Biofuels boom waits on paperwork
2013-01-30 22:39
Cape Town - Seven years after a government feasibility
study showed a biofuels industry in South Africa could create tens of thousands
of new jobs, the paperwork needed to establish it remains outstanding.
Briefing MPs on Wednesday, the energy department's chief
director for clean energy, Mokgadi Modise, said the original target of
producing 400 million litres of biofuels a year, from the 2013 financial year
on, "will be missed".
However, the country was set to produce biofuels "in
excess of the originally-set annual target when the overall enabling and
supporting framework... takes effect".
This framework included mandatory blending regulations
and a pricing framework. Modise said the latter - including the development, by
National Treasury, of a biofuels support mechanism - was at an
"advanced" stage.
"A number of outstanding issues [and] deliverables
are still work in progress due to the required technical investigation."
Biofuels include bioethanol, produced from sugar and
starch crops such as corn or sugarcane; and biodiesel, produced from vegetable
oils.
Incentives offered by government to attract investors
include the exemption of bioethanol from fuel tax; a 50% general fuel levy
rebate on biodiesel; and, a three-year "accelerated depreciation
allowance" for such renewable energy projects.
Modise told MPs these incentives had not proved enough.
"These incentives have proven not [to] be sufficient
to lure investments in the biofuels sector, hence the need to establish a more
enabling and supportive regulatory framework," she said.
According to a document tabled at the briefing, eight
companies - with a total annual capacity of more than one billion litres - have
been granted licences, or provisional licences, to produce either bioethanol or
biodiesel.
But asked after the briefing if these facilities, planned
for the Eastern Cape, Free State, Gauteng and KwaZulu-Natal, had actually been
built, she confirmed they existed only on paper.
South Africa's biofuels strategy is mainly aimed at
stimulating the production of suitable crops, such as sorghum, sugarcane,
soybeans and canola, among others, in so-called "under-utilised
agricultural areas" of the country, including in the former homelands.
According to the document, the government is also mulling
options when it comes to blending biofuels into conventional petrol and diesel
supplies.
Regulations
Regulations in this regard were published in the
Government Gazette in August last year.
They stipulate that the minimum concentration of
biodiesel in diesel is 5% by volume, and the permitted range for bioethanol in
petrol between 2% and 10%.
An implementation date for the regulations has yet to be
set.
Under consideration is whether such blending is done at
the country's existing six refineries, at depots, or at both refinery and
depots. These options would require capital investments of R278m, R459m and
R421m respectively.
MPs at Wednesday's briefing raised concerns about, among
other things, the security of supply of feedstock crops for the biofuels
sector, the cost of transporting feedstock to biofuels manufacturing
facilities, and the application of incentives for producers.
Modise said estimates in a 2006 feasibility study,
conducted by her department, showed the production of 400 million litres of
biofuels a year, representing two percent of the country's annual liquid fuel
requirement, "can create about 25 000 jobs".
- SAPA
