Thesis (MBA)--Stellenbosch University, 2012. / Bioethanol and biodiesel are currently the main biofuels. The United States of America and Brazil
are the major bioethanol producers from maize and sugar cane respectively. European and Asian
countries produce and consume biodiesel as transportation fuel. Generally, governments want to
avoid importing biofuels, since this erodes the advantage of fuel security from growing fuel locally.
There are however opportunities for many African countries to export to Europe and the United
States of America, since they have preferential import tax exemption agreements with African
countries. Sub-Saharan Africa has large potential to produce biomass. Inherently, South Africa has
poor potential to produce biomass, due to the climatic conditions and water scarcity. However,
South Africa has infrastructure, skills, commercial farmers and, importantly, government policy on
biofuels. These advantages should be leveraged to optimise gains from a biofuel industry. A
biofuels industry holds potential in terms of job creation and rural development gains, apart from
the advantages of fuel security, greenhouse gas (GHG) emission reductions, stimulation of the
agricultural sector, and reduced fuel imports with the balance of payment advantages.
The South African government aims to develop rural communities in former homeland areas. If
degraded land in these areas is recovered and used for production of biofuels, the environmental
benefits are immediate and substantial. Fuel crop production in these areas does not compromise
food security nor does it result in further deforestation. Creating jobs in rural areas can contribute
to reduction of poverty. The Department of Minerals and Energy (DME) published its strategy in
2007. This excluded maize as permitted bioethanol feedstock, it sets a two per cent liquid fuels
penetration target, and gave fuel tax exemptions for biodiesel and bioethanol. The biofuels would
be distributed through voluntary low concentration blending into petroleum products by oil
companies. The industry would be regulated and producers require licensing through the South
African Revenue Service (SARS). The license conditions were mainly related to the type of
feedstock, where it was produced, volumes produced, local consumption, environmentally
friendliness, compliance with broad based black economic empowerment requirements and it
should not compete with food sources. The strategy is up for review after the initial five years
phase.
Currently there are no commercial bioethanol fuel production plants in South Africa and only some
small scale biodiesel production plants with very limited outlets to consumers. With all the apparent
advantages, why is nothing happening in the industry? Business is not showing interest, proving
that the economic conditions are not favourable. The government wants to control the production
side to maximise the gains from it, but instead of assisting the industry, it has practically inhibited it
from getting started. The consumers must also be prepared to accept the new fuels. Awareness,
education and a culture of sustainable use are vital to create the required market. This is an
exciting industry with potential benefits to South Africa and its society as a whole, but the
fundamental elements of business must be in place in order for it to become self-sustainable.
| Identifer | oai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:sun/oai:scholar.sun.ac.za:10019.1/95664 |
| Date | 12 1900 |
| Creators | Stemmet, Floris Nicholaas |
| Contributors | La Grange, D. C., Stellenbosch University. Faculty of Economic and Management Sciences. Graduate School of Business. |
| Publisher | Stellenbosch : Stellenbosch University |
| Source Sets | South African National ETD Portal |
| Language | en_ZA |
| Detected Language | English |
| Type | Thesis |
| Format | xiv, 106 p. |
| Rights | Stellenbosch University |
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