Buchanan Renewables Fuel: From dead wood to major export

Site Liberia
Sector Renewable energy; biomass, rubber
Challenge Make use of large volumes of rubber trees that have reached the end of their latex producing lives by harvesting them and producing wood chips to fuel biomass power plants.  Export to address shortage of biomass fuel in Europe, used to reduce greenhouse gas emission from coal consumption, through co-firing in existing coal-fired power plants.
Solution Debt financing for Buchanan Renewables Fuel Inc. of Monrovia to cover clearing and transportation of old trees, production of biomass from wood, planting of new seedlings to revive the rubber industry, and purchase of new materials handling facility to support the project.
Impact Neglected rubber industry in Liberia is revived, a biomass fuel industry is created from the waste product of Liberia’s biggest industry, and a renewable, sustainable, domestic fuel supply is created. 700 local jobs created.

Making biofuel from wood chips

Liberia is a heavily forested country, with a plentiful supply of rubber trees that have made the country a global leader in latex production. But during the latest civil war, rubber production essentially ceased, leaving the vast majority of rubber farms and plantations in a state of neglect. Older trees had reached the natural end of their rubber-producing cycle, but were not cleared to make space for new seedlings. This neglect of a core industry exacerbated the country’s widespread poverty and eliminated a key source of revenue for many small farmers.

Buchanan Renewables Fuel Inc. recognized it could extend the revenue-generating lifespan of the old trees by cutting them down and chipping them into biomass, a form of renewable fuel in great demand throughout Europe. As it cleared the way for new trees to be planted, it could help ensure the continuation of rubber production, the country’s largest industry, which in 2011 accounted for more than 40,000 Liberian jobs and 90% of export revenues. Because the company clears trees and replants at least one tree for each tree removed, it helps ensure continued rubber production, the country’s largest industry.

In December 2008, the company, which is partly owned by American investors Christopher Jorgensen and James Steele, obtained an initial loan  from OPIC to support the recently formed company. OPIC’s early support enabled the company to begin the ramp-up of operations and demonstrate that rubber wood chips were a viable source of fuel for biomass power plants that could attract new investment.

Reviving Liberia's rubber industry

In 2010, one of Europe’s largest utility companies, Vattenfall, together with Sweden’s investment finance institution, Swedfund, acquired a 30% stake in BR Fuel. Vattenfall, meaning “waterfall” in Swedish, operates power plants throughout Europe and has been co-firing and converting its coal-fired plants to run on biomass. It viewed the BR Fuel investment as a major step in securing a steady supply of biomass as it worked toward its goal of becoming a carbon- neutral company by 2050. For BR Fuel, the Vattenfall deal represented the start of a large and sustainable export business. BR Fuel had already secured a separate export deal with Biowood Norway, a manufacturer of wood pellets.

To meet Vattenfall’s demand for biomass, BR Fuel found it needed additional investment to cover the costs of heavy equipment and storage to keep the wood chips dry during Liberia’s lengthy rainy season. In 2011, OPIC extended a commitment for an expansion loan of $90 million to support the production of more than two million metric tons per year by the year 2017. “OPIC’s loan will facilitate a major expansion of the company’s biomass project in Liberia and with that expansion a host of benefits for the Liberian people,” said Don Durand, President of BR Fuel. “It clearly demonstrates OPIC’s strong commitment to private-sector growth in developing countries.”

As it does with all the projects it supports, OPIC examined the project’s likely developmental, environmental and social impact as part of the due diligence process. Buchanan replants at least one seedling for every tree it removes, which will help ensure the long-term viability of its rubber industry.

Supporting the local community

Buchanan also supports the communities in which it operates. As part of BR Fuel’s operations, the company has maintained the highway between the cities of Buchanan and Monrovia. BR Fuel also established two rubber tree nurseries with approximately 400,000 seedlings that will replace the old trees harvested for wood chips.

The project will also have a significant amount of U.S. procurement in equipment, supplies, and professional services, which is expected to also create jobs in the United States.

Although BR Fuel has increased its production over the past three years, studies supported by the European Climate Foundation indicate that demand remains more than sufficient for the company to continue to serve that market. Current European biomass consumption needs to more than double in order for the European Union to meet its “20/20/20” objectives calling for a 20% reduction in CO2 emissions, 20% of energy produced from renewable sources, along with a 20% improvement in energy efficiency by the year 2020. There are seven dedicated biomass power stations under construction in the U.K. and six in Germany, all of which are due to come online by 2013. Many more coal power plants are capable of co-firing biomass, significantly reducing their carbon footprint.

This project was profiled in 2011