Sometimes business leaders seize upon opportunities for spectacular transformation and growth that in retrospect seem obvious, but at the time were invisible to most observers. The biomass pellet industry may be poised for just such a breakout moment if it has the vision to boldly reinvent itself.
Failing to do so would be akin to Jeff Bezos having said in the early days of Amazon “I’m good just selling books.” Or Steve Jobs focusing Apple solely on making personal computers. Or Netflix sticking with its original model of mailing rented CDs to customers’ homes.
The industrial pellet sector has accomplished remarkable things in a few short decades. But with storm clouds hovering over its core business, it faces an inflection point. It can circle the wagons and pour enormous effort into defending its core business. Or it can marshal the enormous talent and capital at its disposal to dramatically transform the planet, picking up a few billion customers along the way.
The opportunity lies in the kitchens of the nearly four billion people who cook some or all of their food with smoky fires burning wood, charcoal, or dung. The costs of this problem are well documented—in terms of unconscionable levels of disease and death, deforestation, lost productivity, and climate change.
Governments, NGOs, and development institutions have tried and failed for decades to solve this problem. The pellet industry can play a central role in
fixing it and make a lot of money in the process. along the way.
A handful of solutions
There are only a handful of technical options for providing healthy, smoke-free, climate and forest-friendly cooking to the half of humanity that lacks it now: electricity, bioLPG, bioethanol, biogas, and biomass pellets fueling ultra-clean gasifying stoves. We have to pursue all of them.
As a recent paper in the scientific journal Nature Energy noted, biomass gasification has the potential to provide the lowest cost of cooking of all the pro-health and pro-climate alternatives. Affordability will enable pellet cooking to serve the most people, with the greatest circular economy benefits, in the shortest amount of time, if it receives critically needed investment now.
That’s where the pellet industry comes in. Consider this—cooking charcoal in Africa alone is a US$25 billion industry and growing as Africa’s population swells and rapidly urbanizes. Governments would love to get rid of charcoal, but they need viable clean alternatives for their citizens, particularly home-grown solutions that are buffered from the global supply chain disruptions and price spikes that have impacted imported fuels like liquefied petroleum gas (LPG). It’s a market ripe for capture.
A handful of small, pioneering pellet cooking firms are already operating in Africa that undercut the cost of cooking with charcoal by 25 percent or more. Some examples include BioMassters in Rwanda, Ecosafi in Kenya, and Emerging Cooking Solutions, operating in Zambia, Malawi, and Mozambique. Their solutions reduce the amount of biomass needed for cooking by 85 to 90
percent, relative to firewood and charcoal.
Moreover, they can use a mix of local feedstocks, including agricultural residues, wood waste, and purpose-grown crops like elephant grass and fast-growing trees. They have customers beating down their doors but they can’t serve the demand because they don’t have the capital to expand.
Why? A primary reason is that investors don’t understand biomass pellets, so they hold back, waiting for the pellet cooking business to be demonstrated at scale. Hmm. Who might be able to step in here? The skeptical reader will be thinking: “Wait, the industrial pellet sector doesn’t know the first thing about selling cooking fuel to poor households in the developing world.” Of course, they don’t.
But the pellet cooking start-ups already on the ground in Africa do. Partner with them, bring your expertise, technology, and capital to the table, and rapidly test
various business models in different market settings. The business plans of existing pellet cooking firms in Africa project very healthy returns, with profit margins of 40 percent or more at scale. Join forces with them, place some modest bets to get these ventures to commercial scale, and harness those lessons to replicate what works across the global south.
In addition to all the other reasons this is worth exploring, consider reputational redemption. The pellet industry in Europe and North America has faced a lot of criticism regarding its environmental impact. The sector can continue to fight and perhaps win that battle in the regulatory arena, but vocal opposition will continue and the optics are not good. The picture is very different from cooking in the global South.
High-efficiency pellet cooking is a huge environmental winner compared to the baseline of inefficient, smoky biomass cooking and charcoal-induced forest degradation. So, if for no other reason than to burnish its environmental standing, the time is ripe for the pellet industry to help solve the cooking crisis in
the developing world.
Facts
About Michael Shepard
Michael Shepard is the Founder and Director of Heza, an NGO working to scale ultra-clean renewable cooking in the global South. He has worked in sustainable energy for four decades. He directed the energy program at Rocky Mountain Institute (RMI), was Chairman and CEO of E Source, a sustainable energy research and advisory firm, and served for a decade on the judging panel of the Global Energy Awards.
Michael Shepard is also an active participant in the Green Cooking working group of the World Bioenergy Association (WBA). This working group includes a number of entrepreneurs and experts active in green cooking – the use of pelletized biomass in gasification cookstoves. Its purpose is, to share experiences in
developing green cooking projects and accelerating market deployment of these technologies. Together with the working group WBA is currently preparing the relaunch of the pellets.africa website with the aim to make it an excellent information hub for green cooking and pellet production in Africa.
