Kenya: Biofuels Boom and Bust

The Kenyan government has hailed bio-diesel as an innovation that combines green politics with poverty reduction. But recent drops in biofuel prices have caused concern about the sustainability of alternative fuel production.

Rural farmers who have invested all their savings into growing oil seeds now fear they have opted for the wrong venture.
Over the last few years, the Kenyan government, NGOs and industry have pushed the production of bio-diesel — which is environmentally sustainable because it emits fewer toxic air pollutants and greenhouse gasses than petroleum-based fuels — and many small-scale farmers have placed their hopes into oil seeds as a new avenue to earn money. Initially, biofuel projects seemed to be a success, with farmers more than doubling their usual income.

However, the farmers’ luck ran out in April when biofuel prices suddenly plummeted from an average of $10 per kilo to less than $0.5 per kilo. Biofuel research companies, producers and NGOs supporting the production of environmentally friendly diesel had created an artificially high demand for the seeds, which resulted a high pricing structure that could not be maintained in an open market in the long-term.

In addition, the development of regulatory policy frameworks and local infrastructure needed to manufacture bio-diesel took longer than expected. As a result, Kenya has only few biofuel processing plants that struggle to keep up production with seed supply, and many rural farmers cannot afford the costs of transporting their seeds to the nearest factory.

Although the production of biofuels creates environmental sustainability, farmers will not be able to continue investing in them if they don’t have a market to sell their produce. Numerous Kenyan farmers who have put their little savings into the planting of oil seed producing trees have now lost their initial investments.

Yet, energy experts remain optimistic, predicting the demand for biofuels to increase in the near future.

IPS