Journal of Energy Technologies and Policy www.iiste.org ISSN 2224-3232 (Paper) ISSN 2225-0573 (Online) Vol.10, No.7, 2020 1 Gross Value Added of Wood Fuel Production in Ethiopia Hundessa Adugna Gemechu Kaba Ethiopian Environment and Forest Research Institute, Addis Ababa Abstract Ethiopia is among the developing countries dependent on solid biomass energy source. Wood-fuel is among the dominant solid biomass energy source used by all households in the country. Charcoal and firewood are the source of income for the poor rural households and primary fuel in most rural and urban areas of Ethiopia. The gross value added from value chain across all levels of wood fuel production in Ethiopia was about USD 5,858 million, accounting about 4.5% of the GDP in 2014. It increased to USD 6,419 million in 2015. It is difficult to present the cost-benefit distribution along the chain of charcoal production and marketing because it passes through informal channels. Large number of people are employed in the various phases of the charcoal value chain, including: tree harvesting; sizing of wood; preparation of charcoal kilns; loading the wood into kilns and unloading charcoal after conversion; unloading, bundling, packaging and transportation, and marketing. However, that distribution of income and profit in charcoal production-supply channel in Ethiopia is highly skewed toward the producers, that is, 75% of the total revenue/bag. Even though, wood-fuel production generates significant income to rural poor, the production and consumption of both charcoal and firewood is inefficient and unsustainable causing environmental problems. Therefore, there is a need for institutional interventions that promote and regulate more environmentally friendly means of production. Promotion of improved cook stoves (ICS) can increase energy efficiency and sustainability. We recommend using alternative renewable energy sources like biogas and electricity (hydroelectric power, electricity from wind power and thermal energy) to reduce the environmental impact wood-fuel production and consumption. Keywords: Wood fuel, gross value added, value chain, gross domestic product, Ethiopia DOI: 10.7176/JETP/10-7-01 Publication date: November 30 th 2020 1. Introduction Ethiopia is among the developing countries depending on solid biomass energy mainly from wood fuel. Wood- fuel production consists of firewood collected from the forest and wood converted to charcoal. Wood product demand and consumption is growing fast in Ethiopia due to continuous increase in population and economic growth. Wood-fuel (firewood and charcoal) is the largest source of wood-based production and consumption in Ethiopia (UNEP, 2016). Wood-fuel is produced mainly from natural forests including natural high forests, woodlands, area exclosures and plantation forests (UNDP Ethiopia, 2017). The past 15 years have seen a massive increase in the consumption of charcoal in all regions from 48,581 tons/year in 2000 to 4,132,873 tons/year in 2013. However, its production and marketing in Ethiopia is organized informally (Geissler et al., 2013; Bekele and Girmay, 2013). The majority of informal charcoal producers are low to middle income or poor pastoral/agro-pastoral and mixed farming households living in the dry lowlands of Ethiopia. These households produce charcoal regularly as their main or additional source of income to support their families (MEFCC, 2016a). With the exception of some women engaged in the retailing activity, in the majority of cases the charcoal business appears to be dominated by younger men, particularly the landless youth. However, the production, transportation and marketing for charcoal and firewood are illegal. Charcoal is transported to urban centers using trucks, automobiles, camels and donkeys (MEFCC, 2016b). The informal nature of production and marketing of charcoal and firewood resulted in difficulty to know the main supply chain and value chain channels. The price at the production site for both fuel wood and charcoal is incomparable to the retail price in the cities. In addition, the price of charcoal is much higher when purchased in small retails than in sacks. Distribution of income and profit sharing in the illegal charcoal production-supply channel in Ethiopia is highly skewed toward the producers who are earning about 75% of the total revenue/bag ((Bekele and Girmay, 2013); MEFCC, 2016a; Gemechu et al., 2019). This is also due to its informal and illegal nature of production and marketing. Therefore, knowing the value chain of the wood fuel production in the country is very essential in assessing the gross value added, which can contribute to the country’s gross domestic product. The gross value added could be expressed both per unit of solid biomass (charcoal and firewood) produced and as a percentage of gross domestic product. In this study national data on major solid biomass production collected by Ethiopian environment, forest and climate change was used. Various national reports from national and regional project documents were also used in the analysis. 2. Wood-fuel (charcoal and firewood) production in Ethiopia Wood fuel is the most important forest product consumed in Ethiopia, with a total volume of consumption of