Senegal's National Domestic Biogas Programme (PNB-SN)
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Senegal’s National Domestic Biogas Programme (PNB-SN) Leo Mongendre Senior consultant Climate Focus 28 October 2020
1. Market situation
and policy context
28 October 2020
3
Senegal: Market situation
Unsustainable use of biomass
• Households in Senegal are dependent on firewood and charcoal for domestic cooking needs
• Biomass fuels are currently unsustainably tapped from Senegal’s forests
• Potential for fuel switching to a sustainable and clean alternative: biogas
• From a recent study, up to 400,000 households could benefit from a biogas digester.
Other
7.8%
Charcoal
28.6% Firewood
63.6%
Firewood and charcoal > 75% cooking fuels in Senegal Final household consumption by fuel type [Semis 2013]
28 October 2020
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Policy context
• Increasing threats on biomass resources due to population growth and rapidly rising
energy demand.
• Domestic fuel substitution and diversification has been encouraged by the Senegalese
Government through national policies (LPDSE and PSE) that endorse the deployment of
clean cooking and sustainable fuels at household levels.
• More importantly, since 2009, Senegal has a national domestic biogas programme
(PNB-SN) that supports and supervises the dissemination of the technology across the
country.
• Senegal NDC: The implementation of domestic biogas digesters is explicitly mentioned
in the communication.
• Unconditional target: Deployment of at least 27,500 biodigesters
• Conditional target: Deployment of up to 49,000 biodigesters with support from the
international community during the period 2020-2030.
28 October 2020
2. Programme description
and stakeholders
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The KliK-PNB collaboration
Project objective:
Fostering the dissemination of domestic biogas systems, with the objective of deploying
more than 52,000 biogas digesters between 2021 and 2030, supporting Senegal in going
beyond the ambition of its NDC target.
Expected outcomes:
• Providing a broader number of small farmers with a clean and renewable cooking fuel
and income generation opportunities
• Contributing to increased crop productivity by enabling the generation of approximately
3 Mt of bio-fertiliser per year
• Creation of labour opportunities for local communities, targeting the development of 50
small-scale biogas enterprises and over 500 skilled jobs
• GHG mitigation: The programme is expected to reduce approximately 550,000 tCO2eq
in the period 2021-2030 (conservative estimate), of which a share could be transferrable
in the form of ITMOs under the Article 6 of the Paris Agreement
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PNB Project: Technology
The PNB evaluates and approves the deployment of different types of biodigesters:
Fixed-dome biogas PVC biogas Geomembrane
The digester has two outputs:
o Biogas, used for cooking, lighting or electricity generation purposes: The digesters are fed
with manure mixed with water, which undergo anaerobic digestion and produce biogas
that is channeled directly to a cook stove
o Bio-effluents, in general rarely valued and often discarded. But the financial centrepiece
under the PNB-SN programme.
28 October 2020
8 PNB: Stakeholders and roles 28 October 2020
2. Baseline
and crediting
28 October 202010
KliK-PNB: Baseline and crediting
The effective use of domestic biogas digesters will contribute to the mitigation of climate
change by reducing GHG emissions in two ways:
Fuel switch, i.e. substitution of non-renewable biomass
(typically wood and charcoal) by renewable biogas, for
lighting and cooking needs of the households;
Improved animal waste management
(manure is used in anaerobic digesters)
28 October 202011
KliK-PNB: Baseline and crediting
Baseline scenario Programme Scenario
• Emissions from fossil fuels and non- • Biogas replaces the combustion of non-
renewable biomass used for cooking and renewable biomass and fossil fuels,
reducing carbon dioxide (CO2) emissions.
heating and emissions from the handling
of animal waste in the reference situation • The biodigesters also reduces methane
(CH4) emissions by diverting manure that
• Biogas digesters installed prior to the start would otherwise decompose without the
of the NDC period of 2020 to 2030, and capture and use of the methane
subsequently under a BAU scenario.
• KliK’s financial support enables a greater
level of deployment of digesters in
Senegal (beyond NDC target)
• The programme will monitor, report and verify (MRV) emission reductions from all new
biogas digesters during the NDC period.
• Part of these emission reductions will be needed for Senegal to meet its unconditional
NDC target while the remaining emission reductions can be traded as ITMOs
28 October 202012
A simplified methodology in the works
• Currently, an average GHG abatement potential of 2.5 tonnes of CO2e per unit per
year has been assumed. This is on the lower range of the mitigation potential of
domestic biogas technologies, with CDM and voluntary carbon projects showing
realised mitigation results of between 2 to 5 tonnes of CO2e globally.
• Extrapolating this over the forecasted implementation rate until 2030, this results in a
total GHG abatement potential of approximately 557,000 tonnes.
• The share of digesters exceeding the unconditional target within the PNB forecast is
51.9%, assuming that such implementation is realised in accordance to the annual
targets set forth by the PNB, an overall amount of 250,000 tonnes transferrable in the
form of ITMOs under Article 6 of the Paris Agreement would be realised over the
targeted investment period.
• A simplified methodology is being developed, combining elements from CDM
AMS-II.G and Gold Standard TPDDTEC (and tailored for the Senegalese context),
and will be applied to calculate emission reductions achieved by the programme.
28 October 20203. Business plan, financing
and exit strategy
28 October 202014
Business plan and financing
• PNB has been developing a new market segment in Senegal for the use (and therefore
the sale) of bio-fertilisers (by-products of domestic bio-digesters).
• By enabling the access to attractively priced loans through qualified enterprises,
households will be able to acquire biogas digesters which will enable them to generate
income while also benefitting from clean cooking: How?
- PNB will set up a dedicated credit guarantee facility that will incentivise local banks
to extend credit to qualified biogas enterprises.
- These enterprises, in turn, will provide biodigesters to end-users at no initial costs
- Households will repay the loan value by means of donating all (or a share) of the
bio-fertiliser generated every month to the enterprises
- By centralising the collection of the bio-fertiliser and establishing long-term offtake
agreements with buyers, the enterprises will in turn monetise the product and
subsequently repay the loan capital to the banks
28 October 202015
Business plan and financing
Financing requirements
• Total cost of implementing the program: CFA 46 billion approximately (EUR 69 million)
until the end of 2030.
• Part of it is already covered through domestic investments (either local actors in the
market, or the Government of Senegal directly) and existing support from the European
Union.
• Leveraging private sector finance (through commercial banks) is key however to the
success of this programme. This is why the PNB is reallocating part of its capital to
establish a guarantee fund that will support biogas enterprises to substantially scale-up
the dissemination of domestic bio-digesters in Senegal.
• Doing so, the PNB will be bearing early-stage development risks but also ensure that a
sound proof-of-concept is demonstrated.
• Additional financing will be required for the programme to reach its full scale and extend
until 2030, leaving a funding gap (and therefore an opportunity for the KliK Foundation)
to participate .
28 October 202016 The KliK-PNB collaboration 28 October 2020
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Business plan and financing
Contribution from the KliK foundation
• The funding gap offers a possibility for an Article 6 transaction whereby the KliK
Foundation would replenish this guarantee facility by means of a series of results-based
payments in exchange for ITMOs.
• The proposed transaction envisages the transfer of approximately 250,000 units to the
KliK Foundation in three instalments:
(1) 50,000 units in 2023;
(2) 80,000 units in 2025, and;
(3) 120,000 units in 2027.
• Pricing and terms and conditions for the delivery (and payment) of units are still being
designed and negotiated by the parties involved.
• It is expected however that KliK would only pay if/when the credits are made available
by the PNB, as the transaction will be structured as an ERPA
28 October 202018
Exit strategy
• By changing how financing institutions relate to businesses in this sector, building
capacity at multiple levels, and providing the necessary infrastructure (e.g. quality
standards, standard terms of trade and contracting, etc.), the programme will promote a
competitive bio-digester market.
• As the market progresses, it is expected that the guarantee coverage ratio provided by
FONGIP to the commercial banks lending money to participating biogas enterprises will
gradually decrease over time. From full coverage of the loan principal during the first two
years of the program, the guarantee will decrease to:
- 70% in 2022,
- 55% in 2025,
- 40% in 2028
- and be entirely phased out by 2030.
• This will transition the credit risk to commercial banks as the market matures and offer
an exit strategy in terms of financial support of the programme.
28 October 20204. Conclusions 28 October 2020
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Conclusions & takeaway
• Current unsustainable use of biomass for cooking and heating purposes
• Biodigester technology can bring economical, social and environmental benefits
• The implementation of domestic biogas digesters is explicitly mentioned in the
communication of Senegal’s NDCs
• Growing domestic market for bio-fertilisers that would serve as a source of revenues
that will be used to pay for the capital loans to banks
• PNB has created a guarantee fund to facilitate access to credit at low rates
• Financial gap constitutes an opportunity for the KliK Foundation to support Senegal in
strengthening its domestic programme and generate credits at the same time:
o The proposed Article 6 transaction aims to recapitalise the guarantee fund through the
transaction of ITMOs to the KliK Foundation
o The financial support of KliK Foundation will be used to replenish the PNB’s guarantee
fund and enable the programme to continue its activities through 2030.
o This would allow Senegal to exceed its unconditional target in terms of digesters
dissemination and generate credits that would be transferred to the KliK Foundation.
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