The Industrial Development Corporation (IDC) is backing an ambitious project that will cost between R7,5billion and R11-billion to produce 1,1billion litres of ethanol a year.
The project will fund between seven and 10 ethanol plants over the next decade, with the hope that the low-cost, greener fuel will help off-set rising oil prices and reduce emissions. The IDC is prepared to half-fund the plants, with the other half coming from operating partners who will manage them.
The project will be rolled out regionally, starting with a pilot plant in a less populous province such as the Eastern Cape, which makes up only 7% of the country’s energy use.
The first ethanol plants are expected to start producing the fuel between early 2008 and late 2009, with the remainder operational by the middle of the next decade.
Noel Kamrajh, a senior projects manager for IDC, laid out the project at a one-day biofuels conference on Thursday hosted by the Energy Development Corporation, a subsidiary of the state-owned Central Energy Fund.
The IDC project is the largest-scale effort at the moment to get South Africa producing ethanol. The 1,1billion litres of ethanol that the project’s plants are expected to produce will hopefully off-set the increasing demand for fuel in South Africa over the next decade, Kamrajh said.
With oil-prices reaching record highs of $75 a barrel this week, ethanol has become a profitable and economic alternative to fossil fuels, he said. In South Africa, ethanol is expected to cost $40 to $50 a barrel.
The conference brought together stakeholders from government and the private sector to discuss the future of biofuels in South Africa. The consensus was that biofuels, such as ethanol, are the future of energy.
Marjorie Pyoos, group executive at the Department of Science and Technololgy, called for a more interventionist role from the government to support biofuels. The govern-ment has allocated R14,2million over the next three years to develop and market biofuels such as ethanol. By October, the Cabinet is expected to make a decision on the country’s strategy in developing a biofuels programme.
“The reality is we need long-term sustainable funding for the sector,” said Kevin Nassiep, chief director of energy planning in the Department of Minerals and Energy.
But there are challenges. Most ethanol would come from sugar cane, and the sugar industry in South Africa is one of the most closed in the world. A large-scale redirection of sugar cane to ethanol would require an overhaul of current sugar legislation, said Adrian Wynne, deputy director of industrial affairs of SA Cane Growers.
Other potential ethanol feedstocks, such as soya beans or jatropha are not produced in South Africa in sufficient quantities to meet future demand, other agriculture specialists said.
The IDC plan expects the bulk — about 50% — of the 1,1billion litres of ethanol to be produced from sugar cane, with 150million litres coming from sugar beet and the rest from maize and sweet sorghum.