Biofuel Policy in South Africa: A Critical Analysis

Abstract

In 2007 the South African government released the country’s National Biofuels Industrial Strategy targeting a biofuels market penetration of 2% of liquid road transport fuels by 2013. Contrary to the international situation, the main driver for the development of a biofuels industry in South Africa is neither the economic threat of increasing oil prices nor mitigation of greenhouse gas emissions, but the need to create a link between the country’s first and second economies. Specifically, the government hopes to stimulate economic development and to alleviate poverty through the promotion of farming in areas previously neglected by the apartheid system. Before the release of this strategy, commercial sugar producers and maize farmers represented the majority of the parties looking to drive the South African biofuels industry. But, 2 years after its release none of the ventures by these stakeholders have been able to take off, mainly due to the Strategy’s restrictions on the type and source of feedstock as well as on the type of farmers whose participation in the industry would be subsidised. This chapter presents a critical scientific-based analysis of the implications and results of South Africa’s National Biofuels Industrial Strategy. Firstly, an update is presented on the state of the biofuels industry in the country, highlighting the current production statistics and the major investment activities, and how these were affected by the release of the Strategy. Then the ambiguities in the Strategy are outlined and critically analysed with reference to the current state of the biofuels industry in the country. The chapter concludes with lessons leant from the South African experience by those African countries which are yet to develop their respective biofuel policies.