Novozymes is to help finance a novel integrated food and energy venture in Mozambique which aims to displace charcoal with biofuel – offering a more sustainable alternative, it says, with a view to opening a massive market.
The Danish enzyme producer has made an undisclosed investment in CleanStar Mozambique, a joint venture between it and CleanStar Ventures, an Australian “venture development partnership”.
The venture will work with farmers to improve their farming methods, help them diversify the crops they grow and buy surplus cassava from them to feed a 1.2 million litre/year ethanol plant, to start production early next year in Maputo.
The venture aims to capture 20% of Maputo’s market for cooking fuels by 2014, displacing charcoal, the production of which is contributing to deforestation across sub-Saharan Africa.
“We’re doing this to enable proof of concept,” Novozymes spokesman Johan Melchior told Environmental Finance. “The model is designed to be scaled and replicated elsewhere.”
Melchior said that the charcoal market in Maputo alone is worth $150 million a year, with the charcoal market in the 50 biggest cities in sub-Saharan Africa worth $10 billion a year. “Prices are going up, as supply lines are getting longer,” he said, adding that “there aren’t any trees within hundreds of kilometres of Maputo”. The ethanol produced by the venture should therefore be increasingly competitive.
Novozymes will own 33% of the for-profit venture, with the remainder owned by CleanStar Ventures.
The ethanol fermentation plant, which will be built by Kansas-based contractor ICM, will use Novozymes enzymes.
Meanwhile, Bank of America Merrill Lynch’s carbon finance desk is “in advanced discussions” to join the venture as the carbon offtaker, Novozymes said, with a view to buying options over any carbon credits generated.
In its demonstration phase to 2014, the venture expects to distribute 80,000 cookstoves. Under an existing Clean Development Mechanism methodology which the venture will use, each of those cookstoves can claim credits for avoiding four tonnes of carbon dioxide emissions per year.
By. Mark Nicholls
Source: Environmental Finance