Sugar Industry

FairPlay welcomes government’s new biofuels plan

Statement by Francois Baird, founder of FairPlay

Government’s decision to revive its biofuels strategy is a welcome move that confirms the FairPlay position that implementing a mandatory bioethanol fuel blend will benefit the country through job creation, increased fixed investment, technology development and energy security, as well as expanded sugar production and desperately needed jobs in poor rural areas.

It’s been a long time coming, and South Africa has to hope that this time it’s for real. More than a decade ago, government committed to a biofuels strategy, aiming at a mandatory blend of at least 2% ethanol in petrol. In 2015, it provided for a mix of between 2% and 10%. Nothing happened, and the strategy was never implemented.

While countries around the world are developing and implementing fuel ethanol policies, spurred by sharply rising oil prices, South Africa has been left behind.

Now, in a speech delivered on his behalf at an energy conference in Cape Town, Energy Minister Jeff Radebe said that government plans to finalise the biofuel blending regulatory framework and have it approved by cabinet by the end of March next year.

It’s welcome news for the country, the economy and in particular the sugar industry which has been contracting in the face of surging sugar imports when it should have been growing and creating jobs. That expansion is now in prospect, dependent on the details of the plan to be released next year.

Minister Radebe plans an initial 2% blend, which will be enough to stimulate a distressed sugar industry. As the local fuel ethanol industry grows, it should be possible to increase the mandated blend to 10% or even higher as countries such as Brazil have done successfully.
It is a plan with multiple benefits. It will result in a new ethanol industry, increased land under sugar cultivation, and more jobs in rural areas. All of this is in keeping with President Ramaphosa’s economic stimulus package.

One government estimate some years ago put the potential job creation from an ethanol policy at 125 000. The sugar industry is more conservative, estimating some 25 000 new jobs could be created. Either way, it will be a huge bonus in a country with one of the highest unemployment rates in the world. The spinoffs from this growth and investment will boost the national economy.

Increasing use of fuel ethanol will also save the country millions in oil imports, particularly if the oil price keeps rising. The Minister is looking at an initial consumption of 400 000 liters. Even with a small levy to stimulate the ethanol industry, it should help government to cushion consumers by slowing the rise in fuel prices.

It is worth noting that, unlike maize, the use of sugar to make fuel ethanol does not impact on national food security.

FairPlay has been advocating this development for some time. The huge potential, both nationally and regionally, of a fuel ethanol policy will be discussed at a conference to be hosted by FairPlay planned for November this year. The Ethanol Action Summit will be a platform for private sector and public sector stakeholders to explore ways to drive growth and economic benefits from a fuel ethanol strategy.

Minister Radebe and the Department of Energy will be invited to the summit to speak about the roadmap for implementation of his ethanol strategy. We hope that he and his biofuels team will do us the honour of attending.