Are Biofuels Economically Competitive with Their Petroleum Counterparts?Production Cost Analysis for Zambia

28 Pages Posted: 20 Apr 2016

See all articles by Thomson Sinkala

Thomson Sinkala

University of Zambia (UNZA)

Govinda R. Timilsina

World Bank - Development Research Group (DECRG)

Indira Ekanayake

World Bank

Date Written: June 1, 2013

Abstract

With increased global interest in biofuels, Zambia, a Sub-Saharan African country that entirely depends on imports for its petroleum supply, is planning to implement blending mandates for biofuels. But, a large number of issues -- including production costs of biofuels, land requirements to meet the mandates, and environmental benefits -- have not yet been explored. This study aims to contribute in filling this gap. It finds that depending on feedstock type, costs of ethanol production range from US$0.360 a liter to US$0.680 a liter while the costs for biodiesel production range from US$0.612 a liter to US$0.952 a liter. Even if lower energy contents of biofuels are taken into account, the analysis shows that biofuels are cheaper than their petroleum counterparts. Considering the cost advantage of these biofuels over petroleum products and the availability of surplus agricultural land, Zambia is likely to benefit from the development of a biofuel industry. Biofuels is expected to reduce Zambia's petroleum import bill, which currently stands at more than US$700 million, enhance food security by providing incentives to increase yields, and increase affordability and accessibility to modern energy in the country where 77 percent of the population still lacks access to modern energy. It could also stimulate rural employment and development.

Keywords: Energy Production and Transportation, Renewable Energy, Economic Theory & Research, Climate Change Mitigation and Green House Gases, Food & Beverage Industry

Suggested Citation

Sinkala, Thomson and Timilsina, Govinda R. and Ekanayake, Indira, Are Biofuels Economically Competitive with Their Petroleum Counterparts?Production Cost Analysis for Zambia (June 1, 2013). World Bank Policy Research Working Paper No. 6499. Available at SSRN: https://ssrn.com/abstract=2284669

Thomson Sinkala (Contact Author)

University of Zambia (UNZA) ( email )

Zambia

Govinda R. Timilsina

World Bank - Development Research Group (DECRG) ( email )

1818 H Street NW
MSN3-311
Washington, DC 20433
United States

Indira Ekanayake

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

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