Ethiopia Ethanol Stoves

Background and Context

Ethiopia has a total of 1.14 million square kilometres and a population of 71.1 million in 2004. It is the ninth largest African country in size and the second most populous. The overall population density is 62 persons per square kilometre. Approximately 16 percent of the country’s population resides in urban areas. Ethiopia is one of the poorest countries in the world. This is reflected in low per capita income (US$ 97 in 2003), very poor social indictors, poor output from the productive sectors, poorly developed infrastructure and a degraded environment.

The country’s economy is based predominantly on rainfed subsistence agriculture. Gross Domestic Product (GDP) at market prices in 2003 was US$6.7 billion. The agricultural sector contributed 43%, with the manufacturing industry, including small-scale and handicrafts, providing 12 percent and the service sector about 45 percent.

The most widely used fuel for cooking in Addis Ababa is kerosene (42.2%) followed by fuelwood (29.4%). Charcoal, LPG, electricity and residues are used by a much smaller section of city households. The primary cooking stove used in Addis Ababa is the single burner kerosene wick stove. This stove is imported from the Far-East and sells for about $5.00. The second most important fuel in the city, fuelwood, is used when cooking over an open fire.

As one moves from Addis Ababa to other urban centres, access to modern fuels declines and use of traditional fuels increases, so fewer households use modern energy in the other urban centres. At national level, kerosene is used as the primary cooking fuel by only 14% of urban households compared with 42% in Addis Ababa. Similarly, only 2-3% of households reported using LPG and electricity as their primary cooking fuel at the national urban level compared to 6- 7% for Addis Ababa.

In the case of kerosene, the number of users has dropped substantially in both Addis Ababa and other towns between 2000 and 2004. The share of kerosene has declined from 66% to 42% for Addis Ababa and from 22% to 14% at the national urban level. As in Addis Ababa, the reduction of kerosene use is accompanied by an increase of fuelwood use. The recent government policy to remove the kerosene subsidy has aggravated the trend, and the kerosene price rose from $0.57 to $0.86 per litre.

The indoor air pollution (IAP) monitoring carried out by Gaia Association in the homes of Addis Ababa residents that use primarily kerosene, fuelwood and charcoal showed high concentrations of carbon monoxide (CO) and particulate matter (PM) which have been shown to be harmful to health. Household energy scarcity and indoor air pollution are widespread problems in Ethiopia.

In addition to urban homes, Gaia Association has completed cooking energy and indoor air pollution studies in homes in refugee camps in the north (Tigray), west (Gambela) and east (Jijiga) regions. These homes rely entirely on solid biomass fuels. The project has found extremely high levels of pollution in these homes.

Ethiopia established an ethanol manufacturing plant called the Finchaa sugar factory in 1999. Seeking potential markets for the ethanol, Project Gaia was invited to do pilot studies in Addis Ababa households in 2004. Since then, Gaia has been working to promote ethanol as a household energy fuel. In recent years the government of Ethiopia has planned and started to use ethanol for automotive fuel (gasoline) blending. Ethanol distilleries being built by the government have a promising potential to cover ethanol demand from both the household and transport sector. The government placed its plan for ethanol in the Ministry of Mines and Energy’s Biofuel Development and Consumption Strategy. According to the plan, the household market will get an adequate share of the ethanol produced.

Results of a pilot study have showed that the project households readily accept the new cooking technology (called the ‘CleanCook’ stove), and ethanol fuel, and that ethanol could effectively substitute for kerosene, for charcoal and for fuel wood use, where the cooking task could be completed with the ethanol stove. Thus, ethanol could provide a new fuel to households, with the potential to mitigate household energy scarcity while increasing stove safety and reducing indoor air pollution.

In 2007, the Gaia Association was formed as an autonomous Ethiopian registered NGO. It began working with a private sector partner to facilitate local manufacture of CleanCook stoves, to reduce the cost of the stove to Ethiopian consumers. Work with the private sector partner is financed by the partner, Makobu Enterprises PLC, and by a ‘commercialisation grant’ from the United States Environmental Protection Agency (USEPA) under its Partners for Clean Indoor Air (PCIA) programme. This effort is also being assisted by Project Gaia, Inc., a U.S. donor-supported non-profit agency.

With respect to the enabling environment, the Ethiopian government has determined that locally manufactured ethanol will be used solely within Ethiopia, thus assuring domestic supply. Gaia Association has worked closely with the government and the sugar agency to ensure a reliable supply chain for the fuel.

Ethanol supply at a reasonable price, and realistic taxes on raw materials and goods are an essential part of the enabling environment for the ethanol stove market in Ethiopia. The current 8 million litres ethanol production in the country is not yet enough to cover the large household market, but the country has a promising ethanol production plan for the coming years through expansion and the construction of new distilleries. According to the Ethiopian Sugar Agency projected annual ethanol production will reach 128,849,000 litres in the next four years from the current 8 million litres. This annual production of ethanol will serve both the households and the transport sectors.

In terms of supporting services, Makobu stove production is supported technically by the original stove manufacturer Dometic AB, a longstanding Swedish company, for consistent product quality. The patent of the stove will be protected so that investments made in stove design and the manufacturing plant will not be jeopardised.

Makobu enterprises has imported and sold stoves for the last five years, and is now starting to produce stoves locally in a custom-built new factory 80Km from Addis Ababa, supported by Dometic. A wholesale outlet in Addis Ababa enables different institutions and retailers to purchase stoves from Makobu wholesale. These include the UNHCR for its refugee camps, and distributors within Ethiopia and in neighbouring countries. Gaia Association purchases stoves from the wholesale market, whilst households in Addis Ababa, and other cities within the country, purchase stoves from retailers and the retailers from the local distributors.

Stoves purchased by Gaia Association will be used for subsidised sales. As ethanol burns very cleanly, Gaia is currently in discussion with carbon financiers about finance to allow the stove to be subsidised for those living in poverty. Low-income households in Ethiopia will get stoves at a subsidised price from Gaia. Gaia subsidy will be covered by carbon finance and donations.

Gaia Association has been working with Makobu Enterprises PLC to produce CleanCook stoves in Ethiopia for around five years. The two partners have a bilateral agreement that has helped them to work on establishing a local stove manufacturing plant.

The partners have have a mutual fund from USEPA (United States Environmental Protection Agency) to further the stove production and commercialisation of the stove. Gaia and Makobu are working closely in advocating ethanol for household energy.

Dometic AB is working with both Gaia and Makobu on patent rights, stove redesign for adaptation, and local manufacturing. Gaia has had an excellent relationship with the Ethiopian sugar agency (responsible for production and distribution of ethanol) for the past four years.

Gaia has been contracting ethanol from the sugar agency for pilot studies and projects in the refugee camps. Now Gaia is working to sustain and strengthen this relationship and also to strengthen Makobu’s relationship with the agency. Makobu’s strong relationship with the agency is necessary to enable Makobu to be a future wholesale ethanol buyer.

Gaia has a formal Implementing Partner relationship with the UNHCR liaison office in Ethiopia to supply CleanCook stoves and ethanol in the refugee camps. UNHCR will continue to buy stoves produced locally, and this will initiate a relationship with Makobu. UNHCR has a very good relationship with the sugar agency, and has greatly assisted Gaia’s advocacy of ethanol for household sector.

Gaia Association has the responsibility to work towards promoting and allocating ethanol and the ethanol fuelled CleanCook stove for household energy. The Association has promoted its pilot study results in Addis Ababa and the success of the project in refugee camps over the past two years. Makobu Enterprises produces CleanCook stoves and distributes ethanol allocated for household energy, penetrating the market through Gaia Association’s promotional work. Gaia Association and Makobu Enterprises have signed an agreement detailing the responsibilities of each entity in achieving their shared goals. Dometic AB will provide technical know-how needed by Makobu to produce CleanCook stoves.

The Ethiopian sugar agency ensures a sufficient amount of ethanol is allocated for the household sector through contracts with Gaia and Makobu. UNHCR is responsible for buying stoves from Makobu Enterprises through Gaia Association for its Clean and Safe Energy programme in the refugee camps. UNHCR and Gaia Association signed an agreement that has been renewed every year in January starting from 2006 to implement the program in the refugee camps.

Gaia Association has the right to use allocated ethanol for its promotional projects in Addis Ababa and refugee camps so that ethanol and the CleanCook stove is promoted widely. Makobu Enterprises will have the opportunity to produce CleanCook stoves exclusively in Ethiopia and to distribute ethanol allocated to the household sector. Dometic AB will have its patent right for the CleanCook stove protected, while Makobu produce the stove locally. The sugar agency has the right to sell ethanol at a price it determines will enable Ethiopian households to use ethanol for cooking. UNHCR will have the right to get CleanCook stoves and ethanol from the local market for the refugee camps.

Gaia takes the risk in promoting ethanol for household energy and convincing the sugar agency in securing ethanol for household sector. Makobu takes the risk of erecting the plant for the stove manufacturing in a monopoly ethanol market.

Gaia Association and UNHCR are organisations which are not looking for profit; with incomes derived from donations, and carbon financing goes back to project sustainability either in the refugee camps or Addis Ababa. Makobu Enterprises produces stoves and facilitates ethanol distribution; the profit made keeps it in business for sustainable stove production, employment, and ethanol distribution. The Ethiopian sugar agency produces and sells ethanol; the profit made keeps it in business also. Dometic AB gets income from stoves sold by Makobu for a pre-agreed period of time.

As Makobu, Dometic AB and the sugar agency are profit-making companies, they make investments taking the risk of market competitiveness in the existing fuel market of Ethiopia. Gaia also makes investments in stove production, taking the risk of ethanol supply and market competitiveness to realize clean and safe household energy in Ethiopia. UNHCR takes the least risk, but requires a sustainable reasonable price of ethanol as its only investment is in purchase of ethanol stoves.

Further Reading

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June 2009