South Africa: Biofuels In South Africa

The use of biofuels1 as a renewable energy source presents the potential for numerous environmental, energy security and efficiency benefits to the South African economy. The biofuels industry also has potential as a key source of employment. In light of this potential, government has sought, over the past few years, to put in place a policy environment conducive to the development of a robust national biofuels industry. These attempts have been only partially successful. However, very recently the biofuels policy debate has been re-ignited by the release of the Draft Position Paper on the South African Biofuels Regulatory Framework (the "Position Paper"). This article traces the development of biofuels policy in the country and considers the implications of the Position Paper.

One of the first policy interventions related to biofuels was the White Paper on Renewable Energy, November 2003 ("Renewable Energy White Paper") which set a target of 10 000GWh of final energy production from renewable energy sources, by the year 2013. This target drove government renewables policy for most of the decade between 2003 and 2013, notwithstanding that the Renewable Energy White Paper was never put through the process required for the White Paper to become an Act.2 While the Renewable Energy White Paper indicated that biofuels made from biomass was among the renewable energy sources under consideration, in order for industry viability it was clear that biofuels policy needed to be developed at a much deeper level than is the case in the Renewable Energy White Paper. In particular, policy which made the biofuels industry an attractive investment opportunity was required especially in light of the strength of the industry's competitors, e.g., the crude oil industry which is characterised by a low cost of supply relative to the costs of establishing a biofuels industry.

In December 2005 the erstwhile Department of Minerals and Energy was directed by Cabinet to lead and co-ordinate the development of the Biofuels Industrial Strategy of South Africa ("Biofuels Strategy") through an inter-departmental Biofuels Task Team ("BTT"). The BTT subsequently developed the draft Biofuels Strategy, informed by a detailed feasibility study, which was approved by Cabinet in December 2006. The draft Biofuels Strategy made a very deliberate link between the renewable energy target and biofuels in that it proposed that up to 75% of the target might be achieved through the uptake of biofuels into the economy. The draft Biofuels Strategy underwent a public consultation process after which the Biofuels Strategy was revised and again approved by Cabinet in December 20073. Over time, the idea of biofuels as the major contributor to the renewable energy target fell away and it is worth noting that the 10 000GWh by 2013 target set in the White Paper on Renewable Energy was not achieved by the end of 2013 despite great progress in recent years towards renewable energy development.4

The Final Biofuels Strategy provides for a 2% (or 400 million litres per annum) penetration level of biofuels in the national liquid fuels supply - revised down from the 4.5% blending target that was proposed in the draft Biofuels Strategy. For the stated purposes of food security and environmental concern, the Final Biofuels Strategy proposes the following crops for the production of biofuels in South Africa:5

  • sugar cane and sugar beet in order to produce bioethanol; and
  • sunflower, canola and soya beans for purposes of producing biodiesel.

Despite the impetus provided by the Final Biofuels Strategy and great energy and investment from the private sector, the South African biofuels industry has remained nascent - possibly due to the persistence of the view that biofuels projects are unattractive due to the relatively low cost of crude oil. However, with a pending deadline on 1 October 2015 for the introduction of mandatory blending of biofuels with petroleum, the Minister of Energy has been prompted to publish the Position Paper in terms of the National Energy Act 34 of 2008. The Position Paper was published on 15 January 2014 for public comment, with a 10 February 2014 deadline for receipt of submissions by government, and is an attempt at fostering a regulatory environment that enables the commercial production of biofuels through the full and proper implementation of the Final Biofuels Strategy, including with financial support for the biofuels industry.

Among the tools for implementation of the Final Biofuels Strategy are the Regulations regarding the Mandatory Blending of Biofuels with Petrol and Diesel promulgated in terms of the Petroleum Products Act 120 of 1997 ("Mandatory Blending Regulations") and the Regulations regarding Petroleum Products Manufacturing Licenses under the Petroleum Products Act 120 of 1997 ("Manufacturing Licences Regulations"). As alluded to above, the Mandatory Blending Regulations commence on 1 October 2015 and will require that all licensed petroleum manufacturers purchase biofuels exclusively from licensed biofuels manufacturers, so long as the volumes can be blended with the petroleum manufacturer's petroleum within the minimum concentration of 5% volume per volume ("v/v") biodiesel blending with diesel, and between 2% v/v and 10% v/v of bioethanol to petrol.

According to the Position Paper, a regulatory framework for the establishment of a financial support programme for biofuels manufacturers will be achieved through a general fuel levy earmarked for the subsidisation of manufacturers of biofuels. The levy is currently proposed to be between 4.5 cents per litre and 5.6 cents per litre for the 20 years commencing on 1 October 2015 in order to provide a firm 15% return on investment for biofuels manufacturers.


1. Biofuels are sourced from biomass (such as crops) in order to generate electricity and power and to produce liquid fuels such as bioethanol and biodiesel.

2. Using a White Paper as a persuasive document driving policy development is fairly common practice within government. For example, the current development of climate change policy is prompted by the White Paper entitled the National Climate Change Response Policy ("NCCRP"),November 2011. Whether this is ever transformed into a climate change Act is debateable. However, it is very clear from a range of government actions (from the development of Carbon Capture and Storage technology to the mooted carbon tax) that the NCCRP is the touchstone for these developments.

3. For purposes of clarity and simplicity, the Biofuels Strategy approved by Cabinet in December 2007, after the public consultation process, will be referred to as the "Final Biofuels Strategy".

4. It is beyond the scope of this article to discuss the successes and perceived failures of the Renewable Energy Independent Power Producer Procurement Programme ("REIPPPP"). However, the REIPPP is the primary driver of renewable energy development in South Africa.

5. Eligible crops exclude maize - the national staple; and, jatropha - an alien to South Africa with a very high calorific value of seed oil but which produces a toxic seedcake remnant after having been used for biofuels production.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions