Analysis of biofuel potential in Nigeria

Abstract

Energy security is a priority for most countries as a pivot for economic development. However, Nigeria, despite being a major oil producer, is plagued by energy insecurity in addition to long-standing food insecurity. Nigeria spent 4% of its GDP (~ US$5B/year) importing refined petroleum products (RPP) for its transport sector between 2005 and 2009. In addition, an annual average food import of 3 million metric tonnes has existed for almost a decade. To combat these energy and food insecurities, the Nigerian government plans to produce bioethanol from its major staple food (sugar and starch) crops in order to increase its transport fuel supply and ameliorate the negative impacts of the on-going import of motor fuel to its economy; given substantial uncultivated arable land, unemployed labour and suitable climatic and soil conditions. The dilemma between the apparent benefits of biofuels versus its potential impacts on food security needs to be analysed in order to articulate and implement a feasible ethanol policy. This study develops and applies a sectoral Energy-Food Model (EFM) to: 1) analyse the supply capacity of the feedstock and food suppliers (the farmers in Nigeria) for ethanol; 2) estimate the bioethanol production potential in Nigeria; 3) identify the regional potential ‘best’ feedstock; and 4) assess the impacts of the potential feedstock and bioethanol demands and supplies on the national energy and food securities. The programming model is based on farm production data from relevant national agencies and on Nigerian energy supply, food consumption, commodity export and import and commodity prices from international and national official databases such as EIA, FAOSTAT, IMF, World Bank, and Nigerian Bureau of Statistics databases. Results show that Nigeria has the potential to produce sufficient feedstock and food crops required to meet the domestic ethanol and crop consumption requirements without reducing domestic food supply or increasing domestic commodity prices. Further, cassava is identified as the best feedstock for ethanol production in all the regions under current production and price conditions. Domestic ethanol production/supply to the local market for blending would generate and add a gross profit of US$2,725M per annum (including the potential co-products revenue) to national income. Also an annual production of 5.14 billion litres of ethanol from all the regions is feasible, and this can substitute 514 million litres of gasoline (4% of the annual average domestic RPP demand) at 10% ethanol blending, and save about US$36B per annum at US$70.33 per litre of the imported RPP. The changes in labour and land use were substantial, but without associated increase in the prices of labour and land, reflecting existing un- and under-employment and stocks of uncultivated arable land. The impacts of ethanol production from the first generation feedstock on food supply and food prices are practically absent in a country with sufficient land and production resources.