We can thus conclude on the basis of this information on stove costs and conversion efficiencies that differences in stove costs are more of a second-order consideration in comparing ethanol and LPG. Similarly, Figure 11 of World Bank (2014) suggests that the environmental performances of the two stove-plus-fuel options are likely to be fairly comparable. Accordingly, the main factor to consider initially is how the two fuel costs compare.

Practical Action (2014, Annex A) reports that LPG costs are CFAF 666-814 per kg, depending on cylinder size (the higher unit cost is for the smaller cylinder). Using an exchange rate of CFAF 500 = $US1, we can express this as $1.33-1.63/kg. Given 42.5 MJ of energy per kg of LPG, we can re-express this range as $0.031 - $0.039/MJ.

To compare these figures to the cost of ethanol, we must speculate on the price of fuel-grade ethanol since no market currently exists. It turns out that the sugar producer produces as a joint product with industrial grade (100%) ethanol a supply of 90-95% ethanol (referred to as “head.”) This material has no market currently and the company burns it off, although it would be well suited for fuel. The company has indicated that it believes it could supply fuel grade ethanol for a price of CFAF 320 per liter. Since there are 28MJ/liter of ethanol, this indicative price is equivalent to $0.023/MJ.

These figures would seem to indicate that ethanol is less costly. However, the ethanol price used above is a producer price, while the LPG figures are consumer prices including cost of distribution to retail suppliers. The difference shown above may not be enough to make ethanol costcompetitive at delivery.

Yet, this comparison is not the end of the story. At present, the producer of the fuel-grade ethanol burns off the product because it has no market outlet and thus no economic value. If an urban market for ethanol fuel were to develop, a price far lower than CFAF 320 per liter would provide the producer with a more profitable alternative to the status quo.<sup>13</sup> By this reasoning, the development of an urban ethanol fuel market in Saint-Louis (along with a market for the stoves) would seem quite promising; the issue instead is putting in place the supply chains.

Let us turn now to consideration of the potential for _ethanol use in rural Saint-Louis_ . This involves comparing ethanol costs versus costs associated with a traditional 3-stone stove that is used by 89% of people in rural Senegal. Practical Action et al (2014) concludes that there is little prospect for penetration of ethanol into rural areas in the nearer term, given differences in fuel and stove costs and set-up costs for supply chains associated with bringing ethanol fuel and stoves to rural areas. In Table 7 we use parameters from Practical Action et al (2014) and other sources to further investigate the comparison.

Practical Action et al. (2014) indicate that in rural Saint-Louis, about 98 kg per household of fuelwood is used each month, with about 25% collected and the remainder purchased. Annex A of their report indicates that the price of fuelwood in Saint-Louis is CFAF 80-100 per kg. Using the approach shown in Table 2, we can compute the monthly cost of fuelwood as follows. The monthly cost of fuelwood purchased, 75% of 98kg or about 74kg, would be CFAF 5880-7350 or $US11.76- 14.70. From the figure of 23 hours per week for fuelwood collection time in Table 6, which assumed no purchases, we could infer that about 23 hours per month would be spent

> 13 Presumably the floor price for the producer is above zero because there would be costs of maintaining availability <u>of the “head,” in particular costs of storage.</u> **16 |** P a g e