The high targets set by the European Union and the United States for the inclusion of biofuels in their fuel supply are a key driver for biofuels projects in the region. In addition, intensified government support for the market has helped attract increased investment into production.
New analysis from Frost & Sullivan (chemicals.frost.com), Sub-Saharan African Biofuels Market, estimates that the market will earn revenues of $26.9 million in 2009 and projects this to reach $229.9 million in 2017.
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"Globally, growing awareness of environmental issues and finite energy sources has led to heightened investment into alternative and renewable energy," notes Frost & Sullivan Research Analyst Kholofelo Maele. "Biofuels have received increased support in an effort to reduce greenhouse gas emissions and for their role in helping countries to achieve energy independence."
Biofuels have the potential to reduce countries' fuel import bills significantly and make the funds available for much-needed poverty alleviation and development. A large percentage of the population in Africa relies on agriculture for its livelihood. Growing energy crops could provide an income for subsistence and small-scale farmers and support rural development initiatives.
Promisingly, many countries in sub-Saharan Africa have suitable climates and available land to grow feedstock. However, delays in formulating and implementing the regulatory framework for biofuels production have been a major restraint for the development of the market. In addition, limited infrastructure in many countries remains a challenge for potential biofuels manufacturers.
"Legislating mandatory blending into a country's fuel supply will create a secure market for biofuels," states Maele. "However, the present uncertainty around policy has made investors hesitant about investing in this industry, which is still in its infancy."
Despite these uncertainties, many foreign organisations and local commercial farmers have invested in land or have made agreements with out-growers for growing energy crops and setting up pilot production facilities. This is to ensure that production can begin once the regulations are in place.
In the absence of mandatory blending, manufacturers are looking to target other fuel end-users. These include commercial farmers, trucking and equipment companies, the export market and the local communities that have limited or no access to electricity.
Biodiesel manufacturers that target the local market will need to ensure that they develop and maintain good relationships with their customers. Ensuring that the product adheres to the necessary standards for use as a fuel is essential.
"For manufacturers targeting the export market, taking sustainability criteria into consideration will be critical to securing market access," advises Maele. "African governments will need to take a proactive stance towards ensuring that the industry's development is regulated to prevent the potential negative impact on food security and the environment."
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Sub-Saharan African Biofuels Market / M441