South Africa looks to develop aviation biofuels supply chain in response to vulnerability over carbon taxes and penalties
Thu 12 July 2012 – As part of policy objectives to reduce carbon emissions by state-owned companies (SOCs) and stimulate a green economy, the South African government is planning a strategy to help develop a home-grown aviation biofuels industry to support South African Airways (SAA). The country’s Minister of Public Enterprises, Malusi Gigaba, said at the launch last week of a climate change policy framework for SOCs that the fully state-owned flag carrier will require biofuels to make up half its fuel supply by 2020 “in order to avoid future penalties”. In the short term, he said, SAA was exploring the implementation of a voluntary carbon offset project to support forestry development in the region. The announcement came as the airline introduced a one to two euro carbon surcharge from the beginning of this month on passengers travelling to and from Europe to cover its EU ETS costs.
South Africa, with an energy intensive and coal dependent economy, is ranked as one of the 30 largest emitters of greenhouse gases in the world and amongst the highest per capita carbon emitters in Africa. Its President, Jacob Zuma, has committed to achieving a 34% deviation below the business-as-usual emission trajectory by 2020 and 42% deviation by 2025, conditional upon the developed Annex One countries providing “appropriate and adequate resources to support our mitigation efforts,” said Gigaba.
As part of its vision for an effective climate change response and a long-term transition to a climate resilient and low-carbon economy, the Public Enterprises ministry, which acts as the government’s shareholder in SOCs, has launched the framework to optimise the impact of SOCs on the reduction of their carbon emissions and the development of the green economy without compromising their financial viability. This development, said Gigaba, required a high level of collaboration across SOCs and with government playing a facilitating role.
He said SAA operated in the global market and “is consequently extremely vulnerable to policies in countries that it operates that impose penalties and taxes on carbon emissions.”
To avoid these penalties, he said there was a pressing demand for an “extremely large” quantity of biofuels that could form the basis for the development of a fully vertically integrated biofuels industry in South Africa and the region. He added the state-owned South African Forestry Company had been developing intellectual property to support this process.
Gigaba revealed the Department of Public Enterprises had convened a supply chain and a technical working group involving the SOCs and relevant government departments and agencies to specifically develop a strategy for meeting aviation biofuel requirements. “We expect an initial strategy to be released in the third quarter of this year,” he stated.
The move coincides with an announcement late last month by SAA that although it would be reducing its fuel levies on passenger fares as a result of a global reduction in jet fuel prices, this would be partly offset by an extra charge of between one and two euros on flights to Europe, which the airline said was being implemented under protest. “The carbon emissions tax is opposed by airlines and governments around the world because it has been unilaterally imposed by the EU despite proposals by the International Air Transport Association for a fair and equitable approach to be agreed under the auspices of the United Nations International Civil Aviation Organisation,” said SAA.
Gigaba revealed SAA was exploring a voluntary carbon offset project that can support the development of forestry in the region.
The airline currently operates a voluntary carbon offsetting programme for passengers. According to its website, SAA says it has engaged IATA to buy carbon credits but has so far not been able to source projects in South Africa that can deliver these carbon credits due to a lack of projects registered in the country and a shortage of supply in the few projects that are registered in the South African market.