Following enquiries from potential international investors regarding prospects for bio-diesel in 'developing' countries, Parallax has investigated the situation in South Africa. Parallax has particular interest in this area since it seems that the best geographical prospects for bio-diesel in South Africa are in KwaZulu Natal, the province in which Switch On Energy Services (the local Section 21 company established by Parallax) operates. Recent developments with regard to the field of biofuels in South Africa have shown that the Government is very keen to encourage greater activity in this sector.
The mainstream economy of South Africa is highly dependent on fossil fuels such as coal. As a result South Africa is a significant global contributor to greenhouse gases. In 1998 it was estimated that South Africa produced 1.4% of global CO2 emissions (
Biofuels is one specific issue that has been taken forward by the Department of Minerals and Energy and, at the beginning of January 2007, DME announced that the South African cabinet had approved an ambitious biofuels industrial strategy. This sets bold targets, including the aim for 4.5% of road transport fuels in South Africa to be replaced with biofuels by 2013. This will require a significant and comprehensive effort to establish agricultural producers and production plants.
A key driver for biofuels in South Africa will be the positive impact on carbon emissions. It is hoped that the draft biofuels plan will meet 75 per cent of the country's renewable energy target, in compliance with the Kyoto Protocol on climate change, which encourages nations to reduce their reliance on fossil fuels. The biofuels announcement comes ahead of the department's Clean Development Mechanism (CDM) conference in Johannesburg in January, at which the significance of biofuels potential in South Africa was underlined. Carbon considerations must therefore be assessed carefully when assessing or developing biofuels policy.
DME expects that biofuels will come from a diverse range of sources. Potential crops include maize and sugarcane to create ethanol, as well as soya beans and sunflower for biodiesel. As with most Government departments, job creation is a key focus for DME strategy and the Department expects that upto 55,000 jobs, many in the agricultural sector, could be created through the use of biofuels.
One of the key issues to consider for the widespread introduction of biofuels in South Africa will be the knock-on effect from changing crude oil prices. One option is to introduce a type of hedge fund to deal with this effect and avoid any potential economic disruption. In periods when prices were high, biofuels producers may pay a certain amount of profits back to the treasury. In exchange, they could receive partial government protection at times of low oil prices. Tax implications relative to crude oil will also be an important economic policy consideration since biodiesel is already covered by a fuel tax exemption, which the biofuels plan suggests expanding to include bioethanol.
The next stage of the biofuels strategy process is for a biofuels task team to consult with key stakeholders in order to develop an appropriate national implemention process. The task team is expected to report back to the cabinet in May 2007. The timing of the COMPETE project is therefore is well-aligned to the process of biofuels policy development and capacity building needs in South Africa.
Demonstration of the potential for biofuels in South Africa is another key step in the process to inform national strategy development and to set appropriate targets. South African synthetic fuels company, Sasol, which pioneered the use of petrol and diesel from coal and natural gas, announced their participation late last year (November 2006). In a joint effort with the government's Central Energy Fund they will build a biodiesel production plant based on soya beans.
However, in addition to considering large-scale industrial production capacity for biofuels in South Africa, the demand on biofuels resources from poor communities is a significant factor for future policy. While the mainstream economy of South Africa is very reliant on fossil fuels, the 2001 Census of South Africa revealed that many poorer South African still use wood for heating (24.6% of households) and cooking (20.5% of households). This high reliance on bioenergy places significant pressure on the natural resource base. Energy solutions are required for poorer households that are efficient, affordable and sustainable.
This national concern for the sustainable development of biofuels has recently been echoed at a United Nations Environment Programme (UNEP) General Council meeting in Nairobi, Kenya (6 February 2007). The Danish environment minister Connie Hedegaard said at this meeting that environmental standards were vital for international trade in biofuels. Hedegaard suggested that not all biofuel is good for the environment and the focus should be on biofuels produced from the by-products of food crops, such as sugarcane, rather than crops grown purely for biofuel production. This is a key issue to address in South Africa where the fuel vs food debate over land use is a potential cause of great conflict.
In the provincial government, the KZN Department of Agriculture and Environmental Affairs (DAEA) is divided along the departmental themes with regard to the use of Jatropha for bio-diesel. The environmentalists are very cautious, expressing concerns over the introduction to South Africa of a potentially invasive plant. There is a need for more investigation to make an informed decisions. One key source has been an academic institute in Darwin, Australia, which has warned DAEA of the invasiveness of Jatropha. At the Task Team meetings, the need for a Strategic Environmental Assessment before the introduction of Jatropha to any land was adopted in January 2003, but then rescinded in the February meeting. The suggestion was that any SEA should be done on a project by project basis at the community level. The environmentalists in DAEA fear that this means the need for any SEA will simply be overlooked.
Overall, DAEA recognises that Jatropha is already present in South Africa. The National Department of Agriculture has declined previous requests for imports of Jatropha, though there is evidence to suggest that the plant is growing in Zululand, KZN. Though permits are required for any application of new plants to previously cultivated land or virgin territory, DAEA believe that vast areas are already planted with Jatropha.
A possible alternative to Jatropha is a plant called Maringa, though again there is little knowledge of this source. Early indications suggested that bio-diesel production may yield more oil from Maringa, though again DAEA has insufficient information to make any valid assessment.
The political position towards Jatropha has been strengthened by a national government initiative to support bio-diesel production. The national department is pushing Jatropha use for bio-diesel, linking this to poverty alleviation. The benefits from job creation (particularly for farmers), as well as the use of the end product, is seen very positively. In addition to the oil produced from Jatropha, the cake remaining after the seeds are processed is a good fertilizer. One concern however is that the seeds are highly flammable and therefore the process should not be located near to any sugar or paper producing operations (two of the major industries currently operating in KZN).
In general, the use of bio-diesel for energy generation has been given a positive reception from the environmentalists at DAEA, though it is clear that further consideration is required. Of particular significance is the growing public interest in the use of bio-diesel. In early 2003, a Bio-diesel Information Day was held at a local Technical College in Pietermaritzburg. This event attracted over 1000 visitors and gave a useful a push to the bio-diesel prospects in South Africa.
Following extended investigations, and discussions with the key players, Parallax believes that there is great potential for the effective introduction of biofuel to South Africa. Our interest is particularly in the generation of electricity from bio-diesel for supply to rural communities, though other applications as part of a renewable energy mix also have great scope. There are clearly good long-term prospects, though policy-makers must first be informed of the practical requirements, the potential for an affordable energy supply, and the barriers that will need to be overcome. International experience in this regard is a vital issue and should be carefully considered to avoid committing resources for the support of an ill-conceived approach. We would be very pleased to hear of partner organisations (national or international) that can help us to develop the South African biofuel industry in a way that will bring maximum benefits and sustainable development.