Two at a Time

Ethanol for Foreign Currency, for Environment

The Ethiopian government will for sure fall short of the goal it set to produce 181.5 million litters of bioethanol fuel by the end of the current fiscal year. So far, the country has only managed to produce 13.5 million litters of the much needed product. However, that isn’t deterring industry insiders from finding ways to produce more ethanol blended fuel, which is a ‘cleaner’ source of energy than normal fossil fuel. Ethanol blended fuel helps reduce carbon emissions from vehicle use. Ethanol is produced as a by-product of sugar cane and, according to EBR’s Ashenafi Endale, Ethiopia’s sugar industry is looking to meet the demands of the government. Still, many roadblocks stand in the way of the nation is trying to achieve its goals of using bioethanol as a means of creating a ‘green economy’.

Exerting efforts to widely use bioethanol blended fuel has not only been one of the pillars for the Ethiopian government’s vision of building a climate-resilient green economy; it’s also become a promising effort that can help the government from spending foreign currency on importing fuel.
However, the highly ambitious plan to produce 181.5 million litres of bioethanol by the end of 2014/15 remains an elusive goal for the government, which aims to achieve middle-income status by 2025 while simultaneously developing a green economy.
Data from the Ethiopian Sugar Corporation reveals that in the last nine months of the current fiscal year, the country managed to produce only 13.5 million liters of ethanol-just 7.4Pct of the target. Out of the total, 6.7 million litter of ethanol were blended with benzene, which enabled the country to save USD5.3 million in foreign currency. The rest went to household consumption and to factories that produce alcoholic beverages.
It was in 2008 that the Ethiopian government allowed blending locally-produced ethanol with benzene as part of a green economy development strategy and a means saving much-needed foreign currency that goes towards importing fuel. In order to achieve these goals, the government implemented the Bio-fuel Development and Utilization Strategy in 2006.
In the past four years, Ethiopia spent USD1.2 billion each year, on average, to import enough fuel to sustain the economic growth the country is registering, which is fueled in large part by huge public expenditures on infrastructure projects.
Saving more foreign currency by substituting fuel import with ethanol produced locally was not as smooth as the government hoped. Initially the government started by blending 5Pct ethanol and 95Pct benzene. However, when the five year Growth and Transformation Plan (GTP) was launched in 2010, the country planned to raise the amount of ethanol that will be blended with benzene to 20Pct at the end of GTP period. That was however, unattainable; in fact raising the blended ethanol amount to 10Pct was started in January 2015.
In Ethiopia, ethanol is produced from molasses, a byproduct of sugar cane, although it can be produced from maize, sweet potatoes and other alcohol by products. So far, only Metehara and Fincha sugar factories produce ethanol.
“The wide shortfall is caused by the shortage of ethanol production, which in turn is caused by the delay in the new sugar factory projects,” says Gashu Aychlum, Media Relations Team Leader at the Ethiopian Sugar Corporation.
Out of ten sugar factories, whose construction is still ongoing, the Corporation expected to start production by the end of the current fiscal year. To the disappointment of the nation’s law makers only the Omo Kuraz Sugar Project is 90Pct complete, while the Tana Belles 1 and 2 projects reached 69Pct and 55Pct, respectively. The construction of the rest of the factories is at the initial stages. Upon completion of construction and commencement of producing the much needed sugar, the factories will crush 4.9 million tons of sugar cane annually; they will also have the capacity to produce 446 million liters of ethanol per year too.
Beyond this fact, the failure of Metehara and Fincha sugar factories to produce as expected contributed to the overall failure to achieve the national target of ethanol production. The factories produced 19 million litres of ethanol in the last fiscal year. ‘‘Although the two factories can produce 32.5 million liters of ethanol per annum, combined, they are not utilizing their installed capacity,’’ explains Gashu. “This is mainly due to the power shortage and other technical problems.”
With such uncertainty, however, oil distributing companies are investing to install a blending facility. Initially, it was Nile Petroleum Company that started blending 5Pct ethanol with 95Pct benzene seven years ago. Then Libya Oil Ethiopia Limited and National Oil Company (NOC) took the same step.
Libya Oil, which started operation in 2010, has been blending 46,000 liters of ethanol although it can blend 50,000 liters of ethanol per day on average, according to Tsegaye Degefu, Customer Service and Logistic Manager of Libya Oil. ‘‘It also provided blending service for Yetebaberut Beherawi Petroleum Company and Total Ethiopia,’’ says Tsegaye. ‘‘For now, we are utilizing our capacity efficiently.’’ Libya Oil has installed the facility with ETB30 million.
NOC, which started blending ethanol two years after Libya Oil, also installed a facility, which has an adjustable capacity, with ETB28 million. The facility blended 1.9 million liters and 2.1 million liters of ethanol with benzene in 2013 and in 2014, respectively, according to Fekade Tilahun, Operations Manager of NOC. From January to April 2015, it also blended 2.07 million liters of ethanol.
Both Tsegaye and Fekade say that the supply of ethanol stops at least for three months in a given year. “But the government informs us in advance before the stock is empty,” says Tsegaye.
Currently, Total Ethiopia is also constructing a new blending facility, which will be completed in six months. “Recently the government gave permission for Total Ethiopia to blend ethanol,” says Bizuneh Tolcha, director of the Public Relations Directorate at the Ministry of Water, Irrigation and Energy. “Although the country’s plan was to blend 20Pct of ethanol with benzene by the end of the current fiscal year, it is impossible with the current conditions of vehicles.”
A year ago, the Ministry of Water, Irrigation and Energy and the Ministry of Transport started to conduct a study that will show how and what part of vehicles need modifications in order to make them efficient with an increased amount of ethanol fuel, according to Bizuneh. “If the sugar factories start supplying [enough] ethanol, we can go up to blending 25pct ethanol with benzene during the second phase of the GTP.”
The study will be revealed in the next fiscal year, according to Bizuneh. “Although its price fluctuates like the fossil oil, the price of blended oil is lower,” argues Bizuneh. “However, users will have to modify their cars [in order] to use it.”
The team involved in the study has also visited Brazil, a country that relies on ethanol as an engine fuel and uses more than any other country. Gasoline sold in Brazil contains at least 25Pct ethanol. However, recently Brazil announced plans to increase the ethanol blend in gasoline from 25 percent to 27 percent.
Brazil produces a third of the world’s ethanol. In 2014, it produced 26.08 billion liters of ethanol. World production of ethanol fuel also increased between 2000 and 2007, from 17 billion to more than 52 billion liters. Although it has slowed in subsequent years due to the global economic crisis, the growth continues, reaching nearly 89 billion liters in 2014, according to the Renewable Fuels Association.
Motivated by volatile oil prices, energy security or increasing carbon emissions from road transport, many countries have mandated biofuel use in their auto markets. For Ethiopia, stakeholders say increasing the production of ethanol will help to develop sustainable alternative energy sources that can support the government’s vision of transferring the country to middle-income status after a decade. EBR