Biofuels could generate major logistics opportunities

An October 1 deadline for the blending of biofuels with diesel and petrol is still on the cards – although the fuels will have to be imported because there are no operational biofuels refineries. Hauliers are unable to plan in order to accommodate biofuel mixtures in a fleet running on engines with increasingly complex and sensitive fuel management systems. The rest of the logistics value chain is also subject to ongoing stop-go scenarios. Refineries announced for the Coega and East London IDZs would make use of imported feedstock initially, while a refinery touted for Bothaville would use locally planted sorghum. The cabinet approved a five-year biofuels industrial strategy in 2007, which allowed for a five-year pilot phase. From October 1 this year all oil refineries will be required to blend between 2% and 10% of locally produced bioethanol into their petrol, and 5% into diesel. A levy of between 4.5 cents and 6.5 cents per litre to offset the costs of biofuels is proposed by the Department of Energy, which published a position paper in January 2014. No final regulations have been published as yet, and the Department of Energy is not responding to questions by the industry. To date there has been much talk with little spark when it comes to investing in refineries or securing the land required to grow the feedstock. The first crops would need to be in the ground already to feed refineries ahead of the October 1 deadline. Incentives such as a 50% rebate on general fuel levy for biodiesel producers and threeyear accelerated depreciation have proven insufficient to attract investment into the biofuel sector. Maize is specifically excluded, which leaves potential producers having to look at alternatives. The government has decided using sorghum and soybeans will alleviate concerns around food security. This means that proven feedstock such as rape seed and canola are being sidelined in order to revive the growing of sorghum. Mass plantings of these crops would need to be supported by their own logistics infrastructure to keep production costs down and to transport millions of tons of feedstock to the refineries. One ton of soya beans can be converted into around 171 litres of fuel. Beans will have to be transported to the refinery, and the biofuel from the refinery and then to a blending facility – which requires another process in the fuel distribution system. South Africa’s biofuel industry therefore promises to power a number of opportunities for the logistics and transport sectors. But the likelihood of the engine spluttering into life in 2015 seems remote. INSERT The likelihood of the biofuel engine spluttering into life in 2015 seems remote.