Feasibility Assessment of Converting Sugar Mills to Bioenergy Production in Africa
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agriculture Article Feasibility Assessment of Converting Sugar Mills to Bioenergy Production in Africa Manoel Regis Lima Verde Leal 1, João Guilherme Dal Belo Leite 2,3,*, Mateus Ferreira Chagas 1, Rui da Maia 4 and Luís Augusto Barbosa Cortez 5 1 Brazilian Bioethanol Science and Technology Laboratory (CTBE), Brazilian Center for Research in Energy and Materials (CNPEM), P.O. Box 6192, Campinas 13083-970, Brazil; [email protected] (M.R.L.V.L.); [email protected] (M.F.C.) 2 Interdisciplinary Center for Energy Planning (Nipe/Unicamp), Rua Cora Coralina 330, Campinas 13083-896, Brazil; [email protected] 3 Federal University of the Southern Frontier (UFFS), Av. Fernando Machado 108E, P.O. Box 181, Chapecó 89802-112, Brazil 4 Technical University of Mozambique (UDM), Av. Albert Lithuli 418/38, Maputo, Mozambique; [email protected] 5 School of Agriculture Engineering (Feagri/Unicamp), Av. Cândido Rondon 501, Campinas 13083-875, Brazil; [email protected] * Correspondence: [email protected]; Tel.: +55-49-2049-6514 Academic Editor: Gbadebo Oladosu Received: 30 June 2016; Accepted: 2 September 2016; Published: 8 September 2016 Abstract: World sugar production has consistently overrun demand in the past five years. Moreover, in 2017 the European Sugar Regime will expire, ending the quota system and preferential sugar prices, largely affecting small producers, particularly in Africa. Diversification emerges as an option for sugar-oriented mills. Two evident alternatives are ethanol and electricity production that allow better use of molasses and cane fibers, respectively. Molasses is the cheapest feedstock for ethanol production, while the cane fibers—in the form of bagasse—are readily available at the mill. The transition from sugar to sugar, ethanol and electricity may require substantial investment capital, yet our results show that significant progress can start at relatively small cost. In this work, we use simulations to explore the impact of ethanol and electricity production in an existing sugar mill in Mozambique. In spite of the large amounts of energy obtained from ambitious scenarios, such as Ethanol-2 and Ethanol/EE, molasses-based ethanol (Ethanol-1 scenario) seems more attractive in economical and infrastructural terms. High opportunity costs for molasses, low oil prices and enabling institutional conditions, such as mandatory blending mandates, to promote bioenergy remain a challenge. Keywords: sugarcane ethanol; biomass electricity; simulation; Mozambique 1. Introduction Sugarcane is produced in more than 100 countries [1] and, in some of them, it has been produced for centuries. In many of these countries, it has fostered agroindustrial development, through the production of sugar for domestic and international markets. In some developing regions, sugarcane became an important source of income, foreign exchange savings, and a propeller to rural development and food sovereignty [2]. The expansion of the sugar industry, however, particularly over the 20th century, occurred under uneven conditions, especially as to the adoption of technology on both agricultural and industrial stages. Such inequalities favored production instability and erratic international prices, which are Agriculture 2016, 6, 45; doi:10.3390/agriculture6030045 www.mdpi.com/journal/agriculture Agriculture 2016, 6, 45 2 of 10 exacerbatedAgriculture by 2016 climate, 6, 45 conditions (disturbing yield levels) and the institutional environment2 of 10 that affects policieswhich are at differentexacerbated scales, by climate from regionalconditions to global(disturbing [3]. yield levels) and the institutional Theenvironment instability that of theaffects sugar policies market at differen peakedt scales, from from 1950s regional to 1970s, to global when [3]. it was not rare to observe prices tripleThe and instability then reach of the historic sugar market low levels peaked within from the1950s same to 1970s, decade when (Figure it was 1not). Sincerare to then, observe the sugar marketprices has been triple relatively and then stable,reach historic mainly low due levels to thewithin consolidation the same decade of near (Figure future 1). Since supply then, and the demand assessments,sugar market which has allowed been relatively producers stable, to mainly take actiondue to the in theconsolidation case of expected of near future surpluses supply and or deficits. demand assessments, which allowed producers to take action in the case of expected surpluses or Moreover,deficits. the numberMoreover, of the sugar number producing of sugar producing countries countries has increased, has increased, thus expanding thus expanding the worldthe world capability (flexibility)capability to respond (flexibility) swiftly to respond to market swiftly demands to market demands [2] and reduced[2] and reduced the impacts the impacts of regionalof regional adverse weatheradverse conditions. weather conditions. Figure 1. World centrifugal sugar ending stocks and sugar prices from 1960 to 2015. Source: [4,5]. Figure 1. World centrifugal sugar ending stocks and sugar prices from 1960 to 2015. Source: [4,5]. In spite of relative stability, sugar prices reached record low levels from 2011 to 2015, coupled In spitewith record of relative high stability,sugar stocks sugar (Figure prices 1). reached Small sugar record producers, low levels limited from in 2011 scale to and 2015, product coupled with record highalternatives, sugar stocksare particularly (Figure 1sensitive). Small and sugar less producers,resilient to market limited price in scalevolatility. and Moreover, product alternatives,these countries are increasingly constrained by the high competition from large foreign exporters, such as are particularlyBrazil and sensitiveThailand that and together less resilient account for to market60% of the price international volatility. sugar Moreover, market [4]. these countries are increasinglyThe constrained ACP (Africa, by Caribbean the high and competition Pacific group fromof States) large countries foreign account exporters, for a large such number as Brazil of and Thailandsmall that sugar together producers account (e.g., for 60%Mozambique). of the international For these sugarcountries, market sugar [4 ].exports depend on Theinternational ACP (Africa, accords Caribbean to shield producers and Pacific from group the open of States) sugar market countries through account a combination for a large of quota number of small sugarsystem, producers reference (e.g.,and minimum Mozambique). prices. The For EU, these one countries,of the world’s sugar largest exports importers depend of sugar on internationaland a key partner for ACP members, has been actively reforming its sugar import/export policy, with the accords to shield producers from the open sugar market through a combination of quota system, end of the quota and minimum price agreements programed to September 2017. The fall of the referenceEuropean and minimum sugar regime prices. is likely The EU,to exert one a of downwa the world’srd pressure largest on importers international of sugarsugar prices, and a keythus partner for ACPsqueezing members, margins has beenand pushing actively out reforming less competitive its sugar producers import/export [6–8]. policy, with the end of the quota and minimumAfrican countries price agreementsin particular are programed very dependent to September on the European 2017. The sugar fall regime of the [7]. European Despite sugar regime isbeing likely a net to importer exert a of downward sugar, in the pressure 2014/2015 onseason international the continent sugar exported prices, 2.4 Mt thus of sugar, squeezing most of margins and pushingall directed out lessto the competitive EU. This is a producersrelatively small [6– 8amount]. compared to the globally traded sugar in the same period (i.e., 64 Mt) [9]. Yet for countries such as Mozambique, Zambia, Sudan, Malawi and African countries in particular are very dependent on the European sugar regime [7]. Despite Madagascar, the international sugar market represent an important source of foreign exchange being asavings, net importer employment of sugar, and rural in the infrastructural 2014/2015 development season the continent[6,9,10]. exported 2.4 Mt of sugar, most of all directedThe to looming the EU. reforms This isin athe relatively EU sugar smallregime amounthave a special compared impact toin Mozambique, the globally where traded the sugar in the samesugar period industry (i.e., is 64 a leading Mt) [9 ].sector Yet in for the countries generation such of jobs as and Mozambique, engagement of Zambia, smallholder Sudan, farmers Malawi in and Madagascar,outgrower the internationalschemes [11,12]. sugar Although market previous represent assessments an important have indicated source a of way foreign forward exchange to sugar savings, mills and policies in Mozambique [12], there is a general absence of more quantitative studies that employment and rural infrastructural development [6,9,10]. combine sugar and bioenergy production. The looming reforms in the EU sugar regime have a special impact in Mozambique, where the sugar industry is a leading sector in the generation of jobs and engagement of smallholder farmers in outgrower schemes [11,12]. Although previous assessments have indicated a way forward to sugar mills and policies in Mozambique [12], there is a general absence of more quantitative studies that combine sugar and bioenergy production. Agriculture 2016, 6, 45 3 of 10 In this paper, our aim