School of Public Policies and Management
Masters in International Development
Integrated Approaches to Sustainable Development Practices
Felipe Castro Borges dos Santos
Building development based on energy
Sustainable development practices
Beijing, January 20th of 2010.
Introduction
In a large continent such as Africa, the sub-Sahara region has plenty of problems which are lead by many causes. Civil war, water shortage, political instability, lack of infra-structure and coordination of the society, which today are the cause for such poverty, epidemiology, low level of education, and so on.
The Millennium Development goals has being trying to improve the life quality of those who are victims of this situation, unfortunately its measures in the majority of the goals haven't achieve acceptable standards and in some of the region the hunger has worst because of the latest economic crisis.
Government of these countries has a common sense about the problem, its lack of energy and infra-structure, the main idea of this article goes in this sense, turn energy policy as a main strategy to achieve development.
Why energy? Energy in any sense can bring solution for tons of problems, include those mentioned by the MDG. If you think a society without energy in a world such as today, it is a tragedy.
Think by yourself living without light during the night, without hot shower for every-day's life. Imagine a company to work without energy, how competitive can it be? How long can you store a meal without a refrigerator? What about clinics and health centers how can they without energy store vaccines and medication. Think about students, how can they dedicate to their studies without electricity? What about communication, how can you at least recharge your mobile without having electricity, or access to Internet. Think about security, what can you expect of safety during dark nights, where anyone can go everywhere without being notice. What kind of future a society like this will achieve in a globalized and competitive world as today.
The main objective of this article is to introduce a set of ideas which are not original but thinking of all these measures together it will make a lot of sense for those who today can't leave the poverty zone. In this article we will talk about government, institutions, regulation, coordination, public policies, economics, production chain, industrial organization, etc.
Public Policies and Microeconomics Measures
The main idea of these microeconomic measures is to create income to the country's population investing in the agriculture sector interlinking it with the energy, industry and service sectors of the economy.
The Economic Relation in the sector
The economic relation between this market is based on contractual relation, where two parties setup specifications of the deal and based on the transaction cost of this economic relation it will determine the limitations of this contract.
Williamson, 1985 defines "a transaction occurs when a good or service is transferred across a technologically separable interface. One stage of activity terminates and other begins." and Ronald Coase says "in order to carry out a market transaction it is necessary to discover who it is that one wishes to deal with, to inform people that one wishes to deal with and to what terms, to conduct negotiations leading up to a bargain, to draw up the contract, to undertake the inspection needed to make sure that the terms of the contract are being observed and so on."
According to Furubotn and Richter (2005, pg 52) the cost of using the market may be divided in 4 areas; a) the costs of preparing contracts, b) the costs of concluding contracts, c) the costs of monitoring and enforcing the contractual obligations, d) the costs of establishing and tending social relations.
The poultry Sector
To simplify the idea, this article will analyze the organization of the poultry chain production and how it can spread wealth through the entire economy. This idea will have a bottom up approach, where we will begin to explaining the basic production of input for the poultry creation.
In the bottom there are the producers which are divided in two groups capital intensive and low-capital intensive. The capital intensive are the organizations responsible to develop the chicken array, they are called incubators, responsible for the production of eggs, genetic improvement and research, focusing on high quality chicken to slaughter. Nowadays, Brazil posses the highest quality and lowest price in world poultry production market, where one chicken can be ready to be consumed in 42 days.
The low-capital intensive agents in this market are the farmers which will produce crops to assist the poultry feed industry and the chicken farmers. The crop production can vary from many cultures depending on the protein basis of this crop and the competitiveness/productivity in the given region, climate, soil fertility, etc. The crops characteristic must meet the needs of the industry production, usually corn, soy beans, sorghum, are commonly used in Brazil to produce feed for poultry activity.
The farmers would organize the poultry feed production in an industrial basis with contract relations with the slaughters industries. In Brazil the relationship between slaughter industry and chicken farmers usually includes a high genetic quality of the chicken, the project for the shelter, technical assistance by veterinarians, where the farmer deal with the cost of feed, energy, water usage, equipments.
In the industry field there are the energy production, the feed industry, equipment production, civil construction industry, and animal nutrition industry.
The Feed industry as mentioned before will be responsible for purchasing the crops from the farmers, process it for the production of chicken feed, medicines and nutrition goods for poultry.
The equipment industry will be responsible to produce any source of equipment to assist in the creation of chicken, starting from net fences, water drill, air conditioning and heating, food compartment, and other equipment in this sense. The civil construction industry involves the entire process of construction, basic materials for civil engineering until ceramic goods, etc.
In the service sector there are technicians and specialized companies which will give consultancy for the activity, research centers in partnership with university, associations which will defend the interest of the activity.
The participation of cooperatives can be very useful in reducing the cost of production by purchasing larger quantity of input goods, create a wealthier relation between industry and farmers, negotiate prices based on the volume of their associates, etc.
Lastly the consumers, brokers, supermarkets and stores, which will trade products between industries, farmers, consumers.
The Energy Industry
The energy industry is more complex and harder to be coordinated, organized and measured because of it is high intensive capital dependency, it deserves a better coordination of the agents, a well established regulation system and a fair price in energy remuneration to stimulate business in the country with cheap energy.
The sector has three areas, which are energy production, energy transmission and energy distribution, all these areas can be explored by the private sector, but not always the private sector is interested in this kind of business because of it low payback and high risky.
Electric Power Plants average Payback | |
Activity | Payback (years) |
Hydro-power plants with 1.000 MW or higher capacity | 20 |
Hydro-power with capacity equal or higher than 30 MW and lower than 1.000 MW | 16 |
Small Central Hydro-powers | 14 |
Windpower | 14 |
Thermopower, co-generation by gas/ and bioelectricity | 12 |
Transmission Sector | 12 |
Distribuction Sector | 6 |
Souce: O PAC e o Setor Elétrico: Desafios para o abastecimento do mercado brasileiro – IPEA
As can be observed thermo power plants has a 12 years payback. According to the Anaerobic Digestion Renewable Fuels Energy Factsheet by the web-site www.nnfcc.co.uk,
the pay-back of production of biogas "depending on scale, feedstock mix and technology, the payback can be as quick as 5-7 years considering just the equipment for the energy production."
The transmission sector is responsible to interconnect the regions of the country by transmission lines and the distribution sector is responsible to distribute energy between the households in urban and rural areas, these two sectors require higher regulation to avoid the monopoly behavior.
The Poultry activity produces a large amount of wastes which can be transformed into energy, as can be observed in the table bellow:
Feedstock Dry Matter % Biogas Yield m3/ton Cattle slurry 10 15-25 Pig slurry 8 15-25 Poultry 20 30-100 Maize silage 33 200-220 Grass silage 28 160-200 Maize grain 80 560 Whole wheat crop 33 185 Wheat grain 85 610 Crude glycerine 80 580-1000 Rape meal 90 620 Fats up to 100 up to 1200 Souce: http://www.biogas-info.co.uk/index.php/biogas-yields
From the farms activity every tone of waste can generate 30-100 m³ of biogas which can be turned into the generation of energy or be used for heating, cook, as fuel to vehicles, and many others activities. The process which treats and transforms the part of the slurry to biogas is called Anaerobic Digestion. The amount of energy that each m³ of biogas can generate can be observed in the table bellow:
| Energy Value | |
| 1m³ biogas | 23MJ |
| Electricity only | 1.7 kWh |
| Heat only | 2.5 kWh |
| CHP of biogas | 1.7 kWh and 2kWh |
| Souce: Anaerobic digestion – Renewable Fuels and Energy Factsheet | |
Considering a farm which creates 3.000.000 chickens at once, can generate per day 200 ton of wastes. In terms of gas this farmer can obtain 6000m³ of bio-gas per day, assuming the production of 30m³ of biogas per ton, which is the lowest base, a power plant can daily generate 10.2 MWh of electricity enough energy to a city of 150 thousand of people.
Benefits of Biomass Energy
Starting by reducing greenhouse gases, methane is one of the most harmful emission gas to the atmosphere, the disposal of slurry cause methane to be released and contribute to the global warming, a well developed Anaerobic Digestion project can reduce overall emissions.
The energy created by AD projects does not add any fossil fuel emission to the atmosphere which is the cause of climate change, by using these methods it can reduce overall emissions of carbon dioxides reducing the risk of climate change.
If the management of the wastes is done correctly it can reduce the use of synthetic fertilizers, reduce the odour, water and land pollution, and support the organic farming. The right treatment of the manure can benefit crop farming reducing the spread of weeds and diseases over crops, reducing the cost of fertilizers and herbicides.
Farmers can be benefited economically by selling the gas to the thermal-power plant. For example one power plant of 1MWh can generate from 3-5 direct job not counting the economic spread which it may turn.
Depending on the localization of the power plant and the localization of the farms, it will be necessary to transport the gas to the power plant which will be mainly made by trucks or pipe-lines, once more create more jobs and opportunities.
Organizing the process
It is known that to achieve such energy production, the methods of production must attend strict requirements to manage the waste deposit, treatment, etc. It is not a simple task. In this sense the government would have to lead the coordination process to obtain the better result in terms of obtaining the methane gas out of the slurry.
Firstly would organize a set of regulation and legislation to give priority for this source of investment. Defining the proper legislation for the activity. The energy industry would be designed in three levels, town level, city level and capital level.
In the City level the state would implement Thermo-Electric Power plants which would run of bio-gas. Each city would be inter-ligated with the town by a fuel pipeline. The energy produced in these Cities would meet the energy demand in the city and also be ready to produce energy for the industries
Each of the main cities would be connected through transmission lines allowing each of them to equilibrate the unbalance of energy demand, by allowing each thermal power plant to trade their energy with other regions of the country.
The capital would be the leader of this entire project boosting research centers, knowledge production and evaluation process of this policy, together with the university day by day analyze the results of its policies. It would be responsible for the formation of highly skilled workers to attend the demand of this growing economy.
Cooperative
According to international co-operative alliance a cooperative is an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise.
Based on sustainable approach, this enterprise can work not only in the economic perspective but also contribute for the environmental and social areas. The formation of this Cooperative in the town level would allow better distributing the city's income, distributing wealth equally. This enterprise would be divided in two economic activities, the process of wastes and the finance of entrepreneurship projects.
The process of wastes would allow to commercialize the biogas with the cities, serving as a main revenue for the cooperative, secondly, the cooperative can also obtain revenue by the manure which is sub-product of slurry. Besides these two activities, the cooperative can also run a Gas industry to sell cooking gas for house-holds and restaurants, and have a small electric thermal power plant to offer energy for the village and for other agribusiness activity that requires energy use, such as irrigation.
The financial institution of this cooperative would promote local business opportunity such as restaurants, cleaning services, small merchants stores, markets, and other activities that represents the culture, and wills of this community.
Another source of income could be the trade of carbon assets, as long this project can be approved by the UNFCC commission. It can generate carbon credits and empower the revenues of the cooperatives.
Moreover it could also meet the needs of the population in terms of education, training and qualification of professions such as tailor, hairdresser, waitress, nurse, notions of business and accounting, computers, data processing, community services, etc.
The Energy Power Plants
In the city level, the power plants would be responsible to bring a lower price of energy to attract foreign direct investment and boost the competitiveness of the local market. This energy power plant would also be responsible for training professionals in the field, and also be responsible to build the infra-structure of the transmission lines inter-city connections and distribution lines inner city connection with households, business and industries.
To better boost the economy after the implementation of the transmission lines and distribution lines, auction the economic exploration of this lines so that the formed professionals can explore their own business and offer the service of maintenance in the transmission and distribution lines. This process would be coordinated by the federal government trying to promote the better competition in this market, avoiding monopoly and oligopoly behavior.
In a broader sense the economic perspective of cities and capital are market economy, different from the villages and towns, opening the foreign investment for industries and service companies so the business in this country would achieve a worldwide competitiveness.
Meeting the MDG Goals
This article analyze just the poultry sector but does not consider the other sectors of the economy that still can produce more energy such as pork, cattle, and others agriculture activities which can be developed in terms of biomass, etc.
If the policies are well developed is very likely that the energy needs of this economy can be found by this development strategy, and whenever the economy meet standards that the biomass can't meet the energy demand, the economy will be so powerful and strong that it will not depend on foreign investment to build new power plants.
Having these measures well implemented it is likely to say that the elimination of extreme poverty, can be meet, as long as the basis and the motor of this economy will be farming and agriculture, whenever economic grows exist.
Going back again for the Poultry Sector, assume that this economy has 30 million habitants. According to the FAO, the world average consumption of chicken meet is 11kg/year, if this economy leaves the extreme poverty line, it will likely to consume more food, which will generate a higher demand for energy, which will expect a higher number of chickens to be produced, and will create more slurry, being able to create more gas, which will lead for more energy production, bringing more revenue for the cooperatives in the town level, amplifying the consumption power of these towns which will impulse the industrial production in the city level, and the consumer industry will demand more energy, and this economy will be able to move along without the intervention of foreign capital in a longer term.
As a result of wealth, the universal primary education would be easily met. As long as income distribution is higher, the promotion of gender equally and empower of woman will be a result of this policy.
With a wealthier nation and child mortality can be reduced, maternal health and control of diseases such as HIV/AIDS and malaria will be minimized.
The goals such as ensure environmental sustainability and develop a global partnership for development are result of such policies.
Conclusion
This article has an overview of how a sub-developed areas such as sub sahara can achieve development. Unfortunately, this article does not consider the macro-economic variables, political power and stability.
There is much to do to bring a sub-developed nation to a patch of developing country. The objective of this article is to give a light for public managers that there are ways to achieve development that undertake the traditional ones which are mostly recommended by developing economies.
In a last recommendation, in this field of biomass there is much more that can be done in terms of solution for development, but the main problem is the technology transfer, country risky, investment guarantee, and other institutional problems that reverse the willingness of direct investment.
In addition investing in energy creates more competitiveness to the country and reduces such problems mentioned above, whenever energy is available and cheap, capital is more likely to be invested.
References
United Nations – Millennium Development Goals Report 2009
NNFCC - Renewable Fuels and Energy Factsheet - Anaerobic Digestion – http://www.nnfcc.co.uk
M. MIELE – CADEIA PRODUTIVA DA CARNE SUÍNA NO BRASIL – EMBRAPA SUÍNOS E AVES, CONCÓRDIA, SC, BRASIL.
P. A. V. JUNIOR, F. LIMA, W. BELIK – Agentes e instituições da cadeia produtiva do frango de corte – UNICAMP/SP
NATIONAL NON-FOOD CROPS CENTRE, THE ANDERSONS CENTRE – A DETAILED ECONOMIC ASSESSMENT OF ANAEROBIC DIGESTION TECHNOLOGY AND ITS SUITABILITY TO UK FARMING AND WASTE SYSTEMS
LUIZ TOLEDO MACHADO – A teoria da dependência na América Latina ESTUDOS AVANÇADOS 13 (35), 1999
Federal Ministry for Economic Development and Cooperation - In partnership for a strong Africa Cooperation in the field of sustainable economic development- BMZ TOPICS 1 6 7
David J.C. MacKay- Sustainable Energy – Without the hot air - Draft 2.2.0 – June 26, 2008
Good Practice Guidelines – Anaerobic Digestion of farm and food Processing residues – The development of a sustainable industry
e. Furubotn r. richter – institutions and economic theory – 2nd edition. economics cognition and society
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