Active Ethanol Policy for Jobs Creation

by Tim Newbold (The Guardian) The global approach to energy is changing rapidly. The urgency of the challenge that climate change presents has focused significant attention and resources on renewable energy solutions, as countries and companies seek to reduce emissions. One of the ways that an increasing number of countries have found to provide such mitigation, is the addition of a renewable energy resource like ethanol. When blended, fuel ethanol has a low-carbon content compared to traditional petrol, and so it offers immediate and immense environmental benefits through the reduction of greenhouse gas emissions and improving air quality.

Beyond these environmental benefits, ethanol also brings economic and social benefits when adopted widely. Developing countries such as Thailand and Brazil have adopted biofuel policies since the 1980s and 1970s respectively. These policies including blending mandates and fuel quality standards and monitoring have resulted in significant growth in local industries, boosting the agricultural sector as well as increasing ethanol-related employment.

Ethanol is sourced from crops rich in carbohydrates such as cassava, sugarcane, sugar beets, corn, or sorghum. Thus, the widespread use of ethanol creates new demand for these commodities and so new demand for labour on farms.

Nigeria is the largest producer of cassava in the world, yet studies show that post-harvest losses of these crops are as much as 51%, driven by lack of appropriate technology for transportation or storage, amongst other issues[2]. Widespread domestic ethanol consumption and production will provide a solution to lingering issues of post-harvest loss and present an opportunity for farmers to convert agricultural waste into income. According to Segun Adewunmi, the President of the National Cassava Association, a significant boost in demand and investment within the cassava value chain could lead to a 150% rise in jobs in the medium to long-term for the sector.

According to the National Bureau of Statistics, the country consumes 20.8 billion litres of gasoline per annum. Thus, if Nigeria was to mandate a 10% ethanol blend for gasoline supply, it would have the potential to create new demand of up to 2 billion litres per annum.

The framework for this is already in place, in the form of the Biofuel Policy, which was introduced in 2007 but suspended shortly afterward due to compliance safeguarding.

The implementation of such a framework accompanied with an import-based program into policy plans will likely be accompanied with pricing benefits. As an average, over the last ten years, the cost of ethanol has been consistently lower than the cost of oil, and so blended E10 products should be able to get to market cheaper than standard PMS, helping margins in the industry, and creating the potential for a lower price point for consumers.

With the NNPC (Nigerian National Petroleum Corporation) investing heavily in cassava for ethanol production, and the ongoing construction at the Dangote refinery, the possibilities of local blending of E10 at scale is promising; however, this is a long-term goal. READ MORE