SMALL-scale farmers would have a better chance of succeeding if the government finalised the regulatory framework enabling independent players to get into the generation of energy, including electricity and biofuels, says Tongaat Hulett CEO Peter Staude.
Tongaat Hulett is one of the companies lobbying the government to relax the regulations and open up the energy generation sector to various agricultural processing industries, which would also create a new market for smallholder farmers.
Mr Staude said in an interview last week that the slow pace of consolidating the policy framework for electricity co-generation as well as the biofuels sector was frustrating the industry. It was also stunting a potentially huge new market that could see farmers, both commercial and emerging ones, planting more crops for the production of biofuels.
“Undoubtedly, this would assist the government to realise its main objective of creating sustainable jobs in rural areas,” he said.
In terms of SA’s draft Biofuels Industrial Strategy, the country plans to achieve a 2% penetration for biofuels in liquid fuel, or an estimated 400-million litres a year. Crops proposed for biofuel production include sugar cane and sugar beet for bio-ethanol, and sunflower, canola and soya beans for biodiesel.
The government, along with other stakeholders like the Industrial Development Corporation (IDC), was due to invest in a pilot bio-ethanol plant to be built at Cradock in the Eastern Cape. The plant would source sugar beet and sorghum from local small-scale farmers and was set to improve the quality of life for rural communities through a guaranteed market for growers.
Mr Staude said Tongaat Hulett would like the government to support proposals allowing the sugar industry to enter the biofuels production market. The industry had the potential to increase the production of bio-ethanol to 5% of SA’s fuel consumption by using the sugar surplus of between 600000 and 1-million tons, which is currently exported.
SA uses about 12-billion litres of petrol a year, produced from crude oil and coal. If the country produced bio-ethanol, it could create an “E2 blend” requiring 240-million litres of ethanol to be mixed with petrol, or an “E10 blend” requiring 1200-million litres of ethanol a year from the annual sugar surplus alone.
It was estimated that a new biofuel plant built from scratch could cost the state about R3,5bn. However, if conversions of existing sugar mills were made to include ethanol production, the capital costs associated with the four existing mills would be between R500m and R700m for each conversion.
Southern African Bioenergy Association president Andrew Makenete said it was puzzling why the government has not finalised the policy despite the Cabinet’s thorough understanding of the positive spin-offs to all farmers of opening the market.
He said SA was lagging behind countries like Swaziland and Malawi which already had biofuels companies supplying the national grid with their surplus electricity. Malawi’s bio-ethanol blending was already at 15%.
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Article source: http://www.businessday.co.za/articles/Content.aspx?id=164186