The Sugarcane Industry : a sustainable source of renewable energy 30 JULY 2012

Transcription

1 The Sugarcane Industry : a sustainable source of renewable energy 30 JULY

2 Presentation Outline Industry Location Contribution to the Economy Global Focus on Greener Technologies Global Competitiveness International Industry Trends SA Industry Potential Policy Development Strategic and Policy Fit Policy Choices Support - Green Economy Accord Industry outlook

3 Where are we located? 3

4 Industry Location 14 Mills Deep rural areas KwaZulu-Natal and Mpumalanga Energy independent, except during off crop Bagasse fibrous material left after juice has been extracted at the mills Bagasse is burned to generate electricity at low efficiencies Sugarcane a remarkable crop and feedstock - multiple value add products Sugar Renewable Electricity Biofuels Animal Feed Paper Bio-plastics Bio-chemicals 4

5 Contribution to the Economy The Sugar Industry on average represents: Total average industry income Export earnings R8 billion p.a R2.5 billion p.a Average value of sugarcane production Direct job opportunities Direct and indirect employment Sustainable livelihoods R5.1 billion p.a. (17.4% of total gross value of annual field crop production) million people 5

6 Global focus on renewable energy INDUSTRY USER OF NATURAL RESOURCES GLOBAL SHIFT TO CLEANER GREENER AND MORE SUSTAINABLE RESOURCE USE 6

7 Global Competitiveness Global focus on renewable energy sources Reduced carbon emissions and reliance on fossil fuels Potential for sugarcane-based industries to participate Changing perceptions of sugarcane-based industries from mature, low-growth grandfather industries to high-tech efficient source of renewable energy Integral part of future and global competitiveness Mandated markets Major investments need long-term stable environment 7

8 International Industry Trends International - Permanent Structural Change World s too largest cane suppliers, Brazil and India have access to sugar, electricity and ethanol markets Brazil ethanol dominant 60% of sugars to ethanol > 50% of transport powered by ethanol 60% growth in electricity from sugarcane over last 10 years 2015 target MW India electricity dominant Started in capacity 3000 MW 2015 target MW Many other sugar producing counties have transformed Australia Mauritius 8

9 Fuel ethanol mandates Around the globe fuel ethanol programmes Includes sugar producing countries Mandated markets Sustained world ethanol production 9

10 SUGARCANE AGRICULTURE AND PROCESSING Tops and leaves 15% fibre Sugarcane 15% Fibre 15% Sugar 70% Water Bagasse Sugars 80% as sugar Current Energy own use Energy Potential - step change Higher efficiencies 2 to 5 times more power Less steam to higher energy efficient mill Export national grid Sugar mill procures electricity Other Products Animal feeds Paper Bio-plastics Bio-chemicals etc. Sugar Act defines Bagasse as Industry Product Sugarcane one of the most efficient plants to convert sunlight into energy Season - April to December Sugars to ethanol 20% as molasses Molasses - potable/ industrial ethanol fuel ethanol 10

11 Renewable Energy from Sugarcane DIVERSIFICATION INTO HIGH VALUE NEW GENERATION MARKETS 11

12 SA Sugar Industry Potential Renewable electricity from sugarcane biomass 14 existing mills at full capacity, 20 million tons of cane MW Excess of R18 billion investment by 2019 Generation during season match to peak winter demand and maintenance periods Fuel ethanol Fastest implementation export sugar into ethanol E5 from excess sugar production ~ 600 million litres New estates and ethanol mills ~ 300 million litres Excess R3 billon investment 40% of White Paper target of GWh of renewable energy

13 Sugar Industry Renewable Energy Projects 13

14 Policy Development : Renewable Electricity White Paper on renewable energy GWh target for renewables, bagasse included 2008: NERSA published first Renewable Energy Feed-in Tariff (REFIT) 2009: NERSA published second REFIT 2011: NERSA - consultation paper Cogeneration Feed-in Tariff (COFIT) Sugarcane included as renewable cogeneration March 2011: Department of Energy released Integrated Resource Plan MW renewable energy Renewable electricity from sugarcane fibre listed under further options July 2011 REFIT/COFIT abandoned August 2011: RE IPPPP launched Comprehensive procurement program jointly by DoE and National Treasury Bidding within ceiling price per technology Two rounds of bidding completed 2012: DoE and Treasury Sugar Industry engagements Extensive discussions and submissions for sugarcane fibre under RE IPPPP Ministerial determination in progress RFP 2012

15 Policy Development : Biofuels National Biofuels Strategy Did not establish mandates, only targets Brownfields investments excluded Pricing mechanism inappropriate Draft Regulations for Mandatory Blending of Biofuels Compulsory blending - E2 and D5 Manufacturers to be licensed Brownfields operations still excluded 2012 Blending and pricing stakeholder meetings Policy process still underway

16 Strategic and Policy Fit Electricity Good fit with south africa s power needs Industry already experienced in power generation Low risk - capacity full from start up date Reduce SA carbon footprint Power production during peak season Power production in rural areas of KwaZulu-Natal and Mpumalanga Ethanol Government looking for E2 E10 At full capacity SA exports tons sugar (~E6 E8) SA currently importing petrol (2,0 billion litres) Contributes to reducing carbon footprint Alternative feedstocks available 16

17 Policy Choices INDUSTRY ISOLATION Single revenue stream Globally uncompetitive Unattractive investment destination Shrink to supply local market Need for high level of protection GRANDFATHER INDUSTRY INDUSTRY PARTICIPATION Full utilization of cane stalk sugar, ethanol, electricity Step change with technology, growth industry Expanding cane production to existing full capacity Increased sugar production Attractive investment destination SUNRISE INDUSTRY 17

18 Industry support : Green Economy Accord Green Economy Accord acknowledges the contribution that the sugar industry could make to renewable energy Sugar and energy industry supports the commitments made in the Accord:- Procurement of renewable energy as part of the energy generation plan Promotion of biofuels providing an incentive and regulation environment that would that would support the development of local biofuels industry Support localisation in manufacture Create and retains green jobs ~36% of national RE target Support increase energy efficiencies 18

19 Green Jobs Job Creation Areas Average number of jobs Construction phase (variable) Operations phase (20 years) 433 Primary fuel generation and agricultural operations (20 years) Total

20 Comparative Assessment across Renewable Technologies 20

21 SUGARCANE INDUSTRY - A SUSTAINABLE SOURCE OF RENEWABLE ENERGY AND CAN GROW THE GREEN ECONOMY Presenter: Dr Marilyn Govender South African Sugar Association marilyn.govender@sasa.org.za tel: