Mozambique: Feasibility study highlights opportunities and challenges for biofuel market

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Mozambique: Feasibility study highlights opportunities and challenges for biofuel market

3:41 CAT | 20 Dec 2024

FILE - For illustration purposes only. [File photo: Portal do agronegócio]

A feasibility study on Mozambique’s biofuel market conducted by the International Finance
Corporation (IFC) indicates that “current regulations are perceived as restrictive for companies looking to expand beyond the local market”. The study also recommends clearer guidance on pricing, sectoral incentives, and standards.

The 223-page document, accessed by Lusa today, highlights Mozambique’s potential to
become the largest energy producer in Southern Africa. However, the country’s current energy matrix reflects the characteristics of a “rural nation.” “Approximately 92% of households rely on traditional fuels for cooking, heating, and other domestic needs, which places significant pressure on forest resources and contributes to deforestation, forest degradation, greenhouse gas emissions, and adverse health effects due to air pollution,” the study notes. It emphasizes the need for a multifaceted national fuel program that combines political support, technological advancements, industrial partnerships, and sustainable practices.

The study outlines essential elements for developing biofuel infrastructure: “It begins with advanced agricultural systems designed to optimize raw material production and harvesting. Next, well-equipped processing facilities are critical to efficiently converting biomass into biofuels, complemented by robust storage solutions for raw materials and finished products.”

Investments in storage, transportation, and distribution infrastructure for biofuels are also highlighted as critical, alongside the “structuring of loans” with lower interest rates for developers, particularly those in agricultural and processing activities.

“Mozambique is advised to implement robust sustainability criteria, standards, and certification schemes to ensure biofuels are both technically viable and environmentally sustainable,” the study adds.

On November 27, 2022, Mozambique’s Ministry of Mineral Resources and Energy announced a total investment of US$80 billion (€77 billion) in its Energy Transition Strategy, to be implemented by 2050.

The strategy is built around four main pillars: “Significant expansion of renewable energy capacity”, “promotion of green industrialization”, fostering “universal access” to energy, and decarbonizing transportation through biofuels, electric vehicles, and rail transport. The plan was approved during a Council of Ministers meeting at the time.

Source: Lusa