries. For the developing
countries the efforts, occupation of land resources and the
internal investment are not only affordable, but also provide
substantial positive consequences.
The logic conclusion of the current situation, is that it is a
great opportunity for the developing countries to start further
development based on biofuel economy. Because of the relative
small volumes and the character of local investments to produce
biofuels, the dependencies on international help or initiatives
are very small. A boost in energy availability, independent on
trade balances, will also boost food and shelter production. It
will also boost employment opportunities and internal financial
activities. The experiences from Brazil during the last 2 decades
are clear and promising.
- The developing countries present energy markets that are very
small in the relation to developed countries and this is one of
the reasons why they are not developed countries. This also means
that a massive production and large facilities for biofuels are not
feasible nor needed. It also open up and support the possibilities
of a decentralized and diversified biofuel production.
- In the developing countries the gap, between the quantities used
of fossil fuels and the quantities of vegetable oil used in food
preparation, is much smaller than that of developed countries. At
the same time it is a need in the cities to take care of the Waste
Vegetable Oils (WVO) that have a negative impact on sewer systems.
Using WVO for biofuel, will be a good start on transition to a
Biofuel economy and a very smart waste management solution. The
quantities of biofuels recycled in this way can be substantial.
- Small biofuel businesses can be set up and production units
standardized. This way the demands on education and training can
be kept to a minimum. The biofuel technologies are not difficult
and they can easily be repeated with small efforts.
- The needs, energy use and market sizes, make the developing
countries a very suitable environment for small energy business
units. Once the models are set up, organized and with initial
subsidies/financing, the energy production could be self
propelling and provide for a fast growth.
Energy as an Instrument for Socio-Economic Development
Both Henry Ford (Ethanol) and Rudolph Diesel (Vegetable oil) had the
firm belief that biofuels was the future for the world. Both were
demonstrating that their engine technologies could run on biofuels.
Vegetable oils, coals and animal fats have been used for thousands of
years, as energy source for cooking, illumination and heating. With the
discovery of larger reserves of fossil coal and oil, an intensive
development period started and resulted in the energy dependent modern
societies of today. Because of the pollution problems and the obvious
risk for depletion for fossil fuels, the biofuels are becoming viable
and sustainable alternatives to fossil fuels and are subject to large
Link for more info:
Biofuels at JTF
With biofuels we normally mean Straight Vegetable oil, Waste Vegetable
oil, biodiesel or Ethanol and these are the subject for this document,
but Biogas and Wood etc. with derivate products are also biofuels. The
following biofuels are the subject for our business interest,
Common for the above Biofuels are simple processes and feasibility as
fossil replacement. It is old and proven "Ready for use" technologies.
The only challenge is to start to implement it to the large scale that
- Straight Vegetable Oil (SVO)
SVO's main application is today in food preparation. With the
diesel technology and oil burning, the SVO can be used directly in
today's user equipment, after thermal viscosity manipulation and
alterations in user equipment. It can also be used in up to 10%
mixes with fossil diesel. The new Ultra Low Sulphur diesel need
additives for maintaining the necessary lubrication and biodiesel
is a good additive. The main markets would be Transportation,
Industry equipment, Lubrication, Heating and Electricity generation.
Links for more info:
More info at JTF
- Waste Vegetable Oil (WVO)
A profitable waste management solution. After using SVO for
cooking, we end up with oil that contains both oil and animal fat.
After filtration, this waste oil can be used in the same way as
SVO. Instead of being a waste disposal problem, we get a valuable
Links for more info:
More info at ESN
- Biodiesel (BD)
Biodiesel is a mainly chemical alteration of SVO and WVO, to get a
product that is very close to fossil diesel or heating oil. It can
be directly used as a substitute for diesel and heating oil, with minor or without
alterations of existing user equipment. It can be mixed in any
proportion with fossil diesel.
Links for more info:
More info at JTF
- Ethanol (ET)
Ethanol or more popular called Alcohol is fermented and distilled
from starch or sugar rich feedstock. It can be directly used as a
substitute for gasoline, with minor or without alterations of
existing user equipment. It can be mixed in any proportion with
fossil gasoline. Investigations show that a 10% mix in gasoline
E10, can directly replace the dangerous additive MTBE and will not
need any changes in user equipment.
Links for more info:
More info at JTF
Links to library and supplier lists on "Journey to Forever":
Online Biofuels Library at JTF
Biofuels supplies and suppliers at JTF
Oil yields and characteristics at JTF
Dukes Energy Crop Index
Making Ethanol from Sugar Cane in Brazil
Yeast selection vs. investment levels for Ethanol production plants.
Characteristics, comparing Ethanol, Biodiesel and SVO.
The following table is a first attempt to map technical feasibility of fossil to biofuel replacement.
|Process: ||Ethanol ||Biodiesel ||SVO |
|Fossil fuel to replace ||Gasoline ||Diesel oil ||Diesel oil |
|Potential fossil replacement vehicles ||more ||less ||less |
|Potential fossil replacement electricity ||less ||more ||more |
|Potential fossil replacement heating ||less ||more ||more |
|Possible raw material sources 1) ||similar ||similar ||similar|
|Possible products ||less ||more ||more|
|Preparation raw material ||more ||less ||less|
|Filtering - pressing ||yes ||yes ||yes |
|Fermentation ||yes ||no ||no |
|Chemical altering or distilling ||yes ||yes ||less |
|Energy for production 2) ||more ||less ||less |
|Net energy gain 3) ||less ||more ||more |
|Conversion of end user equipment ||yes ||no ||yes |
|Current suitable vehicles ||more ||more ||less |
|Current suitability electricity ||no ||yes ||yes |
|Current suitability heating ||no ||yes ||yes|
|Cost to produce ||similar ||similar ||less |
|End use efficiency for fuel/technology 4) ||less ||more ||more |
|Needed quantity to replace fossil fuel ||more ||less ||less |
|Storage time ||more ||more ||less|
|Suitable for fossil - bio mix ||more ||more ||more|
|Time to general implementation vehicles ||less ||more ||more |
|Time to general implementation electricity ||more ||less ||less |
|Time to general implementation heating ||more ||less ||less |
|Suitable for local small scale production ||yes ||yes ||yes |
|Suitable for local large scale production ||yes ||yes ||yes |
|Suitable for existing distribution ||yes ||yes ||yes |
|Large improvements in pollution ||yes ||yes ||yes |
|Biodegradable ||yes ||yes ||yes |
1) Potential crops for combine ethanol and biodiesel production have
hardly been explored yet. Methods for production of both from the same crop is
also hardly explored, which means most or all of the grains at least.
2) This is the actual energy used for production method, without evaluation of
the sources of that energy. Biodiesel will take more energy to produce than SVO,
but less than Ethanol.
3) Net energy gain is also dependent on the source of energy for production. If residues from the source itself can be used, net energy gain should reflect that. It is very difficult to make a general statement. Co-production of ethanol and biodiesel/SVO from the same crop could be very efficient.
4) This mostly reflects the larger difference in efficiency between gasoline and diesel engines, the differences in the fuel are smaller.
For the developing countries, there is a world of wealth laying in the
combination of biofuels and proven "ready for use" simple applications
and equipment. With local energy production of biofuels and local
production of simple equipment for the needs, the necessary sustainable
development of food and shelter can be speeded up. Combine this with
sustainable agriculture, without costly fertilisers and pesticides, and
the space for lifting the country out of the poverty trap can be possible.
There is nothing that says that user equipment for working tasks have to be
sophisticated engine technologies. Pumping water for irrigation,
electricity generation and many working tasks can be done with very
simple engines. I still remember the one cylinder Hot Bulb two cycle
marine engine 45 years ago, without any electrical or complicated
components. To start it, you heated up a iron ball with a simple
soldering blow torch and then you cranked it and it started beautifully.
It would run on diesel, but could also run on crude oil, vegetable oil
and biodiesel. It would run forever and the only way to stop it was to
close the fuel supply.
Small simple multifuel "Hot Bulb Engines" were made by several smaller
suppliers on a more or less work shop level. They were used in many
applications that are desperately needed in developing countries. There were
also several small simple tractors made for agriculture. We keep
forgetting that this kind of simple and old "ready for use" technologies
made the developed countries to what they are today and can still help
the developing countries.
Links for more info:
Pythagoras hot bulb engine.
Picture hot bulb engine tractor from Bolinder Munktell.
More info about old engines.
Adoption of existing user equipment.
Many engines today are prepared for use with biofuels, European autos
made after 1996 or autos made after 1988 from Brazil are good examples
of that. It is however simple conversions for most engines and the links
below give advice on what criteria that are important.
Links for more info:
Biodiesel and your vehicle at JTF
Straight vegetable oil as diesel fuel at JTF
Conversion of a vehicle to operate on Waste Cooking Oil at ESN
How to modify your car to run on alcohol fuel
Production of biodiesel.
Anybody can make biodiesel. It's easy, you can make it in your kitchen
-- and it's BETTER than the petro-diesel fuel. Biodiesel is much cleaner
than fossil-fuel diesel. It can be used in any diesel engine with no
need for modifications -- in fact diesel engines run better and last
longer with biodiesel. Feedstocks for biodiesel are SVO and WVO.
Links for more info:
Make your own biodiesel at JTF
Biodiesel processors at JTF
Aleks Kac foolproof method at JTF
Biodiesel technology at JTF
Production of Ethanol (Alcohol).
Anybody can make alcohol. It's easy, you can make it in your kitchen --
and it's BETTER than the gasoline fuel. Ethanol is much cleaner than
fossil-fuel gasoline. It can be used in any engine with minor
modifications. Feedstocks for Ethanol are fermented and distilled starch
or sugar rich crops. Brazil have with success implemented the largest
Alcohol fuel program in the world.
Links for more info:
Mother’s Alcohol Fuel Seminar at JTF
The Manual for the Home and Farm Production of Alcohol Fuel at JTF
The Butterfield Still at JTF
Production units in containers.
One of the most interesting ideas that I came across until now is the
biofuel production units from BDT Biodiesel Technologies. They are
installed and complete in a standard 20 feet ISO container. Mounting
complete processing equipment in ISO containers, has many exciting
For developing countries container units could be produced for almost
all the needs for getting an initial plant built and operating in a very
short time frame. The plant can be dimensioned for a fairly low initial
production and then expanded in reasonable modular steps. Modules could be
- Efficient development and manufacturing of modular production units.
- Self contained "black box" design with defined input and output.
- Well defined specifications of procedures and capacity.
- A modular design of production units that are pre-tested.
- Applicable for all kind of biofuel processes.
- Delivery of production units with an existing freight system that are supported all over the world.
- Short delivery and installation time.
- Minimized need of engineering skills for plant implementation.
- Standardized documentation, education, training, production and maintenance.
- Well defined costs for production plant implementation and expansion.
- More consistency and control of end product quality.
- Building capacity in modules and the possibility to scale a plant production capacity. Start small and expand.
- Flexibility in replacement and movement of production units.
These container units could be developed and manufactured abroad, built
on license locally or developed and built locally.
- Power units.
Stand alone power units for supply of electricity and heat to the
plant and possibly the nearest neighborhood. It could be simple
multi fuel engines (i.e. see hot bulb engines) and generators, as
well as furnaces for biofuel, byproducts from feed stock waste
and/or biofuel process and heat recuperation.
- Feed stock preparation units.
Units for preparation of WVO, extracting of SVO or fermenting for
- Processor units.
Biodiesel processors and/or distilling units.
- Storage and pumping units.
Easy to move and upgrade storage units for biofuels.
- Laboratory and administration units.
Barrack type of containers with equipment and furniture.
Link for sample and supplier:
Plant in a box at BDT Biodiesel Technologies.
Pollution impacts and other benefits for Biodiesel.
Biodiesel have many advantages, compared to it's fossil opposite. It is very important to know, for the introduction of Biodiesel. Here is a short list from JTF,
Links for more info:
- Biodiesel fuel burns up to 75% cleaner than conventional diesel fuel made from fossil fuels
- Biodiesel substantially reduces unburned hydrocarbons, carbon monoxide and particulate matter in exhaust fumes
- Sulphur dioxide emissions are eliminated (biodiesel contains no sulphur)
- Biodiesel is plant-based and adds no CO2 to the atmosphere
- The ozone-forming potential of biodiesel emissions is nearly 50% less than conventional diesel fuel
- Nitrous oxide (NOx) emissions may increase or decrease but can be reduced to well below conventional diesel fuel levels by adjusting engine timing
- Biodiesel exhaust is not offensive and doesn't cause eye irritation (it smells like French fries!)
- Biodiesel is environmentally friendly: it is renewable, "more biodegradable than sugar and less toxic than table salt" (US National Biodiesel Board)
- Biodiesel can be used in any diesel engine
- Fuel economy is the same as conventional diesel fuel
- Biodiesel is a much better lubricant than conventional diesel fuel and extends engine life -- a German truck won an entry in the Guinness Book of Records by travelling more than 1.25 million km (780,000 miles) on biodiesel with its original engine
- Biodiesel has a high cetane rating, which improves engine performance: 20% biodiesel added to conventional diesel fuel improves the cetane rating 3 points, making it a Premium fuel
- Biodiesel can be mixed with ordinary diesel fuel in any proportion -- even a small amount of biodiesel means cleaner emissions and better engine lubrication: 1% biodiesel will increase lubricity by 65%
- Biodiesel can be produced from any fat or vegetable oil, including waste cooking oil.
National Biodiesel Board's complete evaluation of Biodiesel emissions.
Pollution impacts and other benefits for Ethanol.
Ethanol also have many advantages, compared to it's fossil opposite. It is very important to know, for the introduction of Ethanol. Here is a short list from JTF,
- It is a renewable fuel made from plants
- It is not a fossil-fuel: manufacturing it and burning it does not increase the greenhouse effect
- It provides high octane at low cost as an alternative to harmful fuel additives
- Ethanol blends can be used in all petrol engines without modifications
- Ethanol is biodegradable without harmful effects on the environment
- It significantly reduces harmful exhaust emissions
- Ethanol's high oxygen content reduces carbon monoxide levels more than any other oxygenate: by 25-30%, according to the US EPA
- Ethanol blends dramatically reduce emissions of hydrocarbons, a major contributor to the depletion of the ozone layer
- High-level ethanol blends reduce nitrogen oxide emissions by up to 20%
- Ethanol can reduce net carbon dioxide emissions by up to 100% on a full life-cycle basis
- High-level ethanol blends can reduce emissions of Volatile Organic Compounds (VOCs) by 30% or more (VOCs are major sources of ground-level ozone formation)
- As an octane enhancer, ethanol can cut emissions of cancer-causing benzene and butadiene by more than 50%
Sulphur dioxide and Particulate Matter (PM) emissions are significantly decreased with ethanol.
As pointed out earlier, the fuel markets in the developing countries are
only around 20% of the total world market, but serves 80% of the world
population. The major obstacle for use of machinery to achieve more
effective agriculture, water supply and other necessities, is the world
market prices of fossil fuel and the often limited trade balances to pay
for the fossil fuels.
It is a poverty trap that often forces a developing country to produce
that which is not natural and more serves the need of a particular developed
country, than what is the best and sustainable route for the developing
country. This circle is often difficult to break and it help to maintain
the poverty trap. The biofuel economy that is independent of the trade
balances and is the result of internal resources and production, provide
a way of breaking the circle and to escape the poverty trap.
The biofuel economy can provide large advances in,
- Housing and food preparation.
- Transport and agricultural.
Energy policies and political support.
It is of utmost importance that a developing country have a good energy
plan and it should cover energy conservation and energy supply
solutions. Brazil's ethanol program is a good sample of the benefits for
the local employment, economy and trade balances.
The interests for defense, secure energy supply and secure food supply are vital for the national interest. In the interest for the people and the responsibility of leaders and representatives of any country, the following criteria are clear,
- Energy austerity and energy conservation must be encouraged.
- Local energy sources and production must be encouraged.
- Detachment of energy sources and production from world market influence must be encouraged.
- Pricing and pricing policies are the preferred tools as alternatives to rationing and state controlled consumption.
On the basis of a good energy plan, the government can work out a range of methods to achieve it. To encourage production some of the following could be done,
Energy taxation, prices and price policies.
- Creating a favorable business environment.
Using Energy taxation, prices and price policies.
- Have a biofuel free for all environment.
Developed countries and some developing countries have laws or rules that make the use of on road biofuels illegal. Often this is a result of a tax rules for fossil fuels, were it was desired to make a distinction between off and on road use. The legislation is beneficial in protecting the interests of oil corporations and to protect status quo. If such legislation is in place, the fastest way to deal with it is to issue a blanket exempt for biofuels. This will encourage many home makers and each one will have a small but beneficial impact on trade balances. It will also create and encourage a better knowledge base in the population.
- Consultancy service for biofuel businesses.
Providing a consultancy service for interested in setting up biofuel production. The service should provide technical and business evaluations, as well as assisting in business planning, permissions etc..
- Provide directly or indirectly equipment for production plants.
In many developing countries the know how and equipment for biofuel production can be limited. The authorities can help by providing plant designs or even supply modular equipment, like plant in a container. It can also rent such equipment. The advantages by providing equipment and chemicals, is that consistency in end products is ensured.
- Investment program for production.
Favorable low interest loans for setting up biofuel businesses.
- Waste management program for WVO.
Since WVO is to a large extent a responsibility for government and city authorities, contracts can be worked out that supports smaller biofuel plants. Collectors can deliver directly to the waste disposal (biofuel) plant.
- Governmental purchase support.
The government and cities can also award purchase contracts of biofuels for its own consumption in transportation fleets, demand that public transportation use biofuels etc..
- Agriculture programs for raw material.
Programs can be put in place for use of biofuel equipment in agriculture and also to guarantee production of raw material for biofuels.
- Program for education of biofuel workers.
Education programs can be supplied for producers of biofuels.
- Program for education of engine mechanics.
Education programs can be supplied for engine modificationss.
- Insurance program for auto conversions.
Biofuel conversion insurance can be incorporated in auto insurance. This to cover the few mistakes that can happen.
- Support from job creation programs.
Biofuel feedstock production and biofuel production can be incorporated in job creation programs.
Prices for fossil fuels are dictated by world markets, but for biofuels
it is local conditions. Biofuels will go hand in hand with costs for
local food production in the concerned country. This means that biofuels
have the potential to be cheaper than fossil fuels in most developing
countries. It is also beneficial for the local economy to have price
policies and support for low biofuel prices.
Developing countries are mostly in a situation were they could avoid the worst mistakes done by developed countries. One of those areas is the energy taxation. Argument for the high taxation in Europe has been the will to force austerity and energy saving. The effect of this has been partly successful,
but the tax policies also led to some severe problems,
- Development and sales of fuel efficient vehicles. Europe is leading in fuel efficient and clean air vehicles for transport. The low pollution could also have been achieved with a larger investment in biofuels only.
- Better building codes for thermal insulation. It is not completely in effect everywhere, but countries in Northern Europe are leading the world in this sector.
- Substantial austerity in energy consumption and general awareness of the issues by the population.
- A relatively high interest for biofuels and the highest production/implementation in the world, not enough, but an acceptance of it is achieved.
The US and some other developed countries have relatively low fuel taxes and an other set of problems.
- Very high fuel costs and a dampening on economic development.
- Larger sensitivity to higher oil prices, since interest rates and oil prices today have a major impact on economic cycles.
- Poor flexibility, since oil taxation today are an important part of financing the countries fixed programs like welfare, health etc. Politicians are now used to have the "oil excuse" instead of pressures on governmental prudence. This works to the advantage to the existing oil interests.
- The government and the political community has maneuvered themselves in a position where they have as large interest to maintain "status quo" as the big corporate interests of oil companies.
It is difficult to find a balance in taxation and price policies as a tool for good energy planning and control. It is also clear that pricing and pricing policies should support the interests for the country as a nation and resist corporate short term interests when they are contrary to the nations interest. The following is a suggestion of a possible model,
- The largest energy waste and pollution in the world, with political difficulties to introduce austerity measures. A severe political and awareness problem.
- High fuels consumption in their vehicle fleet, despite the lowest speed limits.
- An almost irresponsible attitude to energy austerity within the population.
- A substantial energy dependence with price sensitivity.
- Inflexible resistance against fluctuations in world market prices for oil.
- Difficulties to get sustainable alternative fuels competitive, which works to the advantage to existing oil interests.
- With expensive election processes, where politicians are wholly dependent on large financial support from corporations. The large corporations have become a major force in deciding who is going to "democratically" represent the population, the big oil corporation have a way to protect their interests. For US it is blatant, when you see the former engagements of the Bush administration. A very large percentage have hold positions in oil corporations, before their engagement in the administration, including the President and Vice President.
Business Organization and Models.
- Taxes on biofuels that corresponds to taxes of basic food products or tax exempted.
- Special basic taxes on imported fossil fuels.
- Flexible additional taxes on fossil fuel.
- Taxes on fossil fuel are not used for fixed spending programs like social security etc.
- A special fuel tax board for determining the flexible tax rate on a periodic base, like the government board that are setting interest rates. The goal is to stabilise and use fossil fuel tax in a similar manner as interest rates.
- Special programs for internal energy production, financed by fossil fuel taxes.
As I already stated, the developing countries only use 20% of the current oil production, the rest is taken by the developed countries. When we already can see substantial problems for developed countries with the depletion of fossil oil reserves, it is very unlikely that the developing countries can get a larger portion than they already have. The route of using fossil fuels for developing a country is in reality already closed and other avenues must be pursued as soon as possible.
With relatively small existing markets for fossil fuels in developing countries, it offers a unique opportunity to go for biofuel economies. In this perspective the expression "Small is beautiful" have a great relevance and biofuels are perfect. If the business environment support it, is opportunities for many kind of businesses.
As said, developing countries have relatively small fossil fuel market and have some very good opportunities already available,
- How to be able to secure the supply?
To start a biofuel business you must secure the supply of raw material, it is quite logical. Since biofuels comes from plants or trees, its source is agricultural. Therefore you have to be a farmer, or contracts have to be made with farmers, or their distribution channels. One other source is biofuels that is made from waste and in this case you have to get it from the source or the collectors of the waste. Depending on circumstances, you can get it for free, get paid to collect it or have to pay for it. To set up production facilities, you must secure long term contracts for the supply of feedstock for the production.
- What are the volumes that can be collected?
If you are a farmer yourself or a collective of farmers, you will be able to clearly and easy estimate your feedstock capacity. The same if you already are a distributor of the feedstock from the farmers. For waste, you have to contract the producers of waste and/or current collectors of waste.
- How is transportation of feedstock solved?
You have to arrange for transportation of feedstock to your production unit and storage of it. This is easy to calculate when you defined volumes and timing for your feedstock. If you for example are collecting WVO from restaurants and current collectors. For a 1,000 L production unit 3 shift 5 days a week production, you need to collect around 30,000 L a day. This is 6-8 small tanker trucks a day 220 days a year.
- Can you get governmental support and maybe subsidies?
Investigate what the government are doing in this field and talk to people that already are active with it. You can get governmental support and maybe subsidies. If you are dealing with a waste disposal system and this may be interesting for the authorities to support financially. It should be in their interest and you might find them very positive. It is after all a waste management system when you deal with WVO, that otherwise often is dumped in sewers and are causing problems.
- What are the volumes that you need to produce?
Once when you determined the supply volumes and the possible growth in supply, you can start to plan production plant capacities and growth. The starting point is then determined, based on sales prognoses. Often you will start at a low volume and then grow the business from demand.
- What are the growth possibilities?
You must investigate and have an expansion plan depending on growth possibilities in feedstock and demand. Learn all you can about your future business environment.
- How to sell and distribute?
You need to look at the distribution side and how you should sell it, also what price you can get.
- Your customers equipment and can they use biofuels?
You have to find mechanics that can do engine/furnace modifications and learn how to do it.
- The waste management opportunity, biodiesel from WVO.
Many developing countries have large cities with many restaurants or food processing plants. Their use of vegetable oil is closer to the consumption of fossil diesel and can therefore produce a larger percentage of their current needs from WVO. Often the current WVO are disposed by restaurants or collectors directly in the sewer systems and causing problems and health risks. This is a obvious business opportunity for a biodiesel producer and for the city management. This give a golden opportunity for starting a biofuel economy.
- The cooperative opportunity.
Many developing countries are already large producers of vegetable oils, sugar products, potato, etc. and also exporters to developed countries. Expensive fossil fuel are often used for the production and can be replaced by biofuels. For many of the countries it will be very cost effective to used a part of their production for replacement of fossil fuel imports, which per quantity often are more expensive than the exported products. This give a possibility for large farmers or farmers cooperatives to produce biofuels.
- The village opportunity.
A village in a developing country is often constituted by an area with small farms. It is possible for a village or small town to set up biofuel production in combination with electricity production. It can supply the smaller farmers with biofuels for the farming and electricity for the community. It can even act as a cooperative for biofuel business.
- The small private business.
In between the waste management solutions, the cooperative and the corporation, it is plenty of space for private initiative. A profitable small business based on batch processing, can be an alternative to the larger continuous processing plant.
- The large corporation.
It is difficult to see large corporations being efficient for the developing nation. The interest from developed countries to buy cheap feedstock for their own use of biofuels is already starting to be obvious and have to be monitored and weighted against the local needs first and the possibility to place some value added local production.
Window of opportunity.
Now is the time to do it. The feasibility is already proven and to wait will bring the developing country in an unfavorable future. Brazil is already seeing the positive results and the necessity to continue on the path.
Available knowledge and references.
We are prepared to assist and it is possible to get help from many knowledgable people. Subject to interest, Keith Addison and myself are prepared to act as facilitator for contacts between parties.
Thanks to Keith Addisson at Journey to Forever and the biofuel discussion list members on the same site, for helping me with education, valuable views and proof reading. A special thanks to Darryl McMahon and Keith Adisson for helping out.
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