12 December 2006

South Africa: Biofuels Industry 'Could Drive Up Staple Food Price'

The government's decision to establish a biofuels industry -- producing fuel from agricultural crops - has been taken without proper consultation and could drive up the cost of maize, a staple food.

This is the warning from "dismayed" NGOs, Citizens United for Renewable Energy and Sustainability (CURES) and Earthlife Africa Johannesburg, following last week's cabinet announcement that it had approved a biofuels plan.

The new industry, to be funded by the government and private investors, is expected to attract R6 billion in investment and could create 55 000 jobs and meet 75% of the country's renewable energy requirements by 2013, the cabinet reported.

A task team is due to submit a more detailed plan in May.

South Africa is following the lead of the US, Brazil and some European countries which have encouraged investment in ethanol plants to combat high crude oil prices, diversify fuel supplies and reduce carbon dioxide emissions.

In October, Energy Minister Buyelwa Sonjica said Brazil, Britain and the European Union would help South Africa develop the industry.

Yesterday, the two NGOs said the cabinet had approved the plan without consulting stakeholders other than the private sector directly involved.

While there was qualified support for a biofuels strategy, civil society had an input to make that could assist the government in ensuring that such a plan took account of broader concerns.

Recently, there had been increases in the price of maize that was the staple diet of many South Africans, in particular the poor. If maize was diverted to the production of fuel, or exported to feed biofuels markets in America and the European Union, this could further increase the domestic price of maize, they warned.

The government was |considering extending the existing subsidy for liquid biofuels - currently a 40% tax reduction - but such blanket subsidies had a history of benefiting primarily large-scale producers.

Careful targeting of the subsidy was needed if benefits were to extend beyond commercial agriculture and the refineries.

"An independent strategy that is directed specifically at the small-scale farmer is required to ensure that benefits are spread across the sectors and do not mainly accrue to the large-scale commercial farmers and large industry, with low-paying, menial jobs being created in the process," said Annie Sugrue of CURES.

"The roll-out of an industrial biofuels strategy should be preceded by full life-cycle analysis of current industrial farming methods, with a view to making them less energy intensive, less water inefficient and less polluting."

Richard Worthington, co-ordinator of the Sustainable Energy and Climate Change Project at Earthlife Africa, said it had been suggested that the recently announced biofuels initiative could meet 75% of South Africa's renewable energy target. But this was not difficult as this target covered "at best" only about 1% of primary energy supply.

"This is a critical juncture for South Africa," Worthington said.

"A responsible and well-informed strategy for biofuels could provide a massive opportunity within the so-called "second economy", making a major impact on poverty and unemployment, while reducing our massive and growing rate of greenhouse gas emissions.

"Or it could simply intensify ecosystem degradation to feed the massive profits of transnational corporations like Sasol, with hollow claims of becoming sustainable.

"It's essential that the cabinet ensures that the former option is realised."

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