SUSTAINABLE BIOENERGY- AN ASSESSMENT OF POTENTIAL POLICY OPTIONS FOR GHANA
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The use of liquid biofuels –mainly for transportation, but also for household uses in developing countries- is seen as one of the major alternatives to the consumption of fossil fuels, in the efforts to mitigate climate change effects, meet increasing global energy needs and national energy security goals. Although both the supply and demand potential for biofuels are huge, they currently have a very low share in the global energy mix and that is not expected to change soon. On the other hand, the success of the biofuels industry in certain countries –predominantly Brazil- along with the significant production potential for some biofuel feedstocks in many Sub-Saharan African (SSA) countries render the prospects of the development of national biofuels industries very appealing. The production process of biofuels does not come without difficulties and has raised many concerns in the past as for its sustainability. Specific challenges in SSA relate to land use regimes, the weak governance structures, the poor infrastructure that also increases production costs, indecisive policies with regards to the biofuels policies or general political instability, all of which bring risks to biofuels producers. Moreover, despite the similarities in the production potential of many African countries, there is no common model for biofuels production and even the objectives of adopted policies may well differ. Due to these and other uncertainties, the production of biofuels in SSA in the past decade has often failed to deliver sustainable outcomes across the triple bottom line (economic, social, environmental) or to distribute benefits equitably to local populations. Consequently, of particular interest for any country which wishes to exploit its production potential are the modes of biofuels production, as well as public sector policies that steer towards the achievement of sustainable outcomes along the whole supply chain and maximize the potential benefits (depending on the national policy priorities). As such a country, Ghana is interested in receiving policy recommendations for the development of a biofuels policy with regard to the business models for the production of biofuels and to the options to stimulate the production and the consumption of biofuels. Therefore, the objective of the research is to contribute to practice-oriented theory building with regards to the adoption of business models for biofuels production and their implementation, as well as with regards to the appropriate governance arrangements to promote the production and consumption of biofuels in the context of SSA. That is the main objective and it implies that the results of the research are largely applicable to many SSA countries. After completing the stages of the research to achieve this objective, it is possible to provide the Ghana Energy Commission (GEC) with recommendations for sustainable biofuels policy development, with regard to the adoption of business models for biofuels production and their implementation, as well as with regard to the appropriate options to stimulate the production and consumption of biofuels, based on the country’s specificities. The following question has guided the efforts to meet this research objective: “Which business models and governance strategies are feasible to contribute to a significant increase in the deployment of liquid biofuels in SSA?” In order to answer this question, the following research steps have been taken. First, by means of a literature review all important aspects from the standpoint of the business sector were investigated. The basic business models (institutional and organizational aspects) have been identified that are applicable in the context of SSA along with their impacts and the success factors that enable them to be employed efficiently. This analysis resulted in a typology of four main types of business models with the addition of two sub-types that include farmer cooperatives. A chapter on biofuels supply chain management (BSCM) describes the operational aspects of the biofuels business that are common for all the business models. A similar analysis was conducted for the options to stimulate the production and consumption of biofuels, outlining the basic implications of each policy option. The stimulation measures were classified in three categories (interventions at start-up phase, production and consumption). At the end of this stage a synthesis of success factors is made and the policy options identified are connected to them, while a classification of them is provided in three different levels. As a next step, the current situation in Ghana was mapped in detail by means of a literature review and a series of interviews. Barriers identified from the literature guided that stage of research and they were scored as for their importance, according to the interviewees’ opinions, while some additional barriers to the deployment of the production potential of the country were identified as well. Next, with an extensive series of interviews the research sought to investigate the possible strategies to maximize the efficiency of the identified business models (again following the same distinction) and to promote the production and consumption of biofuels in the context of SSA, while also addressing Ghana’s most important barriers. That stage of the research served to confront the opinions of interviewees with the literature and at the same time to elaborate on the findings of the literature review, while also adding new elements. Regarding the stimulation of investments, production and consumption –apart from the above- the interview inputs largely aimed to assess options previously identified in the literature, but also to elaborate on the possibilities to implement them. The research concludes by determining which business models are more likely to be feasible based on the current conditions in Ghana and which governance strategies would be required, in order to successfully operationalize them. The clear favourites are the types A and B1, which are large-scale production schemes (the first through conceded land, the second through a partnership of commercial company with smallholder farmers). Small-scale models (Type C) should not be generally excluded, though, as they provide important benefits. A number of recommendations are made to the Ghana Energy Commission. Although most of the direct responsibility naturally lies in the hands of the private companies that wish to invest in the production of biofuels, a strong role is prescribed for the public sector, in order to create the enabling environment, to steer towards the most favourable directions by issuing legal requirements and economic incentives, as well as to adopt a proactive role in mediating between parties and facilitating the efforts of private investors.