What has SAA been smoking now?

There is a commercial biofuel flight somewhere in the world 'just about every day', says SAA environmental affairs specialist Ian Cruickshank.

There is a commercial biofuel flight somewhere in the world 'just about every day', says SAA environmental affairs specialist Ian Cruickshank.

Rooted in the fertile earth outside the town of Marble Hall in Limpopo, row upon row of lush tobacco seedlings grow ever taller as they lap up the summer rains.

But these tobacco plants aren’t just any ordinary crop. The robust strain contains no nicotine, has small leaves and will produce unusually large flowers and seed pods, which could soon be used to produce biofuel to power the SAA fleet.

Industry experts agree it’s ambitious but there are worldwide concerns about the viability of biofuels. Is the technology feasible? Is it economically practical? And can the financially embattled national carrier, which has just asked government for another bailout, afford the project?

The initiative is part of a long-term turnaround strategy for the airline, according to the SAA Group’s environmental affairs specialist, Ian Cruickshank. “We are looking for 20-million litres by end of 2017. And by 2022, we are looking at 400-million to 500-millon litres per annum [half the carrier’s yearly fuel needs],” he said.

Conventional jet fuel can be blended up to 50% with biofuel for use in the fleet and could, in time, be as high as 100% in newer aircraft.

He said the oil from the first crop, expected in December, would probably be sent to Europe for analysis and refining and, if there was enough of it, could be used to power an SAA plane as early as next year.

Globally, the technology was moving ahead faster than one might think, he said. “Just about every day on commercial airlines there is a biofuel flight in the world.”

Energy returns
SAA, with aircraft manufacturer Boeing, will help to finance the project, which will be rolled out on a large scale by SkyNRG, a market leader in sustainable jet fuel, and Sunchem South Africa, whose parent company in Italy (Sunchem), holds the franchise for the tobacco Solaris.

But the large-scale production of biofuels faces many challenges.

“There have been a bunch of biofuel projects and some hard selling but the basic energetics of biofuel are just not good,” said Jeremy Wakeford, the chairperson of the Association for the Study of Peak Oil South Africa.

“Energy returns on investment ratios [the amount of energy returned on the energy invested] are quite low for most biofuels, with international studies showing the best returns for sugarcane, about 8:1, in Brazil. Biodiesel energy return on investment ratios are estimated to be 3:1 on average … but I have seen estimates on some biodiesel of up to 8:1.”

Bioethanol is ethyl alcohol derived from the fermentation of plants and biodiesel is derived from plant oils. The Solaris tobacco will produce oils.

Sunchem did not provide a return on energy investment ratio, but said its fuel could reduce CO2 emissions by 80%.

“Like any other crop, it depends on financial viability,” said Graham von Maltitz, a senior researcher at the Council for Scientific and Industrial Research, who added that this had been the downfall of many biofuel crops in the region.

He said the jatropha tree, for one, had been planted all over Southern Africa to produce fuel but was not viable. “It doesn’t have the yields required.”

“We do expect a slightly greater energy density than conventional fossil-fuel-derived jet fuel,” Cruickshank said.

According to Joost van Lier, the director of Sunchem SA, the crop can be harvested many times, which varies according to weather conditions and affects its financial viability.

But Cruickshank said the yield in South Africa had been extraordinary. He said there were still many steps that could be taken to optimise the yield of the plant.

Already the yields are considered high. “You can get three tonnes of oil per hectare,” said Von Lier.

Cruickshank said SAA had not spent much on the project yet, but “we are budgeting to spend money on research and development [R&D]”, although he could not provide any figures. It was important to note that the carbon tax that was being instituted had an R&D tax incentive of 150%, he said. That would amount to a R1.50 tax deduction for every R1 spent.

Wakeford said: “Ultimately, the question remains as to what is the best marginal use of South Africa’s limited agricultural land and water resources: production of fuel for aeroplanes or of food for its citizens.”

Von Maltitz said: “At the moment, we are not short on land for food. I don’t think at this point in time it is an issue, although it could be in the future.”

Water could be a constraint, he said, and the viability of the project would depend on how much irrigation the crop would require.

“With biofuel you typically get what you pay for and plants that have lower water needs often yield very little,” he said.

“As an industry, we understand we have to do everything in a sustainable way,” Cruickshank said.

Solaris aims to demonstrate its sustainability by meeting the Roundtable on Sustainable Biomaterials standard that has been identified by the World Wildlife Fund and other international nongovernmental organisations as the best guarantee available.

The seeds and pods will be dried in the sun and used for their oil but the rest of the plant could be used for other applications, such as animal feed and biomass for rural electrification.

Referring to land use, Cruickshank said the tobacco industry in South Africa had declined from about 30 000 hectares to 2 000 hectares.

“Because of the yield, it requires less land than other biofuel crops and, while yield is generally linked to water, we are looking to reduce the amounts of water getting wasted,” he said. ‘We are also looking at drip irrigation with drag lines and even doing dry-land trials to see what the yield is.”

Von Lier said the crop required less water than others in the sector typically would.

Second phase
The biofuel initiative might seem a vanity project better left to a cash-flush operator rather than SAA, which recently requested another loan guarantee from the treasury. This follows a R5-billion guarantee in 2012 and a R550-million bank facility from the state.

But airlines are facing emission taxes, which pose a threat to their financial viability unless they innovate. In fact, the aviation industry’s search for alternative fuels was largely triggered by impending emissions trading and taxes.

The European Union’s emissions trading system requires a cap on emissions, in general, and the region had hoped to extend it to airlines in EU airspace in 2012, but this has been suspended until 2016. Had it been applied, it would be costing SAA hundreds of euros per tonne of emissions.

The United Nations is also completing plans to introduce global emissions taxes. Its proposal will be done in several phases, to include the largest emitters, according to Cruickshank.

“The second phase would undoubtedly include South Africa … It’s better to get ahead in looking for a solution now than to chase a solution later.”

The price of biofuels can often be high, and in some cases 10 times more expensive than normal fuel.

“We are trying to achieve parity with fossil fuels … but it may not always be possible,” Cruickshank said.

But Von Maltitz said there was an economic argument to be made for biofuel even if the cost of the fuel itself was more than conventional fuel – it is estimated that biofuel will create at least 100 times more jobs per litre than fossil fuel.

Should the crop be able to meet SAA’s biofuel needs, it would create more than 100 000 permanent jobs and hundreds of thousands of seasonal jobs, Cruickshank said.

Processing centres for the fuel could be set up in the heart of the agricultural centres. “A huge amount of rural development could happen,” he said. “It would create secondary economies.”

One of the initiative’s aims is for small farmers to become part of it and possibly to pair them with commercial growers to transfer skills. If successful, biofuel could have a large impact on the country’s fuel use and, in turn, on the balance of payments.

“There could be a potential negative impact in terms of biodiversity, water use and land use, but it will be a positive for the fiscus,” Von Maltitz said.

Wakeford disagreed. “My general view is that food security should be a higher priority than production of aviation and more general transport fuels. Economic incentives can distort these priorities because demand for food or fuel depends on consumers’ ability to pay. It would be socially suboptimal if rich households could consume aviation biofuels at the expense of poorer households going hungry.”

Cruickshank said it was possible that SAA’s biofuels won’t be produced from tobacco alone and the airline was pursuing several other “quite viable” prospects. He would not divulge more details.

 
Lisa Steyn

Lisa Steyn

Lisa Steyn is a business reporter at the Mail & Guardian. She holds a master's degree in journalism and media studies from Wits University. Her areas of interest range from energy and mining to financial services and telecommunication. When she is not poring over annual reports, Lisa can usually be found pottering about the kitchen. Read more from Lisa Steyn

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