FEASIBILITY STUDY OF BIOFUEL PRODUCTION IN GHANA:
Assessing Competitiveness and Structure of the Industry's Value Chain
By Monica Caminiti, Michelle Cassal, Maitiu OhEigeartaigh, Yelena Zeru MA Candidates, International Development Studies Elliott School of International Affairs - The George Washington University May 2nd, 2007
TABLE OF CONTENTS
EXECUTIVE SUMMARY ................................................................................................ 4 INTRODUCTION .............................................................................................................. 9 The Project ...................................................................................................................... 9 Methodology ............................................................................................................. 10 Limitations ................................................................................................................ 11 BIOFUELS: THE GLOBAL MARKET AND ENVIRONMENT .................................. 11 Ethanol: Current and Future Trends ............................................................................. 13 Biodiesel: Current and Future Trends........................................................................... 13 GHANAIAN ENVIRONMENT....................................................................................... 14 Country Background: Economy, Politics and Society.................................................. 14 Fuel sector..................................................................................................................... 15 Crop Suitability............................................................................................................. 16 National Enabling Environment ................................................................................... 16 National Policy ......................................................................................................... 16 Trade ......................................................................................................................... 17 Finance for biofuel industry...................................................................................... 17 Analysis ..................................................................................................................... 18 CO2 credits................................................................................................................ 18 ETHANOL POTENTIAL................................................................................................. 19 Demand in Ghana and the EU ...................................................................................... 19 National Market ........................................................................................................ 19 International Market................................................................................................. 19 Sugarcane...................................................................................................................... 20 Background ............................................................................................................... 20 Production Model ..................................................................................................... 21 Analysis ..................................................................................................................... 21 Cassava ......................................................................................................................... 23 Background ............................................................................................................... 23 Model ........................................................................................................................ 23 Analysis ..................................................................................................................... 24 Conclusions............................................................................................................... 25 BIODIESEL POTENTIAL............................................................................................... 25 National Model ............................................................................................................. 26 Biodiesel Demand ..................................................................................................... 26 Supply Chain............................................................................................................. 26 Maximum Feedstock price for Biodiesel B100 ......................................................... 27 Current Feedstock Price Analysis ............................................................................ 28 B5 Production Costs ................................................................................................. 30 Best Case Scenario ................................................................................................... 30
B5 Production Costs- Best Case Scenario................................................................ 31 Crude Oil Sensitivity Analysis .................................................................................. 32 Mining Model ............................................................................................................... 34 Biodiesel Demand ..................................................................................................... 34 Supply Chain............................................................................................................. 34 Maximum Feedstock price for Biodiesel B100 ......................................................... 35 B5 Production Costs- Current costs for vegetable oil .............................................. 36 B5 Production Costs- Best Case Scenario................................................................ 37 Crude Oil Sensitivity Analysis .................................................................................. 37 Biodiesel Export Model ................................................................................................ 38 Demand:.................................................................................................................... 38 Potential Export Markets for Vegetable Oil ............................................................. 38 The European Union: a natural market for Ghanaian exports of vegetable oils..... 39 Analysis of the Export Supply Chain Model ............................................................. 39 Competitiveness Analysis for Exports of Ghanaian Vegetable Oils to West European Markets ..................................................................................................................... 40 Conclusions from Biodiesel Analysis........................................................................... 42 DEVELOPMENTAL IMPACT........................................................................................ 43 CONCLUSIONS AND RECOMMENDATIONS ........................................................... 44 REFERENCES ................................................................................................................. 47 APPENDIXES .................................................................................................................. 49 APPENDIX I .................................................................................................................... 50 APPENDIX II ................................................................................................................... 51 APPENDIX III.................................................................................................................. 55 APPENDIX IV.................................................................................................................. 57 APPENDIX V................................................................................................................... 60 APPENDIX VI.................................................................................................................. 63
and oil refining. The main objectives of the project were: to understand if Ghana could be competitive in this industry. specifically ethanol crops. Most importantly time constraints on field research in Ghana. The domestic economy in Ghana continues to revolve around subsistence agriculture. domestic opportunities and enabling environment. It is important to note some constraints in the methodology that limit the generalization of this study’s findings. both politically and economically. Ghana has many advanced industries. Ethanol is produced from sugars. which was contracted out by Technoserve Ghana. to understand the national enabling environment and the industry’s supply chain. which is full of ethnic diversity. and this trend is expected to continue in the future. was to assess the viability of creating a biofuels industry in Ghana. which limited the amount of information collected. and to estimate the developmental impact for the country. steel (using scrap).EXECUTIVE SUMMARY
About Ghana: The Republic of Ghana. and secondly the lack of current production information on some of the selected crops. identify who the major players in the supply chain would be. which include: textiles. it can be concluded that the world biofuels market has been growing at an accelerated pace in the last twenty years. Biodiesel is manufactured from natural oils. whether they be from animal or vegetable matter. Both sectors of the industry have grown significantly. poverty reduction. has been relatively stable in recent years. These are issues that must be taken into consideration in the interpretation of findings. mainly small landholders. as proxy data was utilized to build certain parts of the analytical models. World Market From the research results. The second phase was carried out through an on-theground assessment in Ghana. The study was carried out in three phases with the first phase consisting of desk research on the global market of biofuels. and private investment promotion. Research for the project was divided into three areas of study: global environment and market. This country. which has a population size of 22 million people. The third phase consisted on building models to estimate the costs of local biofuel production. About the Project The purpose of this project. and local value chain analysis. with the United States and Brazil focusing their production efforts largely in ethanol and the European Union concentrating on biodiesel. which accounts for 34% of GDP and employs 60% of the work force. This market can be divided into two broad categories: biodiesel and ethanol.
. either harvested directly or broken down from starches. with the express purpose of using this sector to foster further economic and social development. In addition. is located on the West Coast of Africa and has been hailed as an example of positive development in Africa. The current president has pursued an economic policy of growth acceleration.
by the Tema Oil Refinery. but may require certain engine modifications to avoid maintenance and performance problems
.000 million liters and is expected to reach 70. Officials are currently updating a draft policy that is expected to go to Parliament in the next year to turn into legislation. the government of Ghana is keen to support the industry. such as Merchant Bank of Ghana. a company solely owned by the government. however.000 million liters by 2010. Nevertheless. and coconut for biodiesel production and sugar cane and cassava for ethanol. the National Microfinance and Small Loan Center is willing to give smaller loans for the cultivation of jatropha. lawmakers in Ghana are optimistic and eager to engage in this sector. This policy would mandate the replacement of 5 percent of petroleum diesel with biodiesel by the year 2010 (through B5 blends1).World biodiesel production reached 3.000 million liters in 2010. the refining of oil is carried in country. to emerge and engage in the biofuels industry. specifically biodiesel. The national policy environment is favorable for the biofuels industry at this time. The country imports 100 percent of the crude oil it utilizes. such as Ghana. National Enabling Environment The fuel sector in Ghana is currently controlled by the government. Currently world ethanol production is 55. Ethanol Potential Given the lack of policy drive towards ethanol usage. In regards to financing of feedstock production. demand is expected to exceed supply. In regards to crops that can be used as feedstock for biodiesel and ethanol production. Hence the capacity to transport and store biodiesel across the country currently exists in Ghana. Biodiesel can also be used in its pure form (B100). there is no real discussion in Ghana on introducing the use of sugar for ethanol production. therefore there is potential for new players. this policy is currently a draft and is subject to change before its final approval as legislation. At present. and is expected to reach 11. while the Agriculture Development Bank will continue providing financing for all crops produced in Ghana (including jatropha). In both cases. Potential crops for the production of ethanol are sugarcane and cassava. five crops were identified as suitable for Ghana: these are palm oil. jatropha. and the storage and distribution to regional depots is carried out by BOST. This lack of interest is largely due to reluctance on making investments in an industry
Blends of up to 20 percent biodiesel with 80 percent petroleum diesel (B20) can generally be used in unmodified diesel engines. have received sovereign guarantees to attract capital for the provision of loans to producers of biofuels.524 million liters in 2005. The most realistic possibility given these circumstances lays in the potential use of ethanol as a gasoline oxygenate. Despite limited access to finance. and an increase of this percentage to 20 percent by the year 2015 (through B20 blends1). Some larger banks. there is currently no ethanol production in Ghana and the potential for developing this sector seems small in the short term.
This model can be used to increase the supply of feedstock until capacity for biodiesel production is built in Ghana. The last model deviates from the production of biodiesel by identifying the potential for Ghana to participate in the world market of biofuels as a supplier of raw materials through the exportation of vegetable oils to Europe. However. if Ghana were to utilize this feedstock. coconut. However. This report analyses the possibility of a biodiesel industry based on three identified crops: jatropha. and further research regarding food security issues. it would have to increase productivity of jatropha growers. While there is inherent potential for a cassava-based ethanol industry. Biodiesel Potential There is potential for the biodiesel industry in Ghana that could be supported by the already explicit interest of the government and small entrepreneurs. reduce the seed price by 55 percent. targeting the mining sector as the market for biodiesel. it would need to achieve production costs at the level of Brazil. who are already involved in the nascent industry. and provide a tax break of 5 percent on the total blended fuel. the price of palm oil is subject to volatility due to its demand in the food market. However. If this is not met. this model would be viable only if the prices for palm oil are low and productivity is increased for Jatropha in order to reduce the farm gate price. Furthermore. and steady feedstock supply prevent cassava from being a suitable feedstock for biofuel production at this point in time. as cassava is currently a subsistence crop for a large part of the population. these nations are facing
. There is need for wide-spread improvements on yields. Hence. The most promising sector in Ghana would be that of mining since it consumes approximately 40 percent of the national production of diesel. which would require further subsidies or tax breaks on the blended fuel for it to be competitive. However. Based on the analysis of this model. but would also diversify the economic activity of communities surrounding the mines by creating jobs in the agricultural sector. The first model is based on the government’s policy draft for the biodiesel industry and identifies all of Ghana as the potential market. the best feedstock for B5 blend production at the mine level are palm oil and jatropha. The second model takes a sectoral approach. This model is based on the export of the vegetable oil and not on exporting the biodiesel itself. which could in turn negatively influence the competitiveness of the biofuel industry.that collapsed several years ago. Based on the analysis of this model. the world’s largest producer. the best next alternative is palm oil. it can be concluded that if Ghana were to seek a biodiesel industry competitive with current diesel prices. in order to be competitive. and three potential models of production. because the largest markets for biodiesel consumption have excessive production capacity and are not open to importing biodiesel. forcing the country to import its entire sugar crop. issues with food security. and mining companies are obliged by law to ensure that other economic activities are promoted in the areas where mines are located. and oil palm. diesel represents around 42 percent of operational costs for the mining industry. a biodiesel industry would not only fulfill the sector’s need for fuel. reduction of production costs.
as more wild forest would have to be allocated to agricultural production. Developmental Impact To asses the developmental impact of each model. a major ingredient in the production of biodiesel. independently of the selected model. particularly on utilizing jatropha and palm oil as the primary feedstock. palm oil generates the largest agricultural income. that is oddly very expensive in comparison to other African countries. Lastly. Secondly. Firstly. for both the national and international markets. thereby providing a great opportunity for Ghana to become a potential supplier. the number of hectares needed for feedstock was used to measure the environmental impact. because the potential for exports is much larger and is limited mainly by the ability of producers to increase production volumes and compete in price). some major conclusions and recommendations were proposed. and the reduction on CO2 emissions. although the country should initially focus on the biodiesel sector. The results of analysis of the export model of vegetable oils produced in Ghana show that there is definitely an opportunity for this country to participate in the export markets. and that currently generates up
. Other aspects of the developmental impact that must be considered. for which the export price per metric ton of oil was multiplied times the number of tons that would be consumed in the national model (this is an estimate however. it was found that Ghana has the potential to engage in the biofuel industry. this estimate is conservative as it does not include other jobs created throughout the biodiesel supply chain. Therefore it is determined that overall. Ghana has a comparative advantage over other large vegetable oil producers. in terms of production yields and oil extraction rates. such as the Cotonou Agreement which provides import tax exemptions for vegetable oils. but jatropha has the highest number in employment creation and the lowest amount of land required. Conclusions and Recommendations Based on the research and analysis carried out in this project.bottlenecks in the availability of feedstock and are seeking to import raw materials. as the country will import less crude oil. it is necessary for feedstock producers to realize high productivity gains. particularly in Europe. the implications were analyzed based using three indicators: agricultural income generated. such as Malaysia and Indonesia. like coconut and palm oil into Europe. However. It is assumed that the higher the requirement of land the more negative impact on the environment. total agricultural employment generated and hectares required for biodiesel farming The total income generated in USD was calculated by multiplying feedstock income per hectare times the number of hectares needed to meet the biodiesel demand in each model. Aside from potential competitiveness in terms of production costs. A third conclusion suggests for further research on the cost of Methanol. The only exception is the export model. to export to Western European markets due to close proximity and favorable trade agreements. As will be evident in the report. The second indicator measures the employment created in the agricultural sector. in order to be competitive. are the positive impacts on the foreign reserves. the outcomes of a new biofuel industry in Ghana can have a positive impact on economic and social development in the country.
offer positive developmental impacts in terms of income and labor generation. and based on the international prices trends. it is suggested that ethanol should not be considered in the short term in the biofuels industry in Ghana. it needs to jumpstart the biodiesel production using jatropha. however this crop requires much more extensive research and development. the main recommendations in this report indicate that in order for Ghana to be competitive in the biofuel industry. and the choice of the best model to develop this industry will depend on compromises and tradeoffs among the different players in the industry. additional uses for jatropha biodiesel should be further investigated to see if this fuel can used for rural electrification. and if sugarcane is to be used for production. Finally.to 30 percent of the overall cost of biodiesel production in Ghana. palm oil could directed successfully towards both the export or the local industrial markets. Nevertheless the production of biodiesel can not be successful without government support. to different degrees. Therefore. Another recommendation is that the palm oil industry should be expanded. since the there is no expected government support for this sector. A fourth conclusion is that all the models that ware identified to be competitive in the creation of a biofuels industry in Ghana.
. very low production costs would have to be achieved in order to compete with the largest producers like Brazil and the United States. Finally.
One approach is to develop sustainable industries through private sector development to encourage entrepreneurship. the research was broken down into three areas of study that included the following tasks .
The World Environment and Value Chain a) an industry overview and analysis of worldwide biofuels markets b) a world demand and supply analysis c) assessment of the political climate in key nations concerning the use of biofuels d) a review of taxation incentives. and tariffs being provided concerning biofuels e) a brief examination of other nation’s practices regarding promoting the biofuels industry
2. GDP growth and employment generation. Intrigued by this opportunity. Our team of graduate students at George Washington University met with the director of Technoserve’s Ghana office.
1. decreasing the poverty that afflicts thousands of subsistence farmers while providing renewable sources of energies for the country. It was in that meeting where the director outlined a vision of helping the poor not through government programs or civil society. subsidies. The main objectives were to: assess the industry’s competitiveness in the global and national market. An Analysis of the Opportunities in Relation to Ghana a) examination of the potential for target domestic and 9
In the world of development. identify major players in the supply chain. but investment. and estimate the developmental impact in the Ghanaian agricultural sector. there are many theories and practices that attempt to end world poverty and encourage growth. The possibility of developing a biofuel industry in Ghana would ensure the creation of these factors in the rural area. The origin of this project took place in October of 2006. In order to attain the project objectives.
The purpose of the project was to assess the feasibility of developing a biofuel industry in Ghana by conducting a preliminary analysis on the industry’s value chain. It was the desire of TechnoserveGhana to determine whether it was advisable to initiate a large biofuels project in the Republic of Ghana as a means of alleviating poverty through business development. the team agreed to the terms of reference and began the Biofuels in Ghana project.
. extraction of vegetable oil. The first phase began with the review of academic literature. intermediaries. manufacture of biodiesel and transport to wholesaler / retailer b) costing benchmarks (cost value chain of biofuel competitors) c) determining productivity threshold to be competitive and gap analysis d) providing a map of the value chain e) quantifying the tangible benefits in terms of development (employment. business reports and available statistics on the biofuel global environment. transportation and distribution. until a competitive sugar industry is developed for the production of ethanol.) Given the research and analysis carried. Value Chain Analysis within Ghana a) costing value chain at point of export for the top biodiesel and ethanol feedstock including farm level attractiveness of growing the crop. The industry should initially focus on the production of biodiesel. and biofuel feedstock production at farm level. growth. service providers. The research was divided into three phases. interviews and surveys of local producers. bio-fuel production and refining. Tools utilized on the field study included: site visits. At the same time.b) c) d) e)
export markets assessment of competitive advantages specific to Ghana examination of the potential capacity for both agricultural production as well as refinement assessment of the infrastructure challenges faced throughout the country identification of top 4 feedstock for ethanol and biodiesel production
3. etc. entrepreneurs.
The project utilized a value chain approach in order to research the market. TechnoServe staff and Ghanaian government officials to determine the capacity of Ghana to participate in a potential biofuel industry. the competitiveness of the biodiesel industry is dependent on stable national and international prices for oil palm. export agencies. This was followed by the second phase composed of a two-week intensive on-the ground assessment in Ghana designed to understand the national enabling environment and the industry’s supply chain. it can be concluded that there is potential for a biofuel industry in Ghana. and increased productivity of jatropha obtained through R&D.
all data collected regarding the supply chain in Ghana was analyzed. Another major limitation is the lack of production costs for ethanol given that no industry currently exists in the country. which is produced from crops that are sugar based and fermented into alcohol. The main crops utilized for its production are sugar and maize. the analysis made is to be used only as an indicative of the potential for a biofuel industry and not exact costs of production. This required the use of production costs from the US and Mozambique as estimates. biodiesel. It can be used in compression ignition diesel systems. On one hand. Moreover. This is particularly true for the case of jatropha and sugarcane. all models of production are made based on assumptions and do not include an extensive list of costs incurred in a business such as land. are renewable energies derived from biomass or solar energy captured in plants through the process of photosynthesis. At this time. It can be mixed with gasoline up to a 20 percent blend without the need of modification of motor engines. limiting the information that could be obtained from other regions of the country. rapeseed and sunflower are the most commonly used feedstock to
. either in its 100% “neat” form or more commonly as a 5%. 10% or 20% blend with petroleum diesel. They are heavily utilized in Europe and America for the replacement of fossil fuels due to environmental and national security concerns. On the other hand. certain limitations of methodology exist. and it is followed by an overview of the national enabling environment in Ghana. It continues with an analysis of the potential ethanol and biodiesel industries. lack of current information on crop production was encountered when meeting with the Ministry of Agriculture. and other stakeholders. and presents possible production scenarios. and overhead expenditures. Therefore. feedstock that are produced in large quantities in Brazil and the United States respectively. Additionally. production costs for biodiesel obtained were based on current small-scale production and can hence vary from large-scale production. the biodiesel models created. is used to replace diesel. The paper concludes with recommendations and conclusions based on research and findings which include: the analysis of the world markets. Ministry of Energy. made by transesterification. Due to time constraints. Production models were built in order to determine the competitiveness of the industry.
BIOFUELS: THE GLOBAL MARKET AND ENVIRONMENT
Biofuels. as well as final conclusions and recommendations. in this case ethanol and biodiesel. ethanol. This report is designed to outline both the research taken prior and after the on-ground assessment of Ghana. industries that are not developed in Ghana. and developmental implications of this industry.
As with any research undertaken. The paper begins by outlining the global market of biofuels.Once the global and national enabling environments were identified. is used as an additive or replacement of gasoline. a chemical process that reacts vegetable oil or fat with methanol and a potassium hydroxide catalyst. research on-the ground was only carried for a period of two weeks. Furthermore.
however. some organizations and companies are trying to develop technology to extract biodiesel from algae. In comparison with some of the technologies being developed to produce ethanol and other biofuels. there is no commercially viable production of ethanol from cellulosic biomass.
A number of research organizations and companies are exploring combinations of thermal. In 2002. The process. however. research is being carried on utilizing cellulosic material for the production of ethanol. This method would focus on utilizing cellulosic waste materials to create fermentable sugars. the biodiesel production process involves well-established technologies that are not likely to change significantly in the future. These programs have substantial government support. None of the approaches. Much lower net well-to-wheels greenhouse gas emissions than with grain toethanol processes powered primarily by fossil energy. but if developed. In 2002 world production of ethanol reached 21. has as yet been demonstrated on a large-scale. due to nearly completely biomass-powered systems. Greater avoidance of conflicts with land use for food and feed production. This production not only provided an alternative to fossil fuel. Currently. is more complicated than converting starch into sugars and then to alcohol.
.503 million liters. while biodiesel production was 1. It is important to note that there are several potential benefits from developing a viable and commercial cellulosic ethanol process which include: • • • • Access to a much wider array of potential feedstock (including waste cellulosic materials and dedicated cellulosic crops such as grasses and trees). chemical and biological saccharification processes to develop the most efficient and economical route for the commercial production of cellulosic ethanol. the world’s largest producer and consumer of biodiesel. particularly in the United States and Canada.000 jobs in the US and ½ million direct jobs in Brazil (IEA. However. most producers utilize first and second technologies to turn sugar or starch (that is converted into sugar) into ethanol. it can drastically alter the world ethanol market. but it is also generated large number of employment since biofuel production requires 100 times more workers per unit of energy produced than fossil fuels.841 million liters. particularly the US and Canada. A much greater displacement of fossil energy per liter of fuel. ultimately leading to more efficient production of ethanol. In regards to methods of ethanol production. 2004). The world market of biofuels has been steadily growing in the last years. with an increasing number of countries participating in it for environmental and security reasons. However. but there is substantial ongoing research in this area in IEA countries. the ethanol industry provided more than 200. opening the door to greater ethanol production levels.produce biodiesel in Western Europe.
such as Asia. had been reduced to approximately 80% by 2005. Its share which represented 95% of the market in 2000(Gubler 2006). The estimated size of the Ethanol market in 2010 is expected to be around 70. 2006). According to research from the Chicago board of trade. In Brazil costs are lower than any country and e close to the cost of producing petroleum fuel. For example.3% for the rest of the world. In terms of the market size. the biodiesel industry reached 3. its government is fostering a castor oil–based biodiesel industry. It is forecasted that by 2020 the market will grow to 120. The big palm oil producing countries in Southeast Asia are Malaysia and Indonesia. with Western Europe having the largest share of the market. followed by the US (1000 million liters) and EU (800 million liters) by the same period (Berg 2004). 2006). Both India and China have large jatropha (physic nut) plantations under development. in descending order (CITE). Nevertheless.
. This is accounted by new players.524 million liters in 2005 (Hunt.
Biodiesel: Current and Future Trends
There are many crops that can be used for producing biodiesel. a different picture might emerge: a quadrupling of world production by 2020. rapeseed oil is preferred in Western Europe. They are currently focusing on palm kernel and palm seed oil. production in the EU is expected to increase during the coming years.5% for North America and Brazil. Although it is still the largest producer. Although Brazil is the world’s second-largest producer of soybeans. while the United States favors refined soybean oil as a feedstock. In addition. 2006). However. nevertheless. given recent global policy initiatives and changes in trends.20 $/ GAL in 2005 (Chicago Board of Trade. Japan is expected to become the largest importer of Ethanol (6000 Million liters/year) by 2012. annual growth rates in the future would be about 7% for Europe.000 million liters in 2005 (Hunt 2006). The most important feedstocks by 2010 are expected to be soybean. entering into the market. however the EU ethanol share was lower due to difficulties in competing with cheap imports (USDA. 2.73 $ / GAL in 2003 to more than 3. China is investigating recycled cooking oil as an option. Its market size in 2005 only reached 3700 Million liters (Hunt 2006). market fragmentation has decreased Western Europe’s monopoly in the biodiesel market. Prices are normally influenced by several factors: production costs. rapeseed and palm oil. Brazil and the US dominated the world market taking a share of 19. affordability and government incentives. feedstock prices.000 Million liters (IEA 2004).000 million liters each. but the choice normally depends on local availability.Ethanol: Current and Future Trends
The world market size of Ethanol reached 55. For example.000 Million liters (Berg 2004). and 2. prices of Ethanol have fluctuated from 1. Jatropha and cottonseed oils will show the highest growth rates. If historical trends were to continue. countries legislations and oil prices among the most important ones.
All other countries combined account for only 11% of world consumption. Politics and Society
The Republic of Ghana is located on the West Coast of Africa and has an estimated population of 22 million.html). the world is expected to run into an overcapacity situation during 2007 (Gubler.000 million liters by 2010 and continue to grow to reach 24. steel (using scrap). the enabling environment and feedstock production for the biofuel industry. religion plays an important role in the lives of Ghanaians.
As previously seen. China and India are two new large single markets that are expected to emerge. The United States is expected to be largest single biodiesel consumer and market (18% of world consumption). and Yoruba 1%. Ga 8%. probably. Gurma 3%. Moshi-Dagomba 16%. 2006). mainly small landholders. Tourism has become one of Ghana's largest foreign income earners (ranking third in 2003 at $600 million). which accounts for 34% of GDP and employs 60% of the work force. With capacity growing at 115% per year. Furthermore. squeezed profit margins. Sixty one percent of the world consumption in 2005 was accounted for by Germany. Ghana does not suffer from tension among ethnic lines. 2006). closure of small-scale producers and those in less strategically important regions. and car. oil refining. Africa also has an opportunity to emerge.com/ipa/A0107584.1 million tons in 2007. Ghana's industrial base is relatively advanced compared to many other African countries.98 million tons in 2005 to 6. This section seeks to present information on the country’s background. truck. further fragmentation of the market is expected. Public sector wage increases and
.000 million liters by 2020. tobacco.state. 21% that have indigeneous beliefs and 16% that are Muslim (http://www. Industries include textiles. the biofuel market is continuously growing and will be fragmenting in the years to come allowing new players in Africa.infoplease. The domestic economy in Ghana continues to revolve around subsistence agriculture. Although there is ethnic diversity. Ghana made mixed progress under a three-year structural adjustment program in cooperation with the IMF. Capacity worldwide will far exceed expected consumption growth rates. lower capacity utilization rates. beverages. There are 63% Christians.gov). Ewe 13%. a war for raw materials. tires.
Country Background: Economy. By 2010. The results will be intensified competition. In 1995-97. the total EU biodiesel production is estimated to grow from 2. Among this population there are six major ethnic groups which are: Akan 44%.The forecasted growth for the Biodiesel Market expects that it will reach a size of 11. flour milling. simple consumer goods. and bus assembly. Moreover. The share of other countries will also increase to 44%. and. and the Ghanaian Government has placed great emphasis on further tourism support and development (www. to have an opportunity to enter the industry. such as Ghana. Nevertheless. (Gubler.
Despite being rich in mineral resources. This corresponds to projected consumption in 2005 of roughly 574. and meat also are important dietary staples. as well as direct povertyalleviation efforts. and 2. the current president of Ghana won a second term in December 2004.000 tons of diesel. improve the quality of life for all Ghanaians. peanuts. yams.regional peacekeeping commitments have led to continued inflationary deficit financing. and endowed with a good education system and efficient civil service. In addition. timber products. John Kufuor. refining. processes roughly 45. with a majority of its workers engaged in farming.000 barrels of Nigerian oil per day. Ghana also has established a successful program of nontraditional agricultural products for export including pineapples. However. rice.576 MT of petroleum diesel (GEC 2007). corn. coconuts and other palm products. and bauxite--are produced and exported. manganese ore. Mr Kufuor has made economic growth a priority. The country is mainly agricultural. exploration for oil and gas resources is ongoing (www. representing full capacity of the plant. roughly 11.state. diamonds. which typically provide about twothirds of export revenue.
. depreciation of the cedi. broad-based social and rural development. and pepper. and coffee. Of that production. Fish. poultry. however.
In Ghana. Other reforms adopted under the government's structural adjustment program include the elimination of exchange rate controls and the lifting of virtually all restrictions on imports. Known as the "Gentle Giant". and distributing of fuel is run by Government agencies. This oil supplies about 7075% of the market.gov). cashews. a para-statal. He has also taken a leading role in mediating in regional conflicts. inflation and borrowing costs fell.000 tons of LPG (Adamako 2007). Minerals-principally gold. and sorghum are the basic foodstuffs. Ghana’s economy is inviting of new industries and investments. and reduce poverty through macroeconomic stability. with imports making up the remainder of Ghana’s fuel needs. Nonetheless. The finished products are then stored and shipped by BOST to be distributed throughout the country. shea nuts (which produce an edible fat). the importation. Ghana’s stated goals are to accelerate economic growth. During his first term. and rising public discontent with Ghana's austerity measures. along with 13. including those in Liberia and Ivory Coast Moreover.242 MT of gasoline and 895. Cassava. The Tema Oil Refinery.000 tons of petrol is produced in a week. Therefore. Ghana remains one of the more economically sound countries in the west of Africa By West African standards. Cash crops consist primarily of cocoa and cocoa products. Ghana fell victim to corruption and mismanagement soon after independence in 1957. millet. higher private investment. Although BOST is registered as a private company it is solely owned by the government (Ohene-Amoah 2007). plantains. Ghana has a diverse and rich resource base.
oil palm. Discussions revealed that the draft policy had been in place since November of 2005 yet at the time of interviews (March 2007) the policy had not been put before Parliament nor was there any discernable timetable to do so (Ahenkorah 2007). However it must also be stressed that while the officials were very enthusiastic.Crop Suitability
Given the wide variety of feedstock from which biofuels can be made. there are some measures that the Ghanaian government is considering to promote the use of biofuels. Over the course of several discussions with government officials. cassava. In the case of sugar cane there is currently no significant production of this feedstock in country. it became obvious that there appears to be substantial excitement over the development of a biofuels program. and sugar cane Limitations on information obtained in Ghana prevent a full analysis on some of these crops. there remains doubt as to how much of the policy will be put into effect. and jatropha oil for biodiesel production. That being said. Given that the returns on creating ethanol from this feedstock are much higher than any comparable crop an analysis was made using estimates from US and Brazil. palm. it is important to identify crops that are most suitable for production in Ghana. There is particular interest in the creation of a domestic
See Appendix I for a detailed list of all relevant crop selection criteria and weights
. Many individuals from the Energy Commission to the Ministry of Food and Agriculture had already discussed the potential for developing the sector and a draft of policy recommendations has already been put in place. the added costs in preserving and transporting the feedstock as well as in the actual processing it into ethanol is unknown and believed to be too high.
National Enabling Environment National Policy
Given that the fuel industry in Ghana is state-run. Due to these limitations the models presented in the next sections focus only on sugarcane and cassava for ethanol production and coconut. six different crops were selected for further research on the ground2. In the case of sweet potatoes. coconuts ▬ Ethanol: Sweet potatoes. This is of particular concern in that many of the policies recommended are on timetables that may be unrealistic if not implemented within the next few months (Amoah 2007). Therefore there is some question as to the level of commitment behind these recommendations and potential policies. these policies (and their subsequent consequences) must be taken as no more than “best guesses” at this point in time. Given the uncertainty. By applying a set of criteria. These were: ▬ Biodiesel: Jatropha curcas. which takes into account current yields and production. the policy environment is of particular importance when looking at the potential for the biofuel industry. however efforts are being made to revitalize the industry that existed in the past.
and a potential increase in employment (Ahenkorah 2007). and might have access to a special fund set up by the Indian government of approximately $35 million to further the use of jatropha as a biodiesel feedstock. The primary reasons for this policy include a desire for economic growth. fuel security. There is also a recommendation towards the subsidization of biodiesel by means of removing various levies and BOST margins from biodiesel (GEC 2005). waiving of duties on machinery used to produce biodiesel (Ahenkorah 2007). however this initiative was not successful due to subsequently lower oil prices as well as a lack of implementation on the part of the Ghanaian government (GEC 2005). approximately 5% of the countries total consumption by 2010 and a further 20% by 2015 (GEC 2005). some officials have expressed the possibility of imposing a ban on the export of jatropha seeds (Kufuor 2007). In terms of feedstock.
Finance for biofuel industry
The government of Ghana is also trying to promote the funding of biodiesel production. How these two viewpoints are to be reconciled remains to be seen. Additionally. and requiring all existing commercial gas stations to offer both blends of B20 and B100 (GEC 2005). The policy covers a great deal of ground but the most important measure being considered is the mandated use of biodiesel. however the Energy Commission has also stated that it will not offer such subsidies at the cost of revenue (Ahenkorah 2007). Government officials have expressed generally a protectionist stance. there are policies proposed to look to export biodiesel along the same lines as cocoa is exported today. The reasons for this preference seems to be rooted in the idea that jatropha can grow in a wide variety of places and has the potential to employ a larger number of individuals (Amoah 2007). It should be noted that ethanol production has been all but left out of these policy recommendations. perhaps even seeking import taxes on biodiesel (Ahenkorah 2007).
In addition to the various domestic policies there are several thoughts as to the actual exportation of biofuels. mandating government vehicles to use at least B20 and encouraging other mass transportation fleets to do the same. these goals are increasingly dubious as Ghana has yet to act on these recommendations and there is no large scale production of biodiesel currently being undertaken anywhere in the country. Other policies include: the provision of tax breaks for producers (tax holidays). It is also recommended that biodiesel exports be regulated and taxed as a source of revenue (GEC 2005). According to the draft policy. with a particular emphasis on the former. Cocoa is currently bought by the government at set prices and then subsequently sold on the world market.biodiesel industry. There have been failed attempts in the 1970s to create an ethanol industry. Therefore biofuels is seen as a vehicle for economic development rather than a policy to be pursued based on environmental grounds. In
. Both the draft policy as well as government officials have largely dismissed the production of ethanol as a viable alternative. the government is most interested in promoting the use of jatropha and palm oil. However.
Finally. The government on the other hand will only provide funding for its jatropha initiative.addition to this funding.
Biofuel projects are in principle eligible under the Clean Development Mechanism (CDM) under the Kyoto Protocol. it must also be pointed out that if credit emission reductions are approved. it would only apply for domestic consumption of biofuels and not for exports.” (GEC 2007:11) This raises several questions as to the government’s ability to play an effective role in the promotion of jatropha cultivation or even biodiesel promotion. However no current project has been able to obtain certification because baseline and monitoring methodologies have not been approved by the CDM Executive Board. the National Microfinance and Small Loan Center is willing to give smaller loans for the cultivation of jatropha. As of February of 2007. There also appears to be a swift push for jatropha cultivation despite the lack of established scientific evidence as to its yields. five methodologies have been submitted and are under review. focusing on youths and using set prices for the seed to be sold to the producer (Kufuor 2007). Additionally. First. some of the policies tend to conflict both with various parts of the draft plan as well as various interviews that were completed.
. “unlike most of the other crops.g. however further information on the costs of production still have to be shared with them to determine feasibility and price (AGDB 2007). the Bank is relying on existing microfinance schemes for the provision of credit to farmers. This is coupled with what seems a great misunderstanding as to the effect cultivation may have on land use: e. This is the main constraint for the application of CDM as a financing tool for biofuel projects. the actual policies of the Ghanaian government in both promotion and trade leave room for improvement. Approval of one or more of these would improve chances for biofuel CDM projects significantly. AGDB will also use some of its fund to support this crop.
While the enthusiasm and spirit to promote biofuels is there. However. The Bank. The reported desire to limit the export of jatropha seeds and tax imports of biodiesel also point to policies that may hinder the promotion of this infant industry. which they have accomplished by gaining a sovereign guarantee from the government to provide funding for biofuel production. In regards to financing for feedstock production. and has the liberty to finance a variety of crops. Only when these barriers are cleared. the Merchant Bank of Ghana has determined to seek government support. the Agricultural Development Bank (AGDB) expressed no preference for the crop to be cultivated since they provide support to all crops in Ghana. the oil produced from jatroph [sic] is not edible and thus its cultivation for energy purposes will not deprive the use of arable land for purposes of growing food crops. will finance these crops through its own budget. will certified emission reduction revenues in most cases be able to help cover part of the capital costs of biofuel production and increase the project’s IRR.
The EU is projected to consume roughly 116 Million Metric Tonnes (MMT) of 19
. While energy independence is a concern. the prevailing focus is that of reducing CO2 emissions and creating an environment for “sustainable energy flows.622 574. This concern could present an opportunity for ethanol to substitute MMT as a blend of 2. However MMT may present some health concerns since high levels of manganese inhalation can cause irreversible neurological disease. the use of manganese additives in gasoline could increase inhalation manganese exposures (EPA).939 MT in their respective years (Figure 1). the EU market demonstrates higher potential demand for ethanol and a possible outlet for production in Ghana. the potential for developing the ethanol sector in Ghana is actually quite small. this would be equivalent to the production capacity of one large or two smaller ethanol production plants. While not insubstantial numbers." which sets the objective of 20 % substitution of conventional fuels by alternative fuels in the road transport sector by the year 2020 (EU 2003).652 MT and 13.652
Figure 1: Projected Ethanol Demand in Ghana (MT)
696.938 MT in 2015 (GEC 2005) this would mean an ethanol demand of 12. Ghana has phased out the use of lead in gasoline and is currently using the additive MMT (methylcyclopentadienyl manganese tricarbonyl) as oxygenate in place of the more harmful MBTE (methyl tertiary-butyl ether).ETHANOL POTENTIAL Demand in Ghana and the EU National Market
Given that no policy to drive ethanol usage is in place. Hence the potential national market for ethanol is relatively small unless the government implements policies that mandate further use. Given a projected usage gasoline usage of 632.939
The EU current stance on biofuels has been driven in large part by environmental concerns.622 MT in 2010 and 696.0% with gasoline (EPA 1999).938 632.242
12. Hence.” This is evidenced in the Green Paper. The most realistic possibility given these circumstances lay in the potential use of ethanol as a gasoline oxygenate. "Towards a European strategy for the security of energy supply. Given current legislation as well as trends in gasoline consumption.
Once this capacity is reached. nearly at half the price of its nearest competitors (World Bank 2005). This would imply an ethanol demand of 6. it is uncertain whether it the demand for imports will continue in the longterm.0 116. As the leading producer and consumer of ethanol in the world. In fact. It has also proven to be the most efficient feedstock in terms of using its own waste. make it a natural feedstock for production. What is certain is the EU’s intention to continue producing biofuels which will in turn increase the need for feedstock. However. Europe is currently a net importer of ethanol.
Sugarcane is the single largest source of ethanol production in the world.0 MMT according to current proposals (Figure 2).0 124.6 MMT and 12.0
Gasoline Demand (MMT) Ethanol Demand (MMT)
While there may be a need in Europe to make up for shortfalls in ethanol production in the short-term.1 compared with a ratio of 1. in the form of bagasse.gasoline in 2010 and a further 120 MMT in 2015 (Eurostat 2006).
Figure 2: Projected Ethanol Demand in the EU (MMT)
112. Brazil is arguably the biggest success story in terms of biofuel production and it is in large part due to the country’s ability to grow massive quantities of sugar at very low cost. ethanol produced from sugarcane is the most efficient in terms of energy input/output ratio at roughly 8. particularly Sweden and Denmark. there will be a potential market for feedstock supply since land suitable for ethanol crops is largely being used for biodiesel feedstock production or more traditional forms of agriculture.0 120.0
25.3 for maize (corn) and lower ratios for most biodiesel crops (USDA 2002). as a major source of energy to convert the sugars into ethanol. primarily supplied from Brazil and can continue increasing its imports until it builds enough production capacity. Some nations have seemed content to import ethanol from Brazil. Brazil has managed to make its programs profitable without government subsidies.6 2015 12. while there are large initiatives in both Spain and France to increase production of biofuels (USDA 2006a). The fact that sugarcane requires little in the way of processing before it can be turned into alcohol.1 2005 2010 6.7 2. it must be noted that this has not
This lack of interest is largely due to reluctance on making investments in an industry that collapsed several years ago. the world leader.0654 Processing Labor $0.0478 Fuel $0.0518 Maximum Feedstock Cost $0.28 per liter it would be positioned to be competitive vis-à-vis gasoline in the national market.1544 Cane Transportation $0.0054 Electricity $0.0152 Administrative Non-Labor $0.5264 Production Costs Administrative Labor $0.
All production costs from USDA 2006b Unless otherwise noted all costs are taken from March 14th 2007 5 See Appendix II for detailed cost information on ethanol production from sugarcane
. Nevertheless. Currently. However.2805
Given that Ghana has no current sugarcane production. However. Since there is no current ethanol production in Ghana.0111 $0.0325 $0.0085 Chemicals $0. if Ghana were to produce sugarcane for less than USD 0.0397 Repairs and Maintenance $0.5264
Government subsidy Taxes and Levies Current ex Refinery Price
Table 1: Maximum Feedstock Price3 Current ex Refinery Price (per liter) $0.0340 $0. at the time of this report there was news of private initiatives being developed to revitalize the sugarcane industry in Ghana (Ghanaweb 2007).53/liter) Once this price was obtained estimated ethanol production costs were subtracted to determine the maximum cost for sugarcane (Table 1: Maximum Feedstock ).0245 Total Administrative Costs $0. The model was created by using the current price of petrol gasoline ($0. the scenario for which best data is available. forcing the country to import all of its sugar crop. taxes and levies to determine the ex-refinery price of petroleum gasoline ($0.0056 $0. the model utilized production costs from the United States to obtain an estimated maximum cost of feedstock of approximately USD 0.0057 Materials and Supplies $0.
Table 2: ex-Refinery Price Current price of petrol (ex pump) (per liter) Gross margin (distributors) Transport margin (oil marketers) BOST Margin Distribution Margin
$0. it is useful to identify international costs of production to be used as benchmark.0722 $0.86/liter 4 ) and subtracting transportation costs. distribution margins.8603 $0. and the United States.2435 $0. there is no real discussion in Ghana on introducing the use of sugar for ethanol production.always been the case and that Brazil’s current status as a net exporter of ethanol is a recent development. In the case of sugarcane it is useful to look at production costs for Brazil.
Calculations were made to determine the approximate price of ethanol production in Ghana and to identify the cost of feedstock necessary for a competitive industry.0216 Total Processing Costs $0.28 per liter of ethanol (Figure 3). this figure might be lower since production costs in Ghana are likely to be initially higher than that of the US due to high infrastructure and utility costs.
Reaching these production targets might not be a reasonable goal for Ghana in the shortterm.There is some debate regarding the exact cost of sugarcane production in Brazil. A long period of time was needed to put infrastructure in place and to refine production processes. will likely be necessary to offset higher production or feedstock costs and to make Ghana’s ethanol industry viable in the short-term. In the case of the US. Brazil had a large domestic market which allowed for economies of scale while mandating domestic consumption. First. Barring these developments the
Figure 3: Cost Breakdown for Estimated Maximum Feedstock Cost of Sugarcane-based Ethanol
prospects for developing the Ghanaian ethanol industry in the long-term are low. the Department of Agriculture estimates that large-scale ethanol production from sugarcane is likely to cost approximately USD 0. Additionally.39 per liter (USDA 2006b). it was necessary for the Brazilian government to subsidize ethanol production. Significant developments in sugarcane production must occur if there is to be an adequate supply of feedstock to meet Ghana’s relatively small demand.27 per liter (USDA 2006b). the initial costs of production could be higher than assumed and further research is required to ensure that it would not be too high so as to make ethanol production not viable. Some estimates indicate costs as low as USD 0. The experiences from Brazil might provide an indication on the type of policies required for the creation of a viable industry. Moreover. Ghana would have to produce sugarcane at a cost three times less than that of the United States and achieve costs of production comparable to those of Brazil. significant reduction in taxes and levies. particularly the construction of refineries for a long period before government price-setting was removed in the mid-1990s. Given the limitations of USD 0. or substantial increase in subsidies. Additionally.24 and up to USD 0. This is not to say that a country such as Ghana 22
.14/liter (World Bank 2005) but others estimate the cost around USD 0.28 per liter.
information on production costs for cassava is widely available. industries based on this crop have encountered difficulties in Ghana.While there is no established large scale cassava cultivation for the sole purpose of ethanol production in Ghana.would have to have an equivalent domestic market today. However. This added expense increases costs of 23
. Particular attention must be paid to maintaining steady incentives for small-holders before any cassava based ethanol project can move forward.000 tons/year) producing 1700 tons per year for the export market.000 ha with an average yield of just under 12 tons per ha (RTIP 2004). These opportunities improve the potential for an ethanol market to be competitive in the future.
As opposed to the sugarcane model. These problems were further exacerbated by the lack of a steady supply of feedstock. Because the plant runs under capacity the average cost of production is 250 USD per ton. Furthermore newer high-starch varieties of cassava may be able to increase the yield of ethanol per kilogram of cassava. a commercial starch factory backed by the President’s Special Initiative (PSI). began operations with 10 percent of its installed capacity (22. Despite issues with supply. While some of the test cases may be hard to duplicate. cassava must be broken down into its component starches and sugars before it can be converted into ethanol. Cassava is mostly utilized in the food market or as a subsistence crop. this is not the case in Ghana. The Ayensu experience highlights some of the issues of establishing a cassava-based industry in Ghana. to create a market for cassava based ethanol. The amount of land cultivated is estimated to be 800. but only that in lieu of a competitive product. there are efforts in other parts of the world. a ready market that is required to purchase biofuel is a pre-requisite to develop the sector. The factory soon ran into cash flow problems due to lower demand and reduced global prices. Ayensu. however cassava is also grown for the production of industrial starch. the opportunity for higher yields exists. The Root and Tuber Improvement Program (RTIP) has been able to improve yields by up to 300% (RTIP 2004). however there is doubt as to the costs involved in processing cassava chips. The plant was being supplied almost exclusively by small-holder farmers who had become disillusioned with the project and who were able to find better prices for their wares on the open market (Bonsu 2007). an industry that has been initiated with poor results in Ghana (Bonsu 2007). Ghana has a great potential to improve its production of cassava. the most important being obtaining a steady supply stream.
Cassava is the largest staple crop in Ghana with an estimated production of over 10 million MT a year. a cost too high to compete with global market prices around 200 USD/ton. Despite the large production of cassava. notably Thailand. Unlike sugarcane.
the model fails to include a margin for the ethanol producer and therefore must be factored into future cost analysis. Additionally. Given that the ethanol must be blended with petroleum gasoline to be commercially available. However. we factor in a percentage difference to determine the change in price. an approximate value of producing ethanol-mixed gasoline can be determined. making ethanol from cassava very close to being competitive.
Using these assumptions it was determined that ethanol derived from cassava may have a cost of just over USD 0. It should be pointed out that the price of petroleum gasoline in Ghana is currently USD 0.
For a full analysis of the Cassava to ethanol production costs see Appendix III
. a market could exist if production costs are reduced or if there is an increase in the price of gasoline. By adapting these figures and utilizing average costs of cassava production in Ghana.862.860. The farm gate price for cassava is estimated to be USD 0. if cost assumptions are met the cassava-based ethanol industry is close to being a commercially viable form of biofuel. The following model utilizes estimated cost of production from a cassava-ethanol program in another sub-Saharan African Country. regular taxes and transportation margins are added to calculate the minimum price for ethanol (Figure 4). After the ex-refinery price is determined.026/ per liter of ethanol. While there is a question regarding the production costs as they are taken from a different context. this model uses conservative estimates for production costs and farm gate prices for cassava. despite these caveats.ethanol production.
Figure 4: Minimum Blended Gasoline Price
Although RTIP has demonstrated that cassava may potentially be grown for half of the cost.
Ghana must first reduce some of the production costs that may prevent it being competitive. If cellulosic technology is made available for commercial use the cost and efficiency of sugarcane and cassava-based ethanol is no longer competitive.. and oil palm and three potential models of production. the number of small-holders willing to sell to ethanol producers is likely to fall unless the price is matched. Nevertheless. factors previously mentioned prevent cassava from being a suitable feedstock for biofuel production. Thereby. targeting the mining sector as the market for biodiesel. Additionally. there is a potential to develop a biodiesel industry in Ghana given the support and interest of the government and small entrepreneurs. It is important to note that there is no established domestic market for ethanol. However the government does not currently have plans to implement a regulation to change the use of MMT.In order to take advantage of this opportunity. a breakthrough on the cellulosic research could potentially threaten the economic viability of the industry. Hence Ghana should focus its efforts on developing the biodiesel industry which is subject to less volatility. or starch price substantially increases. it would need to successfully introduce newer high-starch varieties and increase the average yield of small farmers. Additionally. is a major food crop in Ghana.
Based on the models presented neither cassava nor sugarcane is capable of being economically viable at this stage. The last model deviates from the production of
. Additionally. these improvements do not take into account the fact that cassava. The first model is based on the government’s policy draft for the biodiesel industry and identifies all of Ghana as the potential market. While there is inherent potential for a cassava-based ethanol industry. The assumption in the models identify a need for 2% blend of ethanol to be used as gasoline additive. coconut. The second model takes a sectoral approach. if the market food price. This section analyses the possibility of a biodiesel industry based on three identified crops: jatropha. There is need for wide-spread improvements on yields. However this is unlikely given the lack of government interest in this industry. reduction of production costs. An increase in the demand for cassava could potentially raise its price. This is the case unless significant improvements in yields and costs of production are made. the experience of the Ayensu starch factory indicates the need for better market coordination to ensure sustainable and steady supply. adversely affecting the population that depends on the crop for daily consumption. the feedstock is highly susceptible to fluctuations in prices within the food and industrial starch market. and further research regarding food security issues.. government support in the form of direct tax breaks might be required if the industry is to be started. Moreover. However.
Unlike the ethanol industry. unlike sugarcane.
it is imperative that current biofuel policy draft is approved by parliament for these assumptions to hold. Assuming fuel consumption expands in line with GDP growth expectations of 5%. However. however. which are grown at a large and small scale in Ghana. the biodiesel supply chain for this model begins with the production of the feedstock by small farmers.
Figure 5 Projected Demand for Biodiesel
Projected Dem and (MT)
63.223. This could be the case for coconut and oil palm. since yields tend to be lower with small scale production.431 metric tones.818
330.204 metric tones (Figure 5).204 0
1. As mentioned before.biodiesel by identifying the potential of the export of vegetable oils to Europe. Once the feedstock has been bought. Such demand will increase fivefold for the year 2015. Nonetheless. the next step in the supply chain is the transportation to an oil production facility. This is achieved by eliminating the margin of a third-party oil extractor. it is likely that feedstock will also be bought from bigger plantations in order to meet the large demand for vegetable oil.
National Model Biodiesel Demand
The demand for biodiesel will be created by legislation which mandates a B5 blend for the year 2010 and B20 for the year 2015 for all diesel fuel in the country (Energy Commission of Ghana). It is likely that oil will be extracted by the biodiesel entrepreneur in order to reduce the final cost of the oil.431
895. This is due to the government’s interest in supporting an industry that employs a large number of farmers.576
Assumes diesel consumption growth in line with expected 5% GDP growth
As seen in Figure 6.930 1. no current large production of Jatropha exists today. to approximately 330. This model can be used to increase the supply of feedstock until capacity for biodiesel production is built in the country. It is particularly true for the case jatropha seeds
.111. the government has plans to increase small scale cultivation of jatropha by providing land to young farmers for the production of jatropha seeds for the biodiesel industry (Kufuor 2007). it is expected that demand for biodiesel in the year 2010 will reach 63.
methanol and water. it will be turned into biodiesel through a transesterification process by which a catalyst. Alternatively.Biodiesel Supply Chain: National Model
Biodiesel Supply Chain Feedstock Production Transport to Oil Producers
Vegetable Oil Extraction
Transport Oil to Plant
Biodiesel Production Plant
Transport to Blending Facility
Transport to storage depot
Transport by Oil Marketers
Retailers (Gas stations)
Once the oil is obtained.since no current large facilities are dedicated to the commercial extraction of its oil. it is likely that current coconut and palm oil producers can supply the oil directly to the biodiesel producer if the price is competitive enough. The task of blending could fall under the responsibility of BOST or Tema Oil Refinery depending on the legislation to be approved by Parliament. production and distribution costs are deducted from the price of diesel at the pump (USD 0. estimated costs of production are assigned to all of production and distribution steps.8201 on March 16. are added to the oil. the blended fuel will be transported to BOST storage depots across Ghana to be distributed to local gas station or retailers by oil marketers. However.
Figure 6 . In order to determine the maximum price for vegetable oil required for competitive B100 biodiesel. 2007). Subsequently.
Maximum Feedstock price for Biodiesel B100
After the biodiesel supply chain has been identified. the biodiesel can be transported directly to BOST depots and blended with diesel there before it is distributed by oil marketers.
. The biodiesel obtained will then be transported to Tema Oil Refinery for blending with diesel.
Transport of vegetable oil
Methanol cost twice than Mozambique’s Implies $142.50 50.1315 per liter or USD 142.00 22.Figure 7
Biodiesel competitive price analysis for Ghana (US Cents / lt)
12. administrative personnel.15 per liter. estimated prices in Ghana for jatropha oil. it should also be mentioned that costs utilized in this model are only indicatives and do not include other costs such as land.15
Current Fossil diesel price
Source: BOST. the implied maximum cost of vegetable oil would rise by USD 0. TechnoServe.4183 to USD 0. the estimated ex-refinery cost of diesel in Ghana is equivalent to USD 0.22
30.89 per ton. As observed in Table 3.15 per liter.9776 per liter. If the price were to be reduced to the level of Mozambique’s. It is important to mention that the cost of methanol (used with the catalyst) is much higher in Ghana than in other countries such as Mozambique. This implies that biodiesel ex-production plant price has to be equivalent to USD 0.22
2.3707 per liter of biodiesel. The reason behind the high cost of oil is that either the farm gate price for jatropha seed is too high. palm oil and coconut oil range from USD 0. increasing the overall cost of biodiesel production (correspond to 21-37% of costs).5022 per liter.62
Current Feedstock Price Analysis
Current prices of vegetable oil in Ghana are higher than the implied maximum cost of USD 13. and GWU Analysis
As observed in Figure 7. and overhead costs associated with biodiesel production. However.5022 if it were to be competitive with diesel.89/ ton
Table 3 Estimated current cost of oil in Ghana
Price per liter of oil
Jatropha $ 0. or the commercial value of palm oil and coconut oil is high in the food market.29 82.7141
Coconut $ 0. Because production and transportation costs are approximately USD 0.9776
Oil Palm $ 0. It should be clarified that this paper utilizes the current cost of methanol in order to produce models that reflect the environment in Ghana today.4183
Implied max cost of veg oil
. the maximum cost of vegetable oil is roughly USD 0.
Assuming a conservative extraction rate of 20 percent. Transportation and extraction costs make up the remainder. Therefore. the price per kg of jatropha seed is about USD 0.3179 $1. it is unlikely that the oil extractor would sell it for a lower price in order to produce biodiesel at a competitive. USD 1. Although production costs for palm oil are lower than USD 470.7556. competition with the food market does not allow reduced prices for the biodiesel industry.4076 $1. or about USD 776. allowing a third-party to extract the oil instead of the biodiesel producer.1217 $0. In this instance. Although the production cost is lower. The local market price for one liter of coconut oil is equivalent to USD 0. and palm oil were to be utilized to make biodiesel. The case is similar for coconut oil which is the most expensive vegetable oil of the selected crops.1290
. This increases the final price for the oil. This price has built-in margins for oil extraction.21 per metric ton. It is assumed that the oil extractor and biodiesel producers would maximize their profits by selling the oil to the food industry for USD 470.04 (Rayford).51 per liter of oil.7162
Oil Palm $0. coconut. In this case.3179 $1. As observed in Table 4. an approximate cost of oil production was calculated since no official price of jatropha oil exists.203 per liter.7141. USD 0. since the total cost for nuts equivalent to one liter of oil is USD 0.4207 $1. It is assumed that 17 nuts are needed to make one liter of oil. the price of the oil for biodiesel production is tied to the price of palm oil in the food market.3179 $1. 4. the oil extraction is done by the biodiesel producer in order to eliminate the margin of a thirdparty producer.2220 $0.2361 $0. equivalent to USD 0. These values are not competitive with the current price of diesel (USD 0.5111 $0. Please refer to Appendix IV for more detailed costs
Table 4 Estimated B100 Production Costs
Cost per Liter Feedstock Cost – small farmers Cost of oil extraction (includes transport of feedstock and margin) Biodiesel production cost (includes transport to biodiesel plant)** Biodiesel Ex-Production Plant Price Gov taxes and Distribution margins Estimated Max Pump Price B100
*No margin for jatropha oil extraction **5% Biodiesel production margin
Jatropha $0.1822 $0. and the price per nut is equivalent to USD 0. and reflects the international price of USD 470 per metric ton. 2007).3928 $0. Since no current price per kg of copra was available during data collection.222.8201 as of March 16th.4183. if current prices for jatropha.11 (GoldrayBiodiesel). and USD 1. the estimated price at the pump per liter of B100 would be of USD 1. Transportation and oil extraction costs make up the rest of the costs. it is assumed that the oil producer buys the entire nut for production.1290 respectively.7556 $0.6 kg of seeds are needed to produce one liter of oil.9776.3983 $0.7162.2030* $0.8111 $0.4396. bringing the total cost of the feedstock to about USD 0.The price of palm oil per liter is about USD 0. In the case of jatropha. The final cost for a liter of oil is approximately USD 0.4396
high prices for the vegetable oil make the B100 blend uncompetitive with diesel by a range between USD 0.1289 $0.0340 0. The following table introduces estimated costs/prices for vegetable oil under a best case scenario.0056 $0.1574 $0.0056 $0.5022 $0. or if diesel prices were to increase significantly.0111 0. this scenario could change if vegetable oil costs were reduced.0300) $0.3451
Coconut $0.0056 $0.0056 0.3983 $0.0111 $0.4056 $0.8653
Oil Palm US$/L $0.0166 and USD 0.31 and USD 0.0452 per liter. As was shown before.5022 0.0300) 0. it is important to understand the potential impact that lower priced vegetable oils have on the production of biodiesel.0056 $0.1801 $0.2250 (0. However. However.B5 Production Costs
Estimated production costs for B5 blend vary for the three selected crops. Hence. the biodiesel ex-refinery cost is calculated by adding transportation and blending costs to the biodiesel ex-production plant cost.0340 $0.2250 ($0. This implies that with current costs of production and local prices for vegetable oil.8514
Coconut US$/L $1.0340 $0.8183 $0. biodiesel cannot be competitive with fossil fuels without some form of subsidy (less than five US cents per liter).0722 $0.
Best Case Scenario
It has been observed that current prices for vegetable oil are too high if biodiesel is to be competitive with current diesel pump prices.2250 ($0.1759* $0.5180 0.2576 $0. the blended B5 cost will be slightly higher than diesel alone by a range between USD 0. Because the cost of biodiesel is higher than that of diesel.0722 $0.0017 $1.4563
Oil Palm $0.0722 0.
Table 5 .
Table 6 Estimated best case scenario cost of oil in Ghana
Feedstock Cost Cost of oil extraction (includes transport of feedstock and margin) Price per liter of oil
Jatropha $0.5335 $0.0056 $0.62 per liter.0300) $0.1987 $0.5474 $0. this difference is decreased when utilizing a B5 blend since only five percent of the cost is attributed to biodiesel.5022 $0.8111 $0.B5 Production Costs
Biodiesel Ex-Production Plant Price Distribution Margin (from plant to blending) Blending Biodiesel Ex-Refinery cost Diesel Ex-refinery cost Blended B5 Ex-Refinery cost Taxes and Levies Government subsidy Distribution Margin (from Tema to BOST) BOST margin Transport margin (Oil marketers) gross margin (distributor) Estimated Maximum B5 Pump Price
Jatropha US$/L $1.8360
As observed in Table 5.0017 $0.3560
* Combined supply from small farmers and plantation
.0111 $0.0017 $1.1867 $0.1217 $0.
0112. and that the oil extraction rate is 30 percent (obtained by GoldrayBiodiesel). After adding transportation and extraction costs. The assumptions for the best case scenario would require significant R&D to obtain an improved variety to yield. By only buying the copra.07 kg of seeds are needed per liter of oil (compared to 4. assumed 1089 trees could be planted in one hectare (3 by 3 meters space). This scenario assumes that the price per kg is reduced by 55 percent to approximately USD 0. Prices are likely to be established between producers and buyers and will reflect the productivity of the farmer. It is assumed that because the oil extractor would buy in bulk it will be able to obtain a lower price. Since small farmers have costs that are higher than USD 400. Alternatively. it would imply a five percent tax break.8201 per liter – March 16.11 per kg of seed is too high for a competitive biodiesel industry. the government could also put in place a tax break for the biodiesel percentage in the blend. and the oil extraction rate increased. the government could artificially make the B5 blend competitive by using a subsidy of less than two US cents per liter. the price of jatropha seeds could potentially be lowered. Furthermore. which tend to have lower costs of production. as a minimum 5 kilograms of seed per tree. In the case of Coconut. The situation is different for jatropha oil. the final cost for coconut oil is estimated to be USD 0. the estimated B5 pump price for the best case scenario would range between USD 0.Best Case Scenario
Since the best case scenario present lower costs for vegetable oil.3451 per liter. This would mean that only 3.6 kg). In this case. since this product has no competition in the food market.
B5 Production Costs.
. The model built. 2007).4563 per liter or USD 495.8312 and USD 0. since the oil extractor will seek to maximize profits reducing production costs is not enough. it is assumed that 1650 trees are planted per hectare (2 by 3 meters).The best case scenario for oil palm reflects a lower price for palm oil at USD 400 per metric ton (instead of USD 470 per MT). shows the outcome of such measure. In the previous assumption. it was estimated that a jatropha tree would yield 2 kg of seeds per tree (conservative yield based on observations by ADRA). As observed in Table 7. This price would still be higher than the observed cost of diesel at the pump (USD 0. However. Table 8. the production costs for biodiesel and the final pump price for B5 fuel will also be lower. it is assumed that the supply of feedstock will include larger plantations. Because productivity will be increased. hence national coconut oil prices will need to decrease as well. equivalent to USD 0. and no competition with the food market exists. the price of jatropha oil decreases to USD 0.8379 per liter depending on the feedstock. however.93 per metric ton.052. the new price for the feedstock would reflect only the cost of copra and not the entire nut. the producer can save close to 70 percent in feedstock costs. With lower feedstock costs. Since the current price of USD 0. the marginal cost of production needs to be reduced.
Oil Palm US$/L $0.B5 Production Costs for Best Case Scenario
Cost of vegetable oil Biodiesel production cost (includes transport of oil to biodiesel plant.0056 $0.0300) $0.4563 $0.0300) $0.0722 $0.0300) $0.0056 $0.2250 ($0.0340 $0.0340 $0.3897 $0.0056 $0.3560 $0. Please refer to Appendix VI for further information
.5133 $0.5200 $0.3707 $0.0300) ($0. but only if the international price of palm oil is low.5147 $0.Table 7 .0340 $0.5147 $0.8214
Because the amount reduced in taxation is higher than the increase in the cost of exrefinery fuel. each feedstock is competitive for the production of biodiesel B5 blend (keeping feedstock and biodiesel costs fixed).3947 $0.7159 $0.2250 $0.8312
Coconut US$/L $0. However.5022 $0.0722 $0.0722 $0.0017 $0.0111 $0. biodiesel made from jatropha oil has the potential of being competitive. 5% producer margin) Biodiesel Ex-Production Plant Price Distribution Margin (from plant to blending) Blending Biodiesel Ex-Refinery cost Diesel Ex-refinery cost Blended B5 Ex-Refinery cost Taxes and Levies Government subsidy Distribution Margin (from Tema to BOST) BOST margin Transport margin (Oil marketers) gross margin (distributor) Estimated B5 Pump Price
Jatropha US$/L $0.0017 $0. oil palm could be a potential feedstock to be used with marginal subsidies. Additionally.0056 $0.0722 $ 0..7457 $0.2250 ($0.0056 $0.0056 $0.0056 $0.0017 $0.8582 $0. indicates the price of crude oil at which.0056 $0.0111 $0.7529 $0.0111 $0.3451 $0. The following graph.0300) $0.0340 $0.0056 $0.0340 $0.8199 $0.2138 $0.0111 $0.5022 $0.5022 $0.8267 $ 0.0722 $0.
Crude Oil Sensitivity Analysis
It has been shown that with current prices of vegetable oil.B5 Pump Price .0300) ($0.2250 ($0.5133 $0.8327
Table 8 .0111 $0.8509 $0.0340 $0.5% tax break – best case scenario
Blended B5 Ex-Refinery cost Taxes and Levies Government subsidy Distribution Margin (from Tema to BOST) BOST margin Transport margin (Oil marketers) gross margin (distributor) Estimated Maximum B5 Pump Price
$0. it is important to stress that this is only attained with higher productivity and lower prices for the seed.0111 $0.2250 ($0.5200 $0. the production of biodiesel (B100 and B5) is not competitive with the current price of diesel.7231 $0.
and in the case of palm oil.00 $20.00 $Jatropha Best Case Jatropha Coconut Best Case Coconut Palm Oil Best Case Palm Oil $76. For palm oil biodiesel to be competitive. reduce the seed price by 55 percent. However. As previously demonstrated.00 $109.85 $104.88 per barrel) if a tax break were given.92 $64.00 $100. However. It is important then.00 $120. prices of crude oil would only need to increase by 5 to 18 percent (current and best case scenarios).00 $120.00 $40. It can be concluded that if Ghana were to seek a biodiesel industry competitive with current diesel prices. and provide a tax break of 5 percent on the total blended fuel.00 $100.97
$91. The price of crude oil would need to increase between 60 and 190 percent for biodiesel produced with current vegetable oil to be competitive.00
Crude Oil Senstivity Analysis .88 $87.27
Estimated Price of Oil needed for competitiveness
Price of oil (barrel) 03/16/07
Estimated Price of Oil needed for competitiveness
Price of oil (barrel) 03/16/07
The first graph provides the estimated value of a barrel of crude oil needed for the price of B5 to be competitive for each scenario.76 $60.88 $60. the price of palm oil is subject to volatility due to its demand in the food market.66
Price per Barrel of Oil $200.00 $80. or 26 percent for the best case scenario. crude oil prices would need to increase significantly.00 Price per Barrel of Oil $140. prices of oil would need to increase by 40 to 70 percent. for the government to be prepared to provide some type of tax incentive if biodiesel is to become competitive in the near future. that for jatropha to be competitive crude oil should have an average price of USD 88 per barrel.58 $145.00 $60. it would have to increase productivity of jatropha.00 $Jatropha Best Case Jatropha Coconut Best Case Coconut Palm Oil Best Case Palm Oil $60. the best next alternative is palm oil.20
$180. about 140 percent for current costs to be competitive.00 $140.38 $71.00 $60. for the case of coconut.Figure 8
Crude Oil Senstivity Analysis .00 $80.24 $136. However. which would require further subsidies or tax breaks on the blended fuel if it were to be competitive. biodiesel made from jatropha (under a best case scenario) would be competitive with the current price of oil (USD 60.B5 Biodiesel Tax Break
$173. If this is not met. The second graph illustrates the effect of a five percent tax break in the price of B5 fuel.00 $180.04 $99. which can in turn influence the competitiveness of the biofuel industry.00 $160.00 $40.00 $160.
. if we take into account the best case scenario. the price would have to be of USD 91 per barrel (assuming national price of palm oil is USD 400 per metric ton).B5 Biodiesel
$200. That means.00 $20.
and mining companies are obliged by law to ensure other economic activities are promoted in the areas where mines are located. The next step in the chain is the transportation of the feedstock to the oil extraction plant that would be located on-site (near plantation). a biodiesel industry would not only fulfill the sector’s need for fuel. biodiesel demand for the year 2010 is expected to be 23.Mining Model
The second model moves the focus away from the national market and concentrates on a particular sector in the economy as the potential market.
Figure 9 . Once the biodiesel is produced. This demand nearly triplicates for the year 2015 if the blended percentage is increased to B10. but would also diversify the economic activity of surrounding communities by creating jobs in the agricultural sector. and if reliable supply of feedstock exists.503 metric tons. The most promising sector in Ghana would be the mining sector since it consumes approximately 40 percent of the national production of diesel (BOST).
As observed in Figure 10. This is to ensure that feedstock costs are minimized since best practices tend to be developed by plantations and then transferred to small holders and small out-growers. Furthermore.230
Assumes growth in diesel consumption in line with 5% expected GDP growth
As seen in Figure 9.503 0
446. Hence. diesel represents around 42 percent of operational costs for the mining industry.921
The demand for biodiesel is significant in this model due to large consumption of diesel by the mining equipment. it will be transported to the biodiesel production plant also located near the plantation.Projected Demand for Biodiesel for Mining Sector
Projected Demand (MT)
61. It is assumed that the sector would initially utilize a B5 fuel blend for its vehicles and can later increase to B10 if needed. Once the oil is extracted. it will be transported to the diesel storage depot located at the mine where it will be blended with regular diesel and stored for later consumption.436 23.551 552.
. the biodiesel supply chain for the mining sector would begin with the production of feedstock by small holders and plantations owned by the mines.
or USD 409. This would imply a maximum vegetable oil cost of USD 0. production and distribution costs are subtracted from the estimated price of fossil diesel at the mine.Biodiesel Supply Chain: Mining Model
Biodiesel Supply Chain Feedstock Production Transport to Oil Production
Vegetable Oil Extraction
Transport Oil to Plant
Biodiesel Production Plant
Transport to Storage Depot
Blending and storage in depot
Maximum Feedstock price for Biodiesel B100
In order to determine the maximum feedstock price for the production of biodiesel B100. therefore the estimated price for the mining sector is equivalent to USD 0.2455 per liter. Because biodiesel will be produced at the mine for internal consumption it is assumed that it will not be subject to taxation.7479 per liter of diesel (USD 0.7479. it receives a price lower than the national diesel pump price. Subtracting the price of transportation to the mine.3770 per liter. Because the mining sector buys in bulk.In this model the mining companies would outsource the biodiesel and oil extraction onsite in order to reduce transportation costs.
Figure 10 . the exproduction plant price should be USD 0. The elimination of tax and distribution expenses that would occur if biodiesel were to be blended at BOST or Tema Oil Refinery (as in the national model) increases the maximum feedstock price by USD 0. If biodiesel were to be competitive its mine pump price needs to be equal or lower than USD 0.82 per metric ton (Figure 11). This model estimates that the margin of the gas stations is eliminated due to direct distribution by oil marketers.7423 per liter.8201 – USD 0.
3653 $0.6 74.0 74.3268
$0.3708 $0.0056 $0.6
Similar to the national model. however.0017 $0. The B5 mine pump price is higher than
For details production costs please refer to Appedix V
$0.Maximum Feedstock Price: Mining Sector B100
Biodiesel Competitive Price Analysis .0017 $1.5111 per liter)
Table 9 .9542 $0.7768
$0. TechnoServe. jatropha costs are lower since it assumes 50 percent of the feedstock will come from mine-owned plantations which have higher yields and only charges for the cost of production (plantation seed cost $0.Ghana (No Taxes) US cents/Lt
2. 5% producer margin) Biodiesel Ex-Production Plant Price Distribution Margin (from plant to blending) Blending Biodiesel Ex-Refinery cost Diesel Mine pump price (including tax) Estimated B5 Mine Pump Price
* Assumes 50% feedstock from plantation
Jatropha US$/L $0.0017 $0.7479 $0. the price for a B5 fuel at the mine will also be lower.7
Current Fossil diesel price
Source: BOST.0 0.3195 $0. The price for coconut oil and palm oil are the same as the national model.4183 $0.7906 $0.7479 per liter.7479
Coconut US$/L $0.2
Implies $409.5646* $0.B5 Production Costs – Current Estimated Costs
Cost of vegetable oil Biodiesel production cost (includes transport of oil to biodiesel plant.0056 $0.Figure 11 .7479
Implied max cost of veg oil
Transport of vegetable oil
Oil Palm US$/L $0. none of the crops are competitive with the estimated price of diesel equivalent to USD 0. small farmer farm gate seed price $0.2 37. Table 9 presents the estimated price of B5 utilizing current estimated costs for vegetable oil in Ghana.82 MT
30.226 vs.3653 $1.9354 $0.Current costs for vegetable oil7
Given that the price of diesel and distribution are lower than in the national model. and GWU Analysis
B5 Production Costs.
0025 and USD 0.61 $74. if local prices of palm oil are equivalent to USD 400 per metric ton.36
Estimated Price of Oil needed for competitiveness
Price of oil (barrel) 03/16/07
As previously demonstrated.
Table 10 .3707 $0.7473
When comparing the B5 price with diesel pump price it can be observed that under a best case scenario both.00 $40.7479 $0.4563 $0. 5% producer margin) Biodiesel Ex-Production Plant Price Distribution Margin (from plant to blending) Blending Biodiesel Ex-Refinery cost Diesel Mine pump price (including tax) Estimated B5 Mine Pump Price
Jatropha US$/L $0.00 $100.0012. On one hand. it is possible that the biodiesel produced will be competitive with diesel.7159 $0.3653 $0. Palm oil at a price of USD 470 per metric ton is the closest feedstock to being competitive.00 $20.B5 Biodiesel Mining Model
Coconut US$/L $0.7479 $0.8215 $0. utilizing jatropha seeds with a price equivalent to production costs (55 percent lower than current farm gate price).7354 $0.00 $140.0056 $0.88 $57.64
$66.0056 $0. will result in a B5 blend that is cheaper than diesel by USD 0.92
$59.3560 $0. jatropha and oil palm have the potential of being competitive.0017 $0.
Crude Oil Sensitivity Analysis
Crude Oil Senstivity Analysis .88 as of 03/16/07).00 $Jatropha Best Case Jatropha Coconut Best Case Coconut Palm Oil Best Case Palm Oil $60.25 $137. the B5 production scenario for the mining sector looks more promising (Table 10).87 $102.0017 $0.3451 $0.00 Price per Barrel of Oil $120. On the other hand.8288 $0.
B5 Production Costs. only the best case scenarios for jatropha and palm oil could be competitive with current prices of crude oil (USD 60.0056 $0.diesel by a range between USD 0.00 $60.7231 $0.7519
Oil Palm US$/L $0.7479 $0.0017 $0.3653 $0.Best Case Scenario
By utilizing the best case scenarios for vegetable oil costs described in the national model.00 $80.7283 $0.B5 Production Costs – Current Estimated Costs
Cost of vegetable oil Biodiesel production cost (includes transport of oil to biodiesel plant. However. 37
requiring an increase in US production of more than 120 percent. more biodiesel crops would be needed than are expected to be available. the best feedstock for B5 production at the mine level is palm oil. If current farm gate price for jatropha seed were to be used (with 20 percent extraction rate).433 millions of liters and 70 million liters respectively in 2002. thereby providing a great opportunity for Ghana to become a potential supplier. Although the price of petroleum fluctuates throughout the year. with consumptions of 1. and over 100% of projected EU oil-seed (rape and sunflower) production would be required to displace 5 percent of fossil fuels by 2010. Both have plans to increase production capacity and use onerous taxes to deter imports of biodiesel . both are confronted with the challenge of obtaining sufficient feedstock to reach aggressive production targets. Total cropland required for feedstock production in 2010 would be of 13% to 15%. these countries are facing bottlenecks in the availability of feedstock and are seeking to import raw materials. and of 30% in 2020 (IEA 2004). and in the case of Europe of more than 230 percent (EIA. it is highly unlikely that such sustained increase in cost occurs any time soon. Clearly.5% import tax (USDA 2006). Nevertheless. This section explores such opportunity by analyzing the competitiveness of the export price of vegetable oils produced in Ghana vis-à-vis prices of vegetable oil produced in select countries. Consequently both. 2004).. Import duties for biodiesel in the United States are slightly less than USD 23 per barrel (USITC 2007). For the year 2020 these figures increase dramatically. while in the case of coconut it would need to rise by 126 percent. Thus by the year 2020. prices of crude oil would have to increase 69 percent. This means that if best case scenarios are not met.
Biodiesel Export Model
The third model is based on the export of the vegetable oil and not on the export of biodiesel. which is a highly improbable scenario. Estimates from the International Energy Agency indicate that about 60% of US soy production. while the European Union applies a 6. This is because the largest markets for biodiesel consumption have excessive production capacity and currently do not favor importation of the fuel. will be open to imports of vegetable oils for biodiesel production
. the US and Europe. the amount of cropland required to displace 10% of diesel fuel would be larger and would require major cropland reallocations towards oil-seed crops. Despite large production capacity.palm oil could also be competitive (with current production costs reflecting USD 470 per MT) if crude oil if prices were to increase by less than 10 percent. but only if the prices are not too volatile.
Demand: Potential Export Markets for Vegetable Oil
The largest producers and consumers of biodiesel are Europe and the United States.
less than 2 percent of the European farmland is cultivated with crops used for biofuel production. it would require approximately 15 to 18 million hectares of farmland. equivalent to 12 million tons (USDA 2006). the European Union is the biggest producer and consumer of biodiesel in the world. Currently. This is because the car fleet in the EU is made up primarily of diesel cars. The utilization of such a large amount of land for energy crops have been deemed undesirable by the European Commission. The EU target of 5. This represents roughly 15 to 17 percent of the total 103.Figure 12
Percentage increas of biofuels crop rpoduction e neces ary to meet projected demand s
250% 200% 150% 100% 50% 0%
The European Union: a natural market for Ghanaian exports of vegetable oils
As previously mentioned. If the EU tried to domestically grow crops to reach the established target. This makes Europe a very attractive market for vegetable oil exports from Ghana.75 percent biofuels is equivalent to around 24 million tons of biofuel.6 million hectares of arable land in the EU25.
Analysis of the Export Supply Chain Model
Figure 13: Supply Chain for Export of Ghanaian Vegetable Oil to Western Europe
Vegetable Oil Supply Chain Feedstock Production Transport to Oil Production
Vegetable Oil Extraction
Transport Oil to Port of Export
Export to Western Europe
. Biodiesel represents about 80 percent of the EU biofuel market. it has been proposed to produce half the biofuel from domestically grown crops and to import the other half. However.
the price of Palm oil. and shipped in containers to Rotterdam.Rotterdam Sales Price CIF Rotterdam
In contrast to jatropha and coconut. which tracks the prices of selected oils and fats. the competitiveness of Ghanaian vegetable oils were analyzed. it is important to clarify that there are currently no international prices for jatropha oil. These prices were used as a benchmark for the oils produced in Ghana. CIF North West Europe was USD 599 per metric ton. This is due to high production cost for jatropha and high local market prices for coconut. This was compared with export prices of similar vegetable oils produced in other countries. costs of production were calculated to obtain the CIF (Cost Insurance and Freight) price in Rotterdam. in the month of January 2007. The CIF price for Ghana can be obtained by adding export brokerage costs (approximately 5 percent of the value of the vegetable oil) and shipping cost (Tema to Rotteram) to the current cost of vegetable oil (described in the previous two models). while coconut reached USD 731 per MT. The export price of USD 597 per MT is highly competitive when compared to our benchmark prices. therefore rapeseed oil prices were utilized as the benchmark.Tema) Broker costs Export Taxes Export Price FOB Tema Export Transport Tema . As seen in Table 11. while the oil extraction will be done by and independent (medium to large size) producer which will also be in charge of selling the oil in the export markets. This is a conservative calculation because the assumptions made were based on a farm gate price
Table 11: Cost structure for Ghanaian oils for export with current costs and feedstock farm gate prices
Ghanaian Vegetable Oils Sales Price CIF Rotterdam in USD/MT (using current costs and farm gate prices) Jatropha Oil Concount Oil Palm Oil 439 53% 821 68% 50 9% 45 5% 181 15% 62 10% 170 20% 35 3% 74 13% 653 1037 185 46 6% 25 2% 285 48% 699 1063 470 24 3% 24 2% 24 4% 35 4% 54 4% 24 4% 0 0% 0 0% 0 0% 759 1141 518 70 8% 70 6% 70 12% 829 100% 1211 100% 588 100%
Feedstock/Oil Cost of Feedstock Cost of transport fruit to oil extraction plant Cost of oil extraction Oil cost Oil producer margin Estimated sales price in national market Transport oil to export port (Takoradi .Figure 13 The prospective supply chain for this model is presented in figure 13. The oil will be transported to the port of export. results for palm oil are favorable. According to the Malaysian Palm Oil Board. assumed to be Tema.
Competitiveness Analysis for Exports of Ghanaian Vegetable Oils to West European Markets
After identifying Europe as a potential export market for Ghana. The producers of feedstock will be small farmers and large plantations. For this analysis. jatropha and coconut are not competitive against international benchmark costs.
At the time of the on ground assessment. such as the Cotonou Agreement8. This is in comparison to the lowest benchmark price of palm oil of USD 599 per MT. and/or lower international market prices (same as in previous models). Aside from potential competitiveness in terms of production costs. by 79 ACP countries and the then fifteen Member States of the European Union. It entered into force in 2002 and is the latest agreement in the history of ACP-EU Development Cooperation. This treaty between the European Union and the group of
The Cotonou Agreement was signed in June 2000 in Cotonou . the price can fluctuate based on seasonality effects and international prices. This makes the export market of vegetable oil an attractive option for Ghana. the market price of palm oil was approximately 400 USD/MT (BOPP). even if productivity gains are not achieved for the oil palm industry. However. providing an opportunity for Ghanaian farmers and oil producers to capture higher revenues in the export market. research. Ghana will still be competitive in the global market given the trend of steady increases in the international market prices (Figure 14). to export to Western European markets due to close proximity and favorable trade agreements. utilizes assumptions based on lower production costs and lower farm gate prices obtained through productivity gains in yields and oil extraction rates.Rotterdam Sales Price CIF Rotterdam Ghanaian Vegetable Oils Salese Price CIF Rotterdam (USD/MT) (using best case scenario costs and farm gate prices) Jatropha Oil Concount Oil Palm Oil 171 33% 50 16% 33 6% 62 19% 170 33% 74 23% 374 496 74% 185 26 5% 50 7% 33 10% 400 546 218 24 5% 24 4% 24 7% 20 4% 27 4% 10 3% 0% 0 0% 0 0% 445 597 252 70 14% 70 10% 70 22% 515 100% 667 100% 322 100%
It is important to reiterate the need to meet production assumptions for the case of jatropha if exports of oil derived from this feedstock are to be competitive. the capital of Benin. However. such as Malaysia and Indonesia. The results of the analysis. jatropha and oil palm become competitive with prices of USD 515 per MT and USD 322 per MT respectively. The best case scenario for the export model.for the vegetable oil of USD 470 per MT. Ghana has a comparative advantage over main producers.
Table 12: Cost structure for Ghanaian oils for export markets using best case scenario costs and vegetable oil prices
Feedstock/Oil Cost of Feedstock Cost of transport fruit to oil extraction plant Cost of oil extraction Oil cost Oil producer margin Estimated sales price in national market Transport oil to export port (Takoradi . presented in Table 12 show that with the best case scenario.Tema) Broker costs Export Taxes Export Price FOB Tema Export Transport Tema .
Conclusions from Biodiesel Analysis
Three prospective models for the development of this industry have been presented. to European markets which face insufficient supply of raw materials. consumers. on-site production of biodiesel is required to reduce transportation and distribution costs. Once switching to biodiesel is proven to be successful. rather than biodiesel. as the initial market. and retail and distribution occur through existing channels for fossil fuels (oil marketers and gas stations). The results of these analyses show that using current production costs and farm gate prices palm oil is the only feedstock that can be competitive.Figure 14: Palm Oil Prices (2005 to 2006)
African. like coconut and palm oil. The demand for the industry is created through mandatory replacement of conventional diesel. into Europe under provision 15139. provides import tax exemptions for vegetable oils. It is likely that biodiesel produced will be utilized in a B5. Lastly. The second model takes a sectoral approach and targets the mining industry. other sectors such as public transportation will follow. For the model to be successful. the national model identifies all consumers of diesel in Ghana as a potential market for biodiesel. This model could initially be utilized to build the supply of feedstock to be later used in domestic biodiesel production. the export model explores the potential of exporting vegetable oil. B10. Caribbean and Pacific states (ACP countries).
. but only in the case of
Jatropha oil is not currently traded in international markets and there fore is not yet included in the Cotonou Treaty. which heavily depends on diesel for its operations. This is because long term effects on efficiency and energy losses are unknown for vehicles running on B100. or a B20 blend as opposed to B100. such as mine companies. Furthermore. have warranty and insurance restrictions that limit the type of fuels that can be used in their heavy equipment. however the expectation is that it will receive similar treatment to other vegetable oils. First.
766. this estimate does not include other jobs created in throughout the biodiesel supply chain. The total income generated in USD was calculated by multiplying feedstock income per hectare times the number of hectares needed to meet the biodiesel demand in each model. it is observed that palm oil generates an income almost twice as large as jatropha.893 11. Regarding the
. but most importantly because the market price of the coconuts are highly uncompetitive compared with the production costs of jatropha and palm oil fruit. however the potential is larger and is limited by the ability of producers to increase production volumes and compete in price). This is mainly due to two reasons.700 31. When comparing the national model for jatropha with the export model of palm oil (assume the consumption of the same volumes of vegetable oil). first the ‘lethal yellowing disease’ which has already exterminated 1/3 of the coconut palm stock in Ghana. while Jatropha generates approximately half of that.080 12.233 27. jatropha has a potential of being competitive in all three models. The second indicator measures the employment created in the agricultural sector.933 42. palm oil generates higher income when compared to Jatropha in similar models. In general.917.773 17.888 Jatropha $ 11.577 Ha Export 74. However. total agricultural employment generated and hectares required for biodiesel farming. as more wild forest would have to be allocated to agricultural production.502.502. has no potential of being competitive in a biofuel industry.USD Agricultural Sector Impact (Hectares Needed) Palm Oil $ 9.export.401.917. if assumptions are reached. This section analyzes their developmental implications in terms of agricultural income generated. with $ 23. Nevertheless.955 Jatropha $ 4.080 USD per year.031 Ha Mining Palm Oil $ 23. since the feedstock is not competitive in any of the models. 183 Ha Mining (4 months harvesting) Table 13 summarizes the findings of the developmental impact analysis.401.
Table 13: Summary of Developmental impact for each value chain model Model & Agriculture Income Labor Created in the Environmental Crop Generated . for which the export price per metric ton of oil was multiplied times the number of tons that would be consumed in the national model (this is an estimate. jatropha. 958 Ha National (4 months harvesting) 29. In the mining model.233 USD respectively. Lastly. palm oil generates an estimated $9. Without improvements in productivity and reduction in prices. It is assumed that the higher the requirement of land the more negative impact on the environment. the number of hectares needed for feedstock was used to measure the environmental impact. The only exception is the export model.700 USD and $11.
Through previous analyses four models were identified as having the potential of building competitive industries. The case is different for coconut.
Another advantage of using jatropha is that women can participate in the harvesting. Jatropha in general generates almost 3 times more employment than palm oil. Whereas palm oil requires approximately one third more of land with 17. this is not the case for palm oil because harvesting is labor intensive and is usually done by males.577 hectares for the export model.933 permanent jobs. However. In the mining sector jatropha generates 11. Moreover it is important to consider the possible effects that an increase in demand of cassava might have on food security (since higher demand tends to increase the price in the food market).955 jobs during the four months of harvesting season. The advancement of a sugarcane-based ethanol industry in the short term is not likely. but may also open the possibility to enter the carbon credits market in the future. six major conclusions were reached and are outlined below. and 29. since there is no large-scale production of sugarcane at this time. which will have a positive impact on the country’s foreign reserves. by substituting fossil fuels with biodiesel produced locally. 1. it is known that.
CONCLUSIONS AND RECOMMENDATIONS
Based on the research and findings. In order for the industry to be competitive in the long-term.773 permanent jobs. while palm oil creates 12. scientists agree that the use of biofuels for transport has a positive impact on the reduction of CO2 emissions. are the positive impact in the foreign reserves and the reduction on CO2 emissions. Ghana would need to achieve production cost on the same scale as Brazil. while palm oil creates approximately 31. Regarding implications for the environment. with 11183 and 27958 hectares respectively.impact on labor. Although calculating these impacts was outside the scope of this project. independently of the selected model.031 hectares for the mining model and 42. The assumption in the models identify a need for 2% blend of ethanol to be used as gasoline additive. However the government does not currently have plans to implement a
.888 jobs during the harvesting season. Ghana will import less crude oil. 958 permanent jobs and 74. a cassava-based ethanol industry might not be adequate in the short-term because of unreliable supply that has negatively affected the starch industry. Debates in the scientific community remain on whether the total energy balance in the use of biofuels is positive or not. There is no potential ethanol industry for Ghana in the short-term Based on the models presented in the report neither cassava nor sugarcane is capable of being economically viable at this stage. In the national model jatropha creates around 27. Jatropha has the least negative impact because it requires the least amount of land for both the mining and national model. This not only improves the environment in Ghana. In addition.183 permanent jobs. It is important to note that there is no established domestic market for ethanol. Other aspects of the developmental impact that must be considered. This is the case unless significant improvements in yields and costs of production are made.
With enough R&D jatropha can competitively meet both the national and the mining sector demand for B5 fuel However. but to provide financial incentives (such as tax breaks). It is likely that for the industry to become competitive it will require initial support from the government not only to create a demand for the product. There is potential for a biodiesel industry to be developed in Ghana Production models demonstrated that there is a potential for the biodiesel industry in Ghana. which can include its use in rural electrification schemes. Recommendation: In order for the industry to be successful.05 per liter of B5. an important component in the production of biodiesel. if productivity is not increased and prices are not reduced. it would need to successfully introduce newer high-starch cassava varieties and increase the average yield of small farmers. further research is needed to develop other potential applications of the oil. when the price is low. 2. or the government is prepared to subsidize the increase in cost. or compliment the biodiesel industry when prices decline. palm oil could potentially be utilized to meet the needs of biodiesel for the mining sector. jatropha oil should not be utilized for biodiesel production unless prices of crude oil are high enough. Palm oil however. Finally. thereby affecting the production costs of biodiesel in Ghana. However farmer could sell their crops to national or international food markets when prices are higher. Without clear indications that these targets can be met. Furthermore. the oil might not be recommended as the primary source of biodiesel production. and if necessary subsidies like in the case of Brazil. The introduction of this technology would eliminate any need for cassava or sugarcane.
. Nevertheless. The cost of Methanol. This is also applicable to the sugarcane industry. Given that the prices are subject to fluctuation. a breakthrough on the cellulosic research could potentially threaten the economic viability of the industry. since cellulosic methods are more efficient and cheaper Recommendation: If Ghana were to develop an ethanol industry it must make certain ethanol production costs remain low to ensure competitiveness. If improvements cannot be made. the productivity of jatropha needs significant R&D to improve productivity in order to reduce average costs of production and farm gate price. Additionally. which should aim to achieve costs of production comparable to Brazil. 3. In the case of palm oil. can compete at an international level and has the potential of being exported to European countries.regulation to change the use of MMT. is extremely high when compared to other African countries. the industry should continue to be expanded and be developed. government support in the form of direct tax breaks might be required if the industry is to be started. or used for national food consumption when the prices are higher. the crop will not be competitive unless the government provide subsidies of under USD 0.
the use of biofuels decrease the amount of CO2 emissions. Jatropha is a good candidate for the main crop to be used in biodiesel production because the farm gate price is not affected by the market volatility. And in a jatropha mining model. the least amount of land is required. the biofuel industry has the potential to positively impact foreign reserves. Recommendation: Further research is required to determine the cause for high prices of methanol in Ghana. And finally. because less oil will need to be imported. In the jatropha national model the highest amount of labor can be achieved. If the price were to be reduced to the level of Mozambique's. where the highest level of income is generated. 5. the implied maximum cost of vegetable oil would rise by USD 0. The expansion and development of the biofuel industry will have positive developmental impacts on the economy. thereby creating a sustainable industry that is friendly towards the environment. It is strongly encouraged that the Government aim to reduce the price of methanol by providing tax incentives or eliminating any tariffs imposed on it. These impacts can be seen in the palm oil export model. Recommendation: Although Jatropha seems to be an ideal crop. In addition. and decrease average production costs so as to lower farm gate price for the seed. intensive research and development needs to be undertaken to increase potential yields. The price is higher than in Mozambique. increasing costs of production and reducing the overall competitiveness of the industry.15 per liter.
. the people and the environment in Ghana.The cost of methanol represent between 21 and 37 percent of total cost of biodiesel production in Ghana . 4.
Data and Statistics. Personal Interview. 2004). Eurostat (2006) “Fuel Consumption Statistics”.gov/otaq/regs/fuels/additive/mmt_cmts.gov /otaq/consumer/fuels/oxypanel/r99021.jsp?lang=en&ccode Frimpong-Boateng.org/es/esc/prices/PricesServlet. A. Personal Interview.eurostat.eu/ EU Parliament (2006). Personal Interview. Ofosu (2007) Energy Commission. “Achieving Clean Air and Clean Water: The Report of the Blue Ribbon Panel on Oxygenates in Gasoline”. OECD. Biofuels for Transport: An International Perspective. http://www. Samuel Y. (2007) Tema Oil Refinery. http://epp. Jojo (2007). http://www. March 14th Bonsu. Personal Interview. March 13th. “Directive 2003/30/EC of the European Parliament and of the Council of 8 May 2003 on the promotion of the use of biofuels or other renewable fuels for transport”. http://www.fao. March 15th Adamako.REFERENCES
_________(2007). Consulted April 29. March 14th Amoah. Personal Interview.com/GhanaHomePage/NewsArchive/artikel. K.ec. Personal Interview. European Communities EU Parliament (2003). Personal Interview.europa. GoldRay Biodiesel. “National Bio-Fuels Policy Recommendations” (Draft Copy) Ghanaweb (2007). European Communities Food and Agriculture Organization (FAO). President’s Special Initiative.ghanaweb.epa.Agricultural Development Bank.php?ID=122516 International Energy Agency (IEA.htm . Energy Commission [GEC] (2005). Consulted April 2007. Dan (2007). ____(2007). March 2007 Environmental Protection Agency [EPA] (1999).
. EUR-Lex. 2007. EUR-Lex. “Decision No 1639/2006/EC of the European Parliament and of the Council of 24 October 2006 establishing a Competitiveness and Innovation Framework Programme (2007 to 2013)”. March 13th (BOPP) Benso Oil Palm Plantation.epa. “Sugar Factory for Northern Ghana”. National Petroleum Authority. March 15th Ahenkorah.pdf Environmental Protection Agency (EPA) “Comments on the Gasoline Additive MMT” http://www.
(IOI Group, 2006). Market Outlook 2006. Loders Crocklaan Information Service. Kufuor, Kofi (2007), National Microfinance and Small Loan Center, Personal Interview March 13th Ohene-Amoah, Rex (2007), BOST, Personal Interview, March 15th Reuters (2006), “Brazil Could Double Ethanol Output by 2014-Unica”, http://www.reuters.com/article/economicNews/idUSL0447785720070205 Root and Tuber Improvement Programme [RTIP] (2004), “Interim Evaluation”, Republic of Ghana, Root and Tuber Improvement Programme, Report # 1533-GH United Nations Environmental Program [UNEP] (2006) “Report of the GEF-STAP Workshop on Liquid Biofuels”, Nairobi United States Department of Agriculture [USDA] (2006a) “GAIN Report on the EU Biofuels industry”, USDA, Washington, DC United States Department of Agriculture [USDA] (2006b) “The Economic Feasibility of Ethanol Production from Sugarcane in the United States”, USDA, Washington, DC United States Department of Agriculture [USDA] (2002) “The Energy Balance of Corn Ethanol: An Update”, USDA, Washington, DC United States Department of Agriculture (USDA 2006). EU-25 Biofuels Annual2006. US Department Of Agriculture. GAIN Report Number: E36122 United States International Trade Commission. (USITC 2007) “Harmonized Tariff Schedule” http://www.usitc.gov/tata/hts/bychapter/index.htm . Consulted January 2007. World Bank (2005), “The Potential for Biofuels for Transport in Developing Countries”, World Bank, Washington, DC
APPENDIX I Crop Selection Criteria
Weight 6 9 6 6 6 3 6 9 3 6 6 3 6 Criteria Yield compared to other producers mt/ha Yield litres per hectare gal/ha Is it massed produced in Ghana Is there potential for growth in Ghana? Time for first harvest Can it be intercropped Need technology transfer? High-low input (water, fertilizer, man power) by-product potential? potential applications? Generation Environmental impacts Threats to crops Total ETHANOL CROPS weet Maize Sugar Cane Cassava Cellulosicweet Sorghu Potato Bananas 3 18 3 18 9 54 3 18 3 18 3 18 3 18 3 27 9 81 3 27 9 81 6 54 9 81 3 27 9 54 3 18 9 54 3 18 9 54 6 36 9 54 6 36 9 54 6 36 9 54 6 36 6 36 6 36 9 54 9 54 6 36 9 54 9 54 9 54 3 18 6 18 3 9 9 27 3 9 6 18 9 27 6 18 3 18 6 36 9 54 3 18 6 36 6 36 9 54 3 27 9 81 9 81 9 81 9 81 9 81 3 27 6 18 6 18 3 9 9 27 3 9 6 18 3 9 3 18 3 18 3 18 6 36 3 18 3 18 3 18 6 36 9 54 6 36 3 18 9 54 6 36 9 54 6 18 3 9 6 18 9 27 6 18 6 18 6 18 6 36 6 36 3 18 6 36 3 18 9 54 3 18 378 486 468 477 468 513 369 Score 9 above median, 6 close median, 3 below median 9 above median, 6 close median, 3 below median 9 mass produced, 6 some prod, 3 min prod 9 high, 6 medium, 3 low 9 <= 1yr, 6 2-3 yr, 3 > 3 yr 9 intercrop with cash crops, 6 non cash crop, 3 no 9 minimal or no, 6 some , 3 a lot 9 low, 6 medium, 3 high 9 high, 6 medium, 3 low 9 fuel, 6 low value, 3 food and other) (1st- sugar 9, 1st- starch, biodiesel 6, 2nd- 3) 9 positive, 6 neutral or low, 3 negative 9 low, 6 medium, 3 high
Weight 6 9 6 6 6 3 6 9 3 6 6 3 6
Criteria Yield compared to other producers mt/ha Yield litres per hectare gal/ha Is it massed produced in Ghana Is there potential for growth in Ghana? Time for first harvest Can it be intercropped Need technology transfer? High-low input (water, fertilizer, man power) by-product potential? potential applications? Generation Environmental impacts Threats to crops Total
BIODIESEL CROPS Oil Palm Coconut Castor Oil Jatropha Peanut 9 54 9 54 6 36 6 36 6 36 9 81 9 81 9 81 9 81 6 54 9 54 9 54 3 18 6 36 9 54 6 36 6 36 9 54 9 54 6 36 3 18 6 36 9 54 6 36 9 54 6 18 6 18 6 18 6 18 6 18 9 54 9 54 3 18 9 54 6 36 3 27 9 81 9 81 9 81 9 81 3 9 6 18 6 18 9 27 3 9 3 18 3 18 3 18 6 36 3 18 6 36 6 36 6 36 6 36 6 36 6 18 6 18 9 27 9 27 6 18 9 54 3 18 9 54 6 36 3 18 477 522 513 558 468
Soy 9 54 3 27 6 36 6 36 9 54 6 18 6 36 3 27 6 18 3 18 6 36 6 18 9 54 432
Algae 6 36 9 81 3 18 9 54 9 54 3 9 3 18 9 81 3 9 6 36 3 18 6 18 9 54 486
Score 9 above median, 6 close median, 3 below median 9 above median, 6 close median, 3 below median 9 mass produced, 6 some prod, 3 min prod 9 high, 6 medium, 3 low 9 <= 1yr, 6 2-3 yr, 3 > 3 yr 9 intercrop with cash crops, 6 non cash crop, 3 no 9 minimal or no, 6 some , 3 a lot 9 low, 6 medium, 3 high 9 high, 6 medium, 3 low 9 fuel, 6 low value, 3 food and other) (1st- sugar 9, 1st- starch, biodiesel 6, 2nd- 3) 9 positive, 6 neutral or low, 3 negative 9 low, 6 medium, 3 high
0476 $0.83% 10.0152 $0. plants are producing ethanol from sugar feedstocks.00%
.10 $0.1110 $0.4800 $0.2474 $0.02 $0.4108 $0.85% 6.0057 $0.0216 $0.1809 $0. the USDA has estimated the potential costs involved with producing ethanol from sugar.2062 $0.0800 Percent of Production Costs 50.0063 $0. This appendix will demonstrate how the conclusions concerning Ghana were developed using costs for the United States (as taken from a USDA study) and Brazil (as taken from the World Bank). but rather that without numbers for Ghana or any other African nation.0654 $0.7804 $0.4200 $0.0054 $0.26% 32.8165 $0.0800 $0.0055 $0.0478 $0.0133 $0.3237 $0.2547 $1. In this instance it is the United States.0214 $0.0323 $0.3910 $0.S.0123 $0. Corn is the feedstock of choice in the United States primarily due to its low prices (kept artificially so due to massive subsidies) and its relative abundance.8137 US$/Gallon $1.0085 $0. However.14% 7.2253 $0.1632 US$/Liter $0. This data was used to estimate costs for Ghana not because the numbers would be similar.0211 $0.51% 1.56% 61.1961 $0.0022 $0.1504 $2.0205 $0.1800 $3.39% 8.08 $0.34% 0. no U.0039 $0.38% 3.0397 $0. The United States Model Currently.0245 $0.39% 10.89% 3. there is need to use the data which is most complete. one must look at other sources to at least come up with some kind of approximation.24% 100.85% 0.0630 $0.0575 $0.0817 $0.0168 $0.APPENDIX II Ethanol from Sugarcane Given the fact that there is currently no large scale production of sugarcane or ethanol currently being undertaken in Ghana.0528 $0.37% 2. Table Gamma: US Production Costs of Sugar to Ethanol
Cost Breakdown (US)* Cost of Feedstock Production Feedstock Producer Margin Farm Gate price Costs of Ethanol Production: Cane Transportation Processing Labor Fuel Chemicals Electricity Materials and Supplies Repairs and Maintenance Total Variable Processing Costs Administrative Labor Administrative non-Labor Total Administrative Costs Total Costs for Ethanol Production Producer Margin Distribution Margins Taxes and Storage Fees (CA) Taxes (Federal) ex pump price of ethanol (no producer margin) ex pump price of gasoline US (3/16/07) Source: USDA 2006b US$/lb raw sugar $0.0518 $0.6369 $0.0015 $0.0929 $0.0014 $0.0908 $3.0673 $0.
The reason to do this is because Brazil is by far the best producer of ethanol from sugarcane in the world. However corn is a cheaper alternative in the US despite higher processing costs. More than one-half of the total world sugar production occurs in areas where the cost of production is close to three times that in Brazil. The most only important number in this table is Source: USDA 2006b ethanol produced per hectare. These costs also point to the fact that production in the United States is actually economically feasible under these circumstances. but the figures estimate the cost of sugarcane per liter of ethanol produced ranges around $0.000. however. because of exceptionally favorable climate and soil conditions making irrigation hardly necessary…To date. As the UNEP has stated:
The uniqueness of the ethanol program in Brazil must be stressed. The Brazil Model While one may use much of the above to estimate costs for Ghana.14-$0. However it must be noted that any comparison of a sugar industry to Brazil is probably unfair. This points to the sheer productivity as Brazil has managed to produce nearly twice the amount of ethanol per hectare than any other nation (UNEP 2006). The price of sugar-cane in Brazil is much lower than in other major sugar producing countries.000 world’s leading producer of ethanol.000 the sheer volume of it. and the margins for sugarcane are rather low and therefore untrustworthy if the price of oil goes down.400. We can even compare the costs for both hydrous ethanol.27.27 with the real cost likely nearer the latter number. any effort to promote sugarcane based ethanol will have to at some level compare with Brazil as they are the world leader and the competitor Ghana will have to deal with in any exporting scheme.000 a substantial amount of acreage is Production (L/Ha) 2. Total Production (L) 12. As the Brazil Sugarcane Acreage (Ha) 5.
.315 dedicated for the ethanol fuel *Acerage indicates land used for ethanol production industry (Table Delta). Brazil has also stated that it is constantly trying to improve yields and that it will attempt to improve yields by 100% over the next 10 years (Reuters 2006). Brazil is the benchmark by which Ghana has to be judged.
Yet even taking this into consideration.As seen in the preceding chart.500. it can be demonstrated why they are able to produce ethanol at such a reduced cost. and E25. (UNEP 2006:23). converting ethanol from sugar is costly in the United States. Using the high estimate of Brazil’s commodity price of $0.160. Brazil has been relatively reluctant to give out its exact costs. The first thing to understand about Brazil Sugarcane Acreage & Production (2005)* the level of production in Brazil is Brazil Sugarcane Acreage (Acres) 2. largely due to the high price of the feedstock which is over 60% of the production costs when including margins. none of the leading sugar-cane producing countries have been able to achieve the same low cost of production as the Center-South region of Brazil. a fuel derived almost exclusively from feedstock.
the story is similar.94% 12.06 Ex-distillery ethanol price 0.008 0.04% 86.059 Price charged by distributor 0.27 Taxes and duties 0. the excessive taxes and levies placed upon this far outweigh the same tax burden that is placed on ethanol.
This policy has clear implications for Ghana.004 0.012 Distributor's acquisition cost 0.68% 89.82% 12. Brazilian E25 at the pump is less expensive than the current ex refinery price of gasoline (Table Zeta).27% 0.29% 0.426 Retail margin 0. Looking at a blended fuel.69%
US$/Liter 0.49 Total Taxes and Duties 0.366 0.004 Taxes and duties 0.27/liter.
Table Epsilon Hydrous Ethnanol Costs with Taxes and Duties US$/Liter Ethanol commodity price 0.45% 0.79% 3.062 Taxes and duties 0.80% 4. As this table shows in the cost breakdown of petroleum gasoline.11% 85. However here in this cost breakdown we see one possible reason fro Brazil’s success. we see that Brazil is able to keep production costs below the costs of the feedstock.001 0.41% 24. as this is the means by which Brazil has been able to cultivate a domestic market.887
0.554 0.921 0. In this case we see that despite having the added cost of having to mix ethanol with petroleum gasoline. So while it is still true that Brazil no longer directly subsidizes its ethanol industry. then the lesson is that policy is the key to making progress in the biofuel industry.10% 12. If even the world leader in ethanol production requires policy to make ethanol more attractive to its consumers.45% 69. which even at $0.a blend of 25% ethanol and 75% petroleum gasoline.021 Delivery freight cost 0.086 0.797 0. it does alter the market so as to give ethanol a favorable position in the market.65% 0. are far more competitive than those for other countries.342 Distributor margin 0.27 0.121 Source: World Bank 2005 Table Zeta E25 blend costs with taxes and duties Gasoline costs Gasoline commodity price Taxes and Duties Ex-refinery price Ethanol costs Commodity price of anhydrous ethanol Freight cost for anhydrous ethanol Anhydrous ethanol output price Blended Costs Gasoline freight cost Distributor’s cost for E25 acquisition Distribution margin Delivery freight CPMF Distributor’s price Retail margin Retail price Source: World Bank 2006
Percentage 55.24% 67.35% 2.006 0.85% 9.029 0. In the first case (Table Epsilon).761 0.33 Freight cost 0. Compared to United States production costs we see that Brazil’s advantage not just lay in its cheap costs for feedstock but in production as well.002 Total Retail Price 0.278 0.
0722 $0.30 588.00 50.0518 GHC/Liter 7.8603 $0.60 430. one penny more than what was assumed in the Brazilian model.00 100. Considering the current lack of a viable sugar industry in Ghana at the moment.00 -292.50 48. the ex-refinery cost of petroleum gasoline is reached.40 1.2805 Sources: Anehe-Omoah 2007.37 136.The Ghana Model Having established the need to use costs from the United States and benchmarking against Brazil it is possible to construct a model for Ghana that determines what the maximum feedstock price might be in order for Ghana to be competitive in the world ethanol market.0057 $0.09 2.0152 $0.00 306.0654 $0. USDA 2006
.60 51.0325 $0.524.0397 $0.27
Maximum Feedstock Cost $0.0056 -$0.743.72 4. Ahenkorah 2007.5264 $0. it is not realistic to believe that Ghana would be able to produce sugarcane feedstock at a level of efficiency on par with that of Brazil.2435 $0.191.0340 $0.0085 $0.0111 $0.1544 $0.389. Then by applying Ghanaian taxes and duties.50 357.
Table Eta Ghana Ethanol Pricing Current price of petrol (ex pump) Gross margin (distributors) Transport margin (oil marketers) BOST Margin Distribution Margin Government subsidy Taxes and Levies Current ex Refinery Price Production Costs* Administrative Labor Administrative Non-Labor Total Administrative Costs Repairs and Maintainance Processing Labor Fuel Chemicals Electricity Materials and Supplies Total Processing Costs Cane Transportation US$/Liter $0.20 76. By applying United States production costs (and acknowledging that such costs are likely to be higher in Ghana).0245 $0.28. the maximum cost for sugarcane feedstock in Ghana would be roughly $0.737.0216 $0. it is demonstrated that under these circumstances.00 650.0478 $0. In this case one starts from the ex-pump price of petroleum gasoline.80 220.60 466.20 2.30 194.0054 $0. as the price of ethanol becomes competitive when its cost match that that of its petroleum counterpart (Table Eta).
00 -292.58 189.139. There is also another cost factor in that ethanol must be mixed with
. cassava costs have been estimated and utilized by the Ghana Root and Tuber Improvement Programme.00 50.658. it is shown that the maximum cost is approximately $0.72 4. due to the lack of producer margins factored into this model.0056 -$0.743.09 2.73 1.12.0048 $0. In fact it is most likely the largest crop in Ghana in terms of actual production with an estimated annual production of over 10 million Metric Tonnes (RTIP 2004).00 703.19 1. Not only is it widely grown.2378 $0. The Model While costs for sugarcane must be estimated based on production in other countries. however.52 331.1177 GHC/Lite r 7. Using costs obtained through similar programs.0047 $0.5176 $0. cassava is grown in great quantities in Ghana.0210 $0. This compares favorably with an average cost of dried cassava of $0.2435 $0.2072 $0.0325 $0.93 990. However there are still no ethanol production costs and therefore estimates based on similar operations in sub-Saharan Africa must be used.865. The first step is to determine the maximum feedstock cost involved with the production of Cassava. RTIP 2004. Technoserve
This only shows part of the story.16 42.APPENDIX III Ethanol from Cassava Unlike sugarcane.0368 $0.87
Current price of petrol (ex pump) Gross margin (distributors) Transport margin (oil marketers) BOST Margin Distribution Margin Government subsidy Taxes and Levies Current ex Refinery Price Production Costs Inputs (Chemical) Electricity Labour 30 workers Cassava Transport Total Input costs Cost of Drying Maximum Feedstock Price Average Feedstock Price Sources: Ahene-Omoah 2007.00 1.8603 $0. but cassava is also fairly inexpensive throughout the country.0782 $0.17 (Table Theta). As a result it may be that cassava is Ghana’s most viable crop in terms of potential ethanol production.66 43.1100 $0.19 100.1699 $0.191.528.0111 $0.00 2.058.
Table Theta Maximum Costs for Competitiveness of Ghanaian Cassava Ethanol Program US$/Lite r $0.
This again compares favorably with the current price of petroleum gasoline in Ghana and demonstrates that an E10 mixture may be viable if some costs can be reduced.0047 42.0322 289.00 Total Input costs $0. it would appear that cassava has potential to become an economically workable crop for the production of biodiesel.00 Farmer Margins $0.petroleum gasoline in Ghana (as of this report there are no flex-fuel cars available on the Ghanaian market).0048 43. we see that the cost of a liter of ethanol would be just over $0.0120 108.0210 189.0060 54.55 Labor $0.07 Blending Costs $0.19 BOST Margin $0. it must be pointed out that the production costs are estimates and therefore may not accurately reflect costs that would be encountered in a Ghanaian context.191.452.0031 27.82 per liter (Table Iota).5153 4.8618 7. if nothing else this analysis demonstrates a need to critically examine the potential of cassava and determine what factors need to be in place for this production to become a viable industry.
Table Iota Costs of Producing Ethanol from Dried Cassava (Dry Chips Model)) Feedstock Costs: US$/Liter GHC/Liter Land Rent $0.048.2277 2.638. Additionally.58 Cassava Transport $0.2072 1.24 Gross margin (distributors) $0.0782 703.93 Ex Distillery Price (Break even) $0.0227 204.0325 -292.09 Taxes and Levies $0.72 Pump Price of E10 $0.2378 2. the experiences of the Ayensu starch factory have to also be taken into consideration.865.0293 264.85 Implements and Other Materials $0.00 Sources: Ahene-Omoah 2007.0024 21.16 Labour 30 workers $0.39 Farmgate Price $0.
From this analysis. However. while the production of ethanol from cassava may appear to be feasible. Nevertheless.19 Electricity $0.139.756.87 Transportation to Ethanol plant $0.52 Transport margin (oil marketers) $0.0537 482.80 Mix with 90% Gasoline at GHC 4.0855 769. Assuming a blend of E10 (10% ethanol mixed with 90% petroleum gasoline) and taking the farm gate price of cassava and adding both farmer margins and estimated costs of drying the cassava into chips to be converted to ethanol.2435 2.0061 54.00 Production Costs Inputs (Chemical) $0.659 $0.55 Feedstock Cost $0.23 Distribution Margin $0.4948 4.12 Government subsidy -$0.55 Planting Material $0.1100 990.0368 331.49 Cost of Drying $0.
0111 $0.07% -3.0722 650.0300) $0.43
.3003 0.025.3451 0.38% 2.23 52.00 ($0.1560 $0.00 15.00 $0.0300) $0.21 SME US$/L GHC/L $1.0056 $0.956.0026 0.0059 $0.09 % of Cost Best case scenario .43% -3.65% 1.0081 0.1217 GHC/L 2.2250 ($0.26% 0.0340 $0.00 2.69% $1.0111 $0.60%
$0.05% 1.0111 $0.50 23.600.0056 $0.1584 0.0034 0.52% 0.60 72.APPENDIX IV NATIONAL MODEL
Estimated Cost of Jatropha biodiesel B100 Feedstock Cost of Maintenance (equivalent to 1 liter of oil) Farm gate price for seeds equivalent to 1 liter of oil Transport Cost Oil oil extraction cost Estimated cost of jatropha oil per lt Cost to Transport Feedstock (Takoradi-Accra) Biodiesel Production Financing* Depreciation Electricity Labor Causstinc Soda Methanol Margin for Biodiesel Producer ex Production Plant Price Gov and Distribution Taxes and Levies Government subsidy Distribution Margin (from Production plant to BOST) BOST margin Transport margin (Oil marketers) gross margin (distributor) Estimated Biodiesel Pump Price B100 Estimated price of jatropha oil per MT Estimated Cost of B5 Blend Biodiesel Ex-Production Plant Price Distribution Margin (from plant to blending) Blending Biodiesel Ex-refinery cost Diesel Ex-refinery cost Blended B5 Ex-refinery cost Gov and Distribution Taxes and Levies Government subsidy Distribution Margin (from Tema to BOST) BOST margin Transport margin (Oil marketers) gross margin (distributor) Estimated Biodiesel Pump Price $ 776.78% 1.0534 $1.0340 $0.00 414.095.5 kg @ 30% % of Cost 50.7159 $0.61% 0.17% 0.00 650.0059 0.71%
33.7141 $0.5133 $0.8312 SME US$/L $0.0722 $0.971.72 10.29% 6.0056 $0.0056 $0.07% 3.0307 0.1217 $0.63% -2.413.5111 $0.0034 $0.00 306.02% 100.0338
35.00 $1.30 $0.0000
2.00 201.5335 $0.0111 100.5022 $0.00 100.30% 3.32% 0.57% 29.39% 0.77% -2.00%
61.0056 50.56% 0.0017 $1.7231 $0.0224 $0.0340 $0.09% 8.7159 $0.86% 3.75% 27.00 $0.41% 20.427.8514 $ Best case scenario .00 -269.0056 $0.50%
21.48% 100.87 50.00 $0.34% 4.84 30.3003 $0.00 1.926.1574 0.3302 $0.0081 $0.0340 306.80 2.0224 0.0722 $0.1289 $0.33%
49.0300) -269.0300) $0.025.5 kg @ 30% 1650 trees % of Cost 0.50 480.0115 $0.18% 0.11% 0.08% 0.56% 0.99% 8.36% 5.00 0.77% 2.00 6.22
15.0460 $0.1570 $0.0017 $0.66% 26.0026 $0.0166 $0.61% 1.54% 1.90% 0.2250 ($0.90 103.2250 ($0.87 $0.80% 0.702.0115 0.99% 100%
62.4396 $ 12.5022 $0.0722 $1.67% 1.23% 0.2250 2.
0666 $1.7556 $0.0056 0.0081 $0.0722 650.0300) 0.0059 $0.3003 $0.0111 3.0340 4.93% $0.0300) -269.0324 $0.06 Best Case $0.0111 100.9542 $0.28% $0.00 650.3983 2.585.0056 $0.34% 17.80 2.0405 $0.31% 0.7162 $ 15.21% $0.0115 $0.60 72.00% $1.87 50.702.025.1662 $0.0111 $0.50 23.87 $0.COCONUT NATIONAL MODEL
Estimated Cost of coconut biodiesel B100 Feedstock Cost of Maintenance (equivalent to 1 liter of oil) Farm gate price for nuts equivalent to 1 liter of oil Transport Cost Oil oil extraction cost Cost of producing coconut oil Estimated sale price of coconut oil per lt Cost to Transport Feedstock (Takoradi-Accra) Biodiesel Production Financing* Depreciation Electricity Labor Causstinc Soda Methanol Margin for Biodiesel Producer ex Production Plant Price Gov and Distribution Taxes and Levies Government subsidy Distribution Margin (from Production plant to BOST) BOST margin Transport margin (Oil marketers) gross margin (distributor) Estimated Biodiesel Pump Price B100 Estimated price of coconut oil per MT Estimated Cost of B5 Blend Biodiesel Ex-Production Plant Price Distribution Margin (from plant to blending) Blending Biodiesel Ex-refinery cost Diesel Ex-refinery cost Blended B5 Ex-refinery cost Gov and Distribution Taxes and Levies Government subsidy Distribution Margin (from Tema to BOST) BOST margin Transport margin (Oil marketers) gross margin (distributor) Estimated Biodiesel Pump Price Current Small Holder Production US$/L GHC/L % of Cost $0.0722 $0.800.0340 306.00 $0.00% $0.20% 0.96% 1.927
% of Cost 50.8653 $
13.0300) 0.2250 2.318.90 103.1688 495.2576 $0.0034 $0.3983 $0.926.9776 $0.0111 1.025.446.64% $0.26%
2.0300) $0.0115 $0.97 8.0056 $0.0026 $0.27
26.2250 ($0.00 2.00 -269.35% $0.0056 $0.3003 $0.0081 $0.0056 1.19 1062.0722 100.67% 0.98% $0.0056 50.00 $1.47% 0.02%
56.32% $0.0059 $0.1662 $0.00 15.0026 $0.4056 $0.00 291.00 ($0.0224 $0.0722 100.8582 $0.496.65% $0.00 201.29 12.75% ($0.6087 Ghana US$/L GHC/L $1.11% $0.8509
44.50% 3.587.84 30.4563 0.00 100.00 306.00 1.5474 $0.0340 8.4563 $0.2250 -3.2250 -1.00% $0.5022
63.8509 $0.5022 $0.00 $0.0017 $0.0340 $0.30 6.0224 $0.88%
$0.0017 $1.97 9.0324 $0.50 599.2576 $0.0034 $0.8201
.47% ($0.23 52.00 $0.14 $0.2576 $0.5022 $0.15% 0.000.
0026 0.4771 0.0059 0.0224 0.0111 0.0056 0.0722 0.3003 0.5147 0.0111 0.2250 (0.0300) 0.2250 (0.8111 0.0017 0.8327
0.5180 0.7457 0.0056 0.0636
0.0056 0.Accra) Biodiesel Finanacing Depreciation Electricity Labor @ minimum wage (30.PALM OIL NATIONAL MODEL
Farm gate Price USD/Lt % of total Feedstock Cost of Feedstock Cost of transport fruit to oil extraction plant Cost of oil extraction Oil Estimated oil cost Transport oil to biodiesel plant (Takoradi .0111 0.0722 1.0355 0.0115 0.0026 0.0081 0.0017 0.0340 0.0722 1.0034 0.000 cedis/day) Caustic Soda (including transport) Methanol (including transport) Marging for biodiesel producer Biodiesel Ex-production plant cost .2250 (0.0034 0.0376 0.7529 0.0722 0.3003 0.8183 0.0059 0.8360
.0386 0.0115 0.0300) 0.4183 0.1290
0.0056 0.B100 Taxes and Levies Government subsidy Distribution Margion (from Tema to Bost) BOST Margin Transport margin (oil marketers) Gross margin (distributors) Ex-pump price B-100 B-5 Distribution Margin (from production plant to blending) Blending Cost Ex refinery price of Biodiesel B5 at 5% Diesel at 95% Ex refinery price of B-5 Taxes and Levies Government subsidy Distribution Margion (from Tema to Bost) BOST Margin Transport margin (oil marketers) Gross margin (distributors) Ex-pump price of B5
Farm gate Price USD/Lt % of total
0.2250 (0.0340 0.0056 0.0340 0.0056 0.0340 0.0224 0.0111 0.3560 0.0300) 0.0081 0.0409 0.0300) 0.4771 0.
9354 $0.00% 0.3451 0.00% 0.0166 $0.12
0.21 Mixed $0.59% 0.0000 $0.30%
0.0000 $0.0000 $0.85% 3.3668 0.00% 0.5 kg @ 30% .7479 $0.1584 $0.1560 $0.0000 $0.0081 $0.81% 41.0000 $0.0000 $0.7479 $0.7212 $ 375.0224 $0.0017 $0.3003 $0.9354 $0.9403
47.00% 0.5 kg @ 30% .0224 $0.47% 0.0000 $0.7159 $0.0000 $0.7467 $0.0000 $0.0059 $0.45 kg Transport Cost Oil oil extraction cost Estimated cost of jatropha oil per lt Cost to Transport Feedstock (Takoradi-Accra) Biodiesel Production Financing* Depreciation Electricity Labor Causstinc Soda Methanol Biodiesel producer margin ex Production Plant Price Gov and Distribution Taxes and Levies Government subsidy Distribution Margin Blending Biodiesel producer margin Transport margin (biodiesel plant to storage/blending) gross margin (distributor) Estimated Biodiesel Pump Price B100 Estimated price of jatropha oil per MT Estimated Cost of B5 Blend Biodiesel Ex-Production Plant Price Distribution Margin (from plant to blending) Blending Biodiesel Ex-refinery cost Diesel Mining Pump Price including taxes Blended B5 Ex-refinery cost Gov and Distribution Taxes and Levies Government subsidy Distribution Margin (from Tema to BOST) BOST margin Transport margin (Oil marketers) gross margin (distributor) Estimated Biodiesel Pump Price $ 776.0000 $0.0000 $0.7231 $0.0000 $0.1574 $0.1650 t % of Cost $0.APPENDIX V MINING SECTOR MODEL JATROPHA
Estimated Cost of Jatropha biodiesel Feedstock Cost of Maintenance (equivalent to 1 liter of oil) Farm gate price for seeds equivalent to 1 liter of oil = 4.0166 $0.1650 t US$/L $0.11% 1.7576 Mixed 50% Best case scenario .0000 $0.0000 $0.0408 $0.0115 $0.0000 $0.0034 $0.0000 $0.0053 $0.0026 $0.0049 $0.0034 $0.0000 $0.3003 $0.74% 0.00% 100.0059 $0.12% 1.0000 $0.5646 0.0000 $0.0026 $0.0000 $0.9427 $0.7159 $0.64% 2.00%
Best case scenario .0115 $0.00% 0.0056 $0.7576 $0.0017 $0.0081 $0.0307 $0.0000 $0.7467
.1570 $0.0000 $0.37% 0.0056 $0.0000 $0.0000 $0.
0000 $0.0017 $0.7556 $0.0111 $0.8215 $0.84 30.60 72.9542 $0.0000 $0.1662 $0.0056 $0.800.1662 $0.23 52.496.0000 $0.875.93
71.0059 $0.0000 $0.00 201.7768 $0.0081 $0.0115 $0.24 0.86% 0.7519 $0.2576 $0.8288 $0.0000 $0.0000 $0.2576 $0.0000 $0.0000 $0.00 0.30 6.3195 $0.702.0000 $0.0324 $0.7768 Ghana no margin GHC/L 2.7519
100.20 Ghana US$/L $1.0034 $0.0034 $0.85% 1.0000 $0.3003 $0.00% 0.14 99.0017 $1.00 12.00 1.80 2.3003 $0.44% 22.67% 0.00 0.0056 $0.3195 $0.97 0.00% 0.90 48.2576 $0.25% 0.8215 $0.8396 12.3268 $0.0000 $0.0053 $0.0224 $0.038.4563 $0.90 103.40% 0.13% 0.318.50 235.0000 $1.0000 $0.13% $ Ghana
% of Cost $0.7479 $0.0000 $0.0017 $0.00% 0.0324 $0.7479 $0.COCONUT MINING MODEL
Estimated Cost of coconut biodiesel B100 Feedstock Cost of Maintenance (equivalent to 1 liter of oil) Farm gate price for nuts equivalent to 1 liter of oil Transport Cost Oil oil extraction cost Estimated sale price of coconut oil per lt Cost to Transport Feedstock (Takoradi-Accra) Biodiesel Production Financing* Depreciation Electricity Labor Causstinc Soda Methanol Margin for Biodiesel Producer ex Production Plant Price Gov and Distribution Taxes and Levies Government subsidy Distribution Margin Blending Biodiesel producer margin Transport margin (biodiesel plant to storage/blending) gross margin (distributor) Estimated Biodiesel Pump Price B100 Estimated price of coconut oil per MT Estimated Cost of B5 Blend Biodiesel Ex-Production Plant Price Distribution Margin (from plant to blending) Blending Biodiesel Ex-refinery cost Diesel Mining Pump Price including taxes Blended B5 Ex-refinery cost Gov and Distribution Taxes and Levies Government subsidy Distribution Margin (from Tema to BOST) BOST margin Transport margin (Oil marketers) gross margin (distributor) Estimated Biodiesel Pump Price $ Ghana US$/L $0.0000 $0.0000 $0.0081 $0.50 23.00 15.0000 $0.0111 $0.0111 $0.45% 1.27% 495.037.0115 $0.0059 $0.34% 1.0262
0.3376 $ 78.0000 $0.00 0.96%
.0224 $0.00 291.83% 0.20% 0.0026 $0.28 % of Cost $0.0000 $0.51 11.0053 $0.0000 $0.0017 $0.61% 0.0111 $1.0026 $0.00% 101.
7354 0.PALM OIL MINING MODEL
Farm gate price USD/Lt % of total Feedstock Cost of Feedstock Cost of transport fruit to oil extraction plant Cost of oil extraction Oil Estimated oil cost Transport oil to biodiesel plant (Takoradi .7102 0.7725 0.3003 0.7283
0.0026 0.0053 0.0111 0.0224 0.0368 0.7906
0.0081 0.7105 0.0026 0.0053 0.0059 0.0115 0.0111 0.0034 0.7105 0.0034 0.0081 0.3560 0.0018 0.Accra) Biodiesel Finanacing Depreciation Electricity Labor @ minimum wage (30.7504 0.000 cedis/day) Caustic Soda (including transport) Methanol (including transport) Biodiesel Ex-production plant cost Taxes and Levies Government subsidy Distribution Margin Biodiesel Producer Margin Transport margin (oil marketers) Gross margin (distributors) Ex-pump price B-100 B-5 Transport to blending Blending Cost Ex refinery price of Biodiesel B5 (at 5%) Diesel (at 95%) Ex pump price at the Mine of B-5 Taxes and Levies Government subsidy Distribution Margin Transport margin (oil marketers) Gross margin (distributors) Ex-pump price B-5
Farm gate price USD/Lt % of total
0.7473 0.0115 0.4183 0.7977 0.0018 0.0224 0.0399 0.7504
.0059 0.3003 0.
2457 95.3179 143.5022 0.24
NATIONAL MODEL Best Case Best Case Jatropha Coconut Coconut 0.5022 0.8160 0.8201
76.5022 0.89% 60.18% $ 60.9039 $ 1.88
BC Palm Oil 0.7354 0.8201
.88 $ 1.8458 0.23 0.8464 $ 1.9112 0.8582 $ 0.88
$ 109.4291 0.99% 60.7231 $ 1.5022 0.5933 $ 0.4291 $ 1.06% 60.88 $ BC Coconut 0.99% 60.5022 0.92% 60.23 121.7479 1.1761 1.8582 0.85
87.7231 0.1289 0.64
173.0708 0.3066 99.88 $
Best Case Palm Oil 0.36
Pump diesel price (march 16) needed Diesel Ex-Refinery Cost (Lt) New Diesel pump price (B5)
57.7977 0.5022 0.88
$ 136.7529 1.5022 0.7231 0.1289 0.8201
0.5279 0.041 0.4981 $ 0.7479 0.8183 0.5022 0.76
71.7529 0.3066 118.3066 126.3066 179. Price of oil (barrel) 03/16/07 Estimated Price of oil needed (barrel) Price of oil 3/16 * % difference needed $ 1.5022 0.54% 60.7529 0.5220 0.7479 0.88
$ 102.23 $ 0.4774 $ 0.88
Palm Oil 0.3179 149.5022 0.8201 0.5022 0.09% 60.3179 224.94% $ 60.7977
0.5520 $ 0.88
NATIONAL MODEL BC Jatropha Coconut BC Coconut 0.38
145.88 $ BC Jatropha 0.12% $ 60.92
64.88 $ Palm Oil 0.4468 0.14% $ 60.23 1.0921
1.8183 0.92% 60.7479 0.4897 0.6332 $ 0.APPENDIX VI PRICE COMPETITIVENESS WITH CRUDE OIL
No tax for biodiesel produced Jatropha Biodiesel Ex-Refinery Cost Diesel Ex-Refinery cost Taxes and Distribution Percent % difference Approx.88 $ 0.5022 0.88 $ 1.8183 $ 1.3811 0.8201
121.77% 60.0921 0.3179 284. Price of oil (barrel) 03/16/07 Estimated Price of oil needed (barrel) Price of oil 3/16 * % difference needed $ 1.5022 0.9511 0.5022 0.2457 226.92
0. Price of oil (barrel) 03/16/07 Estimated Price of oil needed (barrel) Price of oil 3/16 * % difference needed $ 1.25
66.57% 60.7231 0.27
needed Diesel Ex-Refinery Cost (Lt) New Diesel pump price (B5) Diesel price @ pump 03/16
121.1289 $ 1.5022 0.88 $ BC Palm Oil 0.2041 $ 1.00
liters per barrel (including refinery cost) needed Diesel Ex-Refinery Cost (Lt) New Diesel pump price (B5) Diesel price @ pump 03/16
No Tax break Jatropha Biodiesel Ex-Refinery Cost Diesel Ex-Refinery cost Taxes and Distribution Percent % difference Approx.04
99.5022 0.6125 $ 0.1354 $ 1.88 $ MINES Coconut 1.3066 105.7479 0.8201 0.79% 60.51% 60.2457 168.88
Palm Oil 0.2457 121.8582 0.2457 109.88 $ 0.2457 97.3066 239.3179 162.7479 $ 0.5022 0.23 0.5022 0.8582 0.747 0.1362 0.8201
Tax Break only for Biodiesel (5% cut) Jatropha Biodiesel Ex-Refinery Cost Diesel Ex-Refinery cost Taxes and Distribution Percent % difference Approx.09% 60.23 0.3179 170.