THE Department of Energy had “a stakeholder engagement workshop” in
Sandton on Tuesday to get comment on the draft position paper on which — and how
— much biofuels South Africa will mix into fossil fuels from next year
October.
The draft paper was gazetted on January 15 and members of the
public have until Monday to submit written comments to the Department of Energy
for the attention of Muzi Mkhize. (See details below.)
While consumers will not pay less for fuel that was planted, the
draft paper aims to make growing our own petrol and diesel viable for farmers.
As things stand, the few companies that distil sugar cane still
find it more profitable to sell their ethanol to rum distillers, especially as
Mainstay white rum, rather than as bio-petrol. The burning question
KwaZulu-Natal’s sugar farmers had — as reported in Witness
Wheels last year — was what mandatory percentage of ethanol will have to
be mixed with petrol in South Africa from October 1, 2015?
The draft paper states that a two percent blend will apply in the
first phase, followed by a possible increase on the basis of a cost-benefit
analysis for the State.
Last year, Thomas Funke, director of industrial affairs at the
South African Cane Growers’ Association, said the industry’s 27 036 registered
sugar cane growers would require at least 10% biofuel to be blended into mineral
fuels in order to make it viable to convert the mills into plants that produce
sugar and ethanol.
The amount of ethanol that can be mixed into petrol for modern cars
is determined by the specific petrol’s oxygenate and volatility specifications,
and range between two percent and 10%.
In Brazil, where all cars run on a biofuel blend, the mandatory
percentage mix of ethanol produced from sugar cane had in almost 40 years ranged
from as low as 10% to as high as 25%, depending on the availability of the crop
and the need to ensure its use.
The current slant of the draft paper is for biofuels to be blended
at depot level and not at refineries, to avoid transportation costs.
Manufacturers of biofuels will be subsidised from the General Fuel
Levy, in accordance with strict criteria.
To accommodate as many players as possible in the biofuels
industry, production will be capped at 158 000 cubic metres for bio-ethanol and
113 600 metric metres per year for bio-diesel.
Where profits exceed 20% in terms of the Biofuels Pricing Model,
the excess portion will be paid back into the fiscus. To further incentivise the
production of biofuels, bio-diesel distillers will get a 50% General Fuel Levy
exemption and allowed to claim faster depreciation on their assets by why of tax
incentives.
A similar rebate could not be instituted for bio-ethanol as it
falls outside the fuel tax net. The Biofuel Interim Committee has, however,
suggested several ways in which government can stimulate ethanol production,
ranging from changing the octane specifications for petrol to ensure the highest
mix of enthanol is possible, to “encouraging government agencies to participate
in the initial investment into biofuels”.
To date, four bio-enthanol and four bio-diesel manufacturing
licences had been granted by the Office of the Controller of Petroleum Products.
Only one of the four, Ubuhle Renewable Energy, is from
KwaZulu-Natal. The company intends to distil 50 million litres of sugar cane at
a plant in Jozini. Four licensees are from the Eastern Cape, two from Gauteng
and one from the Free State
In total, these licensees will be able to distil 392,2 million
litres of bio-petrol and 970 million litres of bio-diesel a year. This will
exceed Energy’s two percent requirement by 4,3%.
It should be noted that maize will not be allowed as a biofuel
source in South Africa. The chief director for clean energy at the department of
Energy, Mokgadi Modise, had last year told Parliament that biofuel crops
specifically exclude maize, which is considered a primary food source.
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Comments on the draft biofuel paper can be e-mailed to
muzi.mkhize@energy.gov.za. Inquiries can be directed to
012 406 7571 / -7662.
