Government support for the biofuels industry is critical for the industry to get off the ground in SA. This was one of the key messages at the second African Biofuels Conference held in Gauteng recently.
Andrew president of the Southern Biofuels Association (Saba), said although the proposed incentives are a step in the right direction, they are not enough to enable feasible commercial production. The incentives are also not comparable with other biofuel-producing countries. “SA lags behind the world and our reasons don’t make sense because we have biomass availability,” he said.
He questioned whether SA is pursuing the right policy for its energy demands. “Refineries in SA tell us we will run out of refining capacity soon and by 2012 will be running serious shortages,” he said. F azel Moosa, manager of agribusiness projects at Absa reiterated the need for government support. He said the results of preliminary scenario models compiled by for the production of biofuel from cane, soya and maize are not encouraging. “If we were to provide finance today the answer would probably be no. That’s dismal news,” he said, adding that even the proposed government rebate of 45c/litre is also not feasible if producing biofuel from sugarcane. “We’ve been telling government thank you very much for the incentive but it is not enough. So the question then is what is enough?” he asked.
As it is a new industry, Moosa argued that the market channels and type of subsidies required are similar to what the synthetic fuel industry received since 1954. According to Makenete, Sasol received R3,8 billion worth of tariff protection via the equalisation fund between 1989 and 1995. M akenete said Saba recommends government put in place an investment incentive dispensation to “oil the wheels of the industry.” To create a transparent industry he also suggested a licensing system. He said strategic licensing is crucial for sustainable industry establishment, to ensure appropriate feedstock utilisation, fuel supply consistency and socioeconomic development.
Moosa said one cannot model how the livestock sector will change if the B5 and E10 blend is introduced. “The volume of animal feed that is going to come into the market is massive and we will see a realignment of the livestock and poultry industries,” he said. e explained that currently the livestock herd runs off grazing capacity and the amount of weaners in the market depends on the availability of grazing. “When we start feedlotting our breeding herds we move into a US model and change the basis of our livestock industry,” he said. Jose Francisco Davos, senior vice-president of the sugar and ethanol division at Dedini, a biofuel technology supplier in Brazil, encouraged SA to grow its industry. “You can learn from other countries, but there is no formula,” Davos said. – Wilma den Hartigh
