SUSTAINABLE Biofuels INDUSTRY in Nigeria – A GATEWAY TO ECONOMIC DEVELOPMENT

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SUSTAINABLE BIofUELS INDUSTRY IN NIgERIA –
A gATEWAY To ECoNoMIC DEVELoPMENT
BY
gRoUP gENERAL MANAgER,
RENEWABLE ENERgY DIVISIoN of NNPC
AT THE SECoND NIgERIAN ALTERNATIVE ENERgY

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OUTLINE
 INTRODUCTION
 ENERGY SITUATION
 SUSTAINABLE BIOFUELS AND ECONOMIC DEVELOPMENT IN NIGERIA
 BENEFITS OF BIOFUELS PROGRAMME
 JOURNEY SO FAR
 CONCLUSION
2

3. INTRODUCTION: NA
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What is Biofuels?
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Biofuels are fuels derived from recently living organisms (biomass).
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P O R A T IO
They can be divided into three categories:
a) First-generation Biofuels: produced from energy crops e.g.
Sugarcane, Cassava, Corn, Oil Palm, etc
b) Second-generation Biofuels: produced from ligno-cellulosic plant
materials from organic wastes, food crop wastes and specific
biomass crops
c) Third-generation Biofuels: produced from genetically modified
energy crops such as algae and microbes
Examples of Biofuels include:-
 Liquid: Fuel-Ethanol and Biodiesel;
 Solid: wood, sawdust, grass cuttings, domestic refuse, charcoal,
agricultural waste, non-food energy crops, dried manure;
 Gaseous: —Biogas from anaerobic digestion or gasification of
biomass 3

4. T IO NAL
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INTRODUCTION
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Historical Sectoral Contributions to GDP Growth:
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• From pre-independence to mid-70s, Agriculture provided the seed capital
for the development of the oil and gas industry in Nigeria
• By 2006, Oil and Gas contributed about 37% of GDP, while Agriculture
contribution to GDP declined from 54.99% in 1966 to 32%
• The major end-product of the Agric re-launch is Biofuels
Agric sector
Agric sector
contribution
contribution
Oil Industry and GDP Growth to GDP has
to GDP has
declined
declined
over the
over the
years
years
60
54.96 54.96 54.96 54.96 54.96
50
42.93
40 40.33 37.82
31.13 32.97
30
24.83
20 18.66
13.8
%
G
D
10
P
u
b
n
o
c
r
)
(
t
i
3.8
0
1966 1976 1986 1996 2006
years
Agriculture GDP held constant (%) Agriculture Contribution to GDP (%)
Oil sector contribution to GDP(%)
4
Source: National Bureau of Statistics

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OUTLINE
 INTRODUCTION
 ENERGY SITUATION
 SUSTAINABLE BIOFUELS DEVELOPMENT IN NIGERIA
 BENEFITS OF BIOFUELS PROGRAMME
 JOURNEY SO FAR
 CONCLUSION
5

6. ENERGY SITUATION: GLOBAL T IO NAL
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Non-Renewable Energy account for about 75% of
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Energy Supplies (Oil, Gas & Coal) in the world OR N
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P O R A T IO
Nuclear
Gas 6% Large Hydro
21% 6%
Traditional
Biomass
11% Coal
Oil
Other
Gas
Renewables
2% Nuclear
Large Hydro
Traditional Biomass
Other Renewables
Oil Coal
32% 22%
6

7. T IO NAL
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ENERGY SITUATION: NIGERIA
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 The Energy Resources in Nigeria include: Crude Oil, Natural Gas, Coal,
 Tar Sand and Renewables (Biomass, Hydro, Solar, Wind, etc.)
 Current Estimated Oil Reserve in Nigeria is 35.9 billion barrels with daily
production capacity of 2.7 million barrels of Crude Oil
 Natural Gas is estimated at 185 trillion cubic feet of proven reserve as at (-
OGJ).
 Coal and Lignite Reserves are estimated at 2.75 billion tons.
The 35.9 billion barrels of oil in reserve will be depleted by 30 – 36
years period.
 Renewable Energy (Biofuels) will increase fuel pool and address
the adverse environmental impact of fossil fuels
Source: Oil and Gas Journal
7

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Non-Renewable Energy sources are depleting at a
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fast rate
OR N
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P O R A T IO
1000
1 EJ = 10 18 J C
A
100 D
FLUID FOSSIL FUEL PRODUCTION / DEMAND IN EJ/yr
10
E
B F
1
LEGEND A : World Fluid Fossil Fuel Production
B : Nigerian Fluid Fossil Fuel Production
0.1 C : World Fluid Fossil Fuel Demand Projection
D : World Fluid Fossil Fuel Production Projection
E : Nigerian Fluid Fossil Fuel Demand Projection
F : Nigeria Fluid Fossil Fuel Production Projection
Note: 1E = One Exa-juole = 1018 J
0.01
8
1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100
YEAR

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Non-Renewables cause Global Warming due to CO2
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Emissions OR N
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P O R A T IO
Years
9
Years

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OUTLINE
 INTRODUCTION
 ENERGY SITUATION
SUSTAINABLE BIOFUELS DEVELOPMENT IN NIGERIA
 BENEFITS OF BIOFUELS PROGRAMME
 JOURNEY SO FAR
 CONCLUSION
10

11. Sustainable Biofuels and Economic Development T IO NAL
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 Biofuels provide a new opportunity to enhance economic OR N
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P O R A T IO
development in Nigeria.
 Maximizing the poverty-reducing effects of a Biofuels
industry in Nigeria requires engaging and improving the
productivity of small-holder farmers.
 Our Feasibility Study shows that Sugarcane/Cassava/Oil
Palm-based Biofuels production is more profitable than
other feedstock options.
 Our findings also indicate that a combination of Out-grower
Scheme approach and yield improvements rather than
expanded cultivation will address both poverty alleviation
and land-use issues
11

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Sustainable Biofuels and Economic Development OR N
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P O R A T IO
 Incorporation of the Biofuels industry into National
Development Plans, will contribute to achieving the
Country’s overall development objectives.
 Biofuels industry allows Community participations, including
local farmer
 Biofuels offer Sustainable development option that is full of
promise and are developed in ways that protect our planet
12

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SUSTAINABLE BIOFUELS INDUSTRY DEVELOPMENT
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To ensure sustainability the Biofuels programme will employ
the use of:
 Suitable and more productive crops as feedstock
 Local/Indigenous varieties of selected feedstock
 Suitable feedstock for different ecological zones
 Modern and efficient conversion technology
13

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SUSTAINABLE BIOFUELS INDUSTRY DEVT. CONT.
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Use of suitable and more productive feedstock:
Typical Yields of Raw Materials Used in Biofuels Production
Crop Yield Ethanol/Biodiesel Ethanol/Biodiesel
(ton/ha/yr) yield yield
(litres/ton) (litres/ha/yr)
Sugarcane 50-90 70-90 3,500-8,000
Sweet sorghum 45-80 60-80 1,750-5,300
Sugar beet 15-50 90 1,350-5,500
Wheat 1.5-2.1 340 510-714
Rice 2.5-5.0 430 1,075-2,150
Maize 1.7-5.4 360 600-1,944
Sorghum 1.0-3.7 350 350-1,295
Cassava 10-65 170 1,700-11,050
Sweet potatoes 8-50 167 1,336-8,350
Oil Palm 16 – 35 136 4760
Jatropha 6 – 10 151.36 1513.6
Castor bean 0.75 – 1.5 753.6 1130.4 14
Suitable feedstock Alternative feedstock Low yield feedstock

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Use local/indigenous varieties as feedstock:
To ensure the use of the best local crop varieties of the
Preferred feedstocks, National Research Institutes have
been engaged for selection and breeding of local varieties
that are:
 High yielding;
 Disease resistant, and
 Pest resistant
15

16. SUSTAINABLE BIOFUELS INDUSTRY DEVT. CONT. NA
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Use of suitable feedstock for different ecological zone:
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NATIONAL BIOFUELS FEEDSTOCK MAP
S ot
ok o
Katsina
Jigawa
Zamf
ara Yobe Bor
no
Kebbi
Kano
i
Kaduna Bauchi Gombe
Niger
Adamawa
FCT Plat
eau
Kwara
Oyo N awa
asar
Taraba
Ekiti Kogi Benue
OsunOndo
Ogun
Potential Sugarcane
Lagos Edo Enugu
Anambra
Ebonyi
Potential Cassava
Abia
Delta I
mo Cross River Potential Oil Palm
Balyesa Rivers A I
kwa bom Potential Jathropha
• Some States have potentials for more than one crop
• By 2020, the projected peak of Biofuels production would require about
500,000ha ~ 2% of the arable land (33million ha) in Nigeria. 16

17. SUSTAINABLE BIOFUELS IN TRANSFORMATION AGENDA NA
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In
Su crea
er Oil gar sed
ow g
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C
,A ,S P O R A T IO
P n gro tar Prod
sed n usi rces
ea tio -Ch ch, uct
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Inc era Reso
n
Ge able Fe icals de P of
ed & A alm
ew
R en nim
al
pro v ing,
r& Fo
Susta
Se od
Sus a High
-yield ed &
we y
m
le
Po erg cu
Creat le Jobs
Creat le Jobs
rity
i ng
us in ized Far
M ech arge-sca
GDP
with
GDP
with
En
l ings
inab
i ab
re
ion o
ion of
Creati
Wealth
Impa
Wealt
Impac
H ig h
g im
n Agric ultu
Seed
re tion
an
high
L
f
on
t
TRANSFORMATION
t
AGENDA
ti o
Se
S
rt a
c
c ur
ur
o
un cr u rb e
Co an nv ells
Co ans n
iity
Co ss a t o c f t h
sp
ty
e
Tr g E Fu
us nd
T g F e
st spo iiro //Ble
th
fri
an
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sii dlly
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Ec rsif
s
ve
Di
Cooperative Transfer of
Re
Technology & Access to
Research Findings

18. T IO NAL
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SUSTAINABLE BIOFUELS INDUSTRY DEVT. CONT.
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The Biofuels Programme Modality is
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Food & Fuel NOT Food Vs Fuel
 The National Biofuels Programme excludes staple crops such as:
millet, corn, rice, yam and grain sorghum, but plans to use Sugarcane, Cassava,
Sweet Sorghum, Palm Oil and Jatropha as feedstock for Biofuels production
 Proposed Biofuels Projects are all integrated (Plant & Plantation) and as such will
not distort current food supply
 Currently no commercial scale Biofuels production in Nigeria, hence the rising costs
of food in Nigeria is due to causes other than Biofuels production
 The Programme is intended to boost Agriculture and add to food production through
improved farming techniques and high-yielding varieties
 By 2020, the projected peak of Biofuels production would require about 500,000 ha
– using less than 2% of the arable land (33million ha) in Nigeria for JV Plantations
and Out-growers scheme
 The Programme is modelled to integrate the Agric sector with the Oil and Gas
18
Industry

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Sustainable Biofuels and Economic Development
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The proposed Biofuels Projects are integrated and
meet three design principles:
Integrated Business Model Design Principles:
 Sustainability of the industry dictates
large-scale mechanized Plantation
operations integrated with processing
Plants
 Out-grower schemes are planned
around the core Plantation, using a
Service Company Model managed by
the Plantation governance structure
 Plantation and Plant operations must
meet international sustainability
standards:
 Profitable
 Environment-friendly
 Socially responsible 19

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Modern and efficient conversion technology: P O R A T IO
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Modern and efficient conversion technology OR N
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P O R A T IO
cont.
BIODIESEL PRODUCTION PROCESS FLOW DIAGRAM
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Resource Availability: OR N
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P O R A T IO
 Nigeria has about 33 million Hectares of arable land and only
about 10% is under cultivation
 Favourable agro-climatic and ecological conditions across the
country
 Strong capital base: Financial institutions are willing to
participate
 Enormous skilled and unskilled labour
 NNPC infrastructural facilities nationwide
 Research institutions: NCRI, IITA, NRCRI, NIFOR, Universities,
etc
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Nigeria’s Biofuels Demand OR N
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P O R A T IO
Biofuels Type Time Frame
Short Medium Long
Fuel-Ethanol (demand in 1.3 3.4 52.5
billion liters/yr) (at 15% blend) (at 50% blend)
(at 10% blend)
Biodiesel (demand in 0.233 1.951 12.7
billion liters/yr) (at 20% blend) (at 50% blend)
(at 10% blend)
Source: National Energy Master plan 23

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OUTLINE
 INTRODUCTION
 ENERGY SITUATION IN NIGERIA
 NIGERIA’S BIOFUELS DEMAND POTENTIALS
 RESOURCE AVAILABILITY IN NIGERIA FOR BIOFUELS
 BIOFUELS AND ECONOMIC DEVELOPMENT
 BENEFITS OF BIOFUEL PROGRAMME
 JOURNEY SO FAR
 CONCLUSION 24

25. T IO NAL
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The Biofuels industry presents vast social, economic
ET
N IG E R IA N
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and environmental benefits for Nigeria. OR N
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P O R A T IO
• Good returns on invested capital (high IRRs ~30%)
• Revitalization of the agricultural sector
• Increased local production of sugar and power complement
efforts at filling existing supply gaps in Nigeria (for
Economic Benefits sugarcane to ethanol)
• Diversification of the country’s energy usage and hence
increased ability to hedge supply risk
• Carbon credit earnings
• Reduction of gasoline imports and foreign currency use
Environmental • Environmentally friendly fuels / less pollution
Benefits
• CO2 emission reduction
• Rural wealth and job creation
Social Benefits
• Sustainable development 25

26. THE ENERGY – ECONOMY RELATIONSHIP: T IO NAL
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Energy touches various aspects of our economy
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P O R A T IO
AGRICULTURE
INFORMATION & COMMERCE
COMMUNICATION & INDUSTRY
TRANSPORTATION FINANCE
ENERGY
DEFENCE & HOUSE HOLD
SECURITY & HEALTH
EDUCATION,
SCIENCE & MINES & POWER
TECHNOLOGY
THE NIGERIAN ECONOMY 26

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BENEFITS OF BIOFUELS PROGRAMME CONT.
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P O R A T IO
Diversification
Rural Economic Of Energy
empowerment Matrix
Petroleum &
Environment Agric industry
Friendly integration
Efficient
Maximize supplier Chain
carbon credit Road/Transport
Opportunities
Home grown industry
Research & Learning
Lower cost of production
Sustainable Development
Rural wealth creation
Energy sufficiency &
Potential for export

28. T IO NAL
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OUTLINE
 INTRODUCTION
 ENERGY SITUATION IN NIGERIA
 NIGERIA’S BIOFUELS DEMAND POTENTIALS
 RESOURCE AVAILABILITY IN NIGERIA FOR BIOFUELS
 SUSTAINABLE BIOFUELS INDUSTRY DEVELOPMENT
 ECONOMIC BENEFITS OF BIOFUEL PROGRAMME
 JOURNEY SO FAR
 CONCLUSION
28

29. T IO NAL
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JOURNEY SO FAR CONT.
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P O R A T IO
NNPC has invested significant resources in the promotion
of the Biofuels programme with positive results:
POLICY
Policy & Incentives
• Biofuels Policy approved by the Federal Executive Council and gazetted
Development
(Gazette No. 72, June 20th 2007) but is presently being reviewed by
Energy Commission of Nigeria
OFFTAKE AGREEMENT
The off-take agreement contract design concluded to provides guaranteed
market to local producers of Biofuels.
ETHANOL
• Developed 5 bankable feasibility studies for sugarcane & cassava ethanol
BIODIESEL
Domestic Biofuel • Completed 2 feasibility studies for oil palm to biodiesel projects
Programme
IJV FORMATION
• Credible potential investor groups have shown interest to partner with
NNPC for joint development projects (IJV formation) 29

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Seven bankable feasibility studies have been completed
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in five different states, while engaging various State OR N
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P O R A T IO
Governments in discussion for Land Sites.
S o
okot
Katsina
Jigawa
Zamf
ara Yobe • Bor
Sugarcane 16,000 ha
no
Kebbi • 3 projects
Kano
• EtOH: 75 million liters/yr
• Sugar:116,000 tonnes / year
• Electricity: 64 MW
• Cassava:13,500 ha Kaduna Bauchi Gombe • Investment: $322 million
• 2 projects Niger
• EtOH: 38 million liters/yr Adamawa
• Starch:36,000 tonnes / year
• Investment: $115 million Kwara Plat
eau
FCT
Oyo N awa
asar
• Oil Palm 14,000 ha & 8,500 ha
Taraba • 2 projects
Ekiti Kogi Benue • Palm Oil: 60,000 / 32,000 t/yr
Osun
Ondo • Biodiesel: 38 / 21 million liters/ year
Ogun
• Investment: $75 / 44.5 million
Lagos Edo Enugu
Ebonyi
Anambra Sugar cane
Abia
Delta I
mo Cross River Cassava
Balyesa Rivers A I
kwa bom
Oil Palm
There is potential for many more projects in other states. 30

31. Roadmap for a 500,000 ha Integrated Food, NA
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Biofuels and Energy Industry
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P O R A T IO
Sustain Growth
• Seek increasing
use of biofuels
beyond E10 and
B5
• 500,000 ha
developed
• 250,000 ha
(285,000+ ha in
developed
biofuel
(70,000 ha in
• >65,000 ha production*)
biofuel • 1.2 billion liters of
developed (incl. production*)
biofuels / year
•
cassava, • 360 million liters •
• Create first JVs >33,000 ha 600+ MW co-
developed sugarcane and ethanol/ year)
• Obtain bill generation
• > 100,000 t palm oil) • 120+ MW co-
approval • $6+ billion
cassava • 10+ million liters generation
COMMENCEMENT • Upgrade invested
• Implement policy harvested ethanol/ year • Begin
distribution
• >3,500 jobs • Begin production production of
(off-takes, etc.)_ infrastructure
• Launch E10
created of sugarcane palm biodiesel
• Sanction 2 or more • Launch B5
• Develop shared private projects (15 million
seeding liters/year)
ownership with • Expand financing programme
relevant MDAs facilities
• kick-off bill
Note:
1. There is a lag of 3 to 6 years between land development and Biofuels production depending on the crop used as feedstock
2.Project commencement will be determined by provision of equity by the government for IJV formation. 31

32. T IO NAL
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OUTLINE
 INTRODUCTION
 ENERGY SITUATION IN NIGERIA
 NIGERIA’S BIOFUELS DEMAND POTENTIALS
 RESOURCE AVAILABILITY IN NIGERIA FOR BIOFUELS
 SUSTAINABLE BIOFUELS INDUSTRY DEVELOPMENT
 ECONOMIC BENEFITS OF BIOFUEL PROGRAMME
 JOURNEY SO FAR
 CONCLUSION 32

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CONCLUSION
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P O R A T IO
 The Biofuels industry has potential to make a significant impact on
the Nigerian economy
 Growing oil/energy demand and limited oil resources calls for a
complementary sustainable energy source –BIOFUELS
–
 Awareness creation on the benefits of Biofuels industry and
advocacy for the implementation of Biofuels Projects is paramount
to the success of the industry
 Standardization of policies and incentives will facilitate the
realization of a thriving domestic Biofuels industry
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34. T IO NAL
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P O R A T IO
34