The South African cabinet has approved an ambitious biofuels industrial strategy, announced the Department of Minerals and Energy this week (8 January).
It is hoped that the draft biofuels plan will meet 75 per cent of the country's renewable energy target, in compliance with the Kyoto Protocol on climate change, which encourages nations to reduce their reliance on fossil fuels.
According to the national Engineering News magazine, the fuels will come from a diverse range of sources. Potential crops include maize and sugarcane to create ethanol, as well as soya beans and sunflower for biodiesel. Government spokesperson Themba Maseko suggested that as many as 55,000 jobs, many in the agricultural sector, could be created through the use of biofuels.
The plan also suggests expanding the existing fuel tax exemption for biodiesel to include bioethanol.
Reports said a type of hedge fund could deal with the knock-on effect from changing crude oil prices. In periods when prices were high, biofuels producers may pay a certain amount of profits back to the treasury. In exchange, they could receive partial government protection at times of low oil prices.
A biofuels task team will report back to the cabinet in May following consultations with other stakeholders.
South African synthetic fuels company, Sasol, which pioneered the use of petrol and diesel from coal and natural gas, announced their participation late last year (November 2006). In a joint effort with the government's Central Energy Fund they will build a biodiesel production plant based on soya beans.
The biofuels announcement comes ahead of the department's Clean Development Mechanism (CDM) conference in Johannesburg this month.
Last year, South Africa registered a project to convert coal-fired brick-baking kilns to natural gas and in 2006 launched a low-cost-housing energy upgrade project in Cape Town, Africa's first project in terms of the CDM to be recognised by the UN.