Friday, October 31, 2008


Which of these technologies do you particularly like?

I live in an ever-sunny place now that has limited electricity supply. Most people hand pump their own water or buy from "mairuwa." Really fast internet is really rare here. Granted, all this lives alongside nature and beauty.

The best things in life are free

Tuesday, October 21, 2008

Future of Biofuels in Africa...

Local renewable fuel production is reducing poverty and strengthening markets across the continent. An emerging international market in biofuels— fuel typically derived from plant biomass— presents a unique opportunity for African growth and development. While bio-fuel production can have serious implications for food security and the sustainable management of land resources, with smart policies and actions these obstacles can be overcome to ensure long-term socio-economic and environmental benefits.

For Africa, bio-fuels can be a tool for development that can help create domestic energy supplies, improve rural livelihoods, and put Africa in line to become a global player in the emerging renewable fuel markets.Members of the European Union agreed earlier this year to a goal of using bio-fuels to meet 5.75 percent of their transportation fuel needs by 2010. China is requiring a 10% ethanol blend in 5 provinces of the country by 2010 and the Energy Bill that just passed the Senate floor, likewise, includes a bio-fuels target for the United States of up to 7.5 billion gallons blend by 2012, and Canada with a 3.5% bio-fuels target blend by 2010. It is policies like these, driven by concerns about energy security and climate change in industrialized countries that are propelling the bio-fuels industry to record levels of growth.The ethanol industry has seen production worldwide double since 2001; bio-diesel has similarly expanded dramatically, more than tripling production since 2005.

Brazil, for one, has dominated the spotlight because of its impressive 30-year transition since the mid-1970s from foreign imported fossil fuels to domestically processed bio-based fuels made from sugar cane.Now a question that many people are asking is if Brazil’s story can set an example for other countries in the developing world. Does Africa stand to take advantage of this emerging market? Or will it be left on the sidelines of yet another global industry in the modern era? Bio-fuel production, unlike manufacturing and high-tech industries, is rooted in agriculture development, where the required resources and capability strength is abundant in Africa. With a greater land mass than the United States, Brazil and India put together, tropical climatic zones that have year-round growing seasons, and a large labor force—more than half of the population lives off farming—the continent has many of the right ingredients to become a global supplier of bio-fuels.With oil prices showing no sign of abating, ethanol and bio-diesel are increasingly cost competitive.

For Africa in particular the introduction of a bio-fuel industry could have a broad range of positive economic impacts. The opportunities are endless: creating secondary or supplemental income for farmers, improving rural communities, building domestic foreign refinery capacity, creating jobs, offering diversifying agricultural food production, helping meet domestic fuel demand, and the possibility of energy export, among others. High energy crops like sugarcane, corn, and cassava, produced in excess and known for their high starch content, a key requirement for ethanol production, have been found suitable for production in Africa. Also, peanuts, jatropha, and palm oil, crops that could produce diesel from their oil using a low-cost technology mechanism, grown under Africa’s favorable climatic condition could add to the opportunity for development.

Some African countries have already begun to respond to this opportunity. Senegal, an oil-importing country in West Africa, is at the forefront of these efforts. Led by President Abdoulaye Wade, Senegal has joined forces to form a ‘Green OPEC’ alliance with 14 other non-oil producing countries in Africa under the title of Pan-African Non-Petroleum Producers Association (PANPP). In partnership with Brazil and India, their goal is to exchange knowledge and technologies for the development of a bio-fuel industry. The collaboration has resulted in several investments on projects in Africa, including one with excess of $1 billion over the next six years to construct eight new ethanol plants by Ethanol Africa, a South African company with established knowledge and experience in bio-fuels.

South Africa has taken important steps to implement a policy-wide initiative promoting bio-fuel production in Africa. It recently introduced a 6-billion-rand (US$828-million) plan seeking to use bio-fuels to meet up to 75 percent of its energy needs by 2013. The program will establish an E8 & B2 bio-fuel industry using mostly soybeans for diesel, and maize and sugarcane for ethanol, (crops already produced in excess), with a proposed blending of up to 5% bio-diesel and 10% bio-ethanol.

New policies also propose achieving a liquid bio-fuel average market penetration of 3.4% by 2013 without utilizing surplus agricultural capacity. The program expects to create up to 55, 000 new jobs, contribute up to 11% towards GDP, and add about R1 700 million annually in national domestic product. With limited subsidizing of energy crops for bio-fuel production, proper price regulation standards, government support for domestic production, removal of import tariffs, involvement of government agencies to coordinate and enhance productivity, and promotion of international collaboration, South Africa hopes to become a major player in the bio-fuel market.Namibia, a country in East Africa, has attempted to develop bio-fuels through planting and harvesting jatropha, but the institutional and economic risks involved have hampered further development.

Namibia has also made other attempts at renewable energy production using bio-fuels: a planned project seeks to utilize 6% of its mostly degraded land to grow woody shrubs for production to meet domestic energy needs, reduce poverty, and cut down on environmental degradation. The derivative from the production process could be used for animal feed, as charcoal products, chipboards, and as bush blocks.Similarly, in Mozambique, a two-year program, sponsored by the Global Environment Facility-Small Grant Program and the GAIA Movement with co-financing by Ajuda de Desenvolvimento de Povo para Povo, plants Jatropha around degraded land in rural areas to address deforestation, enhance economic living standards of rural dwellers, and provide domestic fuel capacity for rural communities in what has been termed “fuel fences.” It has been found that the crop simultaneously guards against erosion and encroaching deserts, as well as produces a fruit that can be converted in bio-diesel with simple systems costing less than USD 2,000. The project recruits and trains select groups of farmers to develop and sustain a viable jatropha market in Mozambique. These projects are seen as opportunities for Africa to become major players in the bio-fuel market.Even oil exporting countries have embarked on the trail in making investments for bio-fuel production; Nigeria in partnership with Brazil expects revenues of about $150 million from investments in the production of ethanol from cassava and sugarcane. Nigeria currently produces about 30 million tons of cassava a year with expected production of about 50 million liters of ethanol a year.

Despite these early advances, however, there are concerns and obstacles to widespread production of bio-fuels. These concerns relate to food security, building technical capacity, climate change and environmental impacts, and economic implications.

Food Security
The debate over the impact of bio-fuels production on food security raises the concern that bio-fuel production will affect food production by creating food scarcity, encourage high food prices, and compete for use of the soil’s natural resources. Concerns that from FAO data for 2001-2003, of the 853 million malnourished people in the world, 206 million are in sub-Saharan African countries imply that competition of food production with bio-fuel production will further exacerbate the access and availability of food. Bio-fuel advocates argue, though, that these problems can be mitigated through smart and effective policies that provide fair and equitable access to food, ensure availability, maintain stability in prices etc, and utilize the natural resources available and required for food production. A system that make use of land that is unused or unproductive, rotational crop production techniques, and improved agricultural processes for higher crop yields could also address these problems and challenges to food security.

Building technical capacity
As Africa is dominated by small subsistence farmers in rural areas, trained and knowledgeable farmers who utilize modern technology for agriculture production is deficient. Policies and actions that build on subsistence farmer collaborations, government agencies’ involvement, and infrastructure that supports small to large scale production of bio-fuels could be enacted. Also, increasing government funding for research and development, instituting a program body to coordinate, oversee, and regulate bio-fuel production, and promoting international collaboration to further enhance growth in this field is encouraged.

Climate Change and Environmental Impact:
The threat and danger of rapid deforestation to enhance bio-fuel production is an environmental concern. A case in Uganda reported in the dailies, detail how the government made a decision to lease land to developers to harvest sugar for bio-fuel purposes at the risk of destroying wildlife without regard of the effects on the indigenous communities. Local protests and public outcry did little to curtail these activities. But, with proper management and planning, under the certain policies certain crops can be grown and certain land used for bio-fuel production that will not result in huge deforestation, while also promoting healthy GHG emission levels and economic benefit.Economic

Underinvestment or overinvestment in bio-fuel production could be a problem for developing nation economies in Africa as it might significantly drain their budgets without returning benefits from investment. Studies show that in most oil-importing countries in Africa, like Guinea, the government spends up to 8% of GDP on oil subsidies due to the high oil prices, channeling these investments to bio-fuel production can bring economic benefits for rural development. Also, the challenge of unstable governments in developing countries further exacerbates insecure investment infrastructures and capital investment development. Policies and actions that encourage FDI with incentives, opening of the markets for competition, and guaranteeing secure investments could create new jobs, encourage investment, boost national revenues, and empower rural communities.

The problems and challenges that face bio-fuel development in Africa can be resolved or mitigated through proper management and strong policies. Africa stands at the threshold of success in this field as it is endowed with a wealth of natural resources, knowledge and technology ability, investment capability, and development opportunity to become a major player in the bio-fuel market. The further development of bio-fuels in Africa lies on the responsible and motivated leadership of African governments.

Saturday, October 11, 2008

Derivatives, and Math

The New York Times reports that
George Soros, the prominent financier, avoids using the financial contracts known as derivatives “because we don’t really understand how they work.”
(Read More...)

Nor do I.

The world may be more curious in future to learn the true properties of derivatives, so that the knowledge can be applied to:
1. how they should be valued
2. what they evolve into over time, system wide
For a starter (non-mathematical), I liked Financial Derivatives and the Globalization of Risk (2004, by Edward LiPuma). The basic ideas were that world markets are more linked now, since derivatives got popular, and that we don't understand well how or how much.

Basically, Wall Street needs more mathematics.

The most important article I've read in ages is on the International Mathematics Olympiad. (Read the article.) The author decries that Math has is not embraced more by Americans.

Nigeria finally started running National Olympiads. The level of mathematics required to pass this exam is NOT AT ALL COMPARABLE to that required to tackle the International Competitions. Still, getting the channels/infrastructure for math competition in the country is a start.

It is very important for us to develop *excellent* engineers, technicians, and scientists. This, along with: 1. Power Supply and 2. Ensuring Wealth from Agriculture would be my priorities if I ran this part of the world ;)

Previously on UpNaira