The Department of Energy (DoE) published a draft position paper on the SA Biofuels Regulatory Framework GN 24 of 2014 on 15 January 2014,’ writes Tendai Bonga, candidate attorney at Cullinan & Associates.
The feasibility of mandatory blending is however still questionable primarily due to low profit margins, measured against the cost of feedstock and crude oil prices. As a result the Office of the Controller of Petroleum Products at the Department of Energy has only processed eight biofuel license applications,’ he notes.
‘In an effort to ameliorate this situation, a biofuels task team has been established to coordinate the development of a biofuels industrial strategy as approved by Cabinet on 5 December 2007. Financial incentives are a crucial element to attract buy-in to this sector and the National Treasury has been consulted in order to develop feasible biofuels pricing framework,’ writes Bonga.
‘The aim of this framework shall be to encourage investment in biofuel manufacturing facilities, with the view of rationalising operating costs with the rate of investment return. A general fuel levy will be introduced to apply to all petrol and diesel consumed nationally. This levy shall go toward subsidising eligible biofuel manufacturers.
The blending of biofuels at depots will reduce transport costs, whilst minimising the risk of jet A1 contamination in pipelines,’ he says. ‘A Biofuels Implementation Committee has been constituted to resolve all outstanding blending issues, ideally in time to coincide with the commencement of the Mandatory Blending Regulations on 1 October 2015,’ Bonga states.