This action might not be possible to undo. Are you sure you want to continue?
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
whether they be from animal or vegetable matter. with the United States and Brazil focusing their production efforts largely in ethanol and the European Union concentrating on biodiesel. which include: textiles. Biodiesel is manufactured from natural oils. poverty reduction. This country. domestic opportunities and enabling environment. steel (using scrap). and local value chain analysis. and private investment promotion. Both sectors of the industry have grown significantly. specifically ethanol crops. which has a population size of 22 million people. The second phase was carried out through an on-theground assessment in Ghana. which limited the amount of information collected. Ghana has many advanced industries. with the express purpose of using this sector to foster further economic and social development. which was contracted out by Technoserve Ghana. to understand the national enabling environment and the industry’s supply chain. was to assess the viability of creating a biofuels industry in Ghana. These are issues that must be taken into consideration in the interpretation of findings. and this trend is expected to continue in the future. Ethanol is produced from sugars. both politically and economically. has been relatively stable in recent years. as proxy data was utilized to build certain parts of the analytical models. and to estimate the developmental impact for the country. In addition. it can be concluded that the world biofuels market has been growing at an accelerated pace in the last twenty years. mainly small landholders. The study was carried out in three phases with the first phase consisting of desk research on the global market of biofuels.EXECUTIVE SUMMARY About Ghana: The Republic of Ghana. This market can be divided into two broad categories: biodiesel and ethanol. and secondly the lack of current production information on some of the selected crops. The third phase consisted on building models to estimate the costs of local biofuel production. Most importantly time constraints on field research in Ghana. and oil refining. About the Project The purpose of this project. The current president has pursued an economic policy of growth acceleration. which accounts for 34% of GDP and employs 60% of the work force. Research for the project was divided into three areas of study: global environment and market. identify who the major players in the supply chain would be. The main objectives of the project were: to understand if Ghana could be competitive in this industry. which is full of ethnic diversity. is located on the West Coast of Africa and has been hailed as an example of positive development in Africa. World Market From the research results. 4 . The domestic economy in Ghana continues to revolve around subsistence agriculture. It is important to note some constraints in the methodology that limit the generalization of this study’s findings. either harvested directly or broken down from starches.
The most realistic possibility given these circumstances lays in the potential use of ethanol as a gasoline oxygenate. Biodiesel can also be used in its pure form (B100). Despite limited access to finance. to emerge and engage in the biofuels industry. In regards to crops that can be used as feedstock for biodiesel and ethanol production. there is currently no ethanol production in Ghana and the potential for developing this sector seems small in the short term. the National Microfinance and Small Loan Center is willing to give smaller loans for the cultivation of jatropha. The country imports 100 percent of the crude oil it utilizes. the government of Ghana is keen to support the industry. such as Merchant Bank of Ghana. therefore there is potential for new players. Hence the capacity to transport and store biodiesel across the country currently exists in Ghana. a company solely owned by the government. there is no real discussion in Ghana on introducing the use of sugar for ethanol production. Officials are currently updating a draft policy that is expected to go to Parliament in the next year to turn into legislation. In both cases. The national policy environment is favorable for the biofuels industry at this time. Ethanol Potential Given the lack of policy drive towards ethanol usage. but may require certain engine modifications to avoid maintenance and performance problems 1 5 . This policy would mandate the replacement of 5 percent of petroleum diesel with biodiesel by the year 2010 (through B5 blends1). and coconut for biodiesel production and sugar cane and cassava for ethanol.World biodiesel production reached 3. specifically biodiesel. however. demand is expected to exceed supply. In regards to financing of feedstock production.000 million liters by 2010. five crops were identified as suitable for Ghana: these are palm oil.000 million liters and is expected to reach 70. and an increase of this percentage to 20 percent by the year 2015 (through B20 blends1). Some larger banks. have received sovereign guarantees to attract capital for the provision of loans to producers of biofuels.524 million liters in 2005.000 million liters in 2010. Nevertheless. 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. this policy is currently a draft and is subject to change before its final approval as legislation. the refining of oil is carried in country. and the storage and distribution to regional depots is carried out by BOST. and is expected to reach 11. Currently world ethanol production is 55. National Enabling Environment The fuel sector in Ghana is currently controlled by the government. lawmakers in Ghana are optimistic and eager to engage in this sector. by the Tema Oil Refinery. while the Agriculture Development Bank will continue providing financing for all crops produced in Ghana (including jatropha). such as Ghana. Potential crops for the production of ethanol are sugarcane and cassava. At present. jatropha.
and mining companies are obliged by law to ensure that other economic activities are promoted in the areas where mines are located. it would have to increase productivity of jatropha growers. the best next alternative is palm oil. who are already involved in the nascent industry. reduce the seed price by 55 percent. coconut. forcing the country to import its entire sugar crop. these nations are facing 6 . Based on the analysis of this model. and oil palm. 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. and provide a tax break of 5 percent on the total blended fuel. but would also diversify the economic activity of communities surrounding the mines by creating jobs in the agricultural sector. This model is based on the export of the vegetable oil and not on exporting the biodiesel itself. diesel represents around 42 percent of operational costs for the mining industry. and further research regarding food security issues. However. The first model is based on the government’s policy draft for the biodiesel industry and identifies all of Ghana as the potential market. This model can be used to increase the supply of feedstock until capacity for biodiesel production is built in Ghana. However. Hence. 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. While there is inherent potential for a cassava-based ethanol industry. because the largest markets for biodiesel consumption have excessive production capacity and are not open to importing biodiesel. which would require further subsidies or tax breaks on the blended fuel for it to be competitive. which could in turn negatively influence the competitiveness of the biofuel industry. a biodiesel industry would not only fulfill the sector’s need for fuel. There is need for wide-spread improvements on yields. However. if Ghana were to utilize this feedstock. and three potential models of production. Based on the analysis of this model. the world’s largest producer. the best feedstock for B5 blend production at the mine level are palm oil and jatropha. The second model takes a sectoral approach. it would need to achieve production costs at the level of Brazil.that collapsed several years ago. Furthermore. targeting the mining sector as the market for biodiesel. The most promising sector in Ghana would be that of mining since it consumes approximately 40 percent of the national production of diesel. in order to be competitive. as cassava is currently a subsistence crop for a large part of the population. issues with food security. the price of palm oil is subject to volatility due to its demand in the food market. and steady feedstock supply prevent cassava from being a suitable feedstock for biofuel production at this point in time. it can be concluded that if Ghana were to seek a biodiesel industry competitive with current diesel prices. reduction of production costs. 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. This report analyses the possibility of a biodiesel industry based on three identified crops: jatropha.
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). Ghana has a comparative advantage over other large vegetable oil producers. in terms of production yields and oil extraction rates. Secondly. palm oil generates the largest agricultural income. the outcomes of a new biofuel industry in Ghana can have a positive impact on economic and social development in the country. are the positive impacts on the foreign reserves. Lastly. Other aspects of the developmental impact that must be considered. The second indicator measures the employment created in the agricultural sector. and the reduction on CO2 emissions. The only exception is the export model. it was found that Ghana has the potential to engage in the biofuel industry. and that currently generates up 7 . Conclusions and Recommendations Based on the research and analysis carried out in this project. 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. this estimate is conservative as it does not include other jobs created throughout the biodiesel supply chain. as the country will import less crude oil. As will be evident in the report. like coconut and palm oil into Europe. such as Malaysia and Indonesia. Therefore it is determined that overall. as more wild forest would have to be allocated to agricultural production. to export to Western European markets due to close proximity and favorable trade agreements. A third conclusion suggests for further research on the cost of Methanol. a major ingredient in the production of biodiesel. some major conclusions and recommendations were proposed. but jatropha has the highest number in employment creation and the lowest amount of land required. Aside from potential competitiveness in terms of production costs.bottlenecks in the availability of feedstock and are seeking to import raw materials. in order to be competitive. 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. the number of hectares needed for feedstock was used to measure the environmental impact. Firstly. 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. for both the national and international markets. independently of the selected model. thereby providing a great opportunity for Ghana to become a potential supplier. although the country should initially focus on the biodiesel sector. particularly on utilizing jatropha and palm oil as the primary feedstock. such as the Cotonou Agreement which provides import tax exemptions for vegetable oils. the implications were analyzed based using three indicators: agricultural income generated. However. It is assumed that the higher the requirement of land the more negative impact on the environment. particularly in Europe. Developmental Impact To asses the developmental impact of each model. that is oddly very expensive in comparison to other African countries. it is necessary for feedstock producers to realize high productivity gains.
it is suggested that ethanol should not be considered in the short term in the biofuels industry in Ghana. 8 . it needs to jumpstart the biodiesel production using jatropha. A fourth conclusion is that all the models that ware identified to be competitive in the creation of a biofuels industry in Ghana. and the choice of the best model to develop this industry will depend on compromises and tradeoffs among the different players in the industry. Finally. since the there is no expected government support for this sector. Finally. Therefore. additional uses for jatropha biodiesel should be further investigated to see if this fuel can used for rural electrification. offer positive developmental impacts in terms of income and labor generation. and if sugarcane is to be used for production. and based on the international prices trends. very low production costs would have to be achieved in order to compete with the largest producers like Brazil and the United States. however this crop requires much more extensive research and development.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. the main recommendations in this report indicate that in order for Ghana to be competitive in the biofuel industry. Nevertheless the production of biodiesel can not be successful without government support. Another recommendation is that the palm oil industry should be expanded. to different degrees.
there are many theories and practices that attempt to end world poverty and encourage growth. identify major players in the supply chain.INTRODUCTION In the world of development. and estimate the developmental impact in the Ghanaian agricultural sector. GDP growth and employment generation. decreasing the poverty that afflicts thousands of subsistence farmers while providing renewable sources of energies for the country. An Analysis of the Opportunities in Relation to Ghana a) examination of the potential for target domestic and 9 . The main objectives were to: assess the industry’s competitiveness in the global and national market. but investment. Intrigued by this opportunity. The origin of this project took place in October of 2006. and tariffs being provided concerning biofuels e) a brief examination of other nation’s practices regarding promoting the biofuels industry 2. 1. One approach is to develop sustainable industries through private sector development to encourage entrepreneurship. It was in that meeting where the director outlined a vision of helping the poor not through government programs or civil society. Our team of graduate students at George Washington University met with the director of Technoserve’s Ghana office. The Project 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. the team agreed to the terms of reference and began the Biofuels in Ghana project. In order to attain the project objectives. 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 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. the research was broken down into three areas of study that included the following tasks . The possibility of developing a biofuel industry in Ghana would ensure the creation of these factors in the rural area. subsidies.
interviews and surveys of local producers. entrepreneurs. until a competitive sugar industry is developed for the production of ethanol. The research was divided into three phases. TechnoServe staff and Ghanaian government officials to determine the capacity of Ghana to participate in a potential biofuel industry. 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. service providers. 10 . and increased productivity of jatropha obtained through R&D. etc. business reports and available statistics on the biofuel global environment. At the same time. transportation and distribution. growth. it can be concluded that there is potential for a biofuel industry in Ghana. The industry should initially focus on the production of biodiesel. the competitiveness of the biodiesel industry is dependent on stable national and international prices for oil palm. and biofuel feedstock production at farm level. Tools utilized on the field study included: site visits. bio-fuel production and refining.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. 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. extraction of vegetable oil. intermediaries. Methodology The project utilized a value chain approach in order to research the market. 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. export agencies.) Given the research and analysis carried. The first phase began with the review of academic literature.
and developmental implications of this industry. 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. At this time. On the other hand.Once the global and national enabling environments were identified. the biodiesel models created. a chemical process that reacts vegetable oil or fat with methanol and a potassium hydroxide catalyst. certain limitations of methodology exist. This required the use of production costs from the US and Mozambique as estimates. and overhead expenditures. The paper begins by outlining the global market of biofuels. On one hand. which is produced from crops that are sugar based and fermented into alcohol. The main crops utilized for its production are sugar and maize. and it is followed by an overview of the national enabling environment in Ghana. Ministry of Energy. They are heavily utilized in Europe and America for the replacement of fossil fuels due to environmental and national security concerns. the analysis made is to be used only as an indicative of the potential for a biofuel industry and not exact costs of production. Due to time constraints. Furthermore. Production models were built in order to determine the competitiveness of the industry. and presents possible production scenarios. made by transesterification. ethanol. research on-the ground was only carried for a period of two weeks. and other stakeholders. as well as final conclusions and recommendations. biodiesel. rapeseed and sunflower are the most commonly used feedstock to 11 . BIOFUELS: THE GLOBAL MARKET AND ENVIRONMENT Biofuels. limiting the information that could be obtained from other regions of the country. either in its 100% “neat” form or more commonly as a 5%. Additionally. production costs for biodiesel obtained were based on current small-scale production and can hence vary from large-scale production. It can be used in compression ignition diesel systems. The paper concludes with recommendations and conclusions based on research and findings which include: the analysis of the world markets. 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. 10% or 20% blend with petroleum diesel. in this case ethanol and biodiesel. Moreover. is used to replace diesel. Limitations As with any research undertaken. It can be mixed with gasoline up to a 20 percent blend without the need of modification of motor engines. is used as an additive or replacement of gasoline. feedstock that are produced in large quantities in Brazil and the United States respectively. industries that are not developed in Ghana. Therefore. This report is designed to outline both the research taken prior and after the on-ground assessment of Ghana. are renewable energies derived from biomass or solar energy captured in plants through the process of photosynthesis. This is particularly true for the case of jatropha and sugarcane. Another major limitation is the lack of production costs for ethanol given that no industry currently exists in the country. all data collected regarding the supply chain in Ghana was analyzed.
the world’s largest producer and consumer of biodiesel. In 2002 world production of ethanol reached 21. Currently. the ethanol industry provided more than 200. These programs have substantial government support. while biodiesel production was 1. particularly the US and Canada. however. the biodiesel production process involves well-established technologies that are not likely to change significantly in the future. however. 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. some organizations and companies are trying to develop technology to extract biodiesel from algae. Greater avoidance of conflicts with land use for food and feed production. 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).841 million liters. particularly in the United States and Canada. due to nearly completely biomass-powered systems. most producers utilize first and second technologies to turn sugar or starch (that is converted into sugar) into ethanol. is more complicated than converting starch into sugars and then to alcohol. This method would focus on utilizing cellulosic waste materials to create fermentable sugars. None of the approaches. 12 . chemical and biological saccharification processes to develop the most efficient and economical route for the commercial production of cellulosic ethanol. Much lower net well-to-wheels greenhouse gas emissions than with grain toethanol processes powered primarily by fossil energy. However. In 2002. This production not only provided an alternative to fossil fuel. In comparison with some of the technologies being developed to produce ethanol and other biofuels. opening the door to greater ethanol production levels. The process.503 million liters. ultimately leading to more efficient production of ethanol. it can drastically alter the world ethanol market. there is no commercially viable production of ethanol from cellulosic biomass.produce biodiesel in Western Europe. However. research is being carried on utilizing cellulosic material for the production of ethanol. A number of research organizations and companies are exploring combinations of thermal. but if developed. with an increasing number of countries participating in it for environmental and security reasons.000 jobs in the US and ½ million direct jobs in Brazil (IEA. In regards to methods of ethanol production. A much greater displacement of fossil energy per liter of fuel. has as yet been demonstrated on a large-scale. 2004). but there is substantial ongoing research in this area in IEA countries. The world market of biofuels has been steadily growing in the last years.
feedstock prices. but the choice normally depends on local availability.000 million liters in 2005 (Hunt 2006). 2006). Prices are normally influenced by several factors: production costs.73 $ / GAL in 2003 to more than 3. Biodiesel: Current and Future Trends There are many crops that can be used for producing biodiesel. however the EU ethanol share was lower due to difficulties in competing with cheap imports (USDA. affordability and government incentives. China is investigating recycled cooking oil as an option. If historical trends were to continue. rapeseed oil is preferred in Western Europe. Jatropha and cottonseed oils will show the highest growth rates. Brazil and the US dominated the world market taking a share of 19. the biodiesel industry reached 3. in descending order (CITE). Both India and China have large jatropha (physic nut) plantations under development.000 Million liters (Berg 2004).3% for the rest of the world. with Western Europe having the largest share of the market. Its market size in 2005 only reached 3700 Million liters (Hunt 2006). while the United States favors refined soybean oil as a feedstock. For example. annual growth rates in the future would be about 7% for Europe. and 2. followed by the US (1000 million liters) and EU (800 million liters) by the same period (Berg 2004). its government is fostering a castor oil–based biodiesel industry. production in the EU is expected to increase during the coming years. This is accounted by new players. The estimated size of the Ethanol market in 2010 is expected to be around 70. countries legislations and oil prices among the most important ones. had been reduced to approximately 80% by 2005. They are currently focusing on palm kernel and palm seed oil. entering into the market. In terms of the market size. The most important feedstocks by 2010 are expected to be soybean.20 $/ GAL in 2005 (Chicago Board of Trade. 2006). In Brazil costs are lower than any country and e close to the cost of producing petroleum fuel. a different picture might emerge: a quadrupling of world production by 2020.5% for North America and Brazil. Its share which represented 95% of the market in 2000(Gubler 2006). rapeseed and palm oil. The big palm oil producing countries in Southeast Asia are Malaysia and Indonesia. such as Asia. 2006). prices of Ethanol have fluctuated from 1.000 Million liters (IEA 2004). 2.Ethanol: Current and Future Trends The world market size of Ethanol reached 55. However.000 million liters each.524 million liters in 2005 (Hunt. For example. In addition. It is forecasted that by 2020 the market will grow to 120. According to research from the Chicago board of trade. Although it is still the largest producer. Although Brazil is the world’s second-largest producer of soybeans. Japan is expected to become the largest importer of Ethanol (6000 Million liters/year) by 2012. market fragmentation has decreased Western Europe’s monopoly in the biodiesel market. nevertheless. 13 . given recent global policy initiatives and changes in trends. Nevertheless.
The share of other countries will also increase to 44%. The domestic economy in Ghana continues to revolve around subsistence agriculture. The United States is expected to be largest single biodiesel consumer and market (18% of world consumption). Ghana's industrial base is relatively advanced compared to many other African countries.000 million liters by 2010 and continue to grow to reach 24. Although there is ethnic diversity. Ghana made mixed progress under a three-year structural adjustment program in cooperation with the IMF.98 million tons in 2005 to 6.The forecasted growth for the Biodiesel Market expects that it will reach a size of 11. 21% that have indigeneous beliefs and 16% that are Muslim (http://www. Among this population there are six major ethnic groups which are: Akan 44%. China and India are two new large single markets that are expected to emerge.state. Country Background: Economy. The results will be intensified competition. further fragmentation of the market is expected.gov). the total EU biodiesel production is estimated to grow from 2. the enabling environment and feedstock production for the biofuel industry. Moshi-Dagomba 16%. By 2010. probably. and bus assembly. Ewe 13%. tires. and the Ghanaian Government has placed great emphasis on further tourism support and development (www. beverages.com/ipa/A0107584. Moreover. 2006). a war for raw materials. (Gubler. simple consumer goods.000 million liters by 2020.infoplease. mainly small landholders. the world is expected to run into an overcapacity situation during 2007 (Gubler. and car. truck. flour milling. GHANAIAN ENVIRONMENT As previously seen. such as Ghana. to have an opportunity to enter the industry. Industries include textiles. Sixty one percent of the world consumption in 2005 was accounted for by Germany. steel (using scrap). oil refining. tobacco.1 million tons in 2007. There are 63% Christians.html). lower capacity utilization rates. Ghana does not suffer from tension among ethnic lines. This section seeks to present information on the country’s background. closure of small-scale producers and those in less strategically important regions. All other countries combined account for only 11% of world consumption. Furthermore. Ga 8%. Public sector wage increases and 14 . Gurma 3%. Capacity worldwide will far exceed expected consumption growth rates. and. Politics and Society The Republic of Ghana is located on the West Coast of Africa and has an estimated population of 22 million. and Yoruba 1%. Nevertheless. Africa also has an opportunity to emerge. squeezed profit margins. which accounts for 34% of GDP and employs 60% of the work force. In 1995-97. religion plays an important role in the lives of Ghanaians. 2006). Tourism has become one of Ghana's largest foreign income earners (ranking third in 2003 at $600 million). the biofuel market is continuously growing and will be fragmenting in the years to come allowing new players in Africa. With capacity growing at 115% per year.
along with 13.state. cashews. Fuel sector In Ghana. poultry. Mr Kufuor has made economic growth a priority.000 tons of petrol is produced in a week. which typically provide about twothirds of export revenue. Cash crops consist primarily of cocoa and cocoa products.000 tons of diesel. However. and meat also are important dietary staples. This corresponds to projected consumption in 2005 of roughly 574. depreciation of the cedi. higher private investment. This oil supplies about 7075% of the market. Ghana’s stated goals are to accelerate economic growth. and distributing of fuel is run by Government agencies. the importation. with a majority of its workers engaged in farming. with imports making up the remainder of Ghana’s fuel needs. Cassava.576 MT of petroleum diesel (GEC 2007). Of that production. manganese ore. Ghana has a diverse and rich resource base. Therefore. and endowed with a good education system and efficient civil service. and rising public discontent with Ghana's austerity measures. the current president of Ghana won a second term in December 2004. as well as direct povertyalleviation efforts. yams. and bauxite--are produced and exported. and pepper. peanuts. The Tema Oil Refinery. diamonds. Known as the "Gentle Giant". a para-statal.000 tons of LPG (Adamako 2007). Fish. representing full capacity of the plant. 15 .000 barrels of Nigerian oil per day. Despite being rich in mineral resources. shea nuts (which produce an edible fat). broad-based social and rural development. improve the quality of life for all Ghanaians. Ghana also has established a successful program of nontraditional agricultural products for export including pineapples. timber products. processes roughly 45.242 MT of gasoline and 895. and 2. refining. however. corn. including those in Liberia and Ivory Coast Moreover. The country is mainly agricultural. Nonetheless. Although BOST is registered as a private company it is solely owned by the government (Ohene-Amoah 2007). roughly 11. millet. inflation and borrowing costs fell. During his first term. and reduce poverty through macroeconomic stability. He has also taken a leading role in mediating in regional conflicts. 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. John Kufuor. and sorghum are the basic foodstuffs. Ghana remains one of the more economically sound countries in the west of Africa By West African standards. In addition.regional peacekeeping commitments have led to continued inflationary deficit financing. exploration for oil and gas resources is ongoing (www. The finished products are then stored and shipped by BOST to be distributed throughout the country. and coffee. Ghana’s economy is inviting of new industries and investments. coconuts and other palm products. Minerals-principally gold. plantains. Ghana fell victim to corruption and mismanagement soon after independence in 1957.gov). rice.
coconuts ▬ Ethanol: Sweet potatoes. palm. Over the course of several discussions with government officials. In the case of sugar cane there is currently no significant production of this feedstock in country. there are some measures that the Ghanaian government is considering to promote the use of biofuels. Therefore there is some question as to the level of commitment behind these recommendations and potential policies. it is important to identify crops that are most suitable for production in Ghana. oil palm. there remains doubt as to how much of the policy will be put into effect. Given the uncertainty. these policies (and their subsequent consequences) must be taken as no more than “best guesses” at this point in time. That being said. and jatropha oil for biodiesel production. which takes into account current yields and production. 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. In the case of sweet potatoes. However it must also be stressed that while the officials were very enthusiastic. it became obvious that there appears to be substantial excitement over the development of a biofuels program. There is particular interest in the creation of a domestic 2 See Appendix I for a detailed list of all relevant crop selection criteria and weights 16 . 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). the policy environment is of particular importance when looking at the potential for the biofuel industry. By applying a set of criteria. National Enabling Environment National Policy Given that the fuel industry in Ghana is state-run. and sugar cane Limitations on information obtained in Ghana prevent a full analysis on some of these crops. 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. however efforts are being made to revitalize the industry that existed in the past. six different crops were selected for further research on the ground2. Due to these limitations the models presented in the next sections focus only on sugarcane and cassava for ethanol production and coconut. 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. 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). cassava. These were: ▬ Biodiesel: Jatropha curcas.Crop Suitability Given the wide variety of feedstock from which biofuels can be made.
In terms of feedstock. Therefore biofuels is seen as a vehicle for economic development rather than a policy to be pursued based on environmental grounds. According to the draft policy. It is also recommended that biodiesel exports be regulated and taxed as a source of revenue (GEC 2005).biodiesel industry. The policy covers a great deal of ground but the most important measure being considered is the mandated use of biodiesel. 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. Finance for biofuel industry The government of Ghana is also trying to promote the funding of biodiesel production. some officials have expressed the possibility of imposing a ban on the export of jatropha seeds (Kufuor 2007). mandating government vehicles to use at least B20 and encouraging other mass transportation fleets to do the same. The primary reasons for this policy include a desire for economic growth. It should be noted that ethanol production has been all but left out of these policy recommendations. 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. waiving of duties on machinery used to produce biodiesel (Ahenkorah 2007). Other policies include: the provision of tax breaks for producers (tax holidays). approximately 5% of the countries total consumption by 2010 and a further 20% by 2015 (GEC 2005). Cocoa is currently bought by the government at set prices and then subsequently sold on the world market. There is also a recommendation towards the subsidization of biodiesel by means of removing various levies and BOST margins from biodiesel (GEC 2005). 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). and a potential increase in employment (Ahenkorah 2007). fuel security. In 17 . Trade In addition to the various domestic policies there are several thoughts as to the actual exportation of biofuels. Both the draft policy as well as government officials have largely dismissed the production of ethanol as a viable alternative. however the Energy Commission has also stated that it will not offer such subsidies at the cost of revenue (Ahenkorah 2007). There have been failed attempts in the 1970s to create an ethanol industry. with a particular emphasis on the former. How these two viewpoints are to be reconciled remains to be seen. Additionally. perhaps even seeking import taxes on biodiesel (Ahenkorah 2007). and requiring all existing commercial gas stations to offer both blends of B20 and B100 (GEC 2005). the government is most interested in promoting the use of jatropha and palm oil. However. 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). 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.
CO2 credits 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. This is coupled with what seems a great misunderstanding as to the effect cultivation may have on land use: e. the National Microfinance and Small Loan Center is willing to give smaller loans for the cultivation of jatropha. 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. it would only apply for domestic consumption of biofuels and not for exports. 18 . the Merchant Bank of Ghana has determined to seek government support. First. Only when these barriers are cleared. Analysis While the enthusiasm and spirit to promote biofuels is there. AGDB will also use some of its fund to support this crop. the actual policies of the Ghanaian government in both promotion and trade leave room for improvement. will finance these crops through its own budget. However no current project has been able to obtain certification because baseline and monitoring methodologies have not been approved by the CDM Executive Board.” (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. Finally.g. however further information on the costs of production still have to be shared with them to determine feasibility and price (AGDB 2007). However. 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. Additionally.addition to this funding. The Bank. and has the liberty to finance a variety of crops. which they have accomplished by gaining a sovereign guarantee from the government to provide funding for biofuel production. 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). 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. “unlike most of the other crops. the Agricultural Development Bank (AGDB) expressed no preference for the crop to be cultivated since they provide support to all crops in Ghana. This is the main constraint for the application of CDM as a financing tool for biofuel projects. 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. Approval of one or more of these would improve chances for biofuel CDM projects significantly. the Bank is relying on existing microfinance schemes for the provision of credit to farmers. In regards to financing for feedstock production. The government on the other hand will only provide funding for its jatropha initiative. some of the policies tend to conflict both with various parts of the draft plan as well as various interviews that were completed.
Given a projected usage gasoline usage of 632.” This is evidenced in the Green Paper.939 MT in their respective years (Figure 1).652 MT and 13. However MMT may present some health concerns since high levels of manganese inhalation can cause irreversible neurological disease. this would be equivalent to the production capacity of one large or two smaller ethanol production plants. This concern could present an opportunity for ethanol to substitute MMT as a blend of 2. the prevailing focus is that of reducing CO2 emissions and creating an environment for “sustainable energy flows." 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 13.938 MT in 2015 (GEC 2005) this would mean an ethanol demand of 12. Hence the potential national market for ethanol is relatively small unless the government implements policies that mandate further use.622 MT in 2010 and 696. Hence. While energy independence is a concern.939 2005 2010 2015 Petrol Usage Ethanol Demand International Market The EU current stance on biofuels has been driven in large part by environmental concerns. Figure 1: Projected Ethanol Demand in Ghana (MT) 696. Given current legislation as well as trends in gasoline consumption.622 574.938 632. "Towards a European strategy for the security of energy supply. the use of manganese additives in gasoline could increase inhalation manganese exposures (EPA). the potential for developing the ethanol sector in Ghana is actually quite small.242 0 12.0% with gasoline (EPA 1999). the EU market demonstrates higher potential demand for ethanol and a possible outlet for production in Ghana. The most realistic possibility given these circumstances lay in the potential use of ethanol as a gasoline oxygenate. 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). While not insubstantial numbers. The EU is projected to consume roughly 116 Million Metric Tonnes (MMT) of 19 .ETHANOL POTENTIAL Demand in Ghana and the EU National Market Given that no policy to drive ethanol usage is in place.
What is certain is the EU’s intention to continue producing biofuels which will in turn increase the need for feedstock. In fact. As the leading producer and consumer of ethanol in the world. Some nations have seemed content to import ethanol from Brazil.0 120. 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.3 for maize (corn) and lower ratios for most biodiesel crops (USDA 2002). Brazil has managed to make its programs profitable without government subsidies.0 124. This would imply an ethanol demand of 6. Sugarcane Background Sugarcane is the single largest source of ethanol production in the world. Once this capacity is reached. make it a natural feedstock for production. The fact that sugarcane requires little in the way of processing before it can be turned into alcohol. It has also proven to be the most efficient feedstock in terms of using its own waste. However.gasoline in 2010 and a further 120 MMT in 2015 (Eurostat 2006).0 116. it must be noted that this has not 20 . as a major source of energy to convert the sugars into ethanol. in the form of bagasse. 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.0 MMT according to current proposals (Figure 2). nearly at half the price of its nearest competitors (World Bank 2005).6 MMT and 12.0 25.1 2005 2010 6.6 2015 12. Figure 2: Projected Ethanol Demand in the EU (MMT) 112. particularly Sweden and Denmark. it is uncertain whether it the demand for imports will continue in the longterm. ethanol produced from sugarcane is the most efficient in terms of energy input/output ratio at roughly 8. primarily supplied from Brazil and can continue increasing its imports until it builds enough production capacity. Europe is currently a net importer of ethanol.7 2. while there are large initiatives in both Spain and France to increase production of biofuels (USDA 2006a).0 2020 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.
the world leader. Nevertheless.0518 Maximum Feedstock Cost $0.8603 $0.0397 Repairs and Maintenance $0. In the case of sugarcane it is useful to look at production costs for Brazil.0152 Administrative Non-Labor $0. The model was created by using the current price of petrol gasoline ($0.53/liter) Once this price was obtained estimated ethanol production costs were subtracted to determine the maximum cost for sugarcane (Table 1: Maximum Feedstock ).0325 $0.0245 Total Administrative Costs $0.0654 Processing Labor $0. and the United States. 3 4 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 21 . However. it is useful to identify international costs of production to be used as benchmark.0085 Chemicals $0. the model utilized production costs from the United States to obtain an estimated maximum cost of feedstock of approximately USD 0.28 per liter it would be positioned to be competitive vis-à-vis gasoline in the national market. taxes and levies to determine the ex-refinery price of petroleum gasoline ($0.5264 Production Costs Administrative Labor $0.86/liter 4 ) and subtracting transportation costs. there is no real discussion in Ghana on introducing the use of sugar for ethanol production. if Ghana were to produce sugarcane for less than USD 0. Currently.1544 Cane Transportation $0.2805 Analysis5 Given that Ghana has no current sugarcane production.0478 Fuel $0.28 per liter of ethanol (Figure 3).0056 $0. forcing the country to import all of its sugar crop. Since there is no current ethanol production in Ghana.0054 Electricity $0.0057 Materials and Supplies $0.5264 Government subsidy Taxes and Levies Current ex Refinery Price Table 1: Maximum Feedstock Price3 Current ex Refinery Price (per liter) $0.always been the case and that Brazil’s current status as a net exporter of ethanol is a recent development. Table 2: ex-Refinery Price Current price of petrol (ex pump) (per liter) Gross margin (distributors) Transport margin (oil marketers) BOST Margin Distribution Margin $0.0722 $0. 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. the scenario for which best data is available.0340 $0. However.0111 $0. This lack of interest is largely due to reluctance on making investments in an industry that collapsed several years ago.2435 $0. Production Model 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. at the time of this report there was news of private initiatives being developed to revitalize the sugarcane industry in Ghana (Ghanaweb 2007).0216 Total Processing Costs $0. distribution margins.
14/liter (World Bank 2005) but others estimate the cost around USD 0. Reaching these production targets might not be a reasonable goal for Ghana in the shortterm. Additionally.24 and up to USD 0.27 per liter (USDA 2006b). the Department of Agriculture estimates that large-scale ethanol production from sugarcane is likely to cost approximately USD 0.39 per liter (USDA 2006b). Moreover. 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. 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. Additionally. A long period of time was needed to put infrastructure in place and to refine production processes. or substantial increase in subsidies. This is not to say that a country such as Ghana 22 .There is some debate regarding the exact cost of sugarcane production in Brazil. In the case of the US. Given the limitations of USD 0. it was necessary for the Brazilian government to subsidize ethanol production. Some estimates indicate costs as low as USD 0.28 per liter. will likely be necessary to offset higher production or feedstock costs and to make Ghana’s ethanol industry viable in the short-term. significant reduction in taxes and levies. The experiences from Brazil might provide an indication on the type of policies required for the creation of a viable industry. Brazil had a large domestic market which allowed for economies of scale while mandating domestic consumption. Significant developments in sugarcane production must occur if there is to be an adequate supply of feedstock to meet Ghana’s relatively small demand. particularly the construction of refineries for a long period before government price-setting was removed in the mid-1990s. First. 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.
000 tons/year) producing 1700 tons per year for the export market. industries based on this crop have encountered difficulties in Ghana. These opportunities improve the potential for an ethanol market to be competitive in the future. However. there are efforts in other parts of the world. These problems were further exacerbated by the lack of a steady supply of feedstock. to create a market for cassava based ethanol. Cassava Background Cassava is the largest staple crop in Ghana with an estimated production of over 10 million MT a year. Because the plant runs under capacity the average cost of production is 250 USD per ton. The Ayensu experience highlights some of the issues of establishing a cassava-based industry in Ghana. this is not the case in Ghana. began operations with 10 percent of its installed capacity (22. Cassava is mostly utilized in the food market or as a subsistence crop. 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).While there is no established large scale cassava cultivation for the sole purpose of ethanol production in Ghana. cassava must be broken down into its component starches and sugars before it can be converted into ethanol. the most important being obtaining a steady supply stream. This added expense increases costs of 23 .would have to have an equivalent domestic market today. Model As opposed to the sugarcane model. Despite the large production of cassava. Particular attention must be paid to maintaining steady incentives for small-holders before any cassava based ethanol project can move forward. however there is doubt as to the costs involved in processing cassava chips. an industry that has been initiated with poor results in Ghana (Bonsu 2007). Ghana has a great potential to improve its production of cassava. While some of the test cases may be hard to duplicate. The factory soon ran into cash flow problems due to lower demand and reduced global prices. information on production costs for cassava is widely available. however cassava is also grown for the production of industrial starch. a cost too high to compete with global market prices around 200 USD/ton. but only that in lieu of a competitive product. notably Thailand. a commercial starch factory backed by the President’s Special Initiative (PSI). Furthermore newer high-starch varieties of cassava may be able to increase the yield of ethanol per kilogram of cassava. a ready market that is required to purchase biofuel is a pre-requisite to develop the sector. Unlike sugarcane. 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). The amount of land cultivated is estimated to be 800. Ayensu. Despite issues with supply.000 ha with an average yield of just under 12 tons per ha (RTIP 2004).
an approximate value of producing ethanol-mixed gasoline can be determined. 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.860. It should be pointed out that the price of petroleum gasoline in Ghana is currently USD 0. despite these caveats. the model fails to include a margin for the ethanol producer and therefore must be factored into future cost analysis. The following model utilizes estimated cost of production from a cassava-ethanol program in another sub-Saharan African Country. Analysis6 Using these assumptions it was determined that ethanol derived from cassava may have a cost of just over USD 0. a market could exist if production costs are reduced or if there is an increase in the price of gasoline. However. regular taxes and transportation margins are added to calculate the minimum price for ethanol (Figure 4). making ethanol from cassava very close to being competitive. we factor in a percentage difference to determine the change in price. 6 For a full analysis of the Cassava to ethanol production costs see Appendix III 24 . Additionally. After the ex-refinery price is determined. The farm gate price for cassava is estimated to be USD 0. Figure 4: Minimum Blended Gasoline Price Although RTIP has demonstrated that cassava may potentially be grown for half of the cost. if cost assumptions are met the cassava-based ethanol industry is close to being a commercially viable form of biofuel.026/ per liter of ethanol.862. Given that the ethanol must be blended with petroleum gasoline to be commercially available.ethanol production. By adapting these figures and utilizing average costs of cassava production in Ghana.
However the government does not currently have plans to implement a regulation to change the use of MMT. It is important to note that there is no established domestic market for ethanol. targeting the mining sector as the market for biodiesel. Conclusions Based on the models presented neither cassava nor sugarcane is capable of being economically viable at this stage. However this is unlikely given the lack of government interest in this industry. BIODIESEL POTENTIAL Unlike the ethanol industry. coconut. Moreover. Additionally. the feedstock is highly susceptible to fluctuations in prices within the food and industrial starch market. This is the case unless significant improvements in yields and costs of production are made. these improvements do not take into account the fact that cassava. adversely affecting the population that depends on the crop for daily consumption. This section analyses the possibility of a biodiesel industry based on three identified crops: jatropha. there is a potential to develop a biodiesel industry in Ghana given the support and interest of the government and small entrepreneurs. is a major food crop in Ghana. and further research regarding food security issues. factors previously mentioned prevent cassava from being a suitable feedstock for biofuel production. The last model deviates from the production of 25 . However. government support in the form of direct tax breaks might be required if the industry is to be started. the experience of the Ayensu starch factory indicates the need for better market coordination to ensure sustainable and steady supply. There is need for wide-spread improvements on yields. the number of small-holders willing to sell to ethanol producers is likely to fall unless the price is matched. While there is inherent potential for a cassava-based ethanol industry. reduction of production costs. it would need to successfully introduce newer high-starch varieties and increase the average yield of small farmers. Thereby. Hence Ghana should focus its efforts on developing the biodiesel industry which is subject to less volatility.In order to take advantage of this opportunity.. The second model takes a sectoral approach. a breakthrough on the cellulosic research could potentially threaten the economic viability of the industry. unlike sugarcane. The assumption in the models identify a need for 2% blend of ethanol to be used as gasoline additive. An increase in the demand for cassava could potentially raise its price. and oil palm and three potential models of production. if the market food price. or starch price substantially increases. Nevertheless. Additionally. Ghana must first reduce some of the production costs that may prevent it being competitive. Additionally. If cellulosic technology is made available for commercial use the cost and efficiency of sugarcane and cassava-based ethanol is no longer competitive.. The first model is based on the government’s policy draft for the biodiesel industry and identifies all of Ghana as the potential market.
Figure 5 Projected Demand for Biodiesel Projected Dem and (MT) 63. However. Assuming fuel consumption expands in line with GDP growth expectations of 5%.111. since yields tend to be lower with small scale production. it is likely that feedstock will also be bought from bigger plantations in order to meet the large demand for vegetable oil. This model can be used to increase the supply of feedstock until capacity for biodiesel production is built in the country. This is achieved by eliminating the margin of a third-party oil extractor.576 2005 Consumption 2010 BioDiesel Need 2015 Assumes diesel consumption growth in line with expected 5% GDP growth Supply Chain As seen in Figure 6.431 metric tones.818 330. the biodiesel supply chain for this model begins with the production of the feedstock by small farmers.930 1. This could be the case for coconut and oil palm.204 0 1. This is due to the government’s interest in supporting an industry that employs a large number of farmers. Nonetheless. to approximately 330.431 895. 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 particularly true for the case jatropha seeds 26 . Once the feedstock has been bought.biodiesel by identifying the potential of the export of vegetable oils to Europe. It is likely that oil will be extracted by the biodiesel entrepreneur in order to reduce the final cost of the oil. however.204 metric tones (Figure 5). it is expected that demand for biodiesel in the year 2010 will reach 63. it is imperative that current biofuel policy draft is approved by parliament for these assumptions to hold.223. the next step in the supply chain is the transportation to an oil production facility. 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). As mentioned before. no current large production of Jatropha exists today. Such demand will increase fivefold for the year 2015. which are grown at a large and small scale in Ghana.
2007). In order to determine the maximum price for vegetable oil required for competitive B100 biodiesel. the biodiesel can be transported directly to BOST depots and blended with diesel there before it is distributed by oil marketers. Figure 6 . Maximum Feedstock price for Biodiesel B100 After the biodiesel supply chain has been identified. 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.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 Blending Plant Transport to storage depot Storage Facility Transport by Oil Marketers Retailers (Gas stations) Once the oil is obtained. Alternatively. Subsequently. The biodiesel obtained will then be transported to Tema Oil Refinery for blending with diesel. methanol and water. estimated costs of production are assigned to all of production and distribution steps.8201 on March 16. The task of blending could fall under the responsibility of BOST or Tema Oil Refinery depending on the legislation to be approved by Parliament. are added to the oil. it will be turned into biodiesel through a transesterification process by which a catalyst. However. production and distribution costs are deducted from the price of diesel at the pump (USD 0. 27 .since no current large facilities are dedicated to the commercial extraction of its 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.
00 22. The reason behind the high cost of oil is that either the farm gate price for jatropha seed is too high. This implies that biodiesel ex-production plant price has to be equivalent to USD 0. it should also be mentioned that costs utilized in this model are only indicatives and do not include other costs such as land.15 per liter.15 per liter.15 Current Fossil diesel price Distribution margin Subsidy Source: BOST. and overhead costs associated with biodiesel production. As observed in Table 3.1315 per liter or USD 142. Table 3 Estimated current cost of oil in Ghana Price per liter of oil Jatropha $ 0.9776 Oil Palm $ 0.22 Other 2. and GWU Analysis As observed in Figure 7. palm oil and coconut oil range from USD 0.50 50. administrative personnel. TechnoServe. 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.22 30. the estimated ex-refinery cost of diesel in Ghana is equivalent to USD 0.Figure 7 Biodiesel competitive price analysis for Ghana (US Cents / lt) 12.9776 per liter.01 Methanol cost twice than Mozambique’s Implies $142.5022 if it were to be competitive with diesel. 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. or the commercial value of palm oil and coconut oil is high in the food market.7141 Coconut $ 0. the implied maximum cost of vegetable oil would rise by USD 0. Current Feedstock Price Analysis Current prices of vegetable oil in Ghana are higher than the implied maximum cost of USD 13.29 82.5022 per liter.62 4.4183 to USD 0.4183 28 Implied max cost of veg oil Methanol/ Catalyst Ex-Refinery price Taxes . the maximum cost of vegetable oil is roughly USD 0. However. Because production and transportation costs are approximately USD 0. increasing the overall cost of biodiesel production (correspond to 21-37% of costs).89 per ton.89/ ton 3.24 Transport of vegetable oil 13.3707 per liter of biodiesel. If the price were to be reduced to the level of Mozambique’s. estimated prices in Ghana for jatropha oil.
1217 $0. Transportation and oil extraction costs make up the rest of the costs.04 (Rayford).3928 $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 $0.2361 $0. In this case. Therefore.5111 $0. These values are not competitive with the current price of diesel (USD 0.3179 $1.The price of palm oil per liter is about USD 0.4396 Coconut $0. 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. The final cost for a liter of oil is approximately USD 0. if current prices for jatropha.3179 $1. 4. the estimated price at the pump per liter of B100 would be of USD 1.1290 29 . It is assumed that 17 nuts are needed to make one liter of oil.4183. or about USD 776.51 per liter of oil.1290 respectively.7556 $0.2030* $0.6 kg of seeds are needed to produce one liter of oil.203 per liter.8201 as of March 16th. competition with the food market does not allow reduced prices for the biodiesel industry. it is assumed that the oil producer buys the entire nut for production.3983 $0.4076 $1.3179 $1. since the total cost for nuts equivalent to one liter of oil is USD 0.11 (GoldrayBiodiesel). In the case of jatropha. it is unlikely that the oil extractor would sell it for a lower price in order to produce biodiesel at a competitive.7162 Oil Palm $0. and USD 1. Since no current price per kg of copra was available during data collection.7141.21 per metric ton.4207 $1.4396. This price has built-in margins for oil extraction. Transportation and extraction costs make up the remainder. the oil extraction is done by the biodiesel producer in order to eliminate the margin of a thirdparty producer. The local market price for one liter of coconut oil is equivalent to USD 0. the price per kg of jatropha seed is about USD 0.222. The case is similar for coconut oil which is the most expensive vegetable oil of the selected crops. and the price per nut is equivalent to USD 0. USD 1. This increases the final price for the oil. As observed in Table 4. equivalent to USD 0. Assuming a conservative extraction rate of 20 percent.7556. USD 0. 2007).7162.8111 $0.9776. allowing a third-party to extract the oil instead of the biodiesel producer. Although the production cost is lower. and palm oil were to be utilized to make biodiesel. bringing the total cost of the feedstock to about USD 0. Although production costs for palm oil are lower than USD 470. the price of the oil for biodiesel production is tied to the price of palm oil in the food market. an approximate cost of oil production was calculated since no official price of jatropha oil exists.2220 $0. In this instance. coconut. and reflects the international price of USD 470 per metric ton.1822 $0.
8183 $0. Because the cost of biodiesel is higher than that of diesel.8514 Coconut US$/L $1.0017 $0.0166 and USD 0.1217 $0. However.8653 Oil Palm US$/L $0.1289 $0.5022 $0. Table 5 .2576 $0.1867 $0. it is important to understand the potential impact that lower priced vegetable oils have on the production of biodiesel.B5 Production Costs Estimated production costs for B5 blend vary for the three selected crops. biodiesel cannot be competitive with fossil fuels without some form of subsidy (less than five US cents per liter).B5 Production Costs Biodiesel Ex-Production Plant Price Distribution Margin (from plant to blending) Blending Biodiesel Ex-Refinery cost Diesel Ex-refinery cost Blended B5 Ex-Refinery cost Taxes and Levies Government subsidy Distribution Margin (from Tema to BOST) BOST margin Transport margin (Oil marketers) gross margin (distributor) Estimated Maximum B5 Pump Price Jatropha US$/L $1.4563 Oil Palm $0.0017 $1. this difference is decreased when utilizing a B5 blend since only five percent of the cost is attributed to biodiesel. high prices for the vegetable oil make the B100 blend uncompetitive with diesel by a range between USD 0.0300) $0.0722 $0.0056 $0.3451 Coconut $0. However.1801 $0.1987 $0.2250 ($0.0056 $0.1759* $0. or if diesel prices were to increase significantly.8111 $0.0340 $0.5180 0.5022 0.2250 ($0.1574 $0.8360 As observed in Table 5.5022 $0. The following table introduces estimated costs/prices for vegetable oil under a best case scenario. As was shown before.5474 $0.0722 $0. the blended B5 cost will be slightly higher than diesel alone by a range between USD 0.31 and USD 0.0056 0.0340 0.0452 per liter.62 per liter. 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 $0.0017 $1. 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.0111 0.0722 0.4056 $0.3983 $0. this scenario could change if vegetable oil costs were reduced.0340 $0.0300) 0. Hence. This implies that with current costs of production and local prices for vegetable oil.0056 $0.0300) $0.0111 $0.3560 * Combined supply from small farmers and plantation 30 .5335 $0.0056 $0. the biodiesel ex-refinery cost is calculated by adding transportation and blending costs to the biodiesel ex-production plant cost.0111 $0.0056 $0.2250 (0.
It is assumed that because the oil extractor would buy in bulk it will be able to obtain a lower price. the producer can save close to 70 percent in feedstock costs. However. This scenario assumes that the price per kg is reduced by 55 percent to approximately USD 0. it would imply a five percent tax break.052. the estimated B5 pump price for the best case scenario would range between USD 0. which tend to have lower costs of production.07 kg of seeds are needed per liter of oil (compared to 4. Furthermore. By only buying the copra. In the case of Coconut. the final cost for coconut oil is estimated to be USD 0. Because productivity will be increased. the production costs for biodiesel and the final pump price for B5 fuel will also be lower.8312 and USD 0. the government could also put in place a tax break for the biodiesel percentage in the blend. the price of jatropha seeds could potentially be lowered. In the previous assumption. The assumptions for the best case scenario would require significant R&D to obtain an improved variety to yield. After adding transportation and extraction costs. The situation is different for jatropha oil.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).4563 per liter or USD 495. With lower feedstock costs.93 per metric ton. This price would still be higher than the observed cost of diesel at the pump (USD 0. and no competition with the food market exists. it is assumed that 1650 trees are planted per hectare (2 by 3 meters). since the oil extractor will seek to maximize profits reducing production costs is not enough. Alternatively. shows the outcome of such measure. and that the oil extraction rate is 30 percent (obtained by GoldrayBiodiesel). Prices are likely to be established between producers and buyers and will reflect the productivity of the farmer. hence national coconut oil prices will need to decrease as well. the government could artificially make the B5 blend competitive by using a subsidy of less than two US cents per liter.8201 per liter – March 16.0112. since this product has no competition in the food market. as a minimum 5 kilograms of seed per tree. Since the current price of USD 0. it is assumed that the supply of feedstock will include larger plantations.Best Case Scenario Since the best case scenario present lower costs for vegetable oil.11 per kg of seed is too high for a competitive biodiesel industry. it was estimated that a jatropha tree would yield 2 kg of seeds per tree (conservative yield based on observations by ADRA). however. the price of jatropha oil decreases to USD 0. This would mean that only 3. B5 Production Costs. equivalent to USD 0. the marginal cost of production needs to be reduced. The model built.6 kg). assumed 1089 trees could be planted in one hectare (3 by 3 meters space). In this case. and the oil extraction rate increased. Table 8. 31 . Since small farmers have costs that are higher than USD 400. the new price for the feedstock would reflect only the cost of copra and not the entire nut.8379 per liter depending on the feedstock. As observed in Table 7. 2007).3451 per liter.
0300) $0.5022 $0.0722 $0.5147 $0.B5 Pump Price .8267 $ 0.0340 $0.Table 7 . the production of biodiesel (B100 and B5) is not competitive with the current price of diesel.0017 $0.0017 $0.5133 $0.0300) ($0.0340 $0.0056 $0.0111 $0.0340 $0.7159 $0.7231 $0.8214 Because the amount reduced in taxation is higher than the increase in the cost of exrefinery fuel.3451 $0.0017 $0.5022 $0.8312 Coconut US$/L $0.0340 $0.0300) $0.8379 Oil Palm US$/L $0.0056 $0. it is important to stress that this is only attained with higher productivity and lower prices for the seed.0300) ($0.0056 $0.0722 $0.0056 $0. Crude Oil Sensitivity Analysis It has been shown that with current prices of vegetable oil.0111 $0.5200 $0. However.0722 $0.8327 Table 8 .0111 $0. biodiesel made from jatropha oil has the potential of being competitive. indicates the price of crude oil at which.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 $0.0300) $0.3947 $0.5200 $0.8199 $0.0300) $0.0111 $0.0056 $0.3707 $0. Additionally.2250 $0..8509 $0.0056 $0.8582 $0.0340 $0.2250 ($0.0111 $0.B5 Production Costs for Best Case Scenario Cost of vegetable oil Biodiesel production cost (includes transport of oil to biodiesel plant.5022 $0.0056 $0.5133 $0.2250 ($0. The following graph.2250 ($0.7529 $0.2250 ($0.0111 $0.2138 $0. 5% producer margin) Biodiesel Ex-Production Plant Price Distribution Margin (from plant to blending) Blending Biodiesel Ex-Refinery cost Diesel Ex-refinery cost Blended B5 Ex-Refinery cost Taxes and Levies Government subsidy Distribution Margin (from Tema to BOST) BOST margin Transport margin (Oil marketers) gross margin (distributor) Estimated B5 Pump Price Jatropha US$/L $0.0722 $0.0722 $ 0. but only if the international price of palm oil is low.0056 $0.5147 $0. Please refer to Appendix VI for further information 32 .3897 $0.0722 $0.3560 $0.0056 $0.4563 $0.7457 $0. oil palm could be a potential feedstock to be used with marginal subsidies.0340 $0. each feedstock is competitive for the production of biodiesel B5 blend (keeping feedstock and biodiesel costs fixed).
20 $180.00 $60.27 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.00 $160.00 $20.00 $Jatropha Best Case Jatropha Coconut Best Case Coconut Palm Oil Best Case Palm Oil $76.00 $100. which can in turn influence the competitiveness of the biofuel industry.97 $91.00 $120. The price of crude oil would need to increase between 60 and 190 percent for biodiesel produced with current vegetable oil to be competitive.92 $64. crude oil prices would need to increase significantly. or 26 percent for the best case scenario.00 $60. the price of palm oil is subject to volatility due to its demand in the food market.76 $60.00 $180.88 $60. which would require further subsidies or tax breaks on the blended fuel if it were to be competitive. As previously demonstrated.00 $80.66 Price per Barrel of Oil $200. for the government to be prepared to provide some type of tax incentive if biodiesel is to become competitive in the near future. reduce the seed price by 55 percent. If this is not met. 33 .00 Crude Oil Senstivity Analysis .00 $80.B5 Biodiesel Tax Break $173.00 $120. For palm oil biodiesel to be competitive. the best next alternative is palm oil. biodiesel made from jatropha (under a best case scenario) would be competitive with the current price of oil (USD 60.58 $145. and provide a tax break of 5 percent on the total blended fuel.04 $99.85 $104. prices of oil would need to increase by 40 to 70 percent.00 Price per Barrel of Oil $140.00 $100. prices of crude oil would only need to increase by 5 to 18 percent (current and best case scenarios). for the case of coconut. It can be concluded that if Ghana were to seek a biodiesel industry competitive with current diesel prices. that for jatropha to be competitive crude oil should have an average price of USD 88 per barrel. if we take into account the best case scenario. The second graph illustrates the effect of a five percent tax break in the price of B5 fuel.38 $71. It is important then.B5 Biodiesel $200. However.24 $136. and in the case of palm oil.00 $40. it would have to increase productivity of jatropha.88 per barrel) if a tax break were given. the price would have to be of USD 91 per barrel (assuming national price of palm oil is USD 400 per metric ton).00 $160.88 $87. However.00 $Jatropha Best Case Jatropha Coconut Best Case Coconut Palm Oil Best Case Palm Oil $60.00 $40. about 140 percent for current costs to be competitive.Figure 8 Crude Oil Senstivity Analysis . That means.00 $140.00 $20. However.00 $109.
a biodiesel industry would not only fulfill the sector’s need for fuel. Once the biodiesel is produced. Hence.551 552.503 0 446. It is assumed that the sector would initially utilize a B5 fuel blend for its vehicles and can later increase to B10 if needed. Supply Chain As observed in Figure 10. and if reliable supply of feedstock exists. biodiesel demand for the year 2010 is expected to be 23. Biodiesel Demand The demand for biodiesel is significant in this model due to large consumption of diesel by the mining equipment. The most promising sector in Ghana would be the mining sector since it consumes approximately 40 percent of the national production of diesel (BOST). 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). Furthermore. 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.921 358. and mining companies are obliged by law to ensure other economic activities are promoted in the areas where mines are located. This demand nearly triplicates for the year 2015 if the blended percentage is increased to B10. 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. but would also diversify the economic activity of surrounding communities by creating jobs in the agricultural sector. 34 . Figure 9 .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.503 metric tons. diesel represents around 42 percent of operational costs for the mining industry. the biodiesel supply chain for the mining sector would begin with the production of feedstock by small holders and plantations owned by the mines. it will be transported to the biodiesel production plant also located near the plantation.Projected Demand for Biodiesel for Mining Sector Projected Demand (MT) 61.230 2005 Consumption 2010 BioDiesel Need 2015 Assumes growth in diesel consumption in line with 5% expected GDP growth As seen in Figure 9.436 23. Once the oil is extracted.
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. Figure 10 . it receives a price lower than the national diesel pump price. or USD 409.3770 per liter.82 per metric ton (Figure 11). Because the mining sector buys in bulk. the exproduction plant price should be USD 0.0722).7423 per liter.In this model the mining companies would outsource the biodiesel and oil extraction onsite in order to reduce transportation costs.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. 35 . 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 0.7479. This model estimates that the margin of the gas stations is eliminated due to direct distribution by oil marketers.7479 per liter of diesel (USD 0. production and distribution costs are subtracted from the estimated price of fossil diesel at the mine. Subtracting the price of transportation to the mine.8201 – USD 0. therefore the estimated price for the mining sector is equivalent to USD 0. If biodiesel were to be competitive its mine pump price needs to be equal or lower than USD 0. This would imply a maximum vegetable oil cost of USD 0.
9542 $0. TechnoServe.8 0.7504 Similar to the national model.7479 $0.7906 $0.0017 $0.0 0.B5 Production Costs – Current Estimated Costs Cost of vegetable oil Biodiesel production cost (includes transport of oil to biodiesel plant.2 37.4183 $0.Figure 11 .0 74.0056 $0.Ghana (No Taxes) US cents/Lt 0.226 vs. The price for coconut oil and palm oil are the same as the national model.6 3.Current costs for vegetable oil7 Given that the price of diesel and distribution are lower than in the national model.7768 $0.7479 per liter.6 74.5111 per liter) Table 9 .7576 Coconut US$/L $0.82 MT 30. 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 $0.3195 $0. none of the crops are competitive with the estimated price of diesel equivalent to USD 0.7 2. however.7 Current Fossil diesel price Distribution margin Subsidy Catalyst Source: BOST. Table 9 presents the estimated price of B5 utilizing current estimated costs for vegetable oil in Ghana. and GWU Analysis B5 Production Costs.2 Implies $409.0056 $0.7479 Implied max cost of veg oil Ex-Refinery price Other Transport of vegetable oil Taxes Oil Palm US$/L $0.3653 $0. 5% producer margin) Biodiesel Ex-Production Plant Price Distribution Margin (from plant to blending) Blending Biodiesel Ex-Refinery cost Diesel Mine pump price (including tax) Estimated B5 Mine Pump Price * Assumes 50% feedstock from plantation Jatropha US$/L $0.7977 $0. small farmer farm gate seed price $0.0017 $0.0056 $0.9427 $0.0017 $1.3653 $1.5646* $0. the price for a B5 fuel at the mine will also be lower.7479 $0. The B5 mine pump price is higher than 7 For details production costs please refer to Appedix V 36 .3268 $0.3708 $0.9354 $0.Maximum Feedstock Price: Mining Sector B100 Biodiesel Competitive Price Analysis .
8215 $0.00 Price per Barrel of Oil $120. B5 Production Costs.7519 Oil Palm US$/L $0. the B5 production scenario for the mining sector looks more promising (Table 10).3451 $0.8288 $0.0017 $0.36 Estimated Price of Oil needed for competitiveness Price of oil (barrel) 03/16/07 As previously demonstrated.00 $140.00 $Jatropha Best Case Jatropha Coconut Best Case Coconut Palm Oil Best Case Palm Oil $60.7473 When comparing the B5 price with diesel pump price it can be observed that under a best case scenario both.00 $80.00 $60. 5% producer margin) Biodiesel Ex-Production Plant Price Distribution Margin (from plant to blending) Blending Biodiesel Ex-Refinery cost Diesel Mine pump price (including tax) Estimated B5 Mine Pump Price Jatropha US$/L $0.0017 $0.0017 $0. only the best case scenarios for jatropha and palm oil could be competitive with current prices of crude oil (USD 60.61 $74.7354 $0.88 as of 03/16/07).0056 $0.3653 $0. Table 10 .7479 $0. it is possible that the biodiesel produced will be competitive with diesel. Crude Oil Sensitivity Analysis Crude Oil Senstivity Analysis .7479 $0.7283 $0.3707 $0. utilizing jatropha seeds with a price equivalent to production costs (55 percent lower than current farm gate price).7467 Coconut US$/L $0.0012. On the other hand. 37 .00 $40.88 $57.0056 $0. However.4563 $0.00 $100.3653 $0.25 $137.3560 $0.7231 $0.B5 Biodiesel Mining Model $160.diesel by a range between USD 0.7159 $0.0025 and USD 0.64 $66. will result in a B5 blend that is cheaper than diesel by USD 0.0056 $0. if local prices of palm oil are equivalent to USD 400 per metric ton. Palm oil at a price of USD 470 per metric ton is the closest feedstock to being competitive.92 $59.B5 Production Costs – Current Estimated Costs Cost of vegetable oil Biodiesel production cost (includes transport of oil to biodiesel plant.00 $20.0289.87 $102. jatropha and oil palm have the potential of being competitive. On one hand.Best Case Scenario By utilizing the best case scenarios for vegetable oil costs described in the national model.7479 $0.
which is a highly improbable scenario. Import duties for biodiesel in the United States are slightly less than USD 23 per barrel (USITC 2007). and over 100% of projected EU oil-seed (rape and sunflower) production would be required to displace 5 percent of fossil fuels by 2010. For the year 2020 these figures increase dramatically. Consequently both. Thus by the year 2020. and in the case of Europe of more than 230 percent (EIA. Total cropland required for feedstock production in 2010 would be of 13% to 15%. but only if the prices are not too volatile.. This is because the largest markets for biodiesel consumption have excessive production capacity and currently do not favor importation of the fuel. thereby providing a great opportunity for Ghana to become a potential supplier. 2004). If current farm gate price for jatropha seed were to be used (with 20 percent extraction rate). Demand: Potential Export Markets for Vegetable Oil The largest producers and consumers of biodiesel are Europe and the United States. prices of crude oil would have to increase 69 percent. the US and Europe.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. 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. Despite large production capacity. the amount of cropland required to displace 10% of diesel fuel would be larger and would require major cropland reallocations towards oil-seed crops. it is highly unlikely that such sustained increase in cost occurs any time soon. while in the case of coconut it would need to rise by 126 percent. Both have plans to increase production capacity and use onerous taxes to deter imports of biodiesel . Clearly. Estimates from the International Energy Agency indicate that about 60% of US soy production. and of 30% in 2020 (IEA 2004).5% import tax (USDA 2006). will be open to imports of vegetable oils for biodiesel production 38 . both are confronted with the challenge of obtaining sufficient feedstock to reach aggressive production targets. while the European Union applies a 6. Although the price of petroleum fluctuates throughout the year.433 millions of liters and 70 million liters respectively in 2002. these countries are facing bottlenecks in the availability of feedstock and are seeking to import raw materials. 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. 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. with consumptions of 1.
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 39 . The utilization of such a large amount of land for energy crops have been deemed undesirable by the European Commission. Biodiesel represents about 80 percent of the EU biofuel market. This represents roughly 15 to 17 percent of the total 103.75 percent biofuels is equivalent to around 24 million tons of biofuel. The EU target of 5.6 million hectares of arable land in the EU25. it has been proposed to produce half the biofuel from domestically grown crops and to import the other half. the European Union is the biggest producer and consumer of biodiesel in the world. This is because the car fleet in the EU is made up primarily of diesel cars. equivalent to 12 million tons (USDA 2006). This makes Europe a very attractive market for vegetable oil exports from Ghana. However. it would require approximately 15 to 18 million hectares of farmland. less than 2 percent of the European farmland is cultivated with crops used for biofuel production. If the EU tried to domestically grow crops to reach the established target. Currently.Figure 12 Percentage increas of biofuels crop rpoduction e neces ary to meet projected demand s 250% 200% 150% 100% 50% 0% US 2010 US 2020 EU 2010 EU 2020 The European Union: a natural market for Ghanaian exports of vegetable oils As previously mentioned.
it is important to clarify that there are currently no international prices for jatropha oil. For this analysis. 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. CIF North West Europe was USD 599 per metric ton. and shipped in containers to Rotterdam. the competitiveness of Ghanaian vegetable oils were analyzed. 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. therefore rapeseed oil prices were utilized as the benchmark. 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. Competitiveness Analysis for Exports of Ghanaian Vegetable Oils to West European Markets After identifying Europe as a potential export market for Ghana. These prices were used as a benchmark for the oils produced in Ghana.Figure 13 The prospective supply chain for this model is presented in figure 13. The export price of USD 597 per MT is highly competitive when compared to our benchmark prices. 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 .Tema) Broker costs Export Taxes Export Price FOB Tema Export Transport Tema . This is a conservative calculation because the assumptions made were based on a farm gate price 40 . The producers of feedstock will be small farmers and large plantations. results for palm oil are favorable. jatropha and coconut are not competitive against international benchmark costs. which tracks the prices of selected oils and fats. the price of Palm oil.Rotterdam Sales Price CIF Rotterdam In contrast to jatropha and coconut. According to the Malaysian Palm Oil Board. The oil will be transported to the port of export. As seen in Table 11. This is due to high production cost for jatropha and high local market prices for coconut. assumed to be Tema.
the price can fluctuate based on seasonality effects and international prices. utilizes assumptions based on lower production costs and lower farm gate prices obtained through productivity gains in yields and oil extraction rates. Aside from potential competitiveness in terms of production costs. Ghana has a comparative advantage over main producers. research. presented in Table 12 show that with the best case scenario. The best case scenario for the export model. The results of the analysis. 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 . and/or lower international market prices (same as in previous models).for the vegetable oil of USD 470 per MT. even if productivity gains are not achieved for the oil palm industry. It entered into force in 2002 and is the latest agreement in the history of ACP-EU Development Cooperation. At the time of the on ground assessment. providing an opportunity for Ghanaian farmers and oil producers to capture higher revenues in the export market. This is in comparison to the lowest benchmark price of palm oil of USD 599 per MT.Tema) Broker costs Export Taxes Export Price FOB Tema Export Transport Tema . to export to Western European markets due to close proximity and favorable trade agreements.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. This treaty between the European Union and the group of 8 The Cotonou Agreement was signed in June 2000 in Cotonou . Ghana will still be competitive in the global market given the trend of steady increases in the international market prices (Figure 14). such as Malaysia and Indonesia. However. by 79 ACP countries and the then fifteen Member States of the European Union. 41 . 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). jatropha and oil palm become competitive with prices of USD 515 per MT and USD 322 per MT respectively. the capital of Benin. such as the Cotonou Agreement8. However.
provides import tax exemptions for vegetable oils. which heavily depends on diesel for its operations. such as mine companies. to European markets which face insufficient supply of raw materials. the national model identifies all consumers of diesel in Ghana as a potential market for biodiesel. other sectors such as public transportation will follow. consumers. First. however the expectation is that it will receive similar treatment to other vegetable oils. 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) Source: FAO African. Conclusions from Biodiesel Analysis Three prospective models for the development of this industry have been presented. and retail and distribution occur through existing channels for fossil fuels (oil marketers and gas stations). as the initial market. The second model takes a sectoral approach and targets the mining industry. like coconut and palm oil. B10. This model could initially be utilized to build the supply of feedstock to be later used in domestic biodiesel production. 9 42 . 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. Furthermore. The demand for the industry is created through mandatory replacement of conventional diesel. For the model to be successful. 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. Lastly. on-site production of biodiesel is required to reduce transportation and distribution costs. into Europe under provision 15139. the export model explores the potential of exporting vegetable oil. have warranty and insurance restrictions that limit the type of fuels that can be used in their heavy equipment. Once switching to biodiesel is proven to be successful. rather than biodiesel. It is likely that biodiesel produced will be utilized in a B5. Caribbean and Pacific states (ACP countries).
888 Jatropha $ 11. it is observed that palm oil generates an income almost twice as large as jatropha.401.933 42. has no potential of being competitive in a biofuel industry. DEVELOPMENTAL IMPACT Through previous analyses four models were identified as having the potential of building competitive industries.773 17. however the potential is larger and is limited by the ability of producers to increase production volumes and compete in price).031 Ha Mining Palm Oil $ 23.233 USD respectively. total agricultural employment generated and hectares required for biodiesel farming. The only exception is the export model. while Jatropha generates approximately half of that.917. It is assumed that the higher the requirement of land the more negative impact on the environment.700 USD and $11. first the ‘lethal yellowing disease’ which has already exterminated 1/3 of the coconut palm stock in Ghana.401. as more wild forest would have to be allocated to agricultural production. 183 Ha Mining (4 months harvesting) Table 13 summarizes the findings of the developmental impact analysis. jatropha. this estimate does not include other jobs created in throughout the biodiesel supply chain.577 Ha Export 74. but most importantly because the market price of the coconuts are highly uncompetitive compared with the production costs of jatropha and palm oil fruit. In general. Table 13: Summary of Developmental impact for each value chain model Model & Agriculture Income Labor Created in the Environmental Crop Generated .080 USD per year. jatropha has a potential of being competitive in all three models.917. Without improvements in productivity and reduction in prices. with $ 23. 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. The second indicator measures the employment created in the agricultural sector. palm oil generates an estimated $9.893 11. since the feedstock is not competitive in any of the models. palm oil generates higher income when compared to Jatropha in similar models. When comparing the national model for jatropha with the export model of palm oil (assume the consumption of the same volumes of vegetable oil).export.766.USD Agricultural Sector Impact (Hectares Needed) Palm Oil $ 9.502. 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.080 12. However. This section analyzes their developmental implications in terms of agricultural income generated. In the mining model. Regarding the 43 . This is mainly due to two reasons.502. Nevertheless. the number of hectares needed for feedstock was used to measure the environmental impact. The case is different for coconut.700 31. if assumptions are reached.955 Jatropha $ 4.233 27. Lastly. 958 Ha National (4 months harvesting) 29.
while palm oil creates approximately 31. scientists agree that the use of biofuels for transport has a positive impact on the reduction of CO2 emissions. 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). Other aspects of the developmental impact that must be considered. In the national model jatropha creates around 27.183 permanent jobs. This is the case unless significant improvements in yields and costs of production are made.773 permanent jobs. with 11183 and 27958 hectares respectively. 1. This not only improves the environment in Ghana.955 jobs during the four months of harvesting season.888 jobs during the harvesting season. Jatropha in general generates almost 3 times more employment than palm oil. independently of the selected model. In order for the industry to be competitive in the long-term. 958 permanent jobs and 74.933 permanent jobs. Jatropha has the least negative impact because it requires the least amount of land for both the mining and national model. by substituting fossil fuels with biodiesel produced locally. 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. six major conclusions were reached and are outlined below. it is known that. a cassava-based ethanol industry might not be adequate in the short-term because of unreliable supply that has negatively affected the starch industry. Whereas palm oil requires approximately one third more of land with 17. while palm oil creates 12. It is important to note that there is no established domestic market for ethanol.impact on labor. However. In addition. The assumption in the models identify a need for 2% blend of ethanol to be used as gasoline additive.577 hectares for the export model. Although calculating these impacts was outside the scope of this project. The advancement of a sugarcane-based ethanol industry in the short term is not likely. Debates in the scientific community remain on whether the total energy balance in the use of biofuels is positive or not.031 hectares for the mining model and 42. In the mining sector jatropha generates 11. Regarding implications for the environment. Ghana will import less crude oil. and 29. which will have a positive impact on the country’s foreign reserves. 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. However the government does not currently have plans to implement a 44 . this is not the case for palm oil because harvesting is labor intensive and is usually done by males. CONCLUSIONS AND RECOMMENDATIONS Based on the research and findings. but may also open the possibility to enter the carbon credits market in the future. since there is no large-scale production of sugarcane at this time. Another advantage of using jatropha is that women can participate in the harvesting.
Furthermore. or used for national food consumption when the prices are higher. is extremely high when compared to other African countries. 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. The introduction of this technology would eliminate any need for cassava or sugarcane. which should aim to achieve costs of production comparable to Brazil. jatropha oil should not be utilized for biodiesel production unless prices of crude oil are high enough. This is also applicable to the sugarcane industry. 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. Finally. 45 . when the price is low. government support in the form of direct tax breaks might be required if the industry is to be started. Palm oil however. a breakthrough on the cellulosic research could potentially threaten the economic viability of the industry. an important component in the production of biodiesel. 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. further research is needed to develop other potential applications of the oil. palm oil could potentially be utilized to meet the needs of biodiesel for the mining sector.regulation to change the use of MMT. 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. 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. the oil might not be recommended as the primary source of biodiesel production. it would need to successfully introduce newer high-starch cassava varieties and increase the average yield of small farmers. the crop will not be competitive unless the government provide subsidies of under USD 0. which can include its use in rural electrification schemes. but to provide financial incentives (such as tax breaks). Nevertheless. In the case of palm oil. and if necessary subsidies like in the case of Brazil. Additionally. The cost of Methanol. or the government is prepared to subsidize the increase in cost. Given that the prices are subject to fluctuation. Without clear indications that these targets can be met. 3.05 per liter of B5. 2. or compliment the biodiesel industry when prices decline. can compete at an international level and has the potential of being exported to European countries. Recommendation: In order for the industry to be successful. With enough R&D jatropha can competitively meet both the national and the mining sector demand for B5 fuel However. if productivity is not increased and prices are not reduced. the industry should continue to be expanded and be developed.
The price is higher than in Mozambique. 5. where the highest level of income is generated. the least amount of land is required. the use of biofuels decrease the amount of CO2 emissions. These impacts can be seen in the palm oil export model. because less oil will need to be imported. the biofuel industry has the potential to positively impact foreign reserves. and decrease average production costs so as to lower farm gate price for the seed. The expansion and development of the biofuel industry will have positive developmental impacts on the economy. And in a jatropha mining model.15 per liter. increasing costs of production and reducing the overall competitiveness of the industry. 46 . the people and the environment in Ghana. Recommendation: Although Jatropha seems to be an ideal crop. 4.The cost of methanol represent between 21 and 37 percent of total cost of biodiesel production in Ghana . 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. 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. In addition. thereby creating a sustainable industry that is friendly towards the environment. If the price were to be reduced to the level of Mozambique's. intensive research and development needs to be undertaken to increase potential yields. And finally. the implied maximum cost of vegetable oil would rise by USD 0. Recommendation: Further research is required to determine the cause for high prices of methanol in Ghana. In the jatropha national model the highest amount of labor can be achieved.
Samuel Y.eu/ EU Parliament (2006). http://epp.fao. Eurostat (2006) “Fuel Consumption Statistics”. “Achieving Clean Air and Clean Water: The Report of the Blue Ribbon Panel on Oxygenates in Gasoline”. Personal Interview. Biofuels for Transport: An International Perspective. “Sugar Factory for Northern Ghana”.epa. March 14th Amoah.gov /otaq/consumer/fuels/oxypanel/r99021. OECD. “National Bio-Fuels Policy Recommendations” (Draft Copy) Ghanaweb (2007). Personal Interview. Ofosu (2007) Energy Commission.ghanaweb.europa. EUR-Lex. March 13th. EUR-Lex.php?ID=122516 International Energy Agency (IEA. 2007. Consulted April 29. (2007) Tema Oil Refinery. Personal Interview. March 13th (BOPP) Benso Oil Palm Plantation. European Communities EU Parliament (2003). March 15th Adamako. Jojo (2007).Agricultural Development Bank.pdf Environmental Protection Agency (EPA) “Comments on the Gasoline Additive MMT” http://www. K.eurostat.REFERENCES _________(2007). Personal Interview.jsp?lang=en&ccode Frimpong-Boateng.epa. March 14th Bonsu. http://www.ec. Dan (2007). European Communities Food and Agriculture Organization (FAO). Personal Interview. 2004). “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”. GoldRay Biodiesel. http://www. Data and Statistics. “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)”. http://www. A. March 15th Ahenkorah. Personal Interview.gov/otaq/regs/fuels/additive/mmt_cmts. ____(2007). Energy Commission [GEC] (2005). 47 .htm . March 2007 Environmental Protection Agency [EPA] (1999). National Petroleum Authority. President’s Special Initiative.org/es/esc/prices/PricesServlet. Consulted April 2007.com/GhanaHomePage/NewsArchive/artikel. Personal Interview.
(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
39% 10.24% 100.0055 $0.1809 $0.0575 $0.8165 $0.37% 2. plants are producing ethanol from sugar feedstocks.8137 US$/Gallon $1. However.3237 $0.2062 $0.0214 $0.38% 3.83% 10.0085 $0.2474 $0.1800 $3.0057 $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.4200 $0. The United States Model Currently.7804 $0.S. no U.0014 $0.0800 $0.1110 $0.89% 3.0168 $0.0929 $0. the USDA has estimated the potential costs involved with producing ethanol from sugar.1632 US$/Liter $0.0518 $0.2547 $1.0245 $0.0015 $0.26% 32.0397 $0.08 $0.3910 $0. In this instance it is the United States. This data was used to estimate costs for Ghana not because the numbers would be similar.10 $0.1504 $2.0123 $0.14% 7.2253 $0.0908 $3.0022 $0.34% 0.39% 8.0054 $0.0205 $0.0673 $0. Table Gamma: US Production Costs of Sugar to Ethanol Cost Breakdown (US)* Cost of Feedstock Production Feedstock Producer Margin Farm Gate price Costs of Ethanol Production: Cane Transportation Processing Labor Fuel Chemicals Electricity Materials and Supplies Repairs and Maintenance Total Variable Processing Costs Administrative Labor Administrative non-Labor Total Administrative Costs Total Costs for Ethanol Production Producer Margin Distribution Margins Taxes and Storage Fees (CA) Taxes (Federal) ex pump price of ethanol (no producer margin) ex pump price of gasoline US (3/16/07) Source: USDA 2006b US$/lb raw sugar $0.0216 $0.0133 $0. but rather that without numbers for Ghana or any other African nation.0800 Percent of Production Costs 50.0476 $0. one must look at other sources to at least come up with some kind of approximation.0528 $0.0478 $0.1961 $0.6369 $0.0654 $0.0063 $0.0630 $0.0039 $0.0817 $0.02 $0.56% 61.0323 $0.0152 $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).4800 $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.0211 $0. there is need to use the data which is most complete.85% 6.4108 $0.51% 1.85% 0.00% .
As the Brazil Sugarcane Acreage (Ha) 5. largely due to the high price of the feedstock which is over 60% of the production costs when including margins. (UNEP 2006:23). and E25.27 with the real cost likely nearer the latter number. because of exceptionally favorable climate and soil conditions making irrigation hardly necessary…To date.As seen in the preceding chart. We can even compare the costs for both hydrous ethanol. it can be demonstrated why they are able to produce ethanol at such a reduced cost. however. Brazil is the benchmark by which Ghana has to be judged. 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).000 a substantial amount of acreage is Production (L/Ha) 2. 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.27. a fuel derived almost exclusively from feedstock. 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). These costs also point to the fact that production in the United States is actually economically feasible under these circumstances. As the UNEP has stated: The uniqueness of the ethanol program in Brazil must be stressed. 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.000 world’s leading producer of ethanol.000 the sheer volume of it.500. 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. and the margins for sugarcane are rather low and therefore untrustworthy if the price of oil goes down.000. Using the high estimate of Brazil’s commodity price of $0. The reason to do this is because Brazil is by far the best producer of ethanol from sugarcane in the world.315 dedicated for the ethanol fuel *Acerage indicates land used for ethanol production industry (Table Delta). The Brazil Model While one may use much of the above to estimate costs for Ghana. The most only important number in this table is Source: USDA 2006b ethanol produced per hectare. Yet even taking this into consideration.14-$0. Total Production (L) 12.400. but the figures estimate the cost of sugarcane per liter of ethanol produced ranges around $0. However it must be noted that any comparison of a sugar industry to Brazil is probably unfair. The first thing to understand about Brazil Sugarcane Acreage & Production (2005)* the level of production in Brazil is Brazil Sugarcane Acreage (Acres) 2. Table Delta 52 . converting ethanol from sugar is costly in the United States. The price of sugar-cane in Brazil is much lower than in other major sugar producing countries.160. Brazil has been relatively reluctant to give out its exact costs.
059 Price charged by distributor 0.29% 0.70% This policy has clear implications for Ghana.021 Delivery freight cost 0. If even the world leader in ethanol production requires policy to make ethanol more attractive to its consumers.27% 0.029 0. the excessive taxes and levies placed upon this far outweigh the same tax burden that is placed on ethanol.761 0. the story is similar.27/liter.366 0.49 Total Taxes and Duties 0.45% 0.008 0.69% US$/Liter 0. As this table shows in the cost breakdown of petroleum gasoline. Brazilian E25 at the pump is less expensive than the current ex refinery price of gasoline (Table Zeta).11% 85.45% 69.80% 4.086 0.10% 12.062 Taxes and duties 0. which even at $0.65% 0.27 0. In this case we see that despite having the added cost of having to mix ethanol with petroleum gasoline. as this is the means by which Brazil has been able to cultivate a domestic market.887 % 0.797 0. In the first case (Table Epsilon).82% 12. are far more competitive than those for other countries.06 Ex-distillery ethanol price 0.68% 89.004 0.79% 3.012 Distributor's acquisition cost 0.004 Taxes and duties 0.a blend of 25% ethanol and 75% petroleum gasoline.27 Taxes and duties 0. we see that Brazil is able to keep production costs below the costs of the feedstock.24% 67.33 Freight cost 0. Table Epsilon Hydrous Ethnanol Costs with Taxes and Duties US$/Liter Ethanol commodity price 0. then the lesson is that policy is the key to making progress in the biofuel industry. However here in this cost breakdown we see one possible reason fro Brazil’s success.006 0.278 0.342 Distributor margin 0. it does alter the market so as to give ethanol a favorable position in the market.001 0.554 0.85% 9.426 Retail margin 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. Looking at a blended fuel.94% 12. 53 .41% 24. So while it is still true that Brazil no longer directly subsidizes its ethanol industry.921 0.04% 86.002 Total Retail Price 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.35% 2.
30 588. the maximum cost for sugarcane feedstock in Ghana would be roughly $0.2435 $0. By applying United States production costs (and acknowledging that such costs are likely to be higher in Ghana).0722 $0.30 194.0057 $0.00 306.0325 $0.50 48. Considering the current lack of a viable sugar industry in Ghana at the moment.191.5264 $0.0152 $0.00 100. USDA 2006 54 . Table Eta Ghana Ethanol Pricing Current price of petrol (ex pump) Gross margin (distributors) Transport margin (oil marketers) BOST Margin Distribution Margin Government subsidy Taxes and Levies Current ex Refinery Price Production Costs* Administrative Labor Administrative Non-Labor Total Administrative Costs Repairs and Maintainance Processing Labor Fuel Chemicals Electricity Materials and Supplies Total Processing Costs Cane Transportation US$/Liter $0. In this case one starts from the ex-pump price of petroleum gasoline.0111 $0.0654 $0. Ahenkorah 2007.20 76.00 50.0216 $0. the ex-refinery cost of petroleum gasoline is reached. one penny more than what was assumed in the Brazilian model.60 466.2805 Sources: Anehe-Omoah 2007. 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.737. Then by applying Ghanaian taxes and duties.0245 $0.37 136.389.8603 $0.80 220.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.50 357.72 4.60 430.524.743.0340 $0. as the price of ethanol becomes competitive when its cost match that that of its petroleum counterpart (Table Eta).20 2.60 51.0478 $0.40 1.27 Maximum Feedstock Cost $0.0085 $0.09 2.0054 $0.00 -292.0397 $0.00 650.1544 $0.0518 GHC/Liter 7.0056 -$0. it is demonstrated that under these circumstances.28.
528.19 100.52 331. Using costs obtained through similar programs. There is also another cost factor in that ethanol must be mixed with 55 .743.658.0056 -$0.0111 $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 2007.73 1.00 50.0047 $0.191. 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). This compares favorably with an average cost of dried cassava of $0.2378 $0.66 43. However there are still no ethanol production costs and therefore estimates based on similar operations in sub-Saharan Africa must be used. cassava costs have been estimated and utilized by the Ghana Root and Tuber Improvement Programme. RTIP 2004.1177 GHC/Lite r 7. cassava is grown in great quantities in Ghana.8603 $0.00 -292.0325 $0.00 1.1100 $0. due to the lack of producer margins factored into this model.139. The Model While costs for sugarcane must be estimated based on production in other countries.0048 $0.1699 $0.0210 $0.00 703.058. The first step is to determine the maximum feedstock cost involved with the production of Cassava. but cassava is also fairly inexpensive throughout the country.16 42.17 (Table Theta).5176 $0.93 990.APPENDIX III Ethanol from Cassava Unlike sugarcane.2072 $0.72 4. however. Not only is it widely grown.865. Technoserve This only shows part of the story.00 2.58 189. As a result it may be that cassava is Ghana’s most viable crop in terms of potential ethanol production.0782 $0. Table Theta Maximum Costs for Competitiveness of Ghanaian Cassava Ethanol Program US$/Lite r $0.0368 $0.19 1.12. it is shown that the maximum cost is approximately $0.09 2.2435 $0.
23 Distribution Margin $0.petroleum gasoline in Ghana (as of this report there are no flex-fuel cars available on the Ghanaian market).2072 1.0855 769.0031 27.00 Sources: Ahene-Omoah 2007. Technoserve From this analysis.16 Labour 30 workers $0.07 Blending Costs $0.0048 43.0782 703.82 per liter (Table Iota).2378 2.8618 7.85 Implements and Other Materials $0.55 Feedstock Cost $0. 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.00 Production Costs Inputs (Chemical) $0.72 Pump Price of E10 $0. while the production of ethanol from cassava may appear to be feasible.2277 2. 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.0210 189.00 Farmer Margins $0.19 Electricity $0.4948 4.452.5153 4.93 Ex Distillery Price (Break even) $0.865.49 Cost of Drying $0. Additionally. it would appear that cassava has potential to become an economically workable crop for the production of biodiesel.756.09 Taxes and Levies $0. 56 .52 Transport margin (oil marketers) $0.0325 -292. 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.24 Gross margin (distributors) $0. the experiences of the Ayensu starch factory have to also be taken into consideration. Table Iota Costs of Producing Ethanol from Dried Cassava (Dry Chips Model)) Feedstock Costs: US$/Liter GHC/Liter Land Rent $0.87 Transportation to Ethanol plant $0.0368 331. Nevertheless.19 BOST Margin $0.80 Mix with 90% Gasoline at GHC 4.2435 2.1100 990.048.0024 21.58 Cassava Transport $0.0227 204.0061 54.00 Total Input costs $0.0293 264.55 Planting Material $0.659 $0.0047 42. 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.0060 54.12 Government subsidy -$0.139.638.0537 482.55 Labor $0.0120 108.39 Farmgate Price $0. we see that the cost of a liter of ethanol would be just over $0.0322 289. However.191.
56% 0.0307 0.1289 $0.80% 0.0115 $0.52% 0.21 SME US$/L GHC/L $1.87 $0.65% 1.5022 $0.54% 1.69% $1.0224 $0.11% 0.23 52.025.7231 $0.956.09 % of Cost Best case scenario .78% 1.0026 0.71% 33.0056 $0.17% 0.7141 $0.77% 2.5133 $0.5022 $0.33% 49.00 6.0111 $0.2250 ($0.75% 27.66% 26.0722 $0.99% 100% 62.67% 1.0111 $0.29% 6.5 kg @ 30% 1650 trees % of Cost 0.00 414.09% 8.413.0059 $0.0534 $1.0056 $0.025.00 15.00 201.41% 20.07% -3.86% 3.5 kg @ 30% % of Cost 50.1560 $0.34% 4.43% -3.600.36% 5.5111 $0.7159 $0.0059 0.56% 0.0056 $0.00% 61.39% 0.0026 $0.0017 $0.0081 $0.00% 21.702.07% 3.926.57% 29.50 480.60% $0.00 1.971.1574 0.0056 $0.00 650.0300) $0.90% 0.00 2.3302 $0.48% 100.0722 $1.00 306.60 72.1217 $0.61% 1.0111 $0.3003 $0.61% 0.0000 2.50% 15.80 2.0340 $0.00 0.APPENDIX IV NATIONAL MODEL JATROPHA 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 $ 776.0460 $0.23% 0.0115 0.0111 100.0722 650.8312 SME US$/L $0.00 100.50 23.0300) $0.00 $0.05% 1.0340 $0.60 4.00 $0.00 $0.0034 $0.7159 $0.00 -269.0166 $0.63% -2.0056 $0.0338 35.0224 0.77% -2.0340 $0.2250 2.5335 $0.00 ($0.427.095.0340 306.99% 8.30% 3.38% 2.3451 0.30 $0.0017 $1.8514 $ Best case scenario .02% 100.18% 0.0056 50.72 10.87 50.0081 0.0034 0.90 103.22 15.0300) -269.00 $1.84 30.26% 0.32% 0.0300) $0.08% 0.43 57 .2250 ($0.4396 $ 12.0722 $0.1570 $0.1584 0.3003 0.2250 ($0.1217 GHC/L 2.
00 306.025.0115 $0.0111 1.00 $0.2576 $0.0059 $0.0026 $0.0111 100.9542 $0.2250 -1.2250 -3.926.50% 3.3983 2.0340 306.0081 $0.0324 $0.2576 $0.30 6.29 12.8653 $ 13.0300) 0.0056 $0.00 650.8201 58 .0340 4.00 2.80 2.587.35% $0.0340 $0.3983 $0.2250 ($0.585.21% $0.00 $0.0059 $0.93% $0.4563 $0.000.0056 1.COCONUT NATIONAL MODEL Estimated Cost of coconut biodiesel B100 Feedstock Cost of Maintenance (equivalent to 1 liter of oil) Farm gate price for nuts equivalent to 1 liter of oil Transport Cost Oil oil extraction cost Cost of producing coconut oil Estimated sale price of coconut oil per lt Cost to Transport Feedstock (Takoradi-Accra) Biodiesel Production Financing* Depreciation Electricity Labor Causstinc Soda Methanol Margin for Biodiesel Producer ex Production Plant Price Gov and Distribution Taxes and Levies Government subsidy Distribution Margin (from Production plant to BOST) BOST margin Transport margin (Oil marketers) gross margin (distributor) Estimated Biodiesel Pump Price B100 Estimated price of coconut oil per MT Estimated Cost of B5 Blend Biodiesel Ex-Production Plant Price Distribution Margin (from plant to blending) Blending Biodiesel Ex-refinery cost Diesel Ex-refinery cost Blended B5 Ex-refinery cost Gov and Distribution Taxes and Levies Government subsidy Distribution Margin (from Tema to BOST) BOST margin Transport margin (Oil marketers) gross margin (distributor) Estimated Biodiesel Pump Price Current Small Holder Production US$/L GHC/L % of Cost $0.67% 0.5474 $0.00% $0.00 1.23 52.47% 0.19 1062.02% 56.7162 $ 15.98% $0.00 $1.9776 $0.2576 $0.47% ($0.0017 $0.88% $0.5022 63.2250 2.702.0224 $0.3003 $0.27 26.0111 $0.0340 8.1688 495.0034 $0.31% 0.0300) 0.025.5022 $0.0026 $0.0300) -269.446.0300) $0.26% 2.0111 3.28% $0.7556 $0.00% $0.00 201.0056 50.0722 100.4056 $0.87 50.0722 100.0056 $0.927 % of Cost 50.14 $0.50 23.496.0056 0.60 72.97 9.20% 0.0722 $0.00 -269.0405 $0.0115 $0.0081 $0.5022 $0.00% $1.64% $0.0324 $0.96% 1.0666 $1.00 291.15% 0.00 15.32% $0.06 Best Case $0.318.8509 44.1662 $0.84 30.0017 $1.8582 $0.87 $0.0224 $0.75% ($0.00 $0.4563 0.00 ($0.0056 $0.3003 $0.0034 $0.97 8.1662 $0.800.34% 17.11% $0.0722 650.65% $0.6087 Ghana US$/L GHC/L $1.8509 $0.50 599.90 103.00 100.
8360 59 .0059 0.2250 (0.2250 (0.0115 0.8327 0.0017 0.0300) 0.0056 0.0722 0.0340 0.0224 0.0376 0.0034 0.0111 0.4771 0.0340 0.0026 0.0636 0.8183 0.0340 0.7457 0.2250 (0.0355 0.0056 0.0034 0.0300) 0.0722 1.0056 0.7529 0.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 .0026 0.5180 0.0300) 0.3003 0.0386 0.2250 (0.0056 0.8111 0.0409 0.3003 0.0081 0.0081 0.4183 0.0722 0.4771 0.Accra) Biodiesel Finanacing Depreciation Electricity Labor @ minimum wage (30.0111 0.0111 0.0722 1.3560 0.000 cedis/day) Caustic Soda (including transport) Methanol (including transport) Marging for biodiesel producer Biodiesel Ex-production plant cost .0300) 0.1290 0.0340 0.0056 0.0059 0.0017 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 Best Case Farm gate Price USD/Lt % of total 0.5147 0.0111 0.0224 0.0115 0.
0000 $0.0166 $0.9354 $0.0000 $0.0000 $0.12 $ $ 0.0034 $0.0053 $0.0000 $0.0000 $0.0000 $0.3003 $0.0115 $0.1650 t % of Cost $0.3003 $0.0000 $0.74% 0.7231 $0.1650 t US$/L $0.1570 $0.7467 $0.7479 $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 = 4.00% 0.7159 $0.0017 $0.47% 0.0000 $0.0026 $0.5 kg @ 30% .00% 0.7576 Mixed 50% Best case scenario .0115 $0.0000 $0.0000 $0.0000 $0.0307 $0.1560 $0.0034 $0.0000 $0.3451 0.64% 2.00% 0.0056 $0.37% 0.0017 $0.85% 3.12% 1.0000 $0.0000 $0.0000 $0.3668 0.0059 $0.0081 $0.0000 $0.9427 $0.11% 1.0000 $0.5 kg @ 30% .7212 $ 375.7479 $0.9354 $0.7467 60 .0056 $0.5646 0.7576 $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 $0.7159 $0.00% 100.9403 47.0081 $0.0224 $0.00% Best case scenario .0000 $0.1584 $0.0049 $0.0059 $0.81% 41.0000 $0.0166 $0.30% 0.1574 $0.21 Mixed $0.00% 0.0026 $0.0408 $0.0224 $0.59% 0.0000 $0.00% 0.0000 $0.0000 $0.0000 $0.
00 0.0081 $0.0115 $0.40% 0.0111 $0.875.0000 $0.97 0.83% 0.00 291.0324 $0.0053 $0.34% 1.86% 0.25% 0.8215 $0.4563 $0.3195 $0.1662 $0.0111 $0.702.0111 $1.0000 $0.44% 22.0026 $0.0000 $0.3003 $0.0262 0.8215 $0.0081 $0.24 0.84 30.80 2.51 11.23 52.7768 Ghana no margin GHC/L 2.00% 0.0017 $0.61% 0.0000 $0.0224 $0.20% 0.0000 $0.13% $ Ghana GHC/L % of Cost $0.7519 100.90 48.496.3376 $ 78.0059 $0.00 0.800.67% 0.93 71.60 72.00% 0.7768 $0.7479 $0.0115 $0.8396 12.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 $0.0056 $0.85% 1.7479 $0.0017 $0.1662 $0.8288 $0.0000 $0.2576 $0.2576 $0.27% 495.0000 $1.0000 $0.28 % of Cost $0.30 6.00 15.0324 $0.00% 0.90 103.00% 101.50 23.0000 $0.00 1.0053 $0.00 12.0056 $0.00 201.318.3268 $0.0000 $0.45% 1.7556 $0.0111 $0.0224 $0.0000 $0.0000 $0.0000 $0.50 235.0059 $0.9542 $0.96% $0.0000 $0.0000 $0.0034 $0.7519 $0.037.2576 $0.0000 $0.0034 $0.0000 $0.00% 61 .038.00 0.0017 $0.0000 $0.20 Ghana US$/L $1.14 99.0017 $1.0026 $0.3003 $0.13% 0.3195 $0.
7283 0.7473 0.Accra) Biodiesel Finanacing Depreciation Electricity Labor @ minimum wage (30.0053 0.0053 0.7105 0.0026 0.7504 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 .0224 0.0081 0.0034 0.7725 0.7102 0.0018 0.0399 0.0111 0.7504 62 .0368 0.0111 0.3003 0.7354 0.7105 0.0115 0.0018 0.0081 0.0059 0.0115 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 0.0034 0.7977 0.4183 0.0224 0.3560 0.7906 0.0026 0.3003 0.0059 0.7473 0.
5022 0.5022 0.5022 0.8201 1.5022 0.8183 0.4291 0.64 $ 74.88 $ Best Case Palm Oil 0.06% 60.7231 $ 1.97 $ 76.2218 0.4291 $ 1.1289 0.747 0.3179 162.9112 0. Price of oil (barrel) 03/16/07 Estimated Price of oil needed (barrel) Price of oil 3/16 * % difference needed $ 1.8201 121.1354 $ 1.8201 Tax Break only for Biodiesel (5% cut) Jatropha Biodiesel Ex-Refinery Cost Diesel Ex-Refinery cost Taxes and Distribution Percent % difference Approx.3811 0.7479 0.36 Pump diesel price (march 16) needed Diesel Ex-Refinery Cost (Lt) New Diesel pump price (B5) 0.1289 0.8201 121.51% 60.7479 $ 0.92 $ 59.2457 168.5022 0.23 0.7354 No Tax break Jatropha Biodiesel Ex-Refinery Cost Diesel Ex-Refinery cost Taxes and Distribution Percent % difference Approx.7977 0.12% $ 60.5220 0.8201 121.3179 224.8458 0.4774 $ 0.8582 $ 0.24 $ 104.8183 0.23 121. Price of oil (barrel) 03/16/07 Estimated Price of oil needed (barrel) Price of oil 3/16 * % difference needed $ 1.7231 0.3179 149.1289 $ 1.1362 0.23 $ 0.7529 1.0921 0.7479 1.3179 284.5022 0.7479 0.88 Palm Oil 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.99% 60.7529 0.92 $ 64.2457 109.2457 226.2041 $ 1.9039 $ 1.88 $ BC Palm Oil 0.76 $ 71. Price of oil (barrel) 03/16/07 Estimated Price of oil needed (barrel) Price of oil 3/16 * % difference needed $ 1.23 0.2457 97.8201 0.041 0.5520 $ 0.61 $ 57.8464 $ 1.57% 60.88 $ 109.5022 0.7231 0.27 needed Diesel Ex-Refinery Cost (Lt) New Diesel pump price (B5) Diesel price @ pump 03/16 $ 1.0921 0.7231 0.66 $ 173.92% 60.3066 118.09% 60.4981 $ 0.87 $ 137.3066 239.5022 0.2457 121.88 $ 102.88 $ 1.3179 170.3066 126.88 $ 136.14% $ 60.88 NATIONAL MODEL BC Jatropha Coconut BC Coconut 0.8201 0.8201 0.20 $ 91.85 $ 87.23 1.1761 1.8582 0.3179 143.3811 0.8201 0.4468 0.88 $ MINES Coconut 1.88 $ 0.6125 $ 0.04 $ 99.58 $ 60.79% 60.5022 0.88 $ BC Jatropha 0.3066 179.8201 0.18% $ 60.25 $ 66.3066 99.9511 0.94% $ 60.77% 60.88 $ BC Coconut 0.5022 0.09% 60.92% 60.4897 0.8201 63 .0708 0.88 $ Palm Oil 0.7479 0.3066 105.5022 0.5022 0.5933 $ 0.2457 95.00 liters per barrel (including refinery cost) needed Diesel Ex-Refinery Cost (Lt) New Diesel pump price (B5) Diesel price @ pump 03/16 121.99% 60.5022 0.8582 0.5279 0.88 Palm Oil 0.38 $ 145.8582 0.4291 0.88 BC Palm Oil 0.88 $ NATIONAL MODEL Best Case Best Case Jatropha Coconut Coconut 0.6332 $ 0.88 $ 0.5022 0.8160 0.5022 0.8582 0.8201 121.7354 0.89% 60.8183 $ 1.7231 0.7529 0.23 0.7977 0.5022 0.88 $ 1.5022 0.96% 60.5022 0.7479 0.54% 60.
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue reading from where you left off, or restart the preview.