Biofuels boom on the horizon?
Each industry is either directly or indirectly reliant on some form of fuel – one of the most common being the petrol and diesel used to power vehicles and heavy machinery. Unfortunately, using these fuels comes with environmental consequences. CLAIRE RENCKEN explores the advancements in biofuel technologies in South Africa.
In August last year, the Industrial Development Corporation (IDC) announced that R5,1 billion will be made available to develop liquid biofuels. The money will be used to support the production of 300 million litres of greener fuels every year from 2016 onwards. The project intends to explore feedstock such as maize, sugar cane, sorghum, soya beans and algae for the generation of greener fuels, including bio-ethanol and biodiesel. Maize will probably not be used due to the constant threat of food security. Sorghum’s demand has however declined sufficiently to include it as a potential for feedstock.
The construction of a sorghum plant at Cradock, which will produce 90 million litres of bio-ethanol a year, is set to commence this year. The agricultural sector has been pushing the government to finalise the regulatory framework enabling independent players to get into the generation of energy including electricity and biofuels.
People in agriculture believe small-scale farmers would benefit because of the potential for off-take contracts that would guarantee them a steady income and encourage them to grow feedstock. They feel that the biofuels industry would offer unique opportunities for sorghum production, thus encouraging more farmers to increase hectares for its production. As a result, the grain farmers’ body is expecting a steady increase in sorghum production once the biofuel industry settles, with farmers wanting to take advantage of higher prices.
Grain sorghum is utilised by the ethanol industry because it yields roughly the same amount of ethanol per bushel as maize. Experts say that as new-generation ethanol processes are studied and improved, sorghum’s role may continue to expand. The production of sorghum in South Africa varies from 100 000 tonnes to 180 000 tonnes a year, compared to three million tonnes of wheat and 11,5 million tonnes of maize. The Free State and Mpumalanga are the largest contributors by province to the area planted to sorghum and to sorghum production.
The Department of Rural Development and Land Reform last year acquired 848 farms totalling 882 238 hectares, with 10 000 hectares going to the Cradock biofuels project for sorghum and sugar beet in the Eastern Cape’s Chris Hani district municipality. According to Land Reform Minister Gugile Nkwinti, at least 4 428 women and 3 756 youths have benefited from the land distributed to new farmers, with priority given to vulnerable groups in and around Cradock.
Sorghum – the fifth most important cereal crop grown in the world – is used for food as grain, in sorghum syrup and sorghum molasses, fodder for animal feed, and in the production of alcoholic beverages. Now biofuels would be an additional marketable option for South Africa’s farmers. Most varieties are drought- and heat-tolerant and are especially important in arid regions, where the grain is one of the staples for poor and rural people.
Meanwhile, research on algae as a source for fuel is currently being conducted by Sasol, Rhodes University and the Nelson Mandela Metropolitan University. And in terms of sugar-based alternatives, sugar companies estimate that replacing only 10 percent of the country’s liquid fuel supply with sugar-based bio-ethanol could create 110 000 jobs in the industry. Brazil has employed this self-same method with great success.
What may be problematic is that, while greener fuels will be better for the environment, the increase in the production of feedstock would increase water consumption.
So what’s the hold-up?
Reports indicate that this potential South African biofuels boom may have to wait on paperwork. Seven years after a government feasibility study showed a biofuels industry in South Africa could create tens of thousands of new jobs, the paperwork needed to establish it remains outstanding. Briefing MPs on January 30, the energy department’s chief director for clean energy, Mokgadi Modise, said the original target of producing
400 million litres of biofuels a year, from the 2013 financial year on, “will be missed”. However, the country is set to produce biofuels “in excess of the originally-set annual target when the overall enabling and supporting framework… takes effect”.
This framework includes mandatory blending regulations and a pricing framework. Modise says the latter – including the development, by National Treasury, of a biofuels support mechanism – is at an “advanced” stage. “A number of outstanding issues [and] deliverables are still work in progress due to the required technical investigation.”
Incentives offered by government to attract investors include the exemption of bio-ethanol from fuel tax; a 50 percent general fuel levy rebate on biodiesel; and, a three-year “accelerated depreciation allowance” for such renewable energy projects. Modise says “These incentives have proven not [to] be sufficient to lure investments in the biofuels sector, hence the need to establish a more enabling and supportive regulatory framework.”
According to a document tabled at the briefing, eight companies – with a total annual capacity of more than one billion litres – have been granted licences, or provisional licences, to produce either bio-ethanol or biodiesel. But asked after the briefing if these facilities, planned for the Eastern Cape, Free State, Gauteng and KwaZulu-Natal, have actually been built, she confirmed that they exist only on paper.
South Africa’s biofuels strategy is aimed mainly at stimulating the production of suitable crops, such as sorghum, sugarcane, soybeans and canola, among others, in so-called “under-utilised agricultural areas” of the country, including in the former homelands. According to the document, the government is also considering options when it comes to blending biofuels into conventional petrol and diesel supplies.
Regulations in this regard were published in the Government Gazette in August last year. They stipulate that the minimum concentration of biodiesel in diesel is five percent by volume, and the permitted range for bio-ethanol in petrol between two and 10 percent. An implementation date for the regulations has yet to be set.
Under consideration is whether such blending should be done at the country’s existing six refineries, at depots, or at both refinery and depots. These options would require capital investments of R278 million, R459 million and
R421 million respectively.
MPs at the briefing raised concerns about, among other things, the security of supply of feedstock crops for the biofuels sector, the cost of transporting feedstock to biofuels manufacturing facilities, and the application of incentives for producers.
Another exciting development has been the launch of The South African Biogas Industry Association (SABIA) at the Africa Energy Indaba in February. SABIA has been launched by experts who believe that biogas should no longer be lumped together with other alternative energy sources, but holds enough weight to stand in its own category.
Mark Tiepelt, the chairman of SABIA, explains: “Previously, the only incentive available for investing in biogas energy was that you could get preferential interest rates from the IDC, but Eskom and the Department of Trade and Industry (DTI) recently introduced a rebate scheme and a grant incentive that have substantially improved the financial viability of biogas projects in South Africa.”
SABIA believes that biogas has long been overshadowed by other forms of renewable energy sources such as solar, wind and hydro. Commissioning a biogas plant, however, turns organic waste into electricity, and has the added benefit of producing thermal energy through capturing of excess heat from the generator, which turns the often environmentally hazardous waste into usable organic compost and has the potential to change the carbon status of the operation to being carbon neutral. The methane can also be used as vehicular fuel to run cars, taxis and buses. On a domestic level, biogas is used worldwide for cooking purposes, for lighting and to heat water.
“I believe biogas has the potential to create an entire new industry in South Africa with a market potential of more than R10 billion. Conservative calculations show the industry can produce about 2,5 gigawatts of electricity while creating thousands of job opportunities,” says Tiepelt.
A civil engineer by training, Tiepelt has been running his own biogas digester on his smallholding in Muldersdrift for the past four years and during this time has never purchased liquefied petroleum gas to cook with. His digester is fed with the raw sewage from the property, kitchen waste and also manure from the horse stables in the area. Tiepelt believes that the time has come for biogas to takes it rightful place in the renewable energy sector and for South Africa to “play catch-up” to other countries such as India that has more than 12 million rural biogas plants. This could be the game changer that the biogas industry needs.
However, Tiepelt cautions that the opportunities need to be utilised now. “The Eskom rebate won’t be around forever, and moreover, it’s going to become harder in the future in terms of the criteria and the restrictions placed on qualifying,” he says.