Sugar industry sets its sights on production of bio-jet fuel

The generation of green energy could become a game-changer for the local sugar industry.

In line with its value chain master plan, the sugar industry plans to come up with specialised services and products, including sustainable aviation fuels (SAFs) for visiting jets that have to refuel once they have touched down in Johannesburg, Cape Town or Durban. This is according to Richard Nicholson, who was an SA Cane Growers panellist in an Agri SA-Farmer’s Weekly webinar recently. Since a sharp drop in sugar sales within the Southern African Customs Union in the 2017/2018 season, the industry has made slow but steady progress to regain lost ground. The industry’s attempts to bolster demand came amidst the introduction of a “sugar tax” in 2018, which made sugar roughly 200% more expensive for the sweetened beverage manufacturers, who then switched to artificial sweeteners.

Moreover, the local industry had to deal with excess production around the world as a result of subsidies, a problem with dumping and a drop in recent years in the so-called recoverable value (RV) producer’s price for sugar cane. The latter has subsequently recovered to R5 000 per tonne for 2020/2021, which is just higher than the R4 931 of the 2016/2017 season. Meanwhile the international sugar price has also shown an increase.

Says Nicholson: “We’re looking for markets for our excess production of 6m to 8m tonnes of sugar cane. The co-generation of electricity following President (Cyril) Ramaphosa’s recent announcement of increasing the power generation cap to 100MW for independent or private producers presents opportunities to the sugar industry despite cash constraints.”

In acknowledgement of the sugar industry’s important contribution to SA’s economy, the government and other stakeholders devised the industry master plan to address some of its current production and marketing dilemmas. Following its adoption in November 2020, the plan has already resulted in a positive give-and-take approach between producers, manufacturers and retailers. The modest recovery in the producer’s price can be ascribed to the plan’s positive spin-offs.

Having considered seven possibilities for globally competitive value chain diversification, a task team concluded that the production of bio-jet fuel or SAFs, as well as the generation of biogas are currently viable options offering the most promise.

SAFs, unlike biofuel for local road transport, is considered a premium product driven by international market demand which currently far outstrips supply, good margins, and incentives. Moreover, SAFs are low-carbon, non-petroleum-based drop-in aviation fuels which are generally produced from bio-based feedstocks, including waste, residues, and end-of-life products. New technologies are also being developed to produce SAFs from non-biogenic resources.

Regarding biogas production, Nicholson points out that it’s an opportunity that provides a value proposition for the diversification of the sugar industry by adding value to waste – both on-farm and on an industrial level at sugar mills.

Once the excess fibre of sugar cane has been crushed and washed it results in a watery waste mixture from which solid leftover fibre, called bagasse, is separated. From a cost and return point of view it will be better to generate biogas rather than steam energy from bagasse, which is a renewable source of energy.

Says Nicholson: “Biogas could complement solar and wind energy. Moreover, it potentially offers a more flexible source of green power, while it could provide a source of local gas for South Africa’s integrated resources plan of 2019 and reduce the country’s dependency on imported gas with its associated price volatility.”

The sugar industry would like to pursue these two energy production options, which will require large-scale investments as well as further research and innovation. “Although I’m a bit concerned about the financial performance of the country’s sugar mills in recent times, they do have industrial capacity. However, these options will have to be pursued by the entire industry, including growers. Proceedsof additional industry products like electricity will have to be divided between growers and millers,” says Nicholson.

Two of the industry’s 14 mills were mothballed or shut down during the 2020/’21 season. However, Nicholson concludes that pursuing these two options might be a turning point for companies who have been exporting sugar at a loss. “The industry’s decision makers just need a good investment case.”

THE SUGAR CANE INDUSTRY IN NUMBERS

• Sugar cane production – 18.2m tonnes (2020/2021 season)

• Sugar production – 2m tonnes (2020/2021 season)

• Local demand – 1.4m to 1.5m tonnes

• Dependent livelihoods – 1m

• Direct jobs – 75 350

• Indirect employment – 350 000

• Gross industry revenue – R17.5bn (2020/2021 season)

• Land under cane – 362 000ha

• Support to domestic value chain – R400m per year.

■ editorial@finweek.co.za