Carbon Credit Watch

MOZAMBIQUE: Biofuel companies line up for land and carbon credits

Probe International
March 6, 2009

Despite shrinking demand for biofuels globally, the government of Mozambique may soon grant millions of hectares of land to biofuel developers chasing UN-brokered carbon credits. The government recently awarded 30 000 hectares of land to one such British biofuel developer, Bioenergy Africa, which is hoping to win carbon credits for producing ethanol from sugar cane.

Mozambique:  Country to Make Use of Carbon Credits

Maputo — The Mozambican government is planning to make use of carbon credits granted under the Clean Development Mechanism, established under the Kyoto Protocol, since the country has vast potential to produce clean energy.

The Protocol sets quotas for the maximum amount of carbon dioxide and other greenhouse gas emissions permitted for each country. Countries then set quotas for businesses. Each operator has an allowance of credits, where each unit gives the owner the right to emit one tonne of carbon dioxide. Operators that do not use their quotas can sell their unused allowances as carbon credits, while businesses likely to exceed their quotas can buy those credits.

Energy Minister Salvador Namburete told reporters on Thursday that only one Mozambican institution has gained access to those credits. The cement company ‘Cimentos de Mocambique’ has managed to replace the use of coal by natural gas, which reduced the company’s carbon emissions.

“We are not yet benefiting from Carbon Credits, at least in the area of energy. ‘Cimentos de Mocambique’ is the only Mozambican company that has managed to enter the Clean Development Mechanism and is to receive some credits. I do not know about the amounts involved, but the company will receive some money”, he said.

He explained that it is not easy to register Mozambican projects for clean energy, let alone in the Clean Development Mechanism so as to benefit from Carbon Credits.

It is in the interest of Mozambique to register its bio-fuel projects, which are still at an early stage of development, and hydroelectric projects such as the M’panda Nkuwa, to be built on the Zambezi.

Namburete said that, to benefit from these credits, the country has been working with experts from the World Bank and the Nordic countries. “The technical process for registration is very complicated”‘, said Namburete.

Namburete admitted that the government does not yet know how much land will be needed for biofuel projects. “It all depends on the needs presented by the investors, because biofuels are to be produced by the private sector. But it is important to note that there must be cohabitation between the production of bio-fuels and of food’, he said.

So far, the Mozambican government has received requests for about seven million hectares of land for the production of raw materials for bio-fuels. Most of these projects are on hold, because the government has decided to make a careful study of each project.

“We said no, and decided to stop and assess the situation and see how to grant the land’, Namburete said. “In some cases we reached the conclusion that the applications were just for the investors to grab the land, not for production. We are currently reviewing the applications, and analysing each project”.

He added that this is also a precaution to prevent future land disputes. “In Mozambique we have developed a programme to produce and use bio-fuels fully aware of the challenges of this industry concerning correct use of land, with no conflicts with the local communities’, he said.

The Minister stressed “we are aware of the challenges concerning the need to ensure a balance between the production of bio-fuels and of food, preventing a systematic shortage of food and guaranteeing food security’.

So far, the government has allocated 30,000 hectares to the Procana project, owned by the London-based company Bioenergy Africa, in the district of Massingir, in the southern province of Gaza, and another 18,000 hectares to the Mozambique Principle Energy project in Sussundenga district, in the central province of Manica.

The Massingir project is to invest 510 million US dollars to produce ethanol. Bioenergy Africa has promised to build a factory with the capacity to produce 120 million litres of ethanol a year. This undertaking will create about 7,000 jobs and generate annual revenue in excess of 40 million US dollars, starting in 2010.

As for the Sussundenga project, the investment is 250 million US dollars, also to produce ethanol. It plans an annual harvest of about 2.5 million tonnes of sugar cane a year from which it will produce about 213 million litres of ethanol by 2013.

The project is also planning to build a power station to generate 82.2 megawatts of electricity as from 2012, 20 per cent of which is to be used by the factory while the remainder will be sold to the national grid.

Originally published March 6, 2009.

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