The current frank discussions internationally and in South Africa on the role of biofuels are both timely and welcome — because biofuels, along with bio-energy sources such as solar, wind, wave and hydropower, have a prominent role to play in creating a sustainable future, and especially one in which the rising global temperature is curtailed.
However, the right atmosphere must be created for an international and local biofuels industry to flourish without fear of compromising the environment or food security.
The International Energy Agency (IEA) predicts that chances are evaporating that rising global temperatures will be kept below 2C°, and that the current CO² emission levels of 390 parts per million (ppm) can be kept below 450 ppm. Climate change, partly through the use of fossil fuels, is a growing reality. We are heading towards temperature increases of 3° while our world leaders are still quibbling over policies, targets and commitments.
This means the world — and South Africa — needs a definitive paradigm shift to make sustainable options a reality.
We need the courage to admit that “business as usual” in terms of using fossil fuels and practicing agriculture as our fathers have done, can now be nothing more than fantasy.
By playing its cards right, the agricultural sector can increase its profitability without compromising food security. It can drive a sizeable biomass market side-by-side with its food production sector by transporting agricultural produce and residues — which are already available as part of farming practices — to the market place for use by biofuel producers. The harvesting of invasive plant species and natural grasses sustainably from the countryside can fuel the bioenergy sector.
A thriving local biofuels production industry can significantly promote the agricultural sector, create several thousand jobs and assist in rural development.
Although controversial, Brazil has in recent years eloquently demonstrated just how a bioenergy economy can work. Through a focused programme, 50% of the country’s energy now comes from renewable sources, and it has developed into a food production powerhouse. Concurrently, the biofuels industry has helped to raise 10% of the total population out of poverty.
South Africa can follow in Brazil’s footsteps — contrary to what prophets of doom have to say — despite the current lack of a vibrant biofuels industry under the lacklustre South African Industrial Biofuels Strategy (IBS) of 2007. It can become the biofuels technology leader and top technology integrator in Southern Africa, and has the potential to re-establish itself as a leader in bringing about a more sustainable Africa which provides energy and food to the world.
Jeff Passmore, the CEO of the Passmore Group and a former associate of Iogen, the first cellulosic ethanol start-up in the United States, recently said at an International Energy Agency session in Seattle that governments and agencies similar to the Central Energy Fund and the Industrial Development Corporation (IDC) should not try to build commercial biofuels plants, but rather focus on securing an environment of “revenue confidence” which motivated the private sector to finance and operate commercial plants with IDC backing.
The current South African scenario, based on the biofuels strategy from 2007, does not stimulate an environment in which capital risks are going to be taken. It sets out a very small target of 2% biofuels use and does not prescribe mandatory blending (which can secure take-off). There is also no clear policy on cost structure.
The current inertia in the local biofuels industry can be overcome through a more focused programme by our government and the Department of Energy.
However there are positive signs in the recent Industrial Policy Action Plan 2011/12 — 2013/14 document, which was presented to Parliament.
It suggests key milestones for the next few years, such as:
- Creating a permit-base rebate facility for the import of bioethanol in the event of local bioethanol supply disruption
- Amending fuel specifications to allow for requisite waivers
- Concluding and sanctioning of price support/incentive mechanism for biofuel producers
- Mandatory 2% use of biofuels, increased to 10% over the next 10 years
- Developing a water tariff policy for biofuel feedstock producers
- Industrial financing options provide by the IDC to investors, thereby leading to the commissioning of biofuel processing facilities.
For this to happen, though, we trust the South African government is serious about attaining the key milestones. It needs to create “revenue confidence” to boost the establishment of a local biofuels industry.