The case for domestically produced alcohol fuels in least developed economies Summary & thesis is our starting point: • We are conducting a commercial pilot study in Nigeria with 3 partners, Shell/SNEPCo, UNIKEM (an company) and Forte Oil, Nigeria’s leading fuel sales and distribution company. We are looking for a partner. (In the meantime, we are using imported methanol.) • Despite being the largest producer of crude oil in Africa, Nigeria is a net importer of household cooking fuels such as LPG and . The country faces constant challenges with its refining capacity. • The cost of cooking fuels in Nigeria is high, with kerosene retailing at over $1 per day of cooking. Charcoal is often more expensive. LPG is unreliable and costly. Fuelwood, mostly purchased in cities, is increasing in price. It is not a good fuel for urban settings. • The opportunity exists for a new methanol/ethanol economy in Nigeria and throughout Africa to locally produce cleaner burning and more environmentally friendly fuels more cheaply and in abundance from sugar and starch feedstocks and from . This can be done on large or small scale. 2 Summary (continued) Nigeria as our case in point

• Greater supply of energy and fuels needs to be attracted into the household sector. There are growing limitations with all of the existing fuels. Electricity has severe constraints. • The household energy sector is often overlooked by policy makers. • Nigeria has abundant natural gas. Many other countries have gas as well. • Liquid fuels are the cheapest and most efficient way to transport and distribute energy to consumers who may be widely scattered or living in informal urban areas where infrastructure is lacking. • As kerosene recedes from the market, and LPG struggles, wood and charcoal have filled the gap, to the detriment of Nigeria’s and Africa’s environment. • A domestic solution is needed: fuels produced locally and sustainably, with as low an investment cost as possible. The alcohols, particularly methanol, provide a solution.

3 http://www.worldenergyoutlook.org/home/

Modern energy services are crucial to human well-being and to economic development. Access to modern energy is essential for the provision of clean water, sanitation and healthcare and for the provision of reliable and efficient lighting, heating, cooking, mechanical power, transport and telecommunications services. It is an alarming fact that billions of people lack access to the most basic energy services. Some three billion people still cook with solid biomass fuels. Use of these fuels is associated with indoor air (IAP) and an estimated death toll of 4.3 million people per year. Disease and disability figures are much, much higher. More than 95% of those living without modern cooking fuels are in countries in sub-Saharan Africa and developing Asia. They are in rural areas but also in the growing cities. Nearly three-quarters of the global population living without clean cooking facilities live in ten countries.

4 SE4ALL Global Tracking Framework 2017

5 SE4ALL Global Tracking Framework 2017

SE4ALL Goals for energy access are not being met and are unlikely to be met by 2030. Nigeria stands out as a country where access to clean energy is actually declining, even though Nigeria is so rich in energy resources. http://www.worldbank.org/en/topic/energy/publication/global-tracking-framework-2017 6 SE4ALL Global Tracking Framework 2017

7 And yet, an ideal source of clean energy exists . . . https://www.cia.gov/index.html Natural gas proved* reserves (billion m3) Africa, India, Bangladesh Nigeria 5,153.0 Equatorial Guinea 36.8 Algeria 4,504.0 Mauritania 28.3 Egypt 2,186.0 Cote d'Ivoire 28.3 Libya 1,547.0 Gabon 28.3 India 1,241.0 24.9 Chad 999.5 Ghana 22.6 Yemen 478.5 Sudan 21.2 Angola 366.0 South Africa 16.0 Bangladesh 183.7 Uganda 14.2 Cameroon 135.1 Tanzania 6.5 Mozambique 127.4 Somalia 5.7 Republic of Congo 90.6 2.0 Tunisia 65.1 Morocco 1.4 South Sudan 63.7 Benin 1.1 Namibia 62.3 DRC 1.0 Rwanda 56.6 Many African countries, as well as India and Bangladesh, possess natural gas sufficient to provide cooking for 100 years or more to all of their citizens, provided this gas can be transformed into an easily usable, portable fuel. As oil is exploited in some of these countries, it is inevitable that gas will be flared. Many gas deposits, as well as flares, will be deemed “non commercial.” Yet, they can be exploited commercially on a small scale. As oil and gas are developed around Africa, a better job needs to be done than historically in Nigeria.

* Actual reserves may be much higher than proved reserves, which is natural gas deemed exploitable by conventional means. 8 Introducing Project Gaia

About Us

Project Gaia promotes clean, safe, Nigeria efficient cookstoves powered by alcohol fuels. By providing access to clean burning, low carbon fuels sustainably produced, we hope to change the face of energy poverty. We work wherever people struggle to cook their meals.

9 Project Gaia

About Us

We use cookstoves as a way to Ethiopia developing economies to alcohol fuels. Cooking is the main energy demand in many countries. Our strategy: If we can build the market, the fuel will develop (but with help).

10 Project Gaia Ethiopia Providing stoves and fuel in refugee camps One of the special things we do is work in refugee camps as an implementing partner to the UNHCR. We have provided stoves and fuel in Ethiopian refugee camps since 2005. During this time we have offset the use of more than 40,000 metric tons of wood and avoided the release of 16 million tons of CO2-e.

11 Global Alliance for Clean Cookstoves We are members of the Global Alliance for Clean Cookstoves (cleancookstoves.org)

We are founding members of the Global Alliance. As an NGO associated with the UN Foundation the Global Alliance seeks to bring attention to the problem of cooking fuels, effect funding and policy, and support efforts like ours. See: http://cleancookstoves.org/resources/473.html

12 Project Gaia works where cooking energy is needed

Where we work

Countries

• Nigeria • Kenya • Over 65,000 alcohol-fueled • stoves distributed to date • Ethiopia • Madagascar • Mozambique • Tanz ani a • Malawi • India • South Africa

13 Kerosene in Nigeria

“A litre of kerosene is now N230 in my neighbourhood, so I have resorted to using charcoal and nylon. You know that even with charcoal, I still would need a little kerosene to light the fire; so I now use dry nylon in place of kerosene. I set fire to the nylon and place it on the charcoal until it catches fire. That is how we have been managing to cook and put food on the table for our children” – Mercy, a trader at Volkswagen Bus-stop along Badagry Expressway * The Nation online article titled “Kerosene price hike: We don’t cook any more!” - August 21, 2016 The status of Kerosene in Nigeria

Overview • Nigeria is Africa’s largest producer of crude oil, and the 12th largest oil producing country in the world. Yet, it is heavily dependent on fuel imports. • According to the National Bureau of Statistics, Nigeria imported 41.06 million liters of kerosene in the 1st quarter of 2017, valued at $20 million . • When scarce FOREX is used on fuel imports, it cannot be spent on developing the economy at home. • The subsidy provided on kerosene has cost Nigeria many billions of dollars ($1 billion annually by 2015) over a decade. • Because it is subsidized, kerosene is always in short supply. It is diverted for adulteration in gasoline, to increase gasoline sales margins. This gives rise to a black market for kerosene, resulting in higher prices for consumers and a market without safety standards. Nigerians call it “killer kerosene” because of the many burns and deaths that are caused in the home.

15 100% of LPG Cylinders imported into Nigeria

“Safety is critical in cylinder manufacture and handling. These are products that, starting from the cylinders to valves, burners, clips, regulators and hoses, are critical in the chain. If any of these components is not properly processed, you will have a problem. Cracks on the pipes could mean leakages; if the regulator is not the right one, and it doesn’t regulate the gas, it will continue to flow and it could become a big problem,” - Director, Inspectorate and Compliance Directorate, SON, Engr. Bede Obayi * Leadership, Nigeria’s most influential newspaper article titled “SON confiscates N100m Worth of LPG cylinders” - Nov 28, 2016 The status of LPG in Nigeria

Overview

• One-hundred percent of LPG cylinders are imported. • LPG cylinders are considered high risk by the Standard Organization of Nigeria (SON). SON frequently confiscates container loads of substandard LPG cylinders coming in from unregulated producers. Importers falsify documents to bring in substandard products. • Despite being Africa’s top oil producer and largest holder of natural gas reserves on the continent, Nigeria imports over 60% of the LPG is consumes. (The Nigerian Association (NLPGA) accounts for <30% of supply and the state-owned refineries <10%.) • Nigeria may have imported as much as 300,000 tons of LPG in 2016—a large cost in FOREX. Yet this constitutes less than 10% of Nigeria’s cooking. • Barriers to increasing supply of locally produced LPG include shipping, landing, taxes and competition with U.S. product, which is seasonally cheaper.

17 The status of LPG in Nigeria (cont’d)…

Cost of Cooking

• The average price for refilling a 5 kg cylinder of LPG has increased by 5.48% per month to N2,708.38 in Feb. 2017, up from N2,567.56 in Jan. 2017, and up 45.59% from the same time last year. • The National Bureau of Statistics (NBS) lists the states with the highest average price for refilling a 5kg cylinder of cooking gas to include Edo, at N3,030; Abia, Akwa Ibom, Bayelsa, Cross River, Zamfara, Rivers and Kebbi at N3,000, and Delta at N2,984.62. • For a day’s worth of cooking, expressed in USD, these prices range from $0.85 to $0.96. This is coupled with the fact that the cost of acquiring an LPG stove, with cylinder, regulator and hose, when compared to stoves using other fuels, is significantly higher. • LPG is subject to the forces of commodity pricing. For example, the cost of LPG increases in the winter months because of increased demand in Europe and the U.S. Even Nigeria’s domestically supplied gas is tied to U.S. and global prices.

18 The alcohols:

Opportunity for a locally sourced solution

19 The simple (low carbon) alcohols, methanol and ethanol

The Solution

• Ethanol is usually made from sugars and starches, methanol from natural gas. Methanol can also be made from organic feedstocks, even municipal solid waste. • Methanol is the cheapest and most efficient way to turn natural gas into a liquid fuel. Now it can be done on a very small scale. • Methanol and ethanol mix as one fuel. Both burn very cleanly. • A stove has been developed for this fuel, the “CleanCook.” It stores its fuel safely in an adsorptive, spill-proof, non-pressurized fuel canister for secure handling and distribution. • By creating demand for ethanol and methanol fuels in Nigeria, Project Gaia hopes to encourage manufacture of methanol from flare gas, thereby contributing to flaredown.

20 The simple (low carbon) alcohols, methanol and ethanol

Sustainable pathways

Ethanol Methanol

21 Gas flaring an untapped opportunity

Opportunity for an abundant supply of liquid fuel • Nigeria has the 7th highest level of gas flaring worldwide, at 7.7 million m3/year. • Natural gas, which is the primary feedstock in most of the world’s methanol production, can be used to power methanol/ethanol cookstoves. Methanol burns very cleanly and is easily burned in a simple, properly designed cookstove. • The wet or saturated portion of the gas, sometimes as high as 15%, can be used to produce LPG. The dry portion—which is most of the gas—can be used to make methanol. This provides two clean fuel options—LPG and methanol. • Project Gaia together with Gas Technologies LLC, a Michigan limited liability company, and GasTechno Nigeria Limited, a start-up incorporated under the Federal Republic of Nigeria, have formed a strategic partnership to help fight gas flaring in Nigeria and to provide communities with good cookstoves and clean- burning fuel.

22 This gas could provide cooking fuel for tens of millions of households on a daily basis.

Source: Federal Ministry of Environment’s Gas Flare Tracker. See: http://gasflaretracker.ng/data.html 23 Commercializing and Globalizing the GasTechno® Mini-GTL® Flaring Solution “Methanol in a Box”

http://www.gastechno.com/ The single-step GasTechno® process has much lower CapEx and OpEx than traditional GTL

Traditional Multi-Step GTL Conversion Process

Diesel Methane Syngas Gasoline Natural Gas Ethane Liquid Products (CO +H ) Wax Preconditioning Propane etc. 2 etc.

GasTechno® Single-Step Conversion Process

NGLs Methane Syngas Methanol Natural Gas Ethane Liquid Products (CO +H ) Ethanol Preconditioning Propane etc. 2 Formalin

25 GasTechno® Process and Capabilities

Recycle gas FUEL GAS

Scrubber FLARE GAS

Hydrocarbon gas recycle

SCRUBBED CO2

OXYGEN Separator

Cooling Reactor METHANOL & OTHER LIQUID OXYGENATES Carbon Balance METHANOL & OTHER FLARE GAS SCRUBBED CO FUEL GAS LIQUID OXYGENATES 2 100% ≈ 5% ≈ 35% ≈ 60% 26 Energy Stripping Application

1000 Btu/scf 850-1000 Btu/scf

Pipeline gas Natural gas consumer: power plants, refineries, manufacturing, etc. 850-950 Btu/scf

GasTechno® liquid oxygenates

Applicable to nearly any large natural gas consumer. Because all product streams are utilized (GTL liquids sold at market value and tail gas sold on the same energy content), the overall efficiency of this type of application is extremely high.

27 GasTechno® Gas to Liquids Site - 2017

3rd Generation Commercial Mini-GTL plant started up Nov 2016 28 CAPEX - GasTechno® Cost Comparison Technology Competitiveness Study Comparing GasTechno to Known Commercial Alternatives Source: Nexant ChemSystems May 2006

Without Syngas

29 GasTechno® Mini-GTL Plant Scales & IRR Integrated Mini-GTL Plants using 1350 BTU flared gas feedstock

Raw flare gas Liquid products Pre-tax NPV Payback Period IRR (Mscfd) (bbl/d) (gal/d) (tpd) (MM USD) (years) 300 66.9 2,810 7.8 2.1 62% 1.6 750 197.1 8,276 23.0 11.1 170% 0.8 1,500* 426.2 17,900 49.8 29.1 152% 0.6 5,000 1527.5 64,157 178.5 125.7 282% 0.4 10,000 3055.1 128,313 357.0 259.4 328% 0.3

*Transition from delivered LOX to generated oxygen (from OPEX to CAPEX)

Assumptions: Pricing: Expected (Methanol = $1.03/gal, NGLs =$1.43/gal, EtOH = $1.67/gal, Formalin = $0.82/gal) Debt to equity ratio of 75:25 Feedstock purchased for $1.00/Mscf Interest rate of 8% Project lifespan of 15 years Discount rate of 10%

30 CleanCook stove and local manufacturing in Nigeria

The CleanCook Stove (cleancook.com)

• The “CleanCook” is a powerful, modern stove. It is manufactured in Durban, South Africa. It will be manufactured in Nigeria as soon as volumes warrant. • The stove is designed so it can be shipped in parts and assembled locally. • The company has produced an economical stove for low income consumers. http://cleancook.com/

31 Pilot study in Lagos Pilot study overview

• Project Gaia and Shell Nigerian Exploration and Production Company (SNEPCO) are conducting a 2- year pilot study to introduce the CleanCook stove into the Nigerian market and develop a secure fuel supply chain. Both Shell International and SNEPCO are assisting with project funding. • Project Gaia has enlisted two implementing partners to conduct the study—UNIKEM, a Nigerian ethanol production company, and Forte Oil, Nigeria’s leading fuels retailer. • UNIKEM has recently commissioned a 120,000 liter/day distillery in Kogi State, producing ethanol from cassava, but able to diversify to other feedstocks. • UNIKEM will manage procurement and supply of to the project. • Forte Oil will manage a fuel depot where methanol will be added to the ethanol and filled into the fuel canisters for distribution. Forte Oil will sell stoves and canisters in selected retail outlets in Lagos. • 2,500 CleanCook stoves will be distributed under the study, served by 15,000 canisters in rotation. • The study will build a robust, secure supply chain using a canister-based fuel distribution system. Once the supply chain has been proven, more methanol may be added to the fuel.

32 Pilot study supply chain The supply chain

UNIKEM Domestic Distillery

SNEPCO purchased stoves and canisters; funded PGI to import. UNIKEM

Forte Oil Terminal

UNIKEM & UNICANE Forte Oil Retail Forte Oil

Customer / Market 33 The supply chain model Building a safe, secure supply chain

• Project Gaia is pioneering a supply chain that uses an adsorptive, non-pressurized canister to be refilled safely at fuel depots by trained professionals and sealed for delivery. Thus, there will be no handling by the consumer of stove fuel. • The canister is placed by the consumer directly into the stove after the seal is removed. • Once in the canister, methanol fuel is safely stored and handled, posing no risk to the user. • The canister is robust and is designed to be refilled thousands of times. • The supply chain is being built with an 80/20 ethanol-methanol mix. Once the supply chain is proven, the amount of methanol in the fuel will be increased.

34 Supply chain reference materials A Hazards Mitigation Study was performed in 2011, sponsored by Shell International and workshopped by Project Gaia, Shell Health, DNV and the Methanol Institute. It focused on the potential risks and the opportunities for safety and efficiency in the supply chain. This study is available at www.projectgaia.com.

35 Stoves and fuel canisters arriving from the port to our partner UNIKEM in Lagos.

36 UNIKEM is selling ethanol fuel to the pilot study. Methanol (imported) is being purchased in the domestic market. Initial fuel blend will be 80/20 ethanol to methanol until the supply chain is built. 37 With the 2,500 stoves, 15,000 canisters were imported to equip the fuel supply chain. Fuel is distributed in professionally filled and sealed canisters. 38 Canister Lids – remove lid and place in stove

Implementing partner Forte Oil (Nigeria’s #1 fuel retailer) will sell the stoves and the sealed fuel canisters in their outlets, first in Lagos and then around the country. 39 Thank you! To learn more, please visit www.projectgaia.com

(And if you like what we are doing, please ask how you can help!)

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