Biofuel breakthrough, but the devil is in the detail

The compulsory blending of a minimum of 5% biofuel with mineral diesel and 2% to 10% with bio-ethanol announced in the Government Gazette on 23 August has been hailed as a breakthrough by the agricultural industry.

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“This is the only way to create a market for biofuels in South Africa,” said Bothaville agricultural advisor Fanie Brink.  “However, mandatory blending by itself will not establish a biofuels industry. The required policy framework will have to be fully regulated through the applicable legislation before any progress and investment will take place.” The new specifications are to be phased in, although energy minister Dipuo Peters has yet to set an implementation date.

The Biofuels Strategy, released in 2007, banned the use of maize, but allows grain sorghum, sugar cane and sugar beet to be used for bio-ethanol production, and sunflower, canola and soya beans for biodiesel production. Grain SA CEO Jannie de Villiers said Grain SA had put many hours into preparing for this moment. Farmers – “especially new black farmers” – have been trained and funds have been set aside to buy the best cultivars for producing ethanol from sorghum.

In addition, said De Villiers, partnership agreements have been signed with the department of rural development to recapitalised farms in the Free State, North West and Mpumalanga to produce additional sorghum and soya beans.  “The record prices of soya beans will definitely encourage farmers to plant more in the coming seasons for biofuel,” he said.

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However, it’s important that the implementation date and biofuel prices be set as soon as possible. Very little can be done by the private sector before then, said De Villiers. “The seed industry has to contract farmers before the end of September 2012 to multiply the seed for the 2014 crop when the biofuel plants will be ready for intake.”

Mabele Fuels is currently building South Africa’s first licensed bio-ethanol plant in Bothaville. Using sorghum as feedstock, the R1,7 billion project is expected to be completed in about two years and will be able to produce 153 million litres of fuel-grade bio-ethanol a year. With the US in the throes of its worst drought in 50 years, the diversion of oilseeds, feed and food grains into biofuels is currently under scrutiny.

The largest part of America’s diminished crop was allocated to biofuels, resulting in critical pressure on consumer prices, according to the Food and Agricultural Organisation. Renewable energy production in the US reached 40% of the US maize crop in 2012. However, Grain SA economist Wessel Lemmer said that, at an average national inclusion rate of 2%, the use of feedstock for biofuel in SA won’t affect the cost or availability of food here.