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Aug 31, 2006

SA oil majors willing to market biofuels, but caution on quality

© Reuse this The South African Petroleum Industry Association (Sapia), which represented all of South Africa oil majors, supported government's strategy for the introduction of biofuels into the market, but economic realities and fuel qualities needed strong consideration, executive director Colin McClelland said in the association's 2005 report published Thursday.

He stated that several Sapia members were willing to assist in the marketing of biofuels, but that it was critical to recognise the risk posed by the “mismatch” of the costs of these fuels.

He detailed that this was based on the costs of growing the input materials and the costs of conversion, as well as the revenues based on global oil-prices and the rand-dollar exchange rate.

“Movements in these key parameters could render biofuels production to be highly profitable to highly unprofitable,” McClelland stressed.

However, he noted that, if appropriately managed, biofuels production could lead to job creation, reduce South Africa's dependence on imported fuel feedstocks, reduce greenhouse-gas emissions and improve energy security.

Sapia members are fully prepared to take up both biodiesel and bioethanol, but this would need to take place in a cost-neutral environment, as their use should not result in an increase in the production or distribution costs of the fuels, McClelland highlighted.

He also noted that government policy on biofuels currently concentrated on its use in the on-road transport market, and that the use of biofuels in the off-road and industrial sectors should not be neglected.

“They may offer more cost-effective and easier-to-achieve technical and quality standards,” McClelland said.

He went on to stress that using biofuels components in the production of petrol and diesel posed blending, distribution and usage challenges.

“Failure to properly address these challenges could have serious consequences in the market, as well as for vehicle emissions,” McClelland emphasised, adding that the problems could be overcome if they were adequately recognised and tackled appropriately.

Edited by: Matthew Hill
© Reuse this Comment Guidelines (150 word limit)
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