Biofuel production could help revive South Africa’s sugar industry

The creation of a biofuels industry meant that South Africa’s excess sugar could be used for important functions, such as producing bioenergy. Photo: FW Archives

Establishing partnerships between government, private sector and foreign investors is an important step in launching biofuel projects through innovative financing models in South Africa. This was according to Samukelisiwe Maphumulo, sustainability manager at the South African Sugar Association (SASA). Maphumulo was speaking at a recent webinar on biofuels.

She said the sugar industry has continuously engaged with policy makers to discuss the policy and investment support mechanisms required by the industry to diversify the use of excess sugar produced each year. About 800,000 tonnes of excess sugar were currently being exported at a loss.

She added that South Africa’s political environment had not been conducive to the development of the biofuels industry, due to a delay in policy development, the national biofuels regulatory framework and the feedstock protocol for biofuels was only published in February 2020. The mandatory blending mandate had not yet been enforced.

“The diversification into fuel ethanol has long been identified as an important element for the industry even before the signing of the Master Plan for the sugarcane value chain until 2030 in November of last year in response to the decline of the sugar industry, ”she said.

Eduardo Leão de Souza, executive director of the Brazilian Sugar Cane Industry Association, said Brazil is now the second largest producer and exporter of bioethanol after the United States.

“Thanks to the use of bioethanol, Brazil reduced its fuel imports to 15%, against nearly 75% in 1973. In 2019, more than 48% were replaced by bioethanol”, he declared .

Brazil currently had 376 mills and 70,000 sugar cane producers, and crushed 652 million tonnes of sugar cane in 2019/2020. Brazil also produced 36 billion liters of bioethanol in 2019/2020 and generated 23 million MW of bioelectricity, which represents 18% of the country’s energy matrix. The country also exported 30 million tonnes of sugar in the last season.

“[In order to allow for the growth of the bioethanol industry], Brazil [established] an authoritative ethanol pricing policy and methods, [as well as a] clear model to indicate how farmers will be paid and the risks that will be shared between industry and farmers, ”he said.

In terms of incentives, Brazil has differentiated fiscal policies for fossil and renewable fuels, he said.

“For example, at the federal level, we have a specific tax for gasoline that does not incur in relation to ethanol. At the state level, many states apply a higher VAT for gasoline. This creates incentives for the use of renewable energies thanks to the recognition of the positive externalities of ethanol in terms of [the environment], public health and [the economy],” he said.

Vânia Mahotas, deputy director of the Department of Petroleum, Mineral Resources and Energy Regulation, said the change to the biofuels regulatory framework in South Africa could be finalized later this year.

Rachel J. Bradford