Biogas - Department of Environmental Affairs · CBG Compressed Biogas as a Substitute for CNG ......

environmental affairs Environmental Affairs Department:

REPUBLIC OF SOUTH AFRICA

R E P O R TBiogas FACILITATION OF LARGE-SCALE UPTAKE OF ALTERNATIVE TRANSPORT FUELS IN SOUTH AFRICA – THE CASE FOR BIOGAS

R E P O R TBiogas FACILITATION OF LARGE-SCALE UPTAKE OF ALTERNATIVE TRANSPORT FUELS IN SOUTH AFRICA – THE CASE FOR BIOGAS

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Table of contentsAcronyms and abbreviations ..................................................................3Definitions ................................................................................................ 5Chemical symbols .................................................................................. 6List of tables ............................................................................................ 7List of figures ............................................................................................ 8Executive summary ............................................................................... 10

1. Chapter 1: Introduction ................................................................141.1 Background.....................................................................................................141.2 Study objectives ..............................................................................................141.3 Approach ........................................................................................................15

1.3.1 Feasibility requirements ....................................................................................................151.3.2 Sectors covered ................................................................................................................19

1.4 Guidance to the structure of this report ...........................................................191.5 Conversion between units ...............................................................................20

2. Chapter 2: The biogas-for-transport value chain ..........................212.1 Definition of biogas for transport .....................................................................21

2.1.1 Definitionofrawbiogas ....................................................................................................21

2.2 Value chain analysis ........................................................................................232.2.1 Biogassources .................................................................................................................232.2.2 Upstreamlogistics ............................................................................................................252.2.3 Biogasproduction .............................................................................................................252.2.4 Biogasupgrading..............................................................................................................272.2.5 Downstreamlogistics ........................................................................................................282.2.6 Biogasconsumption .........................................................................................................28

3. Chapter 3: Biogas-for-transport sources in South Africa ................303.1 Status quo of the South African biogas sector .................................................303.2 The Biogas for Transport Sources Inventory ......................................................323.3 Main sectors and potential .............................................................................333.4 Conclusion ......................................................................................................34

4. Chapter 4: Feasibility of transforming to CBG as a transport fuel ..354.1 Cost-benefit analysis: biogas-to-fuel versus biogas-to-electricity .....................35

4.1.1 Biogastofuel ....................................................................................................................374.1.2 Biogastoelectricity ...........................................................................................................414.1.3 Netpricebenefit:biogas-to-fuelversuselectricity ............................................................434.1.4 Benefitanalysisoffuelversuselectricity ..........................................................................444.1.5 Infrastructuralrequirements..............................................................................................47

2FACILITATION OF LARGE-SCALE UPTAKE OF ALTERNATIVE TRANSPORT FUELS IN SOUTH AFRICA

4.2 Risks of supply using CBG ................................................................................474.2.1 RiskofsupplyusingCBG .................................................................................................474.2.2 PotentialforintegratingCBGwithCNGinfrastructure .....................................................484.2.3 CBG/CNGintegration .......................................................................................................50

4.3 High-level macro-economic and environmental impact ...............................514.3.1 Macro-economicimpact ...................................................................................................514.3.2 Environmental impact .......................................................................................................56

4.4 Findings on the viability of CBG for use as transport fuel .................................584.4.1 CompetitivenessofCBGasafuel....................................................................................584.4.2 CNGfortransportisaprerequisiteforCBGasatransportfuel .......................................594.4.3 Importanceofhigh-volumerecurringtransportpatterns...................................................594.4.4 Theexclusivepositionofmunicipalities............................................................................604.4.5 Comparativesummaryofbiogasfortransport .................................................................60

5. Policy intervention rationales and options .....................................625.1 Overview of biogas-for-transport benefits and barriers ....................................62

5.1.1 Benefitsforimplementation ..............................................................................................625.1.2 Barriersforimplementation ..............................................................................................63

5.2 Strategic framework for policy development ..................................................655.2.1 SWOT on a national level .................................................................................................655.2.2 AnalysisofthecaseforSouthAfrica ................................................................................665.2.3 Typesofpolicyinstruments ..............................................................................................695.2.4 Positionofinterventionsacrossthevaluechain...............................................................71

5.3 International policy experience .......................................................................725.3.1 Internationalpolicyoverview ............................................................................................725.3.2 Policyeffectivenessexperiences ......................................................................................74

5.4 South African policy conclusions and recommendations ...............................745.4.1 CBGpolicyrationale .........................................................................................................745.4.2 CBGstimulusscenario .....................................................................................................765.4.3 Envisagedpolicyinterventions .........................................................................................77

6. References ................................................................................... 79

Appendix – List of stakeholders ..............................................................82

Disclaimer

ThisreporthasbeenpreparedbyEcoMetrixAfrica(Pty)LtdfortheDepartmentofEnvironmentalAffairsofSouthAfrica.

EcoMetrixAfrica(Pty)Ltdhastakenallreasonablecaretoensurethatthefactsstatedhereinaretrueandaccurateinallmaterialaspects.However,neitherEcoMetrixAfrica(Pty)Ltdnoranyofitsdirectors,officers,employees,advisorsoragentsmakesanyrepresentationorwarranty,orgiveanyundertakingofanykind,expressorimplied,astotheactuality,adequacy,accuracy,reliabilityorcompletenessofanyopinions,forecasts,projections,assumptionsoranyotherinformationcontainedin,orotherwiseinrelationto,thisreport,orassumesanyundertakingtosupplementanysuchinformationasfurtherinformationbecomesavailableorinlightofchangingcircumstances.

NoliabilityofanykindwhatsoeverisassumedbyEcoMetrixAfrica(Pty)Ltd,anyofitsdirectors,officers,employees,advisorsoragentsinrelationtoanysuchopinions,forecasts,projections,assumptionsoranyotherinformationcontainedin,orotherwiseinrelationto,thisreport.

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Acronyms and abbreviationsAD AnaerobicDigestionAFD FrenchDevelopmentAgencyBFP Basic Fuel PriceBRT Bus Rapid Transit SystemCapex CapitalExpenditureCBG CompressedBiogasasaSubstituteforCNGCNG CompressedNaturalGasCDM CleanDevelopmentMechanismCEF CentralEnergyFundCHP CombinedHeatandPower(Electricity)CNG CompressedNaturalGasCOD ChemicalOxygenDemandCOP ConferenceofthePartiesCPI ConsumerPriceIndexDBSA DevelopmentBankofSouthernAfricaDEA DepartmentofEnvironmentalAffairsDFID DepartmentforInternationalDevelopmentDLE DieselLitreEquivalentDSM Demand-sideManagementDSML Demand-sideManagementLevyDM Dry MatterDoE DepartmentofEnergyDoT DepartmentofTransportESSAC EuropeanScience,SupportandAdvisoryCommitteeEU European UnionFOB Free on BoardFTE Full-timeEquivalentGDP GrossDomesticProductGEF GlobalEnvironmentFacilityGGE GasolineGallonEquivalentGHG GreenhouseGasGIZ GesellschaftfürInternationaleZusammenarbeitGJ GigaJouleGLE GasolineLitreEquivalentGSI GlobalSubsidiesInitiativeGtL GastoLiquidGW GigaWattGWh GigaWatthourHCV HeavyCommercialVehicleIDC IndustrialDevelopmentCorporationIEA InternationalEnergyAgencyIISD InternationalInstituteforSustainableDevelopmentIMF International Monetary FundIP IlluminatingParaffinIPPC IntergovernmentalPanelonClimateChange


KfW KreditanstaltfürWiederaufbauKTBL AssociationforTechnologyandStructuresinAgriculturekW Kilo WattkWh KiloWatthourLCV LightCommercialVehicleLFG LandfillGasLfL GermanBayerischeLandesanstaltfürLandwirtschaftLNG LiquidNaturalGasLPG LiquifiedPetroleumGasMACC MarginalAbatementCostCurveMCV MediumCommercialVehicleMFMA MunicipalFinanceManagementAct2003(ActNo.56of2003)MJ MegaJouleMPA MitigationPotentialAnalysisMSW Municipal Solid WasteMt MillionTonnes(megatonnes)MW MegaWattMWh MegaWatthourMWW MunicipalWastewaterNCCRWP NationalClimateChangeResponseWhitePaperNERSA NationalEnergyRegulatorofSouthAfricaNG NaturalGasNGO Non-governmentalOrganisationNm3 NormalCubicMetre.OECD OrganisationforEconomicCooperationandDevelopmentOpex OperatingExpenseOperationalExpenditurePEG PolyethyleneGlycolPM Particulate MatterPSA PressureSwingAdsorptionREIPPP RenewableEnergyIndependentPowerProducerProcurementSABIA SouthernAfricanBiogasIndustryAssociationSAPIA SouthAfricanPetroleumIndustryAssociationSANEDI SouthAfricanNationalEnergyDevelopmentInstituteSASA SouthAfricanSugarAssociationSCPF StrategicClimatePolicyFundSMME Small,MediumandMicroEnterpriseSUV SuburbanUtilityVehicleSWOT Strengths,Weaknesses,OpportunitiesandThreatsTS Total Solids UASB Up-flowAnaerobicSludgeBlanketUK UnitedKingdomUNFCCC UnitedNationsFrameworkConventiononClimateChangeUNIDO UnitedNationsIndustrialDevelopmentOrganisationVAT Value-addedTaxv/v VolumeperVolumeZAR SouthAfricanRand

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DefinitionsAnaerobic Oxygen-freeBiomethane Biogasupgradedtonaturalgasquality.Mesophilic digestion Digestionat25-40°C.Usuallyaround35-37°C.Methane concentration Amountofmethane(CH4)inthebiogas,normallyexpressedaspercentagebyvolume.Methane yield AmountofCH4produced,expressedine.g.Nm3 per tonne total solids.Normal cubic metre. Volumeatnormalconditionsforwhichtwostandardsarecommonlyused: -DIN1343:273.15K(0°C)and1.013bar(atmosphericpressure) -ISO2533:288.15K(15°C)and1.013bar(atmosphericpressure)Thermophilic digestion Digestionintherangeof50-60°C,butusuallyintherangeof50-55°C.Total solids Theweightofthesubstrateafterdrying,normallyexpressedasapercentageofwet

weight.Alsocalleddrymatter.Wheeling The‘free’movementofelectricityorgasalonginterconnectedtransmission/transport

(pipe-)linesofdifferentownersforacertaintransmissionfee.


Chemical symbolsC CarbonCH4 MethaneCO CarbonmonoxideCO2 CarbondioxideCO2e CarbondioxideequivalentH HydrogenH2O Water vapourH2S HydrogensulphidektCO2e KilotonnesofcarbondioxideequivalentMtCO2e MillionTonnes(megatonnes)ofcarbondioxideequivalentN2 NitrogenNOX NitrogendioxideO2 OxygenSox Sulphuroxides

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List of tablesTable 1.3.1: Feasibilityrequirementstobeappliedonsectorandprojectlevel .............................................................. 15

Table 1.3.2: Sectorscoveredandfocusonspecificwastestreams ................................................................................ 19

Table 1.5.1: Unitsofmeasureconversiontable .............................................................................................................. 20

Table 2.1.1: Comparisonofthecompositionofbiogas,biomethaneandnaturalgas ..................................................... 22

Table 2.2.1: GenericcomparisonbetweenCNGandLNG.............................................................................................. 28

Table 3.1.1: Digesterspercountry................................................................................................................................... 30

Table 3.1.2: OverviewofexistingbiogasprojectsinSouthAfrica ................................................................................... 31

Table 3.2.1: Biogasinventoryqualitativeandquantitativecriteriadefinitions.................................................................. 32

Table 4.1.1: Pricesofenergyofdifferentcarrierscompared ........................................................................................... 36

Table 4.1.2: SouthAfricanpetrolpricingstructurebreakdown ........................................................................................ 39

Table 4.1.3: DomesticelectricitypricesCityPowerversusEskom(May2015) .............................................................. 42

Table 4.1.4: Comparisonreturnonmitigation:bioelectricityversusbiofuel..................................................................... 45

Table 4.1.5: GHGmitigationoptions:electricityversustransportsector ......................................................................... 46

Table 4.2.1: Biogas-for-transportGHGemissionmitigationpoliciesandregulations...................................................... 49

Table 4.2.2: Numberofminibussesandbussesperprovince ......................................................................................... 50

Table 4.2.3: CurrentandproposedCNGrefuellingstations. ........................................................................................... 51

Table 4.3.1: Biogas-for-transportjobcreationpotentialbyskillscategory ...................................................................... 52

Table 4.3.2: Thegasolinelitreequivalentperfueltype .................................................................................................. 53

Table 4.3.3: Vehiclefueleconomy ................................................................................................................................... 54

Table 4.3.4: Biogas-for-transportsubstitutionpotential ................................................................................................... 55

Table 4.3.5: Biogas-for-transportrelatedreductioninfuelimports .................................................................................. 55

Table 4.3.6: Fuelemissionfactors ................................................................................................................................... 57

Table 4.3.7: Biogas-for-transportGHGemissionmitigation ............................................................................................ 57

Table 4.3.8: Non-GHGemissionreductions(%)ofnewCNGcomparedtoin-usepetrol/dieselvehicles....................... 58

Table 4.4.1: Summaryoffindingsofbiogasfortransportanalysis–fuelversuselectricity............................................. 61

Table 5.2.1: Taxonomyofdifferenttypesofpolicyinstruments ...................................................................................... 70

Table 5.3.1: Measuresaimedatpromotingtheuptakeofbiogasfortransportinselectedcountries ............................ 73


List of figuresFigure 1.3.1: Costsofbiogasproduction,upgradingandcompressionasashareoftotalcost ...................................... 17

Figure 1.3.2: Costsofbiogasupgradinganditsdependencyoninstallationcapacity ..................................................... 18

Figure 1.4.1: Report structure ........................................................................................................................................... 20

Figure 1.5.1: Unitsusedfortheanalysisofbiogasforthetransportvaluechain ............................................................. 20

Figure 2.1.1: Thebiogas-for-transportvaluechain ........................................................................................................... 23

Figure 2.2.1: Therelativebiogasyieldpersourcepersector(GJ/ton) ............................................................................. 24

Figure 2.2.2: Biogastechnologymaturitystatus ............................................................................................................... 26

Figure 3.2.1: Biogaspotentialpersector(Nm3perday) ................................................................................................... 33

Figure 3.2.2: Biogaspotentialpersource(Nm3perday) .................................................................................................. 33

Figure 3.4.1: Geographicdistributionofpotentialbiogassources .................................................................................... 34

Figure 4.1.1: Theuseofwasteindifferentwaysandmodalities ...................................................................................... 36

Figure 4.1.2: Costbreakdownof95unleadedpetrolpriceperMJ ................................................................................... 39

Figure 4.1.3: Thepriceparitybreakdownof95unleadedpetrolasopposedtoCNG ...................................................... 40

Figure 4.1.4: AverageNERSA-approvedpriceincreaseandCPIsince2000 ................................................................. 41

Figure 4.1.5: The64projectsawardedunderREIPPPRound1–3,accumulatingto3916MWe .................................... 42

Figure 4.1.6: Comparingnetpricebenefitbetweenenergycarrierswhenusingbiogas-basedsubstitutes ..................... 43

Figure 4.1.7: Valuechainofbiogas-to-electricitycomparedwithbiogasfortransport ...................................................... 46

Figure 5.2.1: ASWOTanalysisofthecaseforCBGasatransportfuelinSouthAfrica ................................................. 67

Figure 5.2.2: Variousoptionsforpolicyinterventionwithinthebiogas-for-transportvaluechain .................................... 71

Figure 5.4.1: Biogas-for-transportincentiverationalerange ............................................................................................. 75

Figure 5.4.2: Biogas-for-transportincentiverationalerange ............................................................................................. 77

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Acknowledgements

“Thefacilitationoflarge-scaleuptakeofalternativetransportfuelsinSouthAfrica–thecaseforbiogas”wascommissionedbytheDepartmentofEnvironmentalAffairs(DEA),incollaborationwiththeSouthAfricanNationalEnergyDevelopmentInstitute(SANEDI).ThestudywasfundedbytheDepartmentforInternationalDevelopment(DFID)oftheUnitedKingdom(UK)governmentthroughtheStrategicClimatePolicyFund(SCPF)ProgrammemanagedbyCardnoEmergingMarkets(UK)Ltd.ThestudywasconductedbyEcoMetrixAfrica(Pty)Ltd. Theprojectteamacknowledgesvariousinputsreceivedfromthedifferentstakeholderswhomadeacontributiontowardsthedevelopmentofthisreport.


Executive summary

• AnassessmentofthefinancialviabilityofthemainCBGproductionprocesses,aswellasthemacro-economiceffectandthenationalgreenhousegas(GHG)mitigationimpact.

• Theidentificationofopportunitiesforpolicyinterventionsbygovernmentincollaborationwithbusiness,withtheaimofstimulatingtheapplicationofCBGasanalternativetransportfuel.

Potential of biogas for transport based on the relevant waste sources in the countryThetotalbiogaspotentialfromsourcescapturedintheinventoryisaroundthreemillionnormalcubicmetres(Nm3)perday,ofwhichthemajoritycanbefoundinthesugarandmunicipalsolidwaste(MSW)sectors.ThemajorityofpotentialbiogassourcesarelocatedintheproximityofSouthAfrica’surbanisedcentres,alongtheKwaZulu-Natalcoast,inGautengandaroundCapeTown.Thefollowingfigureshowsthegeographicdistributionofthepotentialbiogassourcescapturedintheinventory.Eachbubblerepresentsauniquebiogassource.Thesizesofthedifferentbubblesrepresenttherelativebiogasproductionpotentialbetweenthesources.

ThisstudyispartofaprogrammeundertheStrategicClimatePolicyFund(SCPF),establishedbytheDepartmentforInternationalDevelopment(DFID)oftheUnitedKingdom(UK)governmentandmanagedbyCardnoEmergingMarkets(UK)LtdonbehalfoftheDepartmentofEnvironmentalAffairs(DEA).ThepurposeofthefundistotranslatethemitigationplansoutlinedintheNationalClimateChangeResponseWhitePaper(NCCRWP)(RepublicofSouthAfrica,2011)intofeasiblemitigationactions.

Theobjectiveofthisstudyistoestablishanunderstandingoftheeconomicandpracticalpotentialofcompressedbiogas(CBG)asanalternativetransportfuel,therebyprovidinginputstothepotentialfurtherdevelopmentofpoliciesbytheSouthAfricangovernment.Insupportofthismainobjective,thestudytargetedthefollowingresults:

• Thedevelopmentofanationalbiogasinventory,including(asfarasaccessibleandavailable)anindicationofthequantity,qualityandavailabilityofbiogasasapotentialtransportfuel.

Itisworthnotingthat,withashareof38%ofthetotalvolume,theMSWsectoristhelargestcontributortothecountry’sbiogaspotential,andthatthesesources are all located in close proximityofurbanisedareas.Severalofthesourceswithinthissectorareamongthetenlargestpointsourcesidentified.Fromthis,onecanconcludethatlocalgovernmentsinSouthAfricahavethepotentialtocontroland/oroperatealargeshareofthecountry’spotentialbiogas-for-transportsources,makingitideallypositionedtodrivethelarge-scaleuptakeofbiogasasatransportfuel.

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Feasibility of transforming biogas to CBG as a transport fuelCurrently,theapplicationofCBGasatransportfuelinSouthAfricaisinitsinfancy.Biogasismainlyusedtogenerateelectricityandheat(combinedheatandpower),eventhoughtheanalysisshowsthatprocessingbiogasfurtherintoCBG,andusingitasatransportfueliseconomicallythemostattractiveoption.InspiteofcurrentmarketpricesofpetrolanddieselofaroundR11toR14perlitre(ℓ),nomaterialuptakeofCBGasatransportfuelhasmaterialised.Hence,itisevidentthat,undercurrentconditions,marketbarrierspreventsuchuptake.

Toaslightlylesserextent,thesamecanbesaidforcompressednaturalgas(CNG),which,whenappliedasatransportfuel,hasverysimilarpropertiesandtechnicalrequirementsasCBG.Currently,theSouthAfricangovernmentsupportstheuptakeofCNGasatransportfuelviaaninformal(i.e.notregulated)subsidyintheformofanimplicitexemptiononthefuelleviesandtaxesthatareplacedonpetrolanddiesel.Inadditiontothis,theIndustrialDevelopmentCorporation(IDC)providesasubsidyintheformofasoftloanfortheconversionofpetroland/ordieselvehiclestoCNGvehicles.

WhencomparingCNGwithCBGfromaneconomicperspective,CNGwillprobablyremainmorecompetitive,asgasfromMozambiqueisestimatedbytheGasUsers’GrouptobeimportedbySasolatonlyR20/GJandsoldataroundR42/GJonaverage,whileatthepump,petroliscurrentlysoldatapricehigherthanR309/GJ(R10/ℓ).Nevertheless,aspetrolanddieselpricesarelargelygovernedbyinternationalmarkets,whichareonlyinfluencedinaminorwaybylocalalternatives,thiswillnotbeofimportance.Aslongaspetrolanddieselpricesdonotdecreasefurther1,theapplicationofthesameinformalandformalsubsidiesforCBGasarecurrentlybeingappliedforCNGtocountermarket-entrybarriersmaymaketheapplicationofCBGasatransportfuelviableifregulatorycertaintyisprovidedinthisregard.Acknowledgingtheforegoing,theattractivenessforgovernmenttopotentiallystimulatebiogasfortransportwouldneedtolieintheappreciationofthemacro-economiceffect,GHGmitigationimpact

1. http://www.macrotrends.net/1369/crude-oil-price-history-chart

andotherco-benefitstogovernmentthattheapplicationofbiogasasatransportfuelcanmake.

GasinSouthAfricaplaysonlyamarginalroleintheenergymixand,assuch,thereisverylimitedtransportandretailinfrastructureinplace.WhileCBGcanbringinthedesiredgreencontent,CNGasalow-carbonfuel–ifmanagedwell–canprovidethelonger-termsecurityandcontinuityofsupplythatthismarketneedstotakeoff.TheparallelemergenceofCNGandCBGforthetransportmarketthereforeseemsessential.Consideringthelatter,itisthereforecrucialthatgovernment,initsoverallpolicyframework,acknowledgestheimportanceofCNGandCBGfortransport,andfacilitatestheintroductionofpoliciesthatshouldguaranteethesecurityofsupplyandprovideastableenvironmentforbanksandinvestorstoentertheindustry.CNGandCBG,asalternativestodieselandpetrol,canonlyworkifsufficientrefuellingpointsareavailable.Atthemoment,onlyahandfulofCNGfuelstationsareoperational,andasmallnumberareunderdevelopment,predominantlyinGauteng.ConsideringthelimitedrangeofCNGvehiclesversusdiesel-orpetrol-poweredvehicles,itisessentialtofocusonrecurringtransportpatternssoasnottogetintertwinedina‘chicken-and-egg’dilemma.

Thisreportidentifiesthreepotentialactivitycategoriesthatcouldfitthisprofile:minibustaxisinmanyofSouthAfrica’smajorcities,long-haulcargotransportroutesbetweenGautengandDurban,andCBGasafuelforcitybustransportsystemsthatmakeuseoftheabundantwastestreamsofMSWandwastewaterplants,alsoownedbycities.Thesecategoriesoncemoreindicatethatmunicipalitiesareintheuniquepositionofbothcontrollingsubstantialresourcesandoff-take.

Biogas for transport: benefits and barriersInadditiontohigh-levelstrategicbenefitsfortheSouthAfricangovernmentresultingfromtheapplicationofbiogasasatransportfuel,suchasreducedenergydependencyandthediversificationoftheenergymixpotential,benefitsshouldbeconsideredinrelationtothecurrentlyprevailingpracticeofutilisingbiogasforthegenerationofelectricity:

• Economic/financial:Applingbiogasasatransportfuelcreatesatwo-tothree-timeshighervalue,whichwouldresultinanincreaseinincomefromvalue-addedtax(VAT)forgovernment,aswellasreducing


thecountry’sforeignexchange(forex)requirements.Ontheotherhand,utilisingbiogasforthegenerationofelectricitycouldprovidea240-to320-MWcapacitytothestrainedSouthAfricanelectricitygrid.

• Environmental: Asatransportfuel,biogaswouldreducetheimpactonairqualityinurbanareas,whereastheimpactonairqualitywiththeapplicationofbiogasintheelectricitysectorwouldbefeltinmore remote areas.

• Socioeconomic: Theupgrading/compressionofrawbiogasfortransportcouldresultinonetotwoadditionaljobspersizeablefacility.Whenbiogasisusedforthegenerationofelectricity,rawbiogasisdirectlyconvertedintoelectricityviaacombinedheatandpower(CHP)installation.

• Infrastructure development: SouthAfrica’selectricityinfrastructureiswelldeveloped,whiletheCNB/CBGinfrastructureinSouthAfricaisvirtuallynon-existent.Theskillsthatareavailableintheelectricitysectorarealsomuchbetterdevelopedthanareskillsrelatedtotheapplicationofbiogasinthetransportsector.

Inadditiontothelackofeconomicviability,oneofthemainbarriersbroughtforwardbybiogasprojectdevelopersistheabsenceofademandforCBG,certainlyfortherequiredlongerterm(atermof10to15yearsisessentialtofinancebiogasprojects).Therefore,mostprojectdevelopersstilloptforbiogas-to-electricity,aselectricityforownuse,wheelingagreementsanddeliverytothirdparties,aswellasthedeliveryofelectricitytothemunicipalgrid,seemtoprovidebetteropportunities,regardlessofcertaindifficulties(e.g.lackofwheelingregulations)encounteredinrealisingthis.

Regulationsandrelatedlicencesarealsoregularlymentionedasbarrierstotheimplementationofbiogasprojects.Dependingonthetypeofwasteandsizeoftheproject,thiscanvary.Inthecaseofabattoirwaste,regulationsaremoststrict,asoneisdealingwithpotentiallyhazardouswaste,forexamplepathogens,andthedestructionofthiswasteneedstobeensured.Relatedlicencesneedtobeobtainedonanationallevel.Moreover,thedigestateisnotalwaysacknowledgedasbeingsafe(prion-free)andcanstillbeconsideredwaste,thereforelimitingtheopportunitiestouseandsellit.

Policy recommendationsWithoutgovernmentintervention,apositivebusinesscaseforbiogasinthenationaltransportsectordoesnot

exist.Thedecisiontosupportthebusinesscaseshouldcomefromtheoverallbenefitsforthecountryas,inprinciple,CBGiscurrentlynotcommerciallycompetitiveenoughtoovercomethebarriersofimplementationasatransportfuel.Ifgovernmentdecidesthatthesebenefitsjustifysupport,itcanbeprovidedviathreeprimarymeasures:subsidies,taxationandregulation.

Whenassessingopportunitiesfortheapplicationofthesemeasuresacrossthebiogas-for-transportvaluechain,awide-rangingmixofpolicyinstrumentscanbeconsidered.Whenlookingatinternationalexperiencesofgovernmentsupportfortheuptakeofdifferenttypesofbiofuels,itbecomesapparentthatmostcountriestypicallyrelyonatax-incentivescheme,wherebybiofuelsaretaxedatalowerratethanfossilfuelsorarecompletelyexemptedfromregularconsumption/fueltaxes.

Amandatoryblendingrequirement/quotasystemisthesecond-mostreliedonmeasure.Whenreviewingtheeffectivenessofthesedifferentmeasures,asappliedinternationally,usingfinancialincentives,incombinationwithotherpolicymeasures,topromotebiogasfortransportisconsideredaneffectiveoption.TheredoesnotseemtobeacompellingreasonwhythiswouldbedifferentinSouthAfrica.Asaresult,itseemssafetoconcludethatgovernmentincentivescanplayapivotalroleinpromotingtheuptakeofbiogasfortransportinSouthAfrica.

Inadditiontoidentifyingtheoptimalcombinationofmeasuresandtheirlocationacrossthevaluechain,itisusefultoidentifythesizeofthefinancialincentivethatcouldbeapplied.OnerationaletodeterminethelevelofCBG-specificfinancialsupport(incomparisonwithsupportforCNG,whichisgas-specific)istolookatdomesticandinternationalexamples,aswellasexistinglevelsofsupportinrelationtothedifferentCBG-specificco-benefits,andtoconverttheseintotransport-relatedunitsofmeasuretoallowforacomparisonof‘appleswithapples’.Consideringthreedomesticandthreeinternationalvalues(carbontax,jobcreationandgreenfuelsubsidies)thatalsoapplytothecaseforbiogasasatransportfuel,thelevelofsupportthattheSouthAfricangovernmentcouldprovidetothedevelopmentofthebiogas-for-transportsectorcouldlieintherangeofR1,80/GJtoR282,90/GJwhen‘pegged’withintherangeofexistingdomesticorinternationalmeasures,asillustratedinthisstudy.

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Summary overview of study findings and recommendations

FindingsderivedfromestablishinganunderstandingofCBGasanalternativetransportfuel

FIN

DIN

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ThetotalbiogaspotentialfromsourcescapturedintheinventoryisaroundthreemillionNm3 per day.

ThemajorityofsourcescanbefoundwithinthesugarandMSWsectors,andmostlargersourcesareintheproximityofurbanisedcentresalongtheKwaZulu-Natalcoast,inGautengandaroundCapeTown.ThedevelopmentofCBGfortransportisdirectlylinkedtoanddependentonthedevelopmentofCNGfortransportbymeansofsharedinfrastructureandsecurityofsupply.CBGasatransportfuelinSouthAfricaiscurrentlynoteconomicallyviable,despitebenefittingfromaninformalsubsidyprovidedbymeansofanexemptionfromfueltaxesandlevies.Nevertheless,severalstrategic,economic,environmental,infrastructuredevelopmentandsocioeconomicbenefitshavebeenidentifiedasbenefitsforthecountry.Mainbarriersstandinginthewayofthedevelopmentofabiogas-for-transportsectorincludetheabsenceofastablemedium-tolong-termdemandforCBG,theregulatoryframeworkandlicences.

RecommendationsforthedevelopmentofCBGasatransportfuelinSouthAfrica

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IfgovernmentconsidersthedevelopmentofCBGasatransportfuelworthwhile,acknowledgingthebenefitsforthecountry,afirststepcouldbetoformalisethecurrentexemptionfromfueltaxesandleviesforbothCNG/CBGandputinplacedirectsupport(i.e.asubsidyforvehicleconversion)andsupportforCBG,asiscurrentlythecaseforCNG,withregardtotransport.ProvideadditionalsupportforCBGasatransportfuelviatheprovisionofsubsidiesorblendingrequirementsinlinewithinternationalpractice.SpecificsupportforCBGasatransportfuelbasedonitsco-benefitscouldliebetweenR1,80/GJandR282,90/GJiflinkedtothedomesticandinternationalvaluationofco-benefits,asillustratedinthisstudy.FocussupporttowardstheimplementationofCBGfortransportonsectorsthatcontrollargebiogassourcesandfleetswithfixedtransportpatterns,suchasmunicipalitiesthatownand/oroperatelargelandfillsandwastewatertreatmentplants,andownand/oroperatepublictransportfacilities.


Chapter 1: Introduction

transportfuelintheformofCBG.ThecombustionofCNG(orCBGforthatmatter)ismuchcleanerthanthecombustionofpetrolordiesel.Becauseofthehigherhydrogen(H):carbon(C)ratioofCH4 versus conventionalheavierfuels(petrolanddiesel),itgenerateslessCO2perenergyequivalentoffuel2.

Becauseofitscleancombustion,CNG/CBGshouldhaveanadditionaladvantagewhenappliedinurbanareaswhereairqualityisgenerallyanissue.Forthisreason,itcanbeagoodfuelalternativeforpublicfleets(i.e.publictransportandwasteremovalservicevehicles).

IntheMitigationPotentialAnalysisstudy(MPA)(DepartmentofEnvironmentalAffairs,2014),CNGwasidentifiedasoneoftheopportunitiestoreduceemissionsinthetransportsectoratalowcost (R1360/ktCO2eby2050).TheuptakeofCNGvehicleshasshownnegativemarginalabatementcostoverallyears.Assuch,itisanattractivemeasuretocutdownroadtransportemissions.However,thelarge-scaleuptakeofCNGvehiclesrequiresthenecessarysupportinginfrastructure,alongwiththenecessarysupplyofgas.Thisstudyaimstoprovideclarityonthepotentialofbiogasasatransportfuel,aswellasthequestiononhowanemergingCBGindustrycouldsupportthelarge-scaleuptakeofCNG-andCBG-poweredvehicles.

1.2 Study objectivesBeneficiationofbiogascantakedifferentforms,fromproducingheat,electricityandCHP,totheproductionoftransportfuel.Thedigestereffluentresultingfrombiogasproductioncanbeusedasafertilizer.AllthesedifferentformscontributetodiversifyingtheSouthAfricanenergymix,whichiscurrentlydominatedbylocalcoaland(predominantly)importedtransportfuels.Apartfroma

2. Chemically,HatomsareconvertedintoH2O(watervapour)andCatomsareconvertedintoCO2.ThehighertheH:Cratio,thelessCO2generatedperenergyequivalentoffuel.

ThisstudyispartofaprogrammeundertheSCPFestablishedbyDFIDSouthAfricaandmanagedbyCardnoEmergingMarkets(UK)LtdonbehalfofDEA.ThepurposeoftheFundistotranslatethemitigationplansoutlinedintheNationalClimateChangeResponseWhitePaper(NCCRWP)tofeasiblemitigationaction.TheprogrammeincludesarangeofstudiescoveringseveralelementsoftheNCCRWP.

ThemainobjectiveofthisparticularstudyistoestablishanunderstandingoftheeconomicandpracticalpotentialforCBGasanalternativetransportfuelandGHGmitigationmeasure.ThiscouldprovidethebasisforthefurtherdevelopmentofpoliciespromotingbiogasfortransportandtheemergenceofanationalCBGindustry.

1.1 BackgroundAsidentifiedintheNationalClimateChangeResponseGreenPaper(DepartmentofEnvironmentalAffairs,2010),transportsystemsformthebackboneofSouthAfrica’ssocioeconomicactivitiesbyenablingthemovementofpeopleandproducts.Inthecontextofclimatechange,thetransportsectoristhefastest-growingsourceofGHGemissionsinSouthAfrica,andthesecond-mostsignificantsourceaftertheenergysector(DepartmentofEnvironmentalAffairs,2013).Thelatterimpliesthatsubstantialmitigationpotentialmaybefoundinthetransportsector.

AsreportedbytheEnergyResearchCentre(Dane,2013),thetransportsectorconsumesaround28%offinalenergyinSouthAfrica,97%ofwhichisinliquidfuels,contributingto13.1%ofSouthAfrica’sGHGemissions.Thesectorisvitalforeconomicdevelopment(Cohen2011;Mervenetal.2012).AccordingtotheInternationalEnergyAgency(IEA)(2010),naturalgascanplayasignificantroleincuttingvehiclecarbondioxide(CO2)emissions.Nevertheless,overthelongterm,therewillneedtobeacommitmenttotransitiontolowCO2gassources,suchasbiogas.

Biogasfromorganicsourcesneedstobecleaned,upgradedtoamethane(CH4)levelsimilartothatofnaturalgas,andcompressedinordertobeusedas

15

positiveenvironmentalimpact,fuelfortransportandnon-transportusecanpresentasubstantialpositivesocioeconomicimpact,andshouldbeassessedasawholeinrespectoftheoverallbiogaspotentialinthecountry.Nevertheless,thespecificfocusofthisstudyistheuseofCBGasatransportfuel,whichisdifferentfromotheruses,asitrequiresextensivecleaning,upgradingtheCH4contenttohighlevelssimilartonaturalgas(NG),andcompression.

Asstatedatthestartofthissection,themainobjectiveofthisstudyistoestablishanunderstandingoftheeconomicandpracticalpotentialofCBGasanalternativetransportfuelandGHGmitigationmeasure,comparedtothemorecommonuseofthegastogenerateelectricity,andtherebyprovideinputstothepotentialfurtherdevelopmentofpoliciespromotingbiogasfortransportandtheemergenceofanationalCBGindustry.

Insupportofthismainobjective,thestudyistargetedatthefollowingresults:

• Thedevelopmentofanationalbiomassinventory,including(asfarasaccessibleandavailable)anindicationofthequantity,qualityandavailabilityofbiogasasapotentialtransportfuel.

• AnassessmentofthefinancialviabilityofthemainCBGproductionprocesses,aswellasthemacro-economiceffectandthenationalGHGmitigationimpact.

• Theidentificationofopportunitiesforpolicyinterventionsbygovernmentincollaborationwithbusiness,withtheaimofstimulatingtheapplicationofCBGasanalternativetransportfuel.

1.3 ApproachToestablishitspracticalpotential,itwasessentialtodetermineafocusbeforebeingabletoeffectivelymapandassessbiomasssourcesrelevanttotheproductionofbiogasasanalternativetransportfuel.Theapproachtakentodeterminethisfocusisthedefinitionandapplicationoffourfeasibilityrequirements,whichwillprovideabasisforidentifyingpotentialbiomasssourcesthatcouldmakeaneconomicallyviableandpracticallyachievablecontributiontorealisingSouthAfrica’spotentialforCBGasanalternativetransportfuel,while:

• realisingalow-costmeasuretocutdownroadtransportemissions;

• makingasignificantcontributiontomitigationobjectives;and

• achievingapositivesocioeconomicimpact.

1.3.1 Feasibility requirements

Thesetoffeasibilityrequirementsdevelopedonthebasisoftheapproachdescribedabovedistinguishesbetweentwoapplicationlevels:asectorlevelandaprojectlevel.

Table 1.3.1: Feasibility requirements to be applied on sector and project level

Level Feasibility requirement Description

Sector

Commerciallyproventechnology

Includeonlyde-risked,proventechnologiesforcommercialbiogasproductionwithclarityoneconomic,environmentalandpracticalperformance.

Avoidnegativesocioeconomicand/orenvironmental impact

Asacountryintransition,itisimportantforSouthAfricathattheBiogasforTransportStrategyisbasedonthepremisethatithaspositiveimpactsfrombothasocioeconomicandenvironmentalperspective.

Project

Criticalmassforeconomiesofscale

Pointsourcesshouldbeofsufficientsizetoconvertandupgradebiomass,takingadvantageofeconomiesofscale.

Avoidsuboptimalusageofbiomassforenergy

Biomasssourcescurrentlyusedforlower-marginenergyalternativesasheatandelectricityhavebeenincluded.Ifcurrentmarketconditionsandtheregulatoryenvironmentbecomeconducivetobiogasfortransport,thesesourceswillbecomerelevantagain.


Severalstudies,includingBauer,etal.(2013)andValorgas(2011),haveassessedthesemostcommonlyappliedtechnologieswithregardtoeconomicperformanceandthescaleatwhichtheyareapplied.

Avoid negative socioeconomic and/or environmental impactPotentialbiomasssourcesforbiogashaveonlybeenconsideredifthisapplicationdoesnothavenegativesocioeconomicorenvironmentalimpacts.Internationally,arangeofstudiesproposessetsofrationalesandguidelinesthataimtoensurethatthesepotentialsourcesarenotinadvertentlyconsidered(oronlyconsideredifcertainmitigationcriteriaaremet)asasourcefortheproductionofbiogas.Themostprominentissuestoemergearethosearoundtheimpactofcrop-to-fuelandtheuseofwasteasfertilizer.

Crop-to-fuelTheNationalAcademyofSciences(2009),initspublication Liquid transportation fuels from coal and biomass,statesthatbiomassproductionforliquidfuelsshouldnotcompeteforlandonwhichanexistingcropisproducedforfood,feedorfibre,orcompeteforpasturelandthatwillbeneededtofeedagrowingandincreasinglyaffluentpopulation.Moregenerically,ithasbeenconcludedthatbiomassfeedstockshouldfirstcomefromwastethatwouldotherwisegotolandfills(Johnsonetal.,2006a;2006b).

Itisimportanttoconsiderthatgrowingcropsforliquidorgas-basedfueldoesnotonlypotentiallycompetewithagriculturallanduse,butalsowithotheragriculturalresources,suchaswater,farmingskills,infrastructureandcapital.Followingthelatterrationale,theprioritythatshouldbegiventowastestreams,aswellasthefactthatfuelcropscan,inprinciple,begrownonanypieceofavailableland,makinganinventoryofcrop-to-fuelsourcesimpractical,thisstudyexcludespotentialsourcesofbiomassforbiogasthatthatarenotwaste-based.

Use of waste as fertilizerWastestreamsaresometimesusedtofertilizetheland,e.g.fibresludgefrompulpmills(Rashidetal.,2006),therebypreventingtheneedforlandfilling.Certainwastestreams,pendingtheircomposition,canhaveadvantageouseffectsbyconditioningthesoil,increasingitswater-andmineral-holdingcapacity,

Thefirsttwofeasibilityrequirementsappliedonasectorlevelresultinaselectionofsectorsandrelevantwastestreamsfortheproductionofbiogasfortransport,asspecifiedinSection1.3.2.Thesecondtwofeasibilityrequirementsrequireproject-specificinformation(e.g.quantityofwasteproducedatsite)andwillthereforebeappliedonaprojectlevel.Thefeasibilityrequirementssummarisedinthetableabovearefurtherdetailedbelow.

Commercially proven technologyThetwomainareaswhereinnovationtakesplaceandwherethecriterionof‘commerciallyproventechnology’isrelevantareproductionandupgradingtechnologies.Thereasonforapplyingthiscriterionistofocusonapracticalpotentialthatcouldbeachievedintheshort-tomedium-term,ratherthanaftercompletionofaresearchanddevelopmenttrajectory,includinguncertainties.Thelattercouldjeopardisethepotentialoftargetedimprovementsasunexpectedtechnicalproblemsandtechnologycostsmaypreventimplementation.

Production technologiesAsshownintheanalysisofthebiogas-for-transportvaluechain(Figure2.1.1inChapter2),inparticular,thetwomainmaturetechnologiesforprocessingbiomassintobiogasare:• mesophilicanaerobicdigestion(AD);and• biogascollectionfromlandfills.

Gasificationofbiomass,althoughpotentiallyapplicabletoalargevarietyofbiomasssources,iscurrentlynotcommon,andisgenerallynoteconomicallyviable(IRENA,2012).Moreover,thetechnologyandrequiredconversionofthesynthesisgas,obtainedthroughgasification,intobiomethaneisrathercomplexandcostly.Thisintroducesfurtherrisksanddoubtswithregardtothelonger-termpotentialforbiogaswhenproducedusingsuchgasificationtechnologies.

Upgrading technologiesAsdescribedunderSection2.2.4,thefollowingtechnologiesaremostcommonlyappliedfortheupgradingofbiogas,andcanbeconsideredcommerciallyproven:• Waterscrubbing• Chemicalandphysicalscrubbing• Pressureswingadsorption(PSA)

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therebydecreasingtheneedformineralfertilizers.Nevertheless,thispracticeneedscarefulmonitoringtopreventcontaminationinthelongerterm,withpotentiallyundesired(trace)componentslikechemicalsusedintheproductionprocessfromwhichthewastestems.

However,ifthewastestreamisusedtogeneratebiogas,thedigestateisgenerallyasuperiorconcentratedmineralfertilizer,whichcanreplacetherawwastestreamasfertilizer.Moreover,theremainingorganicmatterisbiologicallymorestable,whichissuitableforsoilimprovement(Makádietal.,2012).

Critical mass for economies of scaleRecentinternationalstudies(includingValorgas,2011;Baueretal.,2013)provideimportantinsightsintotheappropriatescaleofbiogasproductionandupgrading.Resultsshowthatthecentralconstraintinthebiogasproduction,upgradingandcompressioncycleliesinupgradingbiogastobiomethane.AlthoughmostbiogasproductioninEuropecomesfrommanysmall-scale

digestersthatproducesmallamountsofrawbiogas(50to200Nm3 perhour),thesesitesaregenerallynoteconomicallysuitableforupgradingandcompression.In2013,therewerearound234upgradingplantsinoperationinEurope,withatotalupgradingcapacityof205 716 Nm3perhourofrawbiogasequivalenttoanaveragethroughputofrawbiogasofaround880Nm3 perhour.Mostofthesearelocatedonlarge-scalebiogasproductionsites.

Thefollowingfiguresshowthecostofbiogasproduction,upgradingandcompressionasashareoftotalcostfortwocategorieswaste:organicwasteandsewagesludge(Valorgas,2011).Inbothcases,theupgradingcostcomprisesasubstantialpartofthetotalcost.Fortheupgradingofbiomethanefromorganicwaste,thisis33%,whereasfromsewagesludge,itisasmuchas47%.Thisgivesagoodindicationoftherelativeimportanceofupgradinginthewholeproductioncycle.

Figure 1.3.1: Costs of biogas production, upgrading and compression as a share of total cost

Biomethane from organic waste (share in total cost)

Biomethane from sewage sludge (share in total cost)

Production ProductionUpgrading UpgradingCompression Compression

21% 29%

46%

24%

33%47%


Thecostsofupgradingbiogastobiomethanedependsignificantlyonproductionplantsize.Ingeneral,duetoeconomiesofscale,upgradingcostsdecreasewithanincreaseincapacity.ThenextfiguredemonstratesthedynamicsfordifferentupgradingtechnolgiesintermsofspecificinvestmentcostandtotalcostperkWhofbiogas-basedelectricityproduced,respectively,asafunctionofthebiogas-processingcapacity.

Itshowsthat,withthecurrentstateoftechnology,aninputofrawbiogasofapproximately750Nm3perhouristheminimumforeconomicalinvestmentinupgradingunits.Furthermore,itisnoteworthythatthisresultdoesnotappeartodependmuchontheexactupgradingtechnologyused,asthecostrangebetweenthetechnologiesisrelativelynarrow.

Waterscrubbing PSA

AminescrubbingOrganicscrubbing

6 000

5 000

4 000

3 000

2 000

1 000

00 500 1 000 1 500 2 000

Specificinvestmentcost(Eu

r/Nm

3 /h)

Capacityrawbiogas(Nm3/h)

Comparison upgrading technologies (Baueretal.,2013)

Thre

shol

d

3.00

2.50

2.00

1.50

1.00

0.50

1.000 500 1 000 1 500 2 000

Cost(Eu

rcent/kWh)

Capacityrawbiogas(Nm3/h)

Comparison upgrading technologies (Valorgas,2011;Persson&Wellinger,2006)

Waterscrubbing(Flotech) Waterscrubbing(Malmberg)

Aminescrubbing(MT-Energe)

PSA(Crmac)

Aminescrubbing(Crmac-Cooab)

Thre

shol

d

Figure 1.3.2: Costs of biogas upgrading and its dependency on installation capacity

Economicsandrelatedscaledependenciessuggestfocusingonsinglesourceswithacriticalmassthatcorrespondstoaminimumcapacityofrawbiogasproductionof18000Nm3perday,equivalentto, forexample,around360tonnesperdayofMSW3. Furthermore,aggregatingbiomassfromdifferentsourcestoacentralpointforprocessingissignificantlyconstrainedbytransportationandloading/unloadingcosts,whichcanaccumulatetohaveasubstantialimpactonthecostofbiomassfeedstockinpractice.

Avoid suboptimal usage of biomassOrganicwastemayalreadybeusedtogenerateenergyinsomewayorother.Asimple,straightforwarduseisburningwasteinaboilertoproduceheat.Morevalue-addcanpotentiallybederivedfromwastewhenconvertedintobiogastoproduceelectricity,

3.Basedonanorganicfractionofaround50%(Kigozi,2014)andayieldof100Nm3pertonneoforganicMSW(Frankiewicz,2014).

CHPortoproduceCBG.Althoughoneoptionmay,intheory,generateahighermonetaryvalueperunitofenergythananother,circumstanceslikefamiliaritywiththetechnology,thedemandonsiteforheatandelectricity,nolocaloff-takeofCBG,andincentivesliketheRenewableEnergyIndependentPowerProducerProcurement(REIPPP)ProgrammeforrenewableelectricitymaydirectownersofbiomasssourcesandprojectdeveloperstootherwaysofproducingelectricitythantheproductionofCBG.

Biomasssourcesthatarecurrentlybeingutilisedinanotherformhavebeenincludedintheinventoryofbiogasfortransportsources.Inprinciple,thesesourcescouldbeutilisedforthepossiblymoreattractiveproductionoftransportfuelsinthelongrunifmarketandregulatoryconditionsarechangedtobeconducivetotheproductionofCBG.Section4.1ofthisreportcontainsacomparisonbetweenelectricityandCBGproduction.

19

1.3.2 Sectors covered

Thesectorscoveredinthisstudyandtheinventoryofbiomassfortransportsourcesarepresentedinthetablebelow.Thetableincludesthefocusonspecificwastestreamswithinthesector.ThesectorsmentionedwereconfirmedasbeingthemainsectorsofimportanceduringstakeholderengagementandattheNationalBiogasConferenceinMarch2015.

Table 1.3.2: Sectors covered and focus on specific waste streams

Sectors Sector focus

AbattoirsSlaughterwasteofvarioustypes(bovine,porcine,poultry),consistingofrumen/stomachcontent,manure,condemnedmaterial/trimmingsandblood

AgricultureWastefromlivestockheldincattlefeedlots,chickenandpighouses,i.e.manure,litterandsilagerespectively

BreweryWastewaterresultingfromthebeer-brewingprocessandthesludgederivedfromitinthewastewatertreatmentprocess

FruitprocessingDiscardedwastefruitandpomace;pomaceisthesolidremainsofgrapes,citrus,legumesorotherfruitafterpressingforjuiceoroil

Municipal solid waste

Wastecurrentlydisposedatlandfills,consistingmainlyofhouseholdgarbageand,dependingonthecircumstances,includinggreencitywasteandgardenwaste

Municipalwaste-watertreatment

Sludgeproducedintheprocessofcleaningwastewatercanbeanaerobicallydigested,therebyreducingtheremainingsludgeandproducingbiogas

Pulp and paperSeveraltypesof(woody)solidwastesandsludgearegeneratedinpulpandpaperproduction;themainwastestreamfocusedonisfibresludge,whichisproducedduringthewastewatertreatmentprocess

SugarproductionThemainwastestreamatsugarmillsthatprocesscaneisbagasse;onthegrowers’side,wasteconcernstopsandleaves,whicharegenerallyleftinthefield

1.4 Guidance to the structure of this report

Thisstudyisgearedtowardsprovidingrecommendationsforpoliciesthatcouldfacilitatetheuptakeofbiogasasatransportfuel.Thefollowingchaptersprovideanoverviewofthebiogas-for-transportvaluechain,anassessmentofthenationalpotential,andthefeasibilityofbiogasfortransport.Thisisfollowedbyafinalchapterwithconclusionsandrecommendationsforpotentialpolicyinterventions.

Chapter2providesananalysisofthevaluechainandtheimportantcharacteristicswhenproducingandimplementingbiogasfortransport.

Chapter3givesanoverviewofthestatusofthedevelopmentofbiogasinSouthAfricaandthepotentialofbiogasfortransport,basedontheavailabilityandlocationoftherelevantwastesources.Thelatterdatahasbeenretrievedfromaninventoryofbiomass

sources,whichhasbeendevelopedaspartofthisstudy.ThecustodianofthisinventoryisSANEDI.

Chapter4focusesonthefeasibilityoftransformingbiogastoCBGasatransportfuel.Thischapterinformspolicymakersaboutthefinancialperformanceandhurdleswithregardtobiogasfortransportinthecontextofacompetitivefuels-for-transportmarketplace.Moreover,itincludesananalysisofthepotentialenvironmentalandmacro-economicbenefits,shouldalarge-scaleuptakeofbiogasfortransportberealised.

Chapter5concludesthisstudywithrecommendationsforpolicyinterventionsandprojects,focusingonfinancialincentivesthatcouldbeprovidedtoenhancetheuptakeofbiogasfortransport.Moreover,ahigh-levelperspectiveisprovidedofthebarriersidentifiedduringstakeholderengagement.Thefollowingdiagramprovidesaschematicoverviewofthereportstructure,which,fortheconvenienceofthereader,isreflectedthroughoutthereport.


1. Introduction

Background(1.1)Objective(1.2)Approach(1.3)Reportstructure(1.4)Unitconversions(1.5)

2. Value chain

Definitions(2.1)Analysis(2.2)

3. Biogas sources

Statusquo(3.1)Inventory(3.2)Mapanalysis(3.3)

4. Feasibility

Cost/benefit(4.1)Supplyrisk(4.2)Economic(4.3)Mitigation(4.3)Viability(4.4)

5. Policy

Benefitsandbarriers(5.1)Strategicframework(5.2)Internationalexperience(5.3)Conclusions(5.4)

Figure 1.4.1: Report structure

1.5 Conversion between unitsAsguidancetothereader,Figure1.5.1andTable1.5.2belowprovideconversionsofimportantunitsofmeasureusedthroughoutthestudy,whichshouldassistininterpretingvaluesandtheirsignificance.ThevaluesinFigure1.5.1arecalculatedfordriedrawbiogaswith65%CH4content,startingwithabiogasvolumeinNm3/hasabasis,whichisconvertedtoMWofinstalledcapacity,assuminga100%(theoretical)conversionrateandsubsequentlyGWhofenergyproducedduringtheyear,basedona100%(theoretical)availability.

0

0

0

0 934 1 868 2 802 3 736 4 670

50 100 150 200 250 300

5 10 15 20 25 30

1 000 2 000 3 000 4 000 5 000

Rawbiogas,Nm3/h 65%CH4 content

GWhperannumat100% conversion and availability

Diesel litre equivalent (DLE)producedperhour

MWat100%conversion

Figure 1.5.1: Units used for the analysis of biogas for the transport value chain

Conversionbetweenseveralunitsanddifferentformsofenergy:

Table 1.5.1: Units of measure conversion table

Energy kWh MJ

1kWh 1.0 3.61MJ 0.28 11 Nm3 ofbiogas(65%CH4) 6.4 231litreofpetrol 9.0 32.41litreofdiesel 35.8 35.81litreofCNG/CBGat250bar 2.5 9.0

ItbecomesapparentfromTable1.5.1above,thattheenergydensityofalitreofCNG/CBG,althoughcompressedto250bars,isonly9MJ,whichissignificantlylowerthanthatofpetrolanddiesel,whichis32.4MJand35.8MJrespectively.Toachievethesamerange,atransportvehiclethereforerequiresalargerCNGtankthantheequivalentpetrolordieselfueltankwould.

21

Chapter 2: The biogas for transport value chain

1. Introduction 2. Value chain

3. Biogas sources

4. Feasibility 5. Policy

Thischapterprovidestherequiredtechnicalcontexttothestudybydefiningbiogasfortransportandprovidinginsightsobtainedduringananalysisofthevaluechainfromtherelevantbiomasssourcesviaproductionandupgradingtousebiogasfortransport.

2.1 Definition of biogas for transport

2.1.1 Definition of raw biogas

Biogasisgenerallyreferredtoasagasmixturederivedfromthedecompositionoforganicmatterbyanaerobicbacteriaintheabsenceofoxygen.Biogasistypicallycomposedof65%CH4and35%carbondioxide,togetherwithtracesofcontaminantgasseslikehydrogensulphideandammonia.Theexactcompositiondependsonthetypeoffeedstockandconditionsofthefermentationprocess.Althoughbiogasisthemostvaluableproduct,anotherproduct–thedigestate–isalargelyinertwetproductwithvaluableplantnutrientsandorganichumusthatcanbeusedassoilconditioner(Redman,2010).

Theaforementionedtypicaldefinitionofbiogas(agasderivedfromthebacterialdecompositionoforganicmatter)isalsousedbytheSouthernAfricanBiogas

IndustryAssociation(SABIA)4.Asbiodigestionisthemost commonly applied and most commercially relevant typeofbiogasproduction,thisstudyrestrictsitselftothisdefinition.

Nevertheless,occasionally,biogasisalsoreferredtoasagasmixtureobtainedfromthegasificationofbiomasswithorwithoutfurthermethanisationtoachieveacompositioncomparabletothatofnaturalgas.Thistypeoftechnologyisnotincludedinthisstudyasitisnotcommerciallyavailable,asfurtherdiscussedin Section 2.2.3.

Biogas for transportForuseintransport,rawbiogasneedstobecleanedandupgradedtoahigh-CH4contentgas,alsoreferredtoasbiomethaneandcompressedtoCBG,whichcanbeusedasasubstituteforor–mixedwithCNG–usedasvehiclefuel.Asillustratedinthefollowingtable,thismeanstheremovalofmorethan90%oftheCO2,smallconcentrationsofnitrogen(N2)andoxygen(O2),aswellasimpuritieslikehydrogensulphide(H2S),siloxanesand ammonia.

4. http://biogasassociation.co.za/


Table 2.1.1: Comparison of the composition of biogas, biomethane and natural gas

ComponentBiogas Biomethane Natural gas

Content

Methane 45–70% 94–99.9% 93–98%

Carbondioxide 25–40% 0.1–4% 1%

Nitrogen <3% <3% 1%

Oxygen <2% <1% -

Hydrogen Traces Traces -

Hydrogensulphide <10 ppm <10 ppm -

Ammonia Traces Traces -

Ethane - - <3%

Propane - - <2%

Siloxanes Traces - -

Source:Kuczyńska&Pomykała(2012)

TheCO2removedintheupgradingofbiogastobiomethaneisgenerallyventedtotheatmosphereandresultsinaGHGemission.However,fromacarbonaccountingperspective,itisimportanttorealisethattheseemissionsstemfromshort-cyclerenewablewastesourcesand,moreover,that,incasethewasteisnotprocessedintobiogas,uncontrolledaerobicorevenanaerobicdecomposition(thelatterbeingmosthurtfulfortheclimate)willoccur,resultinginemissiontotheatmosphere.Everyavoided1000Nm3releaseofbiogasintotheatmosphereequatestoapproximately10tCO2e ofGHGemissions.Nevertheless,thisenvironmentalbenefitisnotaccountedforinthisstudy,asthebiomassmaynotdecayanaerobically,oranyCH4 produced may bedestroyed(e.g.flaringoflandfillgas).

Foruseastransportfuel,naturalgasorbiomethane(upgradedbiogas)iscompressedtoCNGandCBGrespectively. In contrast to bottled butane and liquid naturalgas(LNG),thecompressedgasisnotaliquid.

Asillustratedinthetableabove,thecompositionofbiogascanvary.Thecompositiondependsonmultiplefactors,suchastheprocessdesignandoperation,aswellasthetypeofsubstrate.Onaverage,thebiogasproducedbycontrolledADhasa65%CH4content,whichissignificantlyhigherthanthatofbiogascapturedfromlandfills,whichhasanaverage45%CH4 content. Thesetwoaveragepercentagesareusedthroughoutthisstudy.

Biogas-for-transport value chainThevaluechainofbiogasfortransportiscomplex,withvariouspotentialsources,potentialwaysofcollectingtherequiredbiomass(upstreamlogistics),productionandupgradingtechnologies,andultimatelythemodalitiesoftransporttogetCBGtoconsumers.Inlinewiththefocusofthestudy,thevaluechainisillustratedinthefollowingfigure.

23

Biogas sources

Upstream logistics

Downstream logistics

Biogas production

Biogas upgrading

Biogas consumption

Abattoirs In process pipeline

Landfillgascollection

Water scrubbing

Compression FleetownersRetail useStorage

In process road transport

Mesophilicanaerobic digestion

Pressure swingadsorption

Transport to theenvisagedoff-taker

Polyethyleneglycol(PEG)Scrubbing(e.g.SelexolTM)

Chemicalscrubbing (e.g.amine-orsodiumhydroxide-based

Dedicated pipeline transport

Dedicated road transport

In process rail transport

Dedicated rail transport

Agriculture

Fruit processingMunicipal solidwaste

Municipal wastewater

Sugarproduction

Pulp and paper

Source:EcoMetrixteamanalysis

Figure 2.1.1: The biogas-for-transport value chain

AuniquestepinthecaseofCBGfortransport,asopposedtotheuseofbiogasforelectricitygenerationandheatwithequipmentdesignedtocopewithalowerMethanecontent,istheupgradingstepinwhichtheMethanecontentisincreasedtolevelscomparablewithnaturalgas.Thisstepandothersaredescribedinthesectionthatfollows.

2.2 Value chain analysis

2.2.1 Biogas sourcesThebiogas-for-transportsupplychainstartswithbiogassources,alsoreferredtoasbiomassorfeedstock.Althoughtherearevarioussubdivisions,theyarecategorisedaccordingtothefollowingkeysectorswithrelevantorganicwastesinlinewiththefocusofthisstudy:abattoirs,agriculture,fruitprocessing,municipalsolidwaste,municipalwastewatertreatment,pulpandpaper,andsugarproduction.Manyofthesewastescanbetreated,usedordisposedofinotherwaysthatmaynotbewithoutvalue.Inthatway,theycanbeindirectorindirectcompetitionwithbiogasproduction.Examplesincludespreadingtoland,compostingorincineration.

Thefollowingkeysectorsandfocusontherelevantmainorganicwastetypesaredefined:

1. Abattoir:Wastesgeneratedincluderumen/stomachcontent,manureandcondemnedmaterial/trimmingandblood.Exceptforblood,thesetypesofwastehaveanattractivehighbiogasyieldwhenanaerobically

digested.Adisadvantageofabattoirsistheapplicablehealthandsafetyregulationswithregardtothemicrobialquality.Slaughterhousewastescanbecontaminatedwithhighnumbersofmicroorganisms,includingbacteria,viruses,prions,fungi,yeastsandassociatedmicrobialtoxins(Urlingsetal.,1992).Suchwastesposeapotentialrisktoanimalandhumanhealth,unlesshandledandtreatedproperly.

2. Agriculture:Wastegeneratedatfarmsincludesanimalmanure(e.g.wetmanureslurries)fromintensivestylesoflivestockfarminganddryanimalmanures(e.g.animalbedding).Althoughithasarelativelylowbiogasyield,largecattlefeedlotsandchickenbroilerfarmscanproducesizabletonnagesofwasteandbiogas.

3. Brewery wastewater:Duringtheproductionprocess,wastewateraccumulatesfromthevariouscomponentprocesses(wortproduction,fermentation,storage,filtration,bottling).Anaerobictreatmentisgenerallychosenforthefirststagebecauseofthehigherchemicaloxygendemand(COD).Thevolumeofgasproducedthroughtheanaerobicdigestionofthesolubleorganicmatterisproportionaltothemassoftheorganicmatter.

4. Fruit processing:Althoughfruitprocessingisaseasonalbusiness,discardedfruitandpomace(solidremainsafterpressing)areaninterestingwastesourcewithahighyield.However,seasonalitycanbeadealbreakerasotherbiomasssourcesmayberequiredtocoveraperiodofuptoeightmonthswithoutproduction.


5. Municipal solid waste:Thisconsistsofallwastethatisaccumulatedatlandfills.Organicmaterialisoneofthelargestconstituentsofmunicipalsolidwastestreams.Thewasteiseitherdumpedwithoutseparatingorganicfromnon-organicwastestreams,ortheorganicwasteisseparatedfromthenon-organicwaste(e.g.household,kitchenandgardenwaste).Inpractice,mostmunicipalsolidwaste(includingmostfoodwaste)inSouthAfricaisdumpedwithoutseparation,andhasanorganicfractionofaround48%(DepartmentofEnvironmentalAffairs,2012).

6. Municipal wastewater treatment:Sewagesludgeisproducedasaby-product.Theoretically,allsewagesludgecanfunctionasbiomass.However,inpractice,issuesmayarisebecauseoftoxicitylevels(especiallyinthecaseoftheconcentrationofheavymetals).Theremainingbiosolidismorecompressedthantheoriginalsewagesludge.Itcanbedisposedofinalandfill(accordingtotoxicity)orusedasfertilizer/soilconditioner.

7. Pulp and paper:Wastestreamsareusuallyofsubstantialsizeduetothescaleofoperations.Dependingontheprocess(i.e.chemicalormechanicalpulping)andtypeofend-products(i.e.paper,newsprintorlinerboard),thecontentdiffers.Chemicalpulpingprocesses(i.e.Kraftandsulphiteprocesses)arehighlyintegratedandwastesarelargelyburntintheboilers.Thefibresludgethat

remainsinthewastewatercan,however,beaninterestingsourceofbiomasswithahighyield.

8. Sugar production:InSouthAfrica,sugarproductionisbasedonsugarcanegrowninlargequantitiesinKwaZulu-Natal.Althoughtopsandleavesleftinthefieldaretoodistributedandlowinyield,thebagasseproducedafterpressingthecanecanbeausefulfeedstock.Althoughgenerallyburnedintheboilersofthesugarmill,theproductionofbiogasmaybeanattractivealternative.Inthecaseofsugarproduction,seasonalityalsoplaysarole.

Thegraphbelowprovidesanoverviewofthebiogasyieldsforsolidandsemi-solidwastestreamsasusedinthisstudy.Theseyieldsarebasedonanumberofscientificstudies,includingFachagenturNachwachsendeRohstoffe(2010),thefeedstockatlasoftheEuropeanAssociationforTechnologyandStructuresinAgriculture(KTBL)5andresearchonthewebsiteoftheGermanBayerischeLandesanstaltfürLandwirtschaft(LfL)6,aswellastheanalysisoftheEcoMetrixteam,andareexpressedinGJpertonofwetwaste.

5. http://daten.ktbl.de/euagrobiogasbasis/startSeite.do;jsessionid=6673083D64CB29E2EA6734F-35C03F044

6. http://www.lfl.bayern.de/iba/energie/049711/?sel_list=32%2Cb&anker0=substratanker#substratanker

Chickenslaughterwaste

4.25 GJ/ton

3.07 GJ/ton

2.32 GJ/ton 2.21

GJ/ton

1.69 GJ/ton 1.55

GJ/ton1.14 GJ/ton 1.07

GJ/ton0.64 GJ/ton 0.54

GJ/ton

Pork slaughterwaste

Chickenlitter

Fruit effluent

Bagasse

Municipalwaste

Sugarproduction

Fruitprocessing

Agriculture

Abattoir

Solid waste

Waste-water

Cattleslurry

Pig slurry

Beefslaughterwaste

Figure 2.2.1: The relative biogas yield per source per sector (GJ/ton)

25

Thediagramshowstherelativedistributionoftheyieldpersourceacrossandwithinthedifferentsectorscapturedwithinthisreport.Itisimportanttoconsiderthat,whiletheyieldsreflectedinFigure2.2.1arebasedonbothpracticalandtheoreticalin-depthstudies,yieldscanvaryfromprojecttoproject,basedontheuniquecharacteristicsofaspecificproject.Thelattermayincludethedrymattercontent,storageandhandlingoffeedstock,aswellasthespecificdigesteroperation.

2.2.2 Upstream logisticsThesecondstepinthebiogas-for-transportsupplychainisupstreamlogistics.Thisstagecapturesthetransportationsysteminplacetogetbiomassfromthepointsourcetotheprocessingfacilityorproductionplant.Amainconsiderationintheviabilityofbiogasproductioniscost,asignificantpartofwhichisincurredinthecourseoftransportation.Variousgenericmodesoftransportcanbeidentified,whichmayormaynotberelevant,dependingonthetypeofbiomassandtheconfigurationofexistinginfrastructureinaregionorcountry.Onthewhole,thefollowingcategoriesinupstreamlogisticsaredistinguishedinthebiogasvaluechain:in-processpipeline,roadandrailtransport,anddedicatedpipeline,roadandrailtransport.

Inthisregard,akeydistinctionneedstobemadebetweenpointsourcesthatarelargeenoughindependentlytosustainbiogasproductiononaneconomicallyviablescale,andthosethatarenot.Inthefirstcase,thebiomasswillalreadyhavebeenamassedonasufficientlylargescalethroughexistingcommercialprocesses(e.g.landfillsormanureatfeedlots).Otherwise,thecaseforbiogasrestsondevelopinganefficienttransportsystemthatcollectsfeedstockfromanumberofsmallersourcesandcarriesittoacentralisedbiogasproductionplantforprocessing(e.g.small-scalefarming).

Assuch,importantfactorstotakeintoconsiderationincludethefollowing:

• Costsofon-siteandoff-sitecollectionandtransportation(so-calledfirsttransportandprocessing,andtransporttodestination)

• Distance/concentrationofsources

• Relativesizeofbiomasssources• Gatefees• Costofwastestreamhandlingintheabsenceof

alternatives

Obviously,theshareoftransportationinthetotalproductioncostswilldependsubstantiallyoncountry-orregion-specificconditionsandeconomics.Severalinternationalstudiesalreadyexistontheeconomicsofbiomasscollectionandtransportation.Mostofthesestudiesshowarelativelyhighcostoftransportforbiomassfuelandrelatedhandling,evenwithinrelativelydevelopedregionswithadvancedtransportationnetworks(Jungingeretal.,2011;Brechbilletal.,2011;Nielsen&Hjort-Gregersen,2002;Wamishoetal.,2010).

Asageneralrule,confirmedbyprojectdevelopersduringthisstudy,oneshouldnotgobeyondaradiusof10to15kmcollectingbiomass.Onspecificoccasions(e.g.closerange,highyield)sizablesourcescanbecombined.However,theseareexceptionsratherthantherule.

2.2.3 Biogas productionInrespectofbiogasproduction,onegenerallyreferstoanaerobicdigestion,whichcantakedifferentformsandshapes,likeindustrialbiodigesters,cappedandcontrolledlandfillswithbiogascollectionorcappedlagoons.Insomecases,however,onealsoreferstobiogaswhengasifyingbiomassintoasynthesisgas,whichcanbeconvertedintoCH4usingamethanisationtechnology.However,biomassgasificationisnotacommonlyusedoption.Whenlookingatbiomass-to-electricityapplication(biogasburnedtogenerateelectricity),itisstillregardedasatechnologyinthedemonstrationphase.LFGandAD,ontheotherhand,arerecognisedmaturetechnologiesthatareincludedinthescopeofthisstudy.


Anticipatedcostoffull-scaleapplication

Research

Integratedbiomassgasification–fuelcell

Biohydrogen

Biorefineries

Hybridbiomass- solar/geothermal

High-rate co-firing

Torrefiedpelletproduction

Pressurised gasification

Atmospheric biomassgasification

Anaerobicdigestion

Landfillgas

Refuse-derivedand process-engineeredfuels

Pyrolysis

Medium-rateco-firing

Low-rateco-firingStroker/fluidisedbed

stream-electric combustion

Municipalsolidwaste incineration

Combinedheat/power

100%biomassrepoweringoptions

Development Demonstration Deployment Maturetechnology

Source:IRENA(2012),EcoMetrixteamanalysis

Figure 2.2.2: Biogas technology maturity status

Anaerobic digestionAnaerobicdigestionisanaturallyoccurringprocessthatconcernsthedecompositionoforganicmatterbybacteriathrivingunderlow-oxygen(anaerobic)conditions.TheorganicdecompositionunderanaerobicconditionsresultsinthegenerationofCO2andCH4.SeeTable2.1.1fortypicalcompositions.

Threemaincategoriesofanaerobicdigestioncanbeclassifiedbymeansofthetemperatureregimesunderwhichtheprocesstakesplace(Duff,n.d.):1. Psychrophilic:<20°C(68 °F):

a. Coveredlagoonsb. Slowprocessdependentonambienttemperaturesc. Largearearequirements

2. Mesophilic:35°Cto40 °C(95 °Fto105 °F):a. Industrialandfarmdigestersb. Faster processc. Well controllable

3. Thermophilic:50°Cto60 °C(125 °Fto140 °F):a. Industrialandfarmdigestersb. Fastestreactionkineticsandshortestresidencetimec. Sanitisespathogen-bearingfeedstock,butmorecomplextocontrol

Mostcommonismesophilicanaerobicdigestion,astheprocessisrelativelyeasytooperateandcontrol.Althoughthermophilicprocessesoperatedatahighertemperatureproducemorebiogasinashortertime,itrequireshigherinputenergy(morestringentfeedstockrequirements)toobtainthedesiredoperationtemperaturesandmay,moreover,generatefreeammonia,whichcanactasaninhibitor(ISAT/GTZ1999).

27

Anaerobicdigesterreactorsystemscanbedesignedusinganumberofdifferentprocessconfigurations,dependingonthedesiredoperationandfeedstock:

• Continuousorbatch• Mesophilicorthermophilic,determinedby

temperaturerange• Highsolidsorlowsolids(plug-flowormixedreactor)• Single-stageormultistage

Landfill gas collection LFGiscreatedbymicroorganismsthatactontheorganicwastewithinalandfill.Thisprocessiscontinuous,sothatovertime,thepressurewithinthelandfillbuildsupandthegasisreleasedintotheatmosphere.Landfillgastypicallycontainsbetween 40and60%CH4,wheretheexactqualitydependsonthewastecompositionandlandfillgeometry.

LandfillgascanbecapturedthroughanLFGcollectionsystemofverticalwellsorhorizontaltrenches.Inthisway,thegascanbesyphonedofftoacentralcollectionheaderdownstream.Here,itiseitherflaredtopreventtherelativelyharmfulCH4fromenteringtheatmosphere,oritisusedtogenerateenergy.Inthelattercase,thebiogasfromthelandfillisdirectlytransformedintoelectricityandheatthroughCHP,oritcanbeupgradedtobiomethane.

2.2.4 Biogas upgradingBiogasupgradingconsistsofincreasingtheCH4 content toalevelsimilartothatofnaturalgas,removingwatervapourandseveralimpurities.TheCH4 level is increased byremovingCO2fromthegasmixture.Itisimportanttogetthebiomethanecompositionclosetothecompositionofregularnaturalgasinordertorealiseasimilarcalorificvalueandburningcharacteristics.Thisallowsfortheshareduseofequipmentandinfrastructureoriginallydesignedfornaturalgas.Moreover,asbiomethaneneedstobecompressedtoCBG,noenergyiswastedbycompressingnon-burnablecomponents.

BesidessmallamountsofN2andO2,impuritiesgenerallyconcerncontaminantslikesulphurintheformofH2S,ahighlypoisonousgas,andsiloxanes(R-Si-O-Si-R),which,whenburned,areusuallyconvertedintosilicondioxideparticles.Theseparticlesarechemicallyandphysicallysimilartosandandcancausesignificantinternaldamagetoturbinesand/orengines(McCarrick,2012).

Dependingontheupgradingtechnology,impuritiesareremovedfromthebiogasintheprocessofremovingCO2inaseparatepre-treatmentsteporwithinthedigester.Theremovalofwatercanbedoneinseveralways,butthisdoesnotgenerallyposeachallenge.

Severalsourcesinliterature,includingPeterssonandWellinger(2009),confirmthatthemostwidelyusedtechnologiesforbiogasupgradingarePSA,waterscrubbing,organicphysicalscrubbingandchemicalscrubbing.Thesetechnologiesarederivedfromcommonpetrochemicalprocesstechnologiesandhavematuredfortheapplicationtobiogasupgradingovertheyears.Generallyspeaking,thesetechnologiesbenefitsignificantlyfromeconomiesofscale(Baueretal., 2013).Briefdescriptionsofthesemostwidelyusedtechnologies,largelytakenfromNiesneretal.(2013),areasfollows:• Water scrubbing: Thisrepresentsaprocessbased

onphysicalabsorption,employingwaterasasolventfordissolvingCO2.ThesolubilityofCO2inwaterismanytimeshigherthanthesolubilityofCH4inwater,andthereforeselectivelyabsorbsCO2fromtherawbiogasmixture.

• Chemical scrubbing: Likewaterscrubbing,itisbasedonselectivelydissolvingCO2frombiogasinasolvent.However,absorptionisassociatedwithachemicalreaction(betweenCO2andthesolvent).Themostemployedsolventsaremonoethanolamine,diethanolamineordiglycolamine,which,incomparisontowater,candissolveconsiderablymoreCO2 per unit volume.

• Physical scrubbing: Likechemicalscrubbing,itisanabsorptionprocess,howeverwithoutachemicalreaction.Themost-employedcommercialsolventsareSelexolTM,RectisolTMandGenosorbTM.Thetechnologicalarrangementissimilartochemicalscrubbing.However,theenergyrequirementforregenerationatahighertemperatureislowerthanforchemicalscrubbing.PretreatmentofH2S is not required(Beil&Hoffstede,2010).

• Pressure swing adsorption: Thisisbasedonadsorption. Adsorbent materials are able to selectivelyretainspecificcompoundsofamixturebymolecularsize.CO2moleculesaresmallerthanCH4

molecules,andarethereforeselectivelycapturedfromtheCO2/CH4biogasmixtureintheadsorbentmaterial.Processefficiencydependsmainlyontemperature,pressureandadsorbenttype.The


pressureoftheprocessisvariedtoload/unloadtheadsorbentmaterial.Commercialadsorbentscanincludemolecularsieves,zeolitesandactivatedcarbon(Grande,2011).

2.2.5 Downstream logisticsOnceupgradedtotherequiredspecification,thebiogas,inessence,hasbecomenaturalgas(whichismainlycomposedofCH4).Likenaturalgas,biogascanthenbecompressedtoeitherCNGorLNG.Whilebothareformsofgasreadyforstorageandlong-distancetransportation,thekeydifferenceisthatCNG,albeititshighdensity,isstillagasandisstoredatambienttemperature,whileLNGisaliquidstoredatverylowtemperature.ThetablebelowprovidesagenericcomparisonbetweenLNGandCNG(NationalRenewableEnergyLaboratory,1991).

Table 2.2.1: Generic comparison between CNG and LNG

Comparison CNG LNG

Physicalstate Gas Liquid

Temperaturewhenstored

Ambient -162°C

Typical pressure whenstored

172–248bar 0.7–3.4bar

Typicalenergydensity(lowerheatingvalue)

6500–9500MJ/ℓ

5250–21000MJ/ℓ

Thedownstreamlogisticalstepofthebiogas-for-transportvaluechaincanbeseparatedintothreecomponents:

• Compressionorliquifaction• Storage• Transporttotheenvisagedoff-taker

CNGhasalowercostofproductionandstoragecomparedtoLNG,asitdoesnotrequireanexpensivecoolingprocessorcryogenicstoragetanks.Asaconsequence,LNGisgenerallyonlyusedfortransportingnaturalgasoverlargedistancesbyseawherepipelinesdonotsuffice.Asthisstudyfocusesonthelocalgenerationandutilisationofbiogas,LNGtransportandstorageapplicationisexcluded.

BiogasupgradedtobiomethaneandcompressedtoCBGrequirescompressionequipmentandenergy.Commercialtechnologiesforthecompressionofnaturalgascanbeusedandarereadilyavailable.However,itisimportanttoconsiderthattheinvestmentcostsfortheequipmentandtheongoingcostsofoperatingtheequipment(e.g.energy,maintenance)havetoberecuperatedfromthecommercialisationofthebiogasattheendofthevaluechain.Tocompressbiogastobetween250and270bar,theestimatedcostforcompressionliesataround0.1Eur/Nm3(Valorgas,2011).

Incaseofon-siteuse,CNGstorageisprincipallyusedtomeetloadvariations.Gasisinjectedintostorageduringperiodsoflowdemandandwithdrawnfromstorageduringperiodsofpeakdemand.AsCNGisstoredunderhighpressure,thismostlyhappensincylindricalstoragevesselsthataredesignedtowithstandhighpressures.

InsituationswhereCNGisnotusedonlocation(eitherinternallyorviacommercialisationatthegate),theCNGcanbetransportedfromthestoragefacilitytotheend-userinanumberofways,includingpipeline,railandroadtransport.Theselectionofthetransportmediumisdependentontheexistinginfrastructureinthevicinityofthestoragefacility(e.g.whetherthereisasuitablegaslineorrailroadstationnearby)and/orthecostsofadditionalinfrastructure.Ifvolumesarelimitedandpipelinesandrailroadsarenoteasilyaccessible,whichisoftenthecaseasSouthAfricangasinfrastructureisverylimited,themostpracticalflexiblesolutionistransportbyroadtoanyoff-takerofchoice,pendingdemand.

2.2.6 Biogas consumptionBiogasupgradedandcompressedhasawiderangeofapplications.Withintheconfinesofthisstudy,onlytheapplicationastransportfuelisconsidered.Anexistingpetrolvehiclecanbeconvertedtoadual-fuel(petrol/CNG)vehicle.However,eveninitscompressedstate,CNG’svolumetricenergydensityisonly25%thatofdiesel(Eberhardt,2002).Therefore,therequiredtankinavehicleforCNGislarger,andduetoitspressuredcontainmentrequirement,costlierthanaconventionalfueltank.TheaforementionedbenefitsandcompromisesareillustratedintheexampleoftheHondaCivicprovidedinBox2.2.1.

29

Genericallyspeaking,twomaintypesofdirectoff-takersforCNGcanbedistinguishedinthetransportenvironment:• Fleet owners: Theseareownersofafleetofvehiclesoperatedcollectivelywithfixedroutesand/orstopoverpoints

inmostcases.Fleetscanbeownedand/oroperatedbytheprivatesector(e.g.truckingcompanies)orpublicsector(e.g.citybusservice,publicwastecollectionagencies).

• Retailers: RetailersofferindividualvehicleownerstheservicesofrefillingtheirCNG-convertedvehiclesatcommercialon-demandrefuellingstations,whicharecommonlypartofanexistingfueldistributionsystem(i.e.anadditionalCNGpumpatanexistingpetrolstation).

Inaddition,theremaybedirectoff-takebyindividualuserswithonevehicleoralimitednumberofvehiclesusingCNGinuse.However,investmentinindividualfillingstationsisgenerallymuchlessattractiveeconomically,andindividualoff-takersarethereforerare.

Box 2.2.1 : The Honda Civic on natural gas

Since2008,whenthecarwasintroducedintheUSA,Hondahassoldaround1000to3000CNGvehiclesayear.AnimportantinfluenceonsalesisthecostadvantageofCNGoverpetrolanddiesel.Withfossilfuelpriceshavingdroppedsignificantlyin2014,salescamedownaswell.

Lowerfuelcosts,betterairqualityandlowerGHGemissionsaresubstantialbenefitsthatthenaturalgasoptionbrings.Ontheotherhand,disadvantagesarethelimitedrange,reducedtrunkspaceandlimitedavailability.Anoverviewofprosandcons,asreportedinreviews*arepresentedinthetablebelow.

HondaCivicatapublicnaturalgasfuelstation.

Benefits Compromises

Fuelcost:About30%versus50%lowerfuelcostforcommercialversushomefuelling.

Trunkspace:Roughlyhalfthetrunkcapacityisgivenovertothetank,whilerangeanxietyremains.

Cleanandclimate-friendlyfuel:Whencomparedwithgasoline,90%lessCO2and16to91%lessnitrogendioxide(NOX),fewercarcinogenicpollutants,littleornoparticulatematter,13to18%lessGHGemissions,accordingtoNaturalGasVehiclesforAmerica.

Purchasecost:TheCiviconnaturalgasisabout40%moreexpensivethanagasolineequivalent(beforeincentives).Ahome-fuellingstationcouldaddanother27%,comparedtoagasolineequivalent.

Reducingrelianceonforeignoil:Domesticallysourcednaturalgasreducesrelianceonimportedoil.

Availability:CNGstationsarenotavailableinsomeareas,andsomeareonlyopentofleetowners

*ConsumerReports.org(2014):http://www.consumerreports.org/cro/2012/03/the-natural-gas-alternative/index.htm;USAToday(2011):http://usatoday30.usatoday.com/money/autos/reviews/healey/story/2011-11-10/civic-cng-test-drive/51159408/1;Forbes(2015):http://www.forbes.com/sites/michaelkanellos/2015/01/19/sales-of-hondas-natural-gas-civic-plummet/2/;andNVGAmerica:http://www.ngvamerica.org/natural-gas/environmental-benefits/.


Chapter 3: Biogas-for-transport sources in South Africa


3. Biogas sources


ThischaptercapturestheresultsoftheInventoryofBiogasforTransportSources,providingaperspectiveonthemostrelevantbiogas-for-transportsources,themaincontributingsectorsandtheirlocations.Beforelookingattheinventoryitself,thecurrentstatusquoofthesectorisprovidedbelow.

3.1 Status quo of the South African biogas sector

ToensurethatanobjectiveviewcanbedevelopedaroundthefeasibilityofCBGfortransport,thissectionprovidesanoverviewofthecurrentstatusquoofthebiogassectorinSouthAfrica.

ItisestimatedthattherearecurrentlyseveralhundredbiogasdigestersscatteredacrossSouthAfrica.Mostoftheseareaccountedforbysmalldomesticunitsandafewinitiativesdrivenbynon-governmentalorganisations(NGOs).Incomparison,thereare12millionbiogasdigestersinIndiaand17millioninChina(Ruffini,2013).AlthoughthesenumbersmightgivetheimpressionthatSouthAfricadoesrelativelywellwhenitcomestothetotaldigesterspercapita,consideringthelargepopulationsinIndiaandChina,thetablebelowprovidessomeadditionalinsightintoSouthAfrica’spositioninrelationtoGermanyandChina.

Table 3.1.1: Digesters per country

Country No digesters Population Number per capita

Germany 6 800 82 000 000 0.000 083

China 17 000 000 1 357 000 000 0.012 528

SouthAfrica 200 52 000 000 0.000 004

31

AnESI-Africaarticleentitled‘SAnotusingitsbiogaspotential’7providesanumberofreasonsforthislimitednumberofbiogasdigesterplantsinSouthAfrica.Theseincludepublicapathy(othersourcesofelectricityaremuchlessofahassle),cheapelectricity,limitedgrantsorgovernmentincentivesandnolocaltechnologyproviders.

AnoverviewofexistingbiogasprojectsinSouthAfricawaspresentedatthefirstSABIABiogasConference(Munganga,2013).Thefollowingthreetypesofbiogasinstallationsaredistinguished:

• Type 1: Domestic and residential digesters: Theseareusedforcooking,lightingorsanitationinruralresidentialareas(e.g.villagesandschools).InSouthAfrica,themostcommonoftheseinstallationsisa

7.http://www.esi-africa.com/sa-not-using-its-biogas-potential/

digestermadeofPVC,concreteandplasticbags(i.e.abiobagdigester).

• Type 2: Small-scale and medium commercial digesters:Thesearedefinedasbiogassystemswithaninstalledcapacityofbetween25and250kWe, wherethegasisuseddirectlyforheatingpurposesorindirectlyforthegenerationofelectricity(e.g.conferenceandcommunitycentres,smallcommercialfacilities,suchasabattoirs,aswellasdairyfactoriesandfarms).

• Type 3: Large-scale installations: Theseareinstallationswherelarge-scaledigesters(withacapacitylargerthan250kWe)utilisethebiogasfromlargesources,suchasabattoirs,farms,MSWandwastewatertreatmentfacilities.

ThetablebelowprovidesanoverviewoftheexistingbiogasprojectsforType2andType3asdefinedabove.

Table 3.1.2: Overview of existing biogas projects in South Africa

Size Name Electrical capacity

Small-scale and medium-scale commercial digesters

HumphriesBoerdery(outsideBela-Bela) 30 kW

JanKemdorpAbattoir(iBERT) 100 kW

Cullinan 190 kW

Robertson 150 kW

Jacobsdal 150 kW

Large-scale installations

Mariannhill(Durban) 1 MW

BisasarRoad(Durban) 6.5 MW

Chloorkoplandfillgasproject(EnviroServ) unknown

Ekhurlenilandfillgasproject unknown

RobinsonDeep(CityofJohannesburg) 19 MWAlrode/up-flowanaerobicsludgeblanket(UASB)(brewery)

unknown

Newlands/UASB(brewery) unknown

Rosslyn(brewery) unknown

Prospection(brewery) unknown

Ibhayi(brewery) unknown

CapeFlatsbiogasdigester-dewateringsludge unknown

Ceresfruitfarm-UASBdigester(Veolia) unknown

PetroSA(Biotherm) 4.2 MWNorthernWastewaterTreatmentWorks–Biogas-to-electricityProject

1.1 MW


Mostofthebiogasprojectslistedaboveusethebiogasforthegenerationofelectricityordirectuse,andinsomecasesforacombinationofheatandpower.NoactiveprojectshavebeenidentifiedthatupgradebiogastoCNGforuse in transport services.

3.2 The Biogas for Transport Sources InventoryTodeterminethenationalpotentialofbiogas-for-transport,thisstudyincludesthedevelopmentofawastebiomassinventoryandmap.Itisimportanttonotethatthebiogasinventoryandmaparedevelopedwithoutapredeterminedpro-biogas-for-transportview,andthereforecoversourcesfromwhichbiogascanbeappliedwithinthetransportsector,butalsoforotherapplications.However,toensurethattheinventoryandmapproviderelevantinformationfromabiogas-for-transportapplication,asperthemandateofthisstudy,theinventoryandmapcontaininformationrelatingtothebiogaspotentialandthequalityoftheunderlyingbiomasssourcefromaqualitativeandquantitativeperspective.Thetablebelowprovidesanoverviewofthequantitativeandqualitativedetailscapturedpersource.

Table 3.2.1: Biogas inventory qualitative and quantitative criteria definitions

Type Characteristic Definition Unit of measure

Quantitative Biogasquantity

Providesanindicationofthebiogaspotentialperbiomasssourceandisexpressesasannualaveragebiogaspotentialincubic

metres per day

Nm3 per day

Qualitative

Yield

Expressesthepotentialtoconvertthebiomassfromaparticularsourceintobiogas

incubicmetresofbiogaspertonneofbiomassatthesource

Nm3pertonoffreshmaterial

RemaininglifetimeCapturestheexpectedlifetimeoverwhichthebiomassfromaspecificsourcewill

remain available in yearsAnnum

Seasonality

Indicatestheavailabilityofthebiomassataspecificsourcewithinayear,andisexpressedinmonths,where12months

indicatesthatthebiomassisavailableatthesource on a continuous basis

Months

Inadditiontothesequantitativeandqualitativecriteriaandthephysicallocationofeachpotentialsource,whichisrequiredtomapthegeographiclocationofthesources,theinventorycapturesadditionalspecificinformationonthebiomasssource.Theadditionalinformationdoesnotonlyallowtheusertobetteridentifythesource(e.g.plantname,plantowner,etc.),butalsoenablestheusertodevelopabetterunderstandingoftheoriginofthebiomasswastestream,forexample,viaadescriptionoftheunderlyingprocessfromwhichthewastestreammaterialises.

Thisadditionaldetailcapturedwithintheinventory,incombinationwiththequantitativeandqualitativecriteriapersource,allowstheusertoidentifyindividualsourcesthatmeetspecificrequirementssetforthedevelopmentofabiogas-for-transportgenerationfacilitywithinaspecificgeographicregion.

33

Thebiogas-for-transportviabilitypersourcedependsheavilyontheindividualrequirementsofabiogas-for-transportprojectdeveloper,whichinpracticemeansthatthislevelofanalysisoftheinventorycannotbedonefromanationalbiogas-for-transportpotentialperspective.Forthisreason,thenextsectionprovidesaholisticanalysisoftheinventoryandmaptoprovideinsightintothebiogas-for-transportpotentialwithinthecountryasawhole,ratherthanonasource-by-sourcebasis.

3.3 Main sectors and potentialTheinventorycapturespotentialbiogasdistributedovereightdifferentsectors,anddistinguishesbetween12differentbiomasstypes.Thefigurebelowprovidesanoverviewofthepotentialbiogasvolumespersector.

Sector

Total

Biogas potential (relative per sector)

0.21%

0.36%

1.27%

6.91%

7.27%

13.77%

32.35%

38.07%

Biogas potential (Nm3/day)

Fruitprocessing

Brewery

Abattoir

Pulp and paper

Municipalwastewater

Agriculture

Sugarproduction

Municipalsolidwater

• 6 360 Nm3/day

• 10 615 Nm3/day

• 38 050 Nm3/day

• 206 400 Nm3/day

• 216 911 Nm3/day

• 410 989 Nm3/day

• 965 736 Nm3/day

• 1 136 450 Nm3/day

• 2 985 150 Nm3/day

Figure 3.2.1: Biogas potential per sector (Nm3 per day)

ItbecomesapparentfromthetableabovethatthetotalbiogaspotentialfromsourcescapturedintheinventoryisaroundthreemillionNm3perday,ofwhichthemajoritycanbefoundinthesugarandMSWsectors.Althoughtheremaininglifetimeofthesourceandtheseasonalityofthesource,amongotherthings,arerelevantconsiderationswhenassessingthebiogas-for-transportpotentialofarangeofsources,thetotalpotentialvolumeofasource,inmostcases,providesafirstindicationofthepotentialofthesourcesfromabiogas-for-transportperspective.Thefigurebelowprovidesanoverviewofthetenlargestbiogas-for-transportsourcescapturedintheinventory.

Sources

Total

Biogas potential (Nm3/day)

175 000 Nm3/day

138 146 Nm3/day

116 008 Nm3/day

108 050 Nm3/day

93 296 Nm3/day

89 600 Nm3/day

88 800 Nm3/day

86 972 Nm3/day

81 872 Nm3/day

79 696 Nm3/day

BisasarRoadlandfill

KaranBeeffeedlot

Komati Mill

Vissershoek(south/north)

Sezele Mill

Sappi Saiccor Mill

Onderstepoortlandfill

Malalane Mill

FlextonMill

Noodsberg

1 057 440 Nm3/day

Figure 3.2.2: Biogas potential per source (Nm3 per day)

Itisinterestingtonotethat,amongthetenlargestsources,awiderangeofsectorsisrepresented,suchasMSW,agriculture,pulpandpaper,andsugarproduction.Inadditiontothat,itisworthconsideringthatthetenlargestpotentialsources(aslistedinthefigureabove)makeupoverone-thirdofthetotalidentifiedpotential.


3.4 ConclusionEventhoughthebiogasinventoryandmapitselfweredevelopedwithanindependentandopenviewastothetypeofuseofthebiogas,theanalysisoftheinventoryfocusesonthepotentialapplicationwithinthetransportsector.Duetothedownstreamlogisticalcomplexities(e.g.limitedrangeofCBG/CNGvehicles),thegeographiclocationofpotentialbiogassourcesinrelationtopotentialcustomers,andthecurrentandfutureCNGinfrastructureareofimportancewhenassessingthenationalpotentialofCBGfortransportpurposes.Forthisreason,thebiogas-for-transportinventorywasusedtovisuallyrepresentthedifferentpotentialsourcesonamapofSouthAfrica.

Thefigurebelowshowsthegeographicdistributionofthepotentialbiogassourcescapturedintheinventory.Eachbubblehasauniquecolourandrepresentsauniquebiogassource.Thesizesofthedifferentbubblesrepresenttherelativebiogasproductionpotentialbetweenthesources.

Figure 3.4.1: Geographic distribution of potential biogas sources

Ascanbeseenfromthemapabove,themajorityofpotentialbiogassourcesarelocatedintheproximityofSouthAfrica’surbanisedcentres:alongtheKwaZulu-Natalcoast,inGautengandaroundCapeTown.This,incombinationwiththematerialtotalpotential,ascapturedintheBiogasforTransportSourcesInventory,ofaroundthreemillionNm3ofrawbiogasperday,providessufficientgroundstoconcludethat,fromapotentialbiogasavailabilityperspective,amaterialvolumelocatedwithinwell-accessibleareasandclosetoconsumershasbeenidentified.

Itisalsointerestingtoconsiderthat,withashareof38%ofthetotal,theMSWsector,asawhole,isthelargestcontributortothecountry’sbiogaspotential,andthatthesesourcesarealllocatedincloseproximityofurbanisedareas.Severalofthesourcesinthissectorareamongthetenlargestsourcesidentified.Fromthis,onecanconcludethatlocalgovernmentsinSouthAfricahavethepotentialtocontroland/oroperatealargeshareofthecountry’spotentialbiogas-for-transportsources,makingthemideallypositionedtodrivethelarge-scaleuptakeofbiogasasatransportfuel.

35

Chapter 4: Feasibility of transforming to CBG as a transport fuel


3. Biogas sources


Thischapterprovidesafeasibilityassessmentofthebiogas-for-transportvaluechainanditspotentialtobeintroducedinSouthAfricaasatransportfuel,givenitscompetitiveness,availablelocalinfrastructureandbenefitsforthecountry.

4.1 Cost-benefit analysis: biogas-to-fuel versus biogas-to-electricity

InSouthAfrica,themostcommoncommercialnon-residentialuseofbiogasisforthegenerationofelectricityeitherforownconsumption,tobesourcedtothemunicipal/nationalgrid,orinexceptionalcasesto‘wheel’electricity acrossthegridtoadedicatedoff-taker.Theuseofbiogasasatransportfuelhasbeentestedonafewoccasionsinthecountry.Forexample,NOVOEnergydemonstratedaCBG-dispensingstationatalandfillsitenearORTamboInternationalAirport.Nevertheless,biogasasatransportfuelhasnotemergedasyet.

However,thecompetitionbetweenwastesiswiderthanjustfuelversuselectricity.Heatisalsoanoption,andbeforeanyconversioncantakeplace,thewastemayalreadyhavebeenusedforotherpurposes,likeanimalfeedorasasoilconditioner.Inthissense,wasteoftenalreadyhasapurposeorvaluedivertingitfromlandfilling,thelast-resortalternativeforwhichacostwouldbeincurred.


Bio ‘waste’

Waste sold to others e.g.asafuelforboilers

Internal use

External use

Power Heat FuelHeat/power

Power

Power

Heat

Heat

Heat/power

Heat/power

Fuel

Fuel


Figure 4.1.1: The use of waste in different ways and modalities

Althoughthemainsubjectoftheanalysisisthecomparisonbetweenelectricityandtransportfuel,ananalysishasalsobeendoneonthevalueintermsofprimaryenergyinR/GJforthedifferentenergycarriers,i.e.electricity,heat(intermsofcoal)andfuel(intermsofpetrol).Forelectricity,thismeansthatonecalculatestheelectricityenergyvaluebacktotherandvalueoftheamountofenergyintermsoffuelthatwasrequiredtogeneratetheelectricity.Forcoal,onecanusethedirectheatingvaluethat,inthecaseofthermalcoaltradedatRichard’sBay,is6000kcal/kg.Forpetrol,anenergycontentof32.4MJ/ℓhasbeenused.Theresultsarepresentedinthetablebelow.

Table 4.1.1: Prices of energy of different carriers compared

Energy carrier (unit of measure) Regular priceR/unit of measure

Price per unit of energyR/GJ

Low High Low High

Coal–heat(R/kg)1 0.65 0.83 26 33

Electricity(R/kWh)2 0.89 1.54 98 171

Petrol–transport(R/l)3 10 12.89 309 398

1Richard’sBayfreeonboard(FOB)pricesthermalcoallow/highfortheperiodApril2014toAprl2015.Arand-dollar exchangerateof11isassumed.2Thepriceperunitofprimaryenergyforelectricityiscalculatedonthebasisofa40%electricalefficiency8.3ThepetrolpricefromR10/ℓ(low)uptotheaveragepumppriceon21May2015(high).

8. A40%electricalefficiencyisatthetopoftherange(30to40%).However,newgeneratordesignsclaimefficienciesaround40%asanMWMbiogas-optimisedgenerator,forexample,claimedtohaveanefficiencyof42.8%.See:http://www.mwm.net/mwm-chp-gas-engines-gensets-cogeneration/press/press-releases/optimized-tcg-2016-c-genset-with-improved-efficiency-for-biogas-operation/

37

AsbecomesaparentfromTable4.1.1,thelowestvalueperunitofenergy(R/GJ)ispaidforcoal.Afterthiscomeselectricity,whilebyfarthehighestmonetaryvalueperGJisgeneratedbyatransportfuel,whichinthisexampleispetrol.Althoughindicative,thisorderinvalueisnotconclusive,asoneneedstotakeintoaccounttheinvestmentsrequiredtoconvertprimaryenergy,inthiscasebiogas,intotherespectiveenergycarrier.

Inthenextsectionsofthischapter,wefocusonthepricingofbothpetrolandelectricity,assesstheadditionalcostincurredwhengoingforoneenergycarrierortheother(i.e.thecostofconvertingrawbiogasintoelectricityoratransportfuel)andmakeacomparisonbysubtractingtheadditionalcostforconvertingtothespecificenergycarrierfromtherawbiogas.Thisshouldprovidethenetbenefitwhenchoosingoneabovetheother.

Otherindirectfinancial/non-financialbenefitsandbarriersarealsotakenintoaccount.Inthisway,afullcomparisonofbotheconomic/financial,socioeconomicandenvironmentalbenefitsisprovided,whichareallimportantfactorsforgovernmenttotakeaninformeddecisiononwhetherandtowhatextentitmightsupportandpromotetheuptakeofbiogasasatransportfuel.

4.1.1 Biogas to fuelThepotentialforbiogasintheformofCBGasatransportfuelshouldbeconsideredinrelationtothecurrentlyprevailingfuelalternativeswithinthecountry.Asisthecaseglobally,inSouthAfricatheprimaryfuelsusedfortransportarepetrolanddiesel.Insomepartsoftheworld,CNGisalsoamaterialtransportfuel,butasindicated,theCNGforthetransportmarketinSouthAfricaisstillinitsinfancy.

TobeabletomakearealisticcomparisonbetweentheeconomicsofthedifferentfuelsandtodeterminethepotentialcompetitivepositionofCBGinrelationtoothertransportfuels,thisstudycomparesthesalespriceatthepointofoff-take(i.e.attherefuellingstation)oftheenergycontentofthedifferentfuelsinR/GJ.SincethepredominanttransportfuelinSouthAfricaatthemomentispetrol,thesalespricesofdieseland,tosomeextent,CNGarepositionedinsuchawaythattheyarecompetitivetothepriceofpetrol.

WhenlookingatthecompositionofthepetrolpriceinSouthAfrica,itisimportanttoconsiderthatSouthAfricadoesnotholdoildepositswithinitsborders.Asaresult,itimportscrudeoil,aswellaspetrolanddiesel,asneeded.AccordingtotheSouthAfricanPetroleumIndustryAssociation(SAPIA),thepetrolretailpriceisregulatedbygovernmentandchangesmonthly.ThecalculationofthenewpriceisdonebytheCentralEnergyFund(CEF)onbehalfoftheDepartmentofEnergy(DoE).Thepetrolpumppriceiscomposedofanumberofpriceelements,whichcanbedividedintointernationalanddomesticelements.Theinternationalelement,orbasicfuelprice(BFP),isbasedonwhatitwouldcostaSouthAfricanimportertobuypetrolfromaninternationalrefineryandtotransporttheproducttoSouthAfricanshores.TheBFPisinfluencedby9:

• internationalcrudeoilprices;• theinternationalsupplyanddemandbalancesfor

petroleumproducts;and• therand-dollarexchangerate.

TheBFP,quotedinUS$perbarrelorUS$perton,isconvertedtoUScentsperlitrebyapplyingtherelevantinternationalconversionfactors.ItisthenconvertedtoSouthAfricanrandandcentsperlitrebyapplyingtheapplicablerand-dollarexchangerate.Toarriveatthefinalpetrolpumppriceinthedifferentfuel-pricingzones(magisterialdistrictzones),domesticcosts,importcosts,leviesandmarginsareaddedtotheBFP.

AlthoughnoVATisraisedonpetrolordiesel,theDoEspecifiesthefollowingothercomponentsthatmakeupthedomesticportionofthefinalfuelprice:

• Inland transport costs: Refinedpetroleumproductsaretransportedbyroad,rail,pipelineoracombinationofthesefromcoastalrefineriestoinlanddepots.

• Wholesale margin: Themarginisafixedmaximummonetarymargin.Theformulausedtodeterminethewholesalemarginisbasedonasetofguidelines–theMarketingofPetroleumActivitiesReturn.Thelevelofthismarginiscalculatedonanindustryaveragebasisandaimstograntmarketersabenchmarkreturnof15%onthedepreciatedbookvaluesofassets,withallowancesforadditional

9. http://www.energy.gov.za/files/esources/petroleum/petroleum_fuelprices.html


depreciationbeforetaxandpaymentofinterest.Shouldtheindustry-aggregatedmarginbebetween10and20%,noadjustmentismadetothemargin.Ifitisbelow10%orabove20%,themarginisadjustedtoalevelof15%.

• Retail profit margin: TheretailprofitmarginisfixedbytheDoEandisdeterminedonthebasisoftheactualcostsincurredbytheservicestationoperatorwhensellingpetrol.Inthiscoststructure,accountistakenofallproportionateretail-relatedcosts,suchasrent,interest,labour,overheadsandentrepreneurialcompensation.

• Equalisation Fund: TheEqualisationFundlevyisnormallyafixedmonetarylevy,determinedbytheMinisterofMineralsandEnergyinconcurrencewiththeMinisterofFinance.Thelevyincomeismainlyutilisedtoequalisefuelprices.Thelevyiscurrentlyzero.

• Fuel tax: Afueltaxisleviedonpetrolanddiesel.ThemagnitudeofthislevyisdeterminedbytheMinisterofFinance.

• Customs and excise duty: A levy is collected in terms ofanagreementwiththeSouthernAfricanCustomsUnion.

• Road Accident Fund: A Road Accident Fund levy is applicableonpetrolanddiesel.ThemagnitudeofthislevyisdeterminedbytheMinisterofFinance.Theincomegeneratedfromthislevyisutilisedtocompensatethird-partyvictimsofmotorvehicleaccidents.

• Slate:Aslatelevyisapplicableonfuelstofinancethebalanceinthesocalled‘slateaccount’whentheslateisinanegativebalance.Theslateaccountandhowthebalanceontheslateaccountisdeterminedisdescribedasfollows:TheBFPofpetrol,dieselandilluminatingparaffin(IP)iscalculatedonadailybasis.ThisdailyBFPiseitherhigherorlowerthantheBFPreflectedinthefuelpricestructuresatthattime.IfthedailyBFPishigherthantheBFPreflectedinthefuelprices,aunitunderrecoveryisrealisedonthatday.WhentheBFPislowerthantheBFPreflectedinthepricestructures,anover-recoveryisrealisedonthatday.Anunder-recoverymeansthatfuelconsumersarepayingtoolittlefortheproductonthatday,whileinanover-recoverysituation,consumersarepayingtoomuchfortheproductonthatday.Thesecalculationsaredoneforeachdayinthefuelpricereviewperiod,andan

averageforthefuelpricereviewperiodiscalculated.Thismonthlyunitover-/under-recoveryismultipliedbythevolumessoldlocallyinthatmonth,andthisisrecordedonacumulativeover-/under-recoveryaccount(theslateaccount).

• Demand-side management on 95 unleaded petrol: A demand-sidemanagementlevy(DSML)isapplicableto95unleadedpetrolconsumedintheinlandarea.Thislevywasimplementedinthepricestructureof95unleadedpetrolinJanuary2006when 95unleadedpetrolwasintroducedintotheinlandmarketforthefirsttime.Mostvehiclesintheinlandmarket do not need to run on 95 unleaded petrol anditsunnecessaryuseintheinlandareawouldresultin‘octanewaste’,withnegativeeconomicconsequences.ADSMLwasintroducedtocurtailthedemandof95unleadedpetrolintheinlandarea.

• IP Tracer Dye levy:Tocurtailtheunlawfulmixingofdieselandilluminatingparaffin,atracerdyeisinjectedintoilluminatingparaffin.AnIPTracerDyelevywasintroducedintothepricestructuresofdieseltofinanceexpensesrelatedtothis.

• Petroleum Pipelines levy:TheannualbudgetofthePetroleumPipelinesRegulatorisapprovedbytheMinisterofEnergyandtheMinisterofFinance.IntermsofthePetroleumPipelinesLeviesAct (ActNo28of2004),alevyof0.19c/ℓwasaddedtothepricestructuresofpetrolanddieselon7March2007.

39

ThetablebelowprovidesanindicativepricebreakdownofthepetrolpriceatarefuellingstationofapproximatelyR12,89/ℓ(ason21June2015).

Table 4.1.2: South African petrol pricing structure breakdown

Price components Type Price per litre (R/ℓ)Basicfuelprice International 6,16

Inland transport costs Domestic 0,35Wholesalemargin Domestic 0,34Retailprofitmargin Domestic 1,51Equalisation Fund Domestictaxorlevy -

Fueltax Domestictaxorlevy 2,55CustomsandExciseDuty Domestictaxorlevy 0,04

Road Accident Fund Domestictaxorlevy 1,54Slate account Domestictaxorlevy -

DSMLon95unleadedpetrol Domestictaxorlevy 0,10IP Tracer Dye levy Domestictaxorlevy -

Petroleum Pipelines levy Domestictaxorlevy 0,00Total 12,59

Thetableaboveshowsthat,asiscommoninmanyplacesaroundtheworld,aportionofthepriceofpetrolinSouthAfricaatthepumpismadeupofarangeoftaxesandlevies.Dependingonthetypeoffuelanditsdetailedcomposition,theenergycontentofafuelcanvary.Whencomparingthepricebreakdownofdifferentenergysourcesusedinthetransportenvironment,itisusefultomakeaconversionintoR/GJ,sothatonecancomparecostsonanequalbasis.Inthisstudy,astandardenergycontentof32.4MJ/ℓofpetrolisapplied.Thediagrambelowprovidesaschematicbreakdownoftheinternational,domesticanddomestictaxorlevycomponentsofthepriceof95unleadedpetrolperMJ.

Domestictaxes/levels

Basic fuel price

Retail profitmargin

Inland transport

costs

Fuel tax

Road Accident

Fund

DSM on 95

unleaded petrol

Customsand

ExciseDuty

IP Tracer

Dye levy

Slate levy

Petrol pump price

Equalisation Fund

Petroleum Pipelines

levy

Wholesalemargin

(131)

(190) (48.7%)

(47) (12.0%)

(11) (2.80%)

(10) (2.66%)

(79) (20.26%)

(48) (12.23%)

(3) (0.79%)

(1) (0.32%)

(0.00) (0.01%)

(0.00) (0.0%)

(0.00) (0.0%)

(0.00) (0.0%)

(388) (100%)

(190)

(68)

(388)

(49%)

(17%)

(100%)

(34%)International

Domestic

Total

CUM:

Figure 4.1.2: Cost breakdown of 95 unleaded petrol price per MJ


Asaresultoffluctuationsovertime,forexample,intherand-dollarexchangerate,andchangesintheglobalmarketpriceofcrudeoil,itisimportanttoconsiderthatFigure4.1.2andTable4.1.2abovearebasedonindicativenumbers,andshouldbeseenasanillustrationofthecomponentsanddynamicsthatmakeupthepetrolpriceatarefuellingstationonly.WhenlookingatthetaxesandleviesonCNGfortransportinSouthAfrica,averydifferentpictureemerges,asonlyCNGcarries14%VATatthepump.ThereasonforthisisthatCNGforthetransportsectorinSouthAfricaisstillinitsinfancy,andNationalTreasurystillneedstodeterminehowthetaxingstructureshouldwork10.

Oneoftheobjectivesofthisstudyistomakerecommendationsregardingpotentialfinancialincentivestofacilitatethelarge-scaleuptakeofCBGasatransportfuel.TakingintoconsiderationthefactthatthedevelopmentoftheCNGinfrastructureisofsubstantialimportanceforasuccessfuluptakeofCBGinthetransportenvironment,andthatforCNGtobeaviablealternativetransportfuel,itneedstobeprice-competitivewithpetrolanddiesel.ThecurrentabsenceoffueltaxesandleviesonCNG,butapplicabletopetrolanddiesel,canbeconsideredan‘informaltaxincentive’forCNG.

ThediagrambelowprovidesaschematicoverviewofthepricestructureforCNGinthetransportenvironmentwithoutthis‘informaltaxincentive’.

Basic fuel price

Petrol pump price

Domestic Domestictaxes/ levies

Domestictaxes/ levies

VAT CNGinformaltax

incentive

CNG/petrolpriceparity

CNGPetrol

CNGvehicle

conversionsubsidy

CNGpump price

(190) (48.7%)

(68) (17.5%)

(131) (33.6%)

(388) (100%)

(131) (33.6%)

(48) (14%)

(83) (19.6%)

(388) (100%)

(139) (10%)

(350) (90%)

Domestictaxes/levels

International

Domestic

Total

CNG

Figure 4.1.3: The price parity breakdown of 95 unleaded petrol as opposed to CNG11

Whatbecomesapparentfromthefigureaboveisthatthe‘informaltaxincentive’,whichresultsfromtheabsenceofthetaxesandleviesappliedtopetrolminustheVATof14%thatiscurrentlyleviedonCNGfortransport(butnotonpetrol)iscloseto20%ofthepriceparitybetweenpetrolandCNG.ThefigurealsoincludesadifferentdiscountembeddedintheconversionofapetrolvehicletoaCNGvehicle,sinceanadditionalinvestmentisrequiredtofitaCNGsystemintoapetrolvehicle.

10.http://citizen.co.za/148482/cng-filling-stations-arrive-in-south-africa/

11.InlinewithFigure4.1.2,thedomesticcomponentofthepetrolcostbreakdownconsistsoftheretailprofitmargin,inlandtransportcostsandwholesalemargin,asdeterminedbytheSouthAfricangovernment.

41

Duetotheearly-stagematurityofCNGforthetransportmarket,thissavingontheCNGpumppricethatisrequiredtorepaytheinvestmentontheconversionkitisdifficulttoassess.However,assumingthataconversionkitcosts R20000forastandardminibustaxiandthatavehicledrives20 000kmayearatapetrolpriceofR12,59/ℓ,theadditionalinvestmentcanberecoveredwithin12 monthsatadiscountedCNGpriceof10%,includingpayback,interestandpotentiallossofincome/useofthevehicleduringtheperioditisbeingconverted.Thistranslatestoa‘vehicleconversionsubsidy’ofR0,039/GJ.

Aspartoftheroll-outbyCNGHoldings,CNGrefuellingstationsprovideanincentivefortaxidrivers(supportedbytheIDC)intheformofareductionintheCNGpumpprice.Althoughtheincentiveisstructuredslightlydifferenttotheexampleabove,inessenceitindicatesthatsuchasubsidyisrequiredtodevelopacompetitivemarketforCNGasatransportfuel.Thiskindofincentive,togetherwiththe‘informaltaxincentive’,shouldalsobeconsideredwhenlookingatpotentialpolicymeasuresbygovernmenttokick-startthelarge-scaleuptakeofCBGasatransportfuel.

4.1.2 Biogas to electricityElectricityratesinSouthAfricavarysubstantially,withdifferentrateschemesforurban,residentialandruralareas.Eskom,asthenationalutilitycompany,proposesannualpriceincreasesforblocksofthreeyears,whichneedtobeapprovedbytheNationalEnergyRegulatorofSouthAfrica(NERSA).Thelast10yearswerecharacterisedbyperiodsofashortageinsupplyandsubstantialpriceincreases,whichdonotappearlikelytosubside.Asillustratedinthetablebelow,since2009,averageelectricitypriceincreasesaccumulatedtoover100%.

35

30

25

20

15

10

5

0

2000

2002

2004

2006

2008

2010

2012

CPIAveragetariffincrease%

Figure 4.1.4: Average NERSA-approved price increase and consumer price index (CPI) since 200012

Notsurprisingly,managingsecurityofsupplyandbecominglessexposedtofurtherelectricitypriceincreaseshasbeenastrongdriverforprojectdeveloperstodevelopelectricityfortheirownuse.Therelevantpricesinthisregardmostlyconcernpricesinurbanisedareas,asthesearetheareaswherewasteisavailableforconversionintobiogas(seeSection3.3).

Pricesthathavebeentakenintoaccountinouranalysisstemfromlargeuserdomesticrates,whicharethehighestpotentiallyachievableratesinurbanareaslikeJohannesburg,regardlessofwhethertheuserisconnectedtothenationalorthemunicipalgrid.

12EskomTariffHistory:http://www.eskom.co.za/CustomerCare/TariffsAndCharges/Pages/Tariff_History.aspx


Table 4.1.3: Domestic electricity prices of City Power versus Eskom (May 2015)

City Power City Power City Power Eskom Eskom Eskom Eskom

Monthly kWh

60A prepaid

60A credit

80A credit

20A prepaid

60A prepaid

60A credit

80A credit

1 000 1 148 1 532 1 563 1 016 1 379 1 379 1 506

1 500 1 803 2 168 2 200 1 558 2 295 2 295 2 425

2 000 2 459 2 805 2 836 3 210 3 210 3 337

3 000 3 939 4 148 4 179 5 042 5 042 5 168

4 000 5 544 5 557 5 594 6 873 6 873 7 000

OtherpreferentialratescanbeobtainedwhenparticipatingintheREIPPPProgramme.However,thenumberofbiogasprojectsparticipatinginREIPPPProgrammehasbeenclosetozero,withonlyonequalifyingproject,theJohannesburgLandfillGas-to-energyProject,whichisanticipatedtodeliver18 MWofelectricity.

Figure 4.1.5: The 64 projects awarded under REIPPP Round 1–3, accumulating to 3 916 MWe

ThepricethatthebiogasprojectsparticipatingintheREIPPPProgrammeobtainedinthiscasewasR1108/MWh partiallyindexed(Rycroft,2013),andislowerthanwhatwouldbepotentiallyachievablewhensellingtocustomerswithinurbanisedareas.AnotherobservationisthatthelocationofthemajorityofsolarandwindprojectsintheREIPPPProgrammeareoutsideurbanisedareas.Inthatsense,electricityprojectsrunningonbiogascouldcomplementthecurrentREIPPPProgramme’srenewableenergyprojectsbygeographicallybalancing(remoteversusurban)therenewablefeedintothegridtosomeextent.

43

4.1.3 Net price benefit: biogas-to-fuel versus electricity Althoughfuelasaproductseemstobemoreattractive,oneneedstotakeintoaccounttheadditionaleffortthatisrequiredtoproducefueloverelectricity.Inordertocompare‘appleswithapples’,oneneedstodistinguishbetweenhowtherawbiogasisconvertedintotheenergycarrierofpreference,whetheritisbeingaCHPgeneratorincaseofelectricityoranupgrading,compression,storageanddispensingsystemincaseofCBG.

Onthebasisofinputsfromlocalandinternationalstakeholders,aswellasdatafrombiogasstudies,anindicativecostrangehasbeenderivedforaCHPunit,andforupgradingandcompression.Thesecostsareindicativeforsizableprojectsofaround2MWeor18000Nm3perhourofrawbiogasandlarger.Thenetpricebenefitiscalculatedbysubtractingthe‘additionalcost’fromthepriceonecanobtainbysellingtheenergyeitheraselectricityorasafuelrespectively.InlinewithSection4.1.1,wehavechosen95unleadedpetrolasafueland,inlinewithSection4.1.2,theelectricitydomesticpricerangeaschargedinurbanareaslikeJohannesburg.Forpurposesofcomparison,CBGasasubstituteforCNGhasbeenadded,showingpriceswhenfinaluse(heatorfuel)isstilltobedetermined.

Electricity from biogas

CBG as a substitute for CNG

CBG as a substitute for petrol

MA

RG

INC

OST

PRIC

E

R98–171/GJBasedonelectricityrate:R0.89–1.54/kWh-e

R238–249/GJBasedonratesknownfromEgoli/CNGlicense

R309–398/GJBasedonpetrolpriceof:R10–12.6/ℓ

R71–79/GJBasedonCHPcost:R900–1,100/kWe

R91–116/GJUpgrading+compressioncostofbiogas

R91–116/GJUpgrading+compressioncostofbiogas

R19–100/GJAvailableforproductionofrawcleanedbiogasandadditional cost



Figure 4.1.6: Comparing net price benefit between energy carriers when using biogas-based substitutes

Thefigureaboveshowsthatproducingafuelisthemostattractiveoption,sincethehighercostforupgradingandcompressionismorethancompensatedforbythehigherpriceofenergy.Itisacknowledgedthattheassessmentincludessomesimplificationsasitdoesnotincludealldetailed(oftenproject-specific)costsrelatedtotheestablishmentofagasorelectricitygridconnection,forexample,neitherdoesitincludethecostsrelatedtoupstreamlogistics.Nevertheless,consideringthesubstantialdifferenceinnetpricebenefitofoneenergycarrierversusanother,thiswillnotchangetheperspectivethat,inmonetaryterms,thevalueofbiogasasafuelisafactortwotothreehigherthanwhenitisconvertedtoelectricity,whileatthisstageitistaxedequallybyVATatarateof14%.

Inthefollowingsection,themonetaryadvantages,othersocioeconomicandenvironmentalbenefits,aswellasinfrastructuralrequirementsregardingbiogas-basedelectricityversusbiogas-basedfuelareassessed.


4.1.4 Benefit analysis of fuel versus electricity

Inthissection,wediscussthemainbenefitsandrequirementsofbiogas-to-fuelversusbiogas-to-electricitypermainbenefitcategory:economic/financial,environmental,socioeconomicandinfrastructural.

Economic/financialBiogas-to-fuelhasanumberofadvantagesoverbiogas-to-electricityineconomic/financialterms.Beingsuperiorinmonetarytermsbyafactortwotothreewithrespecttomarketvalue,aswasdemonstratedinTable4.1.1,thiswillreflectequallyintaxrevenueforthecountryasbothelectricityandCBG/CNGarecurrentlysubjecttoVAT(nofuelleviesarechargedonCBG).

Electricityisalocalcommodity,whilefortheprovisionoftransportfuels,SouthAfricaishighlyreliantontheimportofcrudeoil.Thebenefitsrelatedtotheimprovementofthetradebalanceanddecreaseofforexexpenditurewillthereforeonlymaterialisewhenbiogasisconvertedintoatransportfuel,whichreducesthereliance on crude imports.

Fromastrategiceconomicperspective,onecouldarguethatbiogas-to-electricityhasthestrongestbenefitsasSouthAfricaisstrugglingwithitssecurityofelectricitysupply.Biogasgeneratorsmayprovidereliefforownuse,aswellasfeedsomeadditionalcapacityintothegrid.Whilebeingreliantoncrudeoilimportsandtheconversionofcoalintoliquidfuels,nosupplyconstraintsareexperiencedinthecaseoffuels.Forobviousreasons,itisdifficulttoforecasthowboththelocalelectricitymarketandinternationaloilandgasmarketsaregoingtodevelopinthefuture.

Withregardtosecurityofsupply,onehastotakeintoaccountthattherelevantbiogas-for-transportsources,asidentifiedinthebiogassourcesinventory,arefocusedatsourcesof18000Nm3 per day or larger.Theremaybemanysmallersources,whichdonotqualifyforbiogasfor-transport,butmightmakeameaningfulaggregatedcontribution,similartobiogas-for-transportintermsofelectricity.

EnvironmentalWhetherbiogasisusedtodisplacepetrolordiesel,ortoproducebioelectricity,displacingcoal-basedgridelectricity,bothresultinareductionofnetGHGemissions.Althoughonemightthinkthatreplacingdirtycoal-basedelectricityfromthegridhasbyfarthelargestmitigationeffect,thisislargelydependentontheefficiencywithwhichthebiogasisconvertedintoelectricity.Theefficiencyofgeneratorsgenerallylieswithintherangeof30to40%.

Table4.1.4illustratestheassessmentofthenetmitigationeffectforthesubstitutionofpetrolwithCBG,andcoal-basedelectricitywithbiogas-basedelectricity,takingintoaccountthedifferentenergycontentsandemissionfactors.TheassessmentshowsthatthenetmitigationeffectperNm3ofrawbiogas(65%CH4 content)issignificantlyhigherinthecaseofagenerator-efficiencyof40%electrical(i.e.0.002504/0.001702=47%),whileinthecaseofageneratorefficiencyof30%electrical,thenetmitigationeffectbecomescomparablewithonlya10%netmitigationadvantage (i.e.0.001878/0.001702)ofbioelectricityversus biofuel.

45

Table 4.1.4: Comparison return on mitigation: bioelectricity versus biofuel

Substitution of petrol Value Unit of measurement

1litreofpetrol-Nm3ofbiogasequivalent 1.41 Nm3

Gasolineemissionsfactor 0.000074 tCO2e/MJ

GHGavoidedperlitreofpetrolreplaced 0.002398 tCO2e/ℓ

Net mitigation effect per Nm3 raw biogas2 0.001702 tCO2e/Nm3 biogas

Substitution of coal-based electricity Value Unit of measurement

1000kWh-egridelectricity,CO2e emissions 0.98 tCO2e1

1000kWh-egridelectricity,energycontent 3,600 MJ

1000kWh-e,Nm3ofbiogasequivalent(at40%efficiency) 391 Nm3

1000kWh-e,Nm3ofbiogasequivalent(at30%efficiency) 522 Nm3



1GridemissionfactorderivedfromEskom’sinputsinits2013annualreport.2RawbiogaswithaCH4contentof65%hasbeenassumed.3GasolineemissionfactorasstatedintheMitigationPotentialAnalysis(DepartmentofEnvironmentalAffairs,2014).

Whileonthebasisofthenetmitigationbenefit,onemightfavourbioelectricityoverbiofuelasanoptionforbiogas,thiswilltoalargeextentdependonthechoiceofgeneratorbytheprojectdeveloper.Itisimportanttonoteinthisrespectthat,asmaybeexpected,lower-efficiencygeneratorsaregenerallylessexpensive.

Althoughimportant,climatechangemitigationisnottheonlyenvironmentalbenefittotakeintoaccount.Airqualityandtheeffectsonrespiratoryhealthareofimportanceaswell,andareparticularlyanissueinurbansettingswithhighpopulationdensities.SouthAfricahashadnewairqualitylegislationsince2004,withnewnationalstandardsforthemonitoringofambientairpollutants.Itacknowledgesthefactthattheeffectsoffossilfuelburnedbyelectricityplantsandcarsisamajorfactorthatinfluencesairqualityoutdoors.Asgasburnscleanercomparedtodiesel,petrolorcoal,withlittlesootandverylowsulphuroxides(SOx),nitrogendioxide(NOx)andCO2emissions,itcanmakea contribution to improve air quality.

Atpointsourceslikelarge-scalecoal-firedelectricityplants,itisinprinciplepossibletotreatfluegassessothatlowemissionlevels(similartothecombustionofgas)arereached.ThisistosomeextentplannedtohappenatthenewelectricityplantsofKusileandMedupi(currentlyunderconstruction),whichincludeNOXburnersandwetfluegasdesulphurisationprocesses.Withinthetransportsector,thecleaningoffluegassesismuchharderbecauseofitsdistributednature,withmillionsofvehiclesofdifferentmakesandmodels,whiletheareaswherealargenumberofvehiclescometogetherarethehighlypopulatedareaswherepeopleareaffectedbydeterioratingairquality.Inthissense,thebenefitsofairqualityimprovementmayberegardedassubstantiallymoresignificantinthecaseofbiogasasatransportfuel.

Athird,morestrategicconsiderationisthevalueoftheindividualGHGmitigationmeasureofbiogasfortransportorelectricity,aspartofaportfolioofGHGmitigationmeasures.Ofimportanceistorealisewhatoptionsthedifferentsectorsofapplicationhave.


Table 4.1.5: GHG mitigation options: electricity versus transport sector

Electricity sector Transport sector

Electricityplantefficiency Fuelefficiency

Consumerefficiency Passengertransportefficiency

Demand-sidemanagement Passengerdemandreduction

Solarheating Shifttopublictransport

Gasheating Hybridvehicles

Solar electricity Biofuelsfortransport

Wind Biogasfortransport

Hydro-electricity

Biomass-to-electricity

Biogas-to-electricity

Asthetableaboveillustrates,thenumberofmitigationmeasuresthatcanbeappliedtoachieveGHGmitigationislargestintheelectricitysector.Moreover,theimprovementintheenergyefficiencyofvehiclesmaybehardtoachieveasmostvehiclesaredesignedandmanufacturedoutsideSouthAfrica.However,moreimportantmaybethatseveralpoliciesalreadysuccessfullydrivemitigationmeasuresintheelectricitysector.MostprominentinthisregardistheREIPPPProgramme,whichisdesignedtocontributetowardsatargetof3725MWofrenewableelectricity,theEnergyEfficiencyDemand-sideManagement(DSM)Policyandthe12ℓEnergyEfficiencyTaxIncentive.

Withregardtobiofuelsinthetransportsector,theMandatoryBlendingRegulationsareonlyenvisagedtocommenceon1October2015attheearliest(ifnodelaysoccur).Theblendingregulationwillrequirealllicensedpetroleummanufacturerstopurchaseablendofbiofuelsfromlicensedbiofuelsmanufacturerswithaminimumof5%volumepervolume(v/v)ofbiodiesel(ablendwithdiesel),andbetween2and10%v/vofbioethanoltopetrol.Biogasand‘blending’intoCNGasatransportfueliscurrentlynotincludedinthislegislation.

SocioeconomicJobcreationisthefirstandforemostdesiredsocioeconomicimpactinadevelopingcountrylikeSouthAfrica.Inthisregard,wehavetoconsider,asillustratedinthefigurebelow,thatthevaluechainofbiogas-to-electricityisshorterthanthevaluechainofbiogasfortransport.Moreover,consideringthefactthattheelectricitygridisexistinginfrastructureandthatgasinfrastructure(transport,fuelstationsandvehicles)isnewinfrastructure,investmentinthisnewinfrastructurewastriggeredasaresultofanemerginggasmarket,whichmayincludeanadditionalindirectjobcreation potential.

Rawbiogas

Raw biogasCHP

generator Power grid

Upgrading Fuel stationCompression TransportVehicle

conversion

Figure 4.1.7: Value chain of biogas-to-electricity compared with biogas for transport

47

TheupgradingandcompressionofbiogasmayrequiretwoadditionalpersonscomparedtotheoperationofaCHPunitpersizableinstallation(say2to4MWeequivalent).Thefurtherindirectemploymentbenefitwillemergefromtheinvestmentinthenewinfrastructurethatisrequiredforgas,whilethedirectjobsintransportandretail(fuelstations)willprobablylargelyreplacejobsinthetransportindustryandthedistributionofregularfossilfuels.Afurtheranalysisofthejobcreationpotentialofbiogasfortransportisprovidedlateroninthisreport.

4.1.5 Infrastructural requirementsAlthoughinfrastructuralrequirementsforbiogas-to-electricityorbiofuelare–inessence–similar,therearedifferencesastheexistingelectricitytransmissioninfrastructureissubstantial,whilethegastransportationgridonlyexistsincertainpartsofthecountry.Moreover,biogasfortransportwill,inadditiontoanaerobicdigestionfacilities,requireexpertiseandskillsregardingtheupgradingandcompressionofbiogas.Whencomparingbiogas-to-electricitywithbiogasto-fuel,oneshouldalsotakeintoaccountinfrastructuralrequirementsanddifferencesinthisregard.

Electricity versus gas gridAlthoughthereisanalmostnationalcoveragebytheelectricitygrid,‘wheeling’ofelectricityisnotcommonpractice.Projectdevelopersingeneralexpresstheirconcernaboutthelongandcomplexregulatoryprocessesoneneedstogothroughinordertoarrangeforwheelingagreementsincollaborationwiththemunicipalityand/orEskom.Thereare,however,afewexamplesofprojectdeveloperswhohavesucceededindoingso.OnesuchdevelopmentistheBronkhorstspruitBiogasPlant,whichhasanallowancetoconnecttotheEskomgridandawheelingagreementwiththeCityofTshwane.OneofthemainhurdlesindicatedistheMunicipalFinanceManagementAct(ActNo.56of2003),whichlimitsthefreedomofmunicipalitiestoenterintolong-termcommercialagreements.

Atthispointintime,therearenoexamplesofbiogasprojectsthathaveconnectedtothegasgrid.AlthoughNERSAhasbeenmandatedwiththistask,nospecificregulationshavebeendevelopedasyettofacilitatetheopeningupofthefewlong-distancepipelinesandurbanfinegridsinGauteng.However,asanalternativetoagasgrid,CBGcanbetransportedbytrucktofuel

stationsdispensingCNG.FuelstationsdispensingCNGarecurrentlystilllimited(seeSection4.2).

Supporting skills and the service industryThebiogasindustryinSouthAfricaisonlyemerging.However,thereareseveralfirst-moverbiogassystemvendorsandprojectdeveloperswithregionaland/orinternationalexperience(seethewebsiteofSABIA13forexamples),whoareabletodeliverprojects,whetheritisbiogas-to-electricityorbiogas-to-fuel.Nevertheless,ithastobesaidthatalthoughseverallocalbiogas-to-electricityprojectsareupandrunning,nobiogas-tofuelprojectsarecurrentlyoperational.

ExperiencesinEuropeshowthatfarmers,forexample,areabletooperatebiogasprojectsattheirfarmswiththesupportofexpertserviceproviders.On-farmworkersarerequiredtofocusoncollectingwasteandfeedingthedigester,whiletheremainderoftheprocesscanbehandledbysemi-skilledoperatorsworkingwiththesupportofexpertserviceproviders.

4.2 Risks of supply using CBGThissectionassessestheriskofsupplyusingCBGandthepotentialofintegrationbetweenthecurrentCNGsupplynetworkandCBGproductionfacilities.ThefirstpartofthissectionlooksatthedifferentcomponentsofCBGriskofsupply,andprovidesanoverviewofthepotentialsolutionstoaddressthissupplyrisk.Thisisfollowedbyamorein-depthanalysisofhowalignmentofCBGwiththecurrentandfutureCNGinfrastructureinSouthAfricacouldworkandhowthiscanbestructured.TheconcludingpartofthissectionlooksatthedevelopmentofthepotentialCBGcustomerbaseandtheimportanceofintegratingCNGandCBGfortransportinfrastructureforthesuccessfullarge-scaleuptakeofCBGasatransportfuel.

4.2.1 Risk of supply using CBGAsopposedtofirst-generationbiogasproductionusingcropsasfeedstock,second-generationbiogasproduction,bydefinition,isdependentonthesupplyoforganicwaste,which–withinthescopeofthisstudy–isconvertedintobiogasusingananaerobicdigesterorlandfilling.Theorganicnatureoftheproductionof

13.http://biogasassociation.co.za/membership/members/


biogascreatesaCBGsupplyriskinthatthevolumeofbiogasproducedcanvaryovertime.Holistically,thisvariationcanbecontributedtothefollowingcomponents:

• Variation in the volume of biomass supplied: Variationsinthebiomassvolumesuppliedcanbecausedbyarangeofnaturalphenomena,suchasdrought,butcanalsobetheresultofoperationalconsiderations,suchasharvestingcycles.

• Variations in the biogas volume generated:Theanaerobicdigestionprocessinbothadigesterandalandfillcanslowdownoracceleratethegenerationofbiogas,dependingonanumberofvariables,suchastemperatureandthedetailedcompositionofthebiomass,whichcausesthebacteriatoincreaseordecreasethenaturalprocessofanaerobicdecay.

• Variations in the CH4 concentration:Duringthebiogasupgradingprocess,oneoftheactivitiesthattakesplaceistheseparationoftheCH4usedfortheproductionofCBGfromtheothercomponentsinthebiogas.Variationsintemperatureandhumidity,forexample,canincreaseordecreasetheCH4

concentrationwithinthebiogassupply,which,inturn,increasesordecreasestheproducedvolumeofCBG.

AlthoughtheabovelistofCBGsupplyriskcomponentsisnotexhaustive,suchriskscanmaterialiseindependentlyorincombination.ThismakesmanagingthesupplyriskfromwithintheCBGproductionprocessverycomplex.TomanagetheCBGsupplyrisk,astudyentitled‘Acceleratingthetransitiontogreenmunicipalfleets’(LinkdEnvironmentalServices,2015)looksoutsidetheCBGproductionprocessitselfandidentifiestwolayersofsecuritythatcanserveasback-uptothesupplyofCBG:

• First-generation agricultural biogas:IncountrieswherethereisexistingproductioncapacityofCBGfromfirst-generationagriculturalbiogas,thisservesasaback-upandfirstlevelofsupplysecurityincasetheCBGsupplyriskfromsecond-generationbiogasproduction capacity materialises.

• Compressed natural gas:Inthiscase,theexistingCNGproductioncapacityandinfrastructureservesasaback-upandsecondlevelofsupplysecuritytoCBGproductionfromsecond-generationbiogasfacilitiesintheeventthattheexistingfirst-generationagriculturalbiogascapacitycannotsubstitutetheshortfallinsupply.

Whenlookingatthesecondpoint,itisapparentthatthisback-upwould,inessence,substitutefossilfuelforbiofuel(CBGwithCNG)insituationswheresecond-andfirst-generationbiogasproductionisunabletosustainastablesupply.However,afuelswitchfrompetroltoCNGalwaysresultsinsubstantialGHGemissionreductions(25%) (KreditanstaltfürWiederaufbau,2012).Inpracticalterms,thismeansthat,intheeventthattheCBGsecurityofsupplyisprovidedbyCNG,thiswouldstillresultinasubstantialreductionofGHGemissionsincomparisontopetrol,eventhoughCNGisafossilfuel.

4.2.2 Potential for integrating CBG with the CNG infrastructure

BeforebeingabletoassessthepossibilityofintegratingthecurrentandfutureCBGandCNGinfrastructure,itisimportanttogetagoodunderstandingofthecurrentCNGinfrastructureinthecountry.SouthAfricapresentlyimportsnaturalgasfromitsneighbouringcountry,Mozambique,viaan865km-longpipeline.Thegasispredominatelyusedinindustrialprocessesandconversionintodieselfuel,foramongothers,transportapplicationsviathegas-to-liquids(GtL)process.SomeofthenaturalgasisredirectedintotheGautengdistributiongrid,whichsuppliespartsofthegreaterJohannesburgarea.

ThelimitedCNGinfrastructureisaconcernwhenitcomestothelarge-scaleroll-outofCNGandCBGfortransportacrossthecountry.Globally,CNGinfrastructurebuild-upisconsideredaconcernwheneverCNGvehiclesareintroducedintoamarketfromscratch,andmustgohandinhandwithnaturalgasdemandtoavoidsunkencosts.Adifferentmannerinwhichthisshortcomingcanbeaddressedisbytheapplicationoftheso-called‘virtualpipeline’concept(truckinginCNG),whereexpansionofthenaturalgasgridmaynotbeeconomicallyjustifiable(KreditanstaltfürWiederaufbau,2012).

Internationally,andtosomeextentdomestically,theconceptof‘blending’biofuelswithfossilfuelsattheupstreamsectionofthesupplychainisimplementedeitherviatheprovisionofgovernmentsubsidiestodosoorbecausegovernmentshavesetaminimumbiofuelblendinglevelforbiofuels.Duringthisstudy,nolegislationwasidentified(neitherinternationallynordomestically)regardingCBGblendingrequirementsforCNG.Table4.2.1thereforeonlyprovidesasnapshotoftheregulationsforotherbiofuelsinthisregard.

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Table 4.2.1: Biogas-for-transport GHG emission mitigation policies and regulations

Jurisdiction Fuel type Status Summary of legislation

South Africa Liquidfuels(petrolanddiesel)

Scheduledforimplementation from1October2015

Regulationsregardingthemandatoryblendingofbiofuelswithpetrolanddiesel,promulgatedintermsofthePetroleumProductsAct(ActNo.120of1997)(MandatoryBlendingRegulations)willrequirethatalllicensedpetroleummanufacturerspurchasebiofuelsexclusivelyfromlicensedbiofuelmanufacturers,solongasthevolumescanbeblendedwiththepetroleummanufacturer’spetroleumwithintheminimumconcentrationof5%v/vbiodieseladdedtodiesel,andbetween2and10%v/vbioethanoladdedtopetrol.

European Union (EU)

Liquidfuels(petrolanddiesel)

Implemented ViaitsRenewableEnergyDirectiveof2009,theEUcurrentlyhasa5.75%mandatedirectiveinplace,whichwasscheduledtoincreaseto10%by2020.However,inSeptember2013,theEuropeanParliamentvotedtocapfirst-generationethanolconsumptionat6%offueldemandby2020,ratherthanthe10%originallymandatedbytheRenewableEnergyDirective

Brazil Petrol Implemented Aminimumethanolcontentof25%iscurrentlymandatedbygovernment,whichwasincreasedto27.5%inSeptember 2014.

Diesel Implemented Ablendingrequirementforbiodieselof5%isinplace.TheBraziliansenatevotedtoraisethebiodiesellimitfrom5%to6%,butPresidentRoussefhadyettoapprovethelegislation.

WhenlookingattheexistingnaturalgasinfrastructureandwhereintheSouthAfricaneconomynaturalgasisutilised,itbecomesclearthatCBGblendedintothenaturalgasinfrastructurewouldcurrentlyalmostneverendupasatransportfuel,exceptmaybeviatheGtLprocessasdieselorpetrol.Fromthisperspective,itisalsoimportanttoconsiderthat,asbecameclearfromoneoftheinterviewswithstakeholdersatSasol,includingadditionalsupplytotheexistingnaturalgasnetworkmightnotbepossibleintheshorttermduetocapacityconstraintsonmostofthepipelinesystem(excludingsomeofthecapacityaroundGauteng),aswellasconcernsaroundtheabilitytomaintainsafetystandardsforrelativelysmallsourcesaddedtothepipeline system.

WhenconsideringCNGsupplyasaback-uptoaddresspotentialCBGsupplyrisks,anumberofpossible

combinationsfromarefuelling-stationperspectivecanbederivedfromtheaboveunderstandingoftheCNGinfrastructure:

• Refuelling station at CBG source and CNG pipeline:AnexampleofthiskindofsetupwouldbearefuellingstationthatislocatedatalandfillfromwhichitextractsbiogasandupgradesittoCBGfortransportapplication,whileconnectedtotheCNGgridtoprovideanincreasedsecurityofsupply.AlthoughthiscombinationwouldbethemosteconomicalwiththecurrentlimitedCNGinfrastructure,thechancesofabiogassourcebeinglocatednexttoanexistingCNGpipelineareverylimited.ItisconceptuallyfeasibletoextendtheCNGnetworktothelocationofbiogassourcesorviceversa,butthiswoulddependoneconomiccomparisonwithavirtualCBGorCNGsupply.


• Refuelling station at CBG source with virtual CNG back-up:Inthissetup,therefuellingstationislocatedatthebiogassource,andCNGistruckedinandstoredattherefuellingstationforback-uppurposes.Thissetupwouldbethemost‘pure’formofCBGfortransportapplicationinthesensethattheCNGprovidedtotherefuellingstationservestoprovidesecurityofsupplybyaddressingtheCBGsupply risks.

• Refuelling station at CNG pipeline with virtual CBG pipeline:Inthissituation,therefuellingstationislocatednearaCNGpipelinetoprovideitwithareliablesourceofCNG.CBGistruckedinandstoredonsite.IntheearlystagesofthedevelopmentoftheupstreamCBGinfrastructure,itisreasonabletoassumethatthemajorityofsupplywillinitiallycomefromCNGandthat,overtime,theCBGshareofsupplytotherefuellingstationwillincrease.

• Refuelling station with virtual CBG pipeline and virtual source and CNG pipeline:Inthissetup,therefuellingstationissuppliedvirtuallywithbothCNGandCBGbeingtruckedin.Althoughthisincreasesthelogisticalcomplexityandpotentiallyalsothetransportcosts,italsoincreasestheflexibilityofwheretherefuellingstationcanbelocated.Inpractice,thismeansthattherefuellingstationcanbepositioned closer to its potential customer base.

Consideringtherangeofoptionsabove,itisapparentthatseveraloptionsexistwhereCNGsupplyasaback-uptoaddresspotentialCBGsupplyriskscanbeutilised.ThenextsectionconsidershowthepotentialCBGforatransportcustomerbasecanbedefinedanddevelopedover time.

4.2.3 CBG/CNG integration

InadditiontoCNGprovidingasecurity-of-supplybackstopforCBG,makingthealignmentofthedevelopmentofaCBGdownstreaminfrastructuretothatofCNGareasonableassumption,itisalsoimportanttoconsiderthat,duetothelimitedrangeofaCNGvehicle,ahigherdensityofCNGrefuellingstationswouldberequiredthanwouldbethecasefordieselorpetrolrefuellingstations.

Inessence,CBGdoesnotdifferfromCNGwhenitcomestodownstreamstorage,treatmentandtransportuse.Hence,thevolumetricenergydensity,similarto

CNG,isonly25%ofthatofdiesel(fordetailsseetheinceptionreportsectiononthecustomerbase),makingtherequiredtankinavehicleforCBGlargerandcostlierthanaconventionalfueltank.Thissmallerrange/largertankrationaleneedstobetakenintoaccountwhenassessingtheuptakeofCBG(andCNGforthatmatter)as it develops over time.

Initially,alimitednumberofrefuellingstationswillbeavailabletocustomers.ThisimpliesthattheconversionfrompetrolordieseltoCNGorCBGisonlypracticalinsituationswheretherefuellingstationislocatedalongaroutethatisfrequentlyusedbythecustomerbase.Althoughthiskindofroutingpatternexistsinadomesticenvironmentwhere,forexample,amemberofthehouseholdcommutesbackandforthtoworkalongthesamerouteonadailybasis,itisthestandardpatternwithinpublictransportwherebusesandminibustaxistravelthesamerouteonanongoingbasis.

Anadditionaladvantageofinitiallyfocusingonthepublictransportsectoristhatpublictransportinacertainregionisoftencollectivelyownedorcontrolledbyoneoralimitednumberofentities.These‘fleetowners’canconvertanumberoftaxisand/orbussesinonego,therebykickstartingthedevelopmentofarefuellingstation’scustomerbase.Incontrasttoconvertingfrompassengercars,minibustaxisandcitybussescanaccommodateanadditionalfueltankwithoutmateriallyreducingtheloadingcapacityofthevehicle.ThetablebelowprovidesanoverviewofthenumberofminibustaxisandcitybussesinSouthAfrica(eNATIS,2012).

Table 4.2.2: Number of minibusses and busses per province

Province Minibusses Busses, bus-train, midi-busses

Gauteng 110 765 16 779 KwaZulu-Natal 46 320 6 753 WesternCape 33 887 5 329 EasternCape 20 688 3 700 Free State 11 933 2 267 Mpumalanga 20 732 5 320 NorthWest 16 618 3 260 Limpopo 19 280 4 533 NorthernCape 3 966 1 313 Total 284 189 49 254

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Ascanbeexpected,themajorityofbothminibustaxisandcitybussesoperatewithinSouthAfrica’smainmetropolitanareas.WhenlookingatthegeographicdistributionofpotentialsourcesofbiogasasoutlinedinSection3.3ofthisreport,itbecomesapparentthatthemajorityofthesesourcesarealsolocatedinandaroundthecountry’surbanisedareas.

Asindicated,thereisalimitedCNGinfrastructurewithinSouthAfrica,ofwhichonlyaverysmallportionisdedicatedtotransportapplications.Aspartofthisstudy,asitevisitwasconductedtooneofthefront-runnerswithintheCNGforthetransportsectorinSouthAfrica,CNGHoldings.WithassistancefromtheIDC,CNGHoldingshasdevelopedtwoCNGrefuellingstationsinJohannesburgwiththeintentionofdevelopingadditionalrefuellingstationsinotherpartsofthecountry.Thetablebelowprovidesanindicationofidentifiedcurrentandproposedrefuellingstationsacrossthecountryatpresent.

Table 4.2.3: Current and proposed CNG refuelling stations

Area Address

Johannesburg72MainReefToad,Langlaagte

Johannesburg1162SteveKganeStreet,Dobsonville

CityofTshwane N/A

Vereeniging N/A

CapeTown N/A

Insummary,thissectionshowsthat,asaresultofthedownstreamsimilaritiesbetweenbothCNGandCBGfortransportapplications,bydevelopingtheCNGdownstreaminfrastructure,thepotentialfordevelopingCBGfortransportincreasessubstantially.

4.3 High-level macro-economic and environmental impact

Aspartoftheanalysis,thestudyalsoaskedforahigh-levelassessmentofthemacro-economicandGHGmitigationimpactofthelarge-scaleuptakeofbiogasfortransport.Thebiogaspotentialidentifiedinthisstudywillhaveanumberofimportantconsequencesonan

economy-widelevel.Inadditionaltothis,therearesignificantenvironmentalbenefits(i.e.GHGemissionreductionandreducedairpollution)associatedwiththeuptakeofbiogas.Inordertogaugetheseeffects,thestudyprovidesananalysisofanumberofkeyareasthathavebeenidentified,wheretheimpactisexpectedtobethelargest.Tostructurethingslogically,theanalysisbelowfirstfocusesonthemacro-economicimpact,andthenprovidesadetailedanalysisoftheGHGmitigationimpact.

4.3.1 Macro-economic impactTheprojectteam,togetherwiththeProjectSteeringCommittee,hasidentifiedthreekeyareaswherethesocioeconomicimpactofbiogasfortransportislikelytobelargest,andwhichthereforerequirefurtheranalysis.Theseincludethefollowing:

• Jobcreationintherenewableenergysector,whichwillresultfromtheproductionofbiogas

• Thesubstitutionofbiogasforforeigncrudeoilimports,andhenceareductioninthedependenceonforeignenergy,animprovementinthecountry’stradebalanceandadecreaseinforeign-currencyexpenditure

Thesetwofactors,inconjunctionwiththeestimatedproductionpotentialofroughlythreemillionNm3ofrawbiogasperdayinSouthAfrica(seeSection3.3),couldimplysignificantsocioeconomicbenefitsfromtheuptakeintransport.Assuch,ithasthepotentialtounlocksignificantprivate-sectorinvestmentandcreateacompletelynewgreenindustryinthecountry.Thiswouldspureconomicgrowthandsustainabledevelopment,inadditiontocreatingsignificantenvironmentalbenefits.

Job creationStakeholderswhowereconsultedduringthisstudyindicatedsignificantpotentialforbiogastocreatepermanentjobsthroughouttheSouthAfricaneconomy.Thesefindingsareconfirmedbyinternationalexperiences.Forobviousreasons,forecasting(macro-economic)variableslikethenumberofjobsaddedthatresultfromprivate-sectorinvestmentaresurroundedbysignificantuncertainties.Thereareseveralcross-sectoraldynamicsatwork.Jobsaddedcanbecomparedtojobcreationthroughinvestmentsinalternativesourcesofrenewableenergy,suchassolarandwindenergy(somesourcesindicateajobcreationpotentialofbiogasoversolarandwindof10to


one).However,whenitcomestobiogasfortransport,onewouldalsohavetotakeintoaccountemploymentloss,forexample,incrudeoilrefining.Investmentsaretypicallyalsolong-term,addingfurtheruncertainty/risk.

Thebelowassessmentofthelarge-scaleuptakeofbiogasintransportisbasedonstakeholderconsultationsandinputs.Thenumbershavebeenconfirmedbyinternationalexperiencesandresearch.Thelatteris,ofcourse,notstrictlycomparabletotheSouthAfricansituation,butcanbeusedtocheckwhetherdomesticallygeneratednumbersareapproximatelyinline.

Thereareseveralstagesatwhichbiogasproductionaddstojobcreationpotentialasaresultofinvestmentinbiogasproductioncapacity.Forexample,employmentisgeneratedintheproductionphaseofbiogas,and,whenusedfortransport,intheupgradingandcompressionphase,aswellasinthedistributionphase.

Whatismore,forjobcreationtobe‘true’jobcreationinaneconomicsense,anecessaryconditionhastobethatthebiogascanbeproducedandsoldatpricesthatareroughlycompetitivewithitsalternativesintheformofpetrolanddieselonanequivalentlitrebasis(seenextsectionforanelaborationofthe‘gasolinelitreequivalent’concept).ThesubsidiesrequiredtojumpstartthebiogasindustryinSouthAfricacannotbeconsideredexcessivelyhighcomparedtointernationalexperiences,andcanbeseenasnecessarypreciselyforthatreason.This,moreover,comesatatimeofrelativelylowinternationaloilandgasprices14.

Inlinewiththepurposeofthestudy,Table4.3.1providesanindicationofthejobcreationpotentialassociatedwiththelarge-scaleuptakeofbiogasfortransport.ThenumbersarebasedonanassumedrawbiogasproductionpotentialofaboutthreemillionNm3 perday,thetotalpotentialasindicatedintheBiogasforTransportSourcesInventory.Thisindicatesajobcreationpotentialwithalowerrangeof2324andanupperrangeof14248jobscreatedonafull-timeequivalent(FTE)basis.Thejobpotentialhasbeensubdividedintothreecategoriesofskills,accordingto

14.www.macrotrends.net/1369/crude-oil-price-history-chart

thedefinitionprovidedbyStatisticsSouthAfrica:low-skilled(elementaryanddomesticworkers),semi-skilled(clerks,salesandservicesstaff,skilledagriculture,craftandmachineoperators)andskilled(managers,professionalsandtechnicians)15.

Table 4.3.1: Biogas-for-transport job creation potential by skills category

Lower range (full-time jobs

added)

Upper range (full-time jobs added, FTE)

Low-skilled 697 4 274

Semi-skilled 1,395 8 549

Skilled 232 1 425

Source:Stakeholdermeetings,IDCandEcoMetrixteamanalysis

Itcanbeseenthattheresultingrangeisratherwide.Thelowerrangeisbasedonaperprojectbasisasobtainedfromvariousstakeholderinputs.TheupperrangeisbasedonworkbytheIDC(IndustrialDevelopmentCorporation,2013).Inthefirstcase,itconcernsonlydirectjobscreatedbytheproductionofbiogas.However,dependingonwhetheronechoosestoincludeindirectjobsaswell,thisnumberincreases.Anexampleisjobsatrefuellingstations,forwhichoneneedstobemindfulofdoublecounting(whethertheconsumptionofCBGcreatesanextrajobattheservicestation,ordoesitsimplydisplacelabourthatwouldotherwisehavebeenusedtorefuelpetrol-ordiesel-poweredvehicles).Moreover,acertainamountofexpertisewillalwaysberequiredfortheproductionofCBG,butthismaynotbesignificantlymorethan,forexample,isthecasewiththeproductionofsolarorwindenergy.

Reduction of crude oil importsAsidefromtheeconomicbenefitsrelatedtojobcreation,thequestionhasbeenraisedwhethertheuptakeofbiogascanhaveasignificantimpactonfuelimportsandthusonthetradebalance(aspartofthecurrentaccount)ofthecountry.Currently,SouthAfricareliessubstantiallyonoil/fuelimportstomeetitsenergydemandfortransport.Amongotherthings,thishasa

15.http://www.statssa.gov.za/presentation/Stats%20SA%20presentation%20on%20skills%20and%20unemployment_16%20September.pdf

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considerableimpactonthebalanceoftrade,whichisalreadysignificantlynegative(lastyearthecurrentaccountdeficitstoodat5.4%ofgrossdomesticprofit(GDP)accordingtotheInternationalMonetaryFund(IMF)).Italsoimpliesasubstantialrelianceonforeigncrudeoilimports,withimplicationsforenergysecurityandexposuretointernationalcrudeoilpricefluctuations.Aspartofthismacro-economicimpactassessment,thissectionthereforeincludesahigh-levelanalysisofthepotentialofbiogastoreducethecountry’simportoffuels.

Theimportoftransportfuelscomesinanumberofforms,butmostnotablyascrudeoil,whichisprocessedatvariouspetroleumrefineriesinthecountry.Amongotherplaces,oilisproducedinAngola,theMiddleEastandNigeria,andthentransportedtoDurbanbyship.Here,theoilistransformedintoend-productssuchasnaphtha,liquifiedpetroleumgas(LPG),kerosene,bitumenandheavyoil,aswellaspetrolanddiesel.Locally,fuelsarealsoproducedthroughcoal-andgas-liquifactionprocesses.Theassessmentassumesthelatteroutputtoholdconstant.Tokeepthingsstrictlycomparable,andtobeabletoputamoreexactmonetarynumbertoit,thestudyfocusesonthedirectsubstitutionofbiogasforpetrolanddiesel,themainfuelsusedintransport,andnotonoilastheimportedproduct,which–asindicated–hasseveralotherend-productsassociatedwithit,makingsuchananalysisunnecessarilycomplex.

Incalculatingthepotentialofbiogastoreplacepetrolanddiesel‘imports’,anumberoffactorsaretakenintoaccount.Firstly,alternativefuelseachhaveadifferentenergycontent,soinordertomakeavalidcomparison,anadjustmentneedstobemade.Secondly,thefueleconomiesofvehiclesusingvariousfuelsdiffer.Generallyspeaking,adieselengineismoreefficientthanapetrolengineinconvertingenergytokilometrestravelled.Thisfactoralsoinfluencestheoutcome,sinceless-economicalfuelenginetypesrequiremoreofthesubstitutefueltogetthesameresult.Finally,weneedtoputapriceonthistoestimatetheoverallimpactonthetradebalanceinrand.

Duetodifferentchemicalcompositions,thefuelsunderconsiderationvaryinenergycontent.Inanefforttocompare‘appleswithapples’,acorrectionhastobeenmade.Inpractice,theenergycontentofvariousfuelsiscomparedusingagasolinelitreequivalent(GLE)ordiesellitreequivalent(DLE)16.Forexample,dieselfuelhasahigherenergycontentthanpetrol.ItsGLEisabout0.88.Inotherwords,onelitreofdieselcontainsabout113%oftheenergycontainedinonelitreofpetrol.ThetablebelowprovidestheGLEofanumberofalternativefuels.TheoriginaltableisfromtheUSDepartmentofEnergyandprovidesthevaluesingasolinegallonequivalent(GGE).

Table 4.3.2: The gasoline litre equivalent per fuel type

Fuel type Chemical structure Gasoline litre equivalent

Gasoline/E10 C4toC12 andethanol≤10% 97to100%.

Low-sulphurdiesel C8toC25 Onelitreofdieselhas113%oftheenergycontentofonelitreofgasoline.

Biodiesel MethylestersofC12toC22fattyacids B100has103%oftheenergyofonelitreofgasolineor93%oftheenergyofonelitreofdiesel.B20has109%oftheenergyofonelitreofgasolineor99%oftheenergyofonelitreofdiesel.

Propane(LPG) C3H8(majority)andC4H10(minority) Onelitreofpropanehas73%oftheenergyofonelitreofgasoline.

16.Sincethisisaninternationalconcept,theterm‘gasoline’isusedinsteadoftheterm‘petrol’commoninSouthAfrica.


Fuel type Chemical structure Gasoline litre equivalent

CNG CH4(majority)C2H6andinertgasses 0.68kgor0.95m3ofCNGhas100%oftheenergyofonelitreofgasoline;0.76kgor1.04 m3ofCNGhas100%oftheenergyofonelitreofdiesel.

LNG CH4–sameasCNGwithinertgasses<0.5%

0.64kgofLNGhas100%oftheenergyofonelitreofgasolineand0.73kgofLNGhas100%oftheenergyofonelitreofdiesel.

Ethanol/E100 CH3CH2OH OnelitreofE85has73to83%oftheenergyofonelitreofgasoline(variationduetoethanolcontentinE85).OnelitreofE10has96.7%oftheenergyofonelitreofgasoline.

Methanol CH3OH Onelitreofmethanolhas49%oftheenergyofonelitreofgasoline.

Source:USDepartmentofEnergy–AlternativeFuelsDataCenter17. EcoMetrixteamanalysis.

Itiswellknownthatdifferentengineshavedifferentefficienciesintransformingenergy.Ingeneral,dieselenginesareabletogetrelativelymore‘work’outofanequivalentlitreoffuelinput(i.e.acertainamountofenergycontent)thanpetrolenginesare.Inotherwords,dieselenginesarebetterattransformingagivenamountofenergyintokilometresontheroad.Thisgivesrisetoaneffectoverandabovetheonethatcantheoreticallybeexpectedfromthevaryingenergycontentsofvariousfuels(asdiscussedabove).Asaruleofthumb,modernpetrolengines,inpractice,haveamaximumaveragethermalefficiencyof35to40%,whilethismaybeupto40to45%fordiesel-poweredengines18.

Tocapturethedifferencesinfueleconomy,anaveragehasbeenapplied,whichisassumedtoholdconstantover time. Numerous international studies and sources areavailableonfueleconomies.Forthepurposeofthisassessment,werelyontheresultofastudyforSouthAfricaspecifically,conductedbytheEnergyResearchCentreoftheUniversityofCapeTownincooperationwithSANEDI(EnergyResearchCentre,2012). Table4.3.3summarisesthemostimportantcategories.WhilethistabledoesnotcontainCNG-poweredvehicles

17.http://www.afdc.energy.gov/fuels/fuel_comparison_chart.pdf

18.http://large.stanford.edu/courses/2011/ph240/goldenstein2/

asacategory,internationalsourcesindicatethat,onaverage,thefueleconomyofCNG-poweredvehiclesisapproximatelyequaltothatofaconventionalpetrolvehicleonaGLEbasis19.

Table 4.3.3: Vehicle fuel economy

Type of vehicleVehicle fuel economy (ℓ/100 km)

Diesel car 7.5

Gasolinecar 8.3

Dieselsuburbanutilityvehicle(SUV) 11.5

GasolineSUV 13.0

Diesellightcommercialvehicle(LCV) 11.5

GasolineLCV 13.0

Dieselmediumcommercialvehicle(MCV)

28.1

GasolineMCV 33.3

Dieselheavycommercialvehicle(HCV)

37.5

Dieselmainbattletank(MBT) 11.4

GasolineMBT 13.5

Diesel bus 31.2

Source:EnergyResearchCentre(2012)

19.http://www.afdc.energy.gov/fuels/natural_gas_basics.html

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Inpractice,LFGhassignificantlylowerCH4contentthanbiogasproducedthroughAD.Internationalresearchonthistopicshowsthat65%CH4 content is a reasonable assumptionwithregardtobiogasfromAD,whilethisisonaverage45%forLFG.Fromatheoreticalperspective,itispossibletoproducebiogasfromMSWusingbothmethods(ADorLFG).ForthepurposeoftheGHGmitigationimpactassessment,thestudydistinguishesbetweentwoscenarios.Thesescenariosfunctionasso-called‘boundaries’,orcasesbetweenwhichaninfinitenumberofpossibilitiescanoccur.

Inthefirstscenario,allMSWistreatedasbeingprocessedentirelythroughAD,sothat,ineffect,allwastetypesareassumedtoproducethesameconstantCH4contentof65%.Inthesecondscenario,thebiogasproductionattributedtotheMSWpartoftheinventoryisproducedentirelyasLFG,whichhasanaverageCH4contentof45%,whiletheremainderisassumedtocomefromAD/LFG.

Moreover,withregardtotheuseoftheBiogasforTransportSourcesInventory’stodeterminethepotentialofbiogasasatransportfuel,biogascanbesubstitutedforeithertheconsumptionofpetrolortheconsumptionofdieselfuel.Asindicated,thetwofuelshavedifferentenergycontentsandfueleconomies.Thisprovidesafurthertwoscenariosthatcanfunctionas‘boundaries’withregardtotheoverallimportreductionpotential.

Thisgivesarangeofpossibilitiestoconsider.Thematrixbelowprovidestheresultsofthepotentialofthelarge-scaleuptakeofbiogasfortransportasasubstituteforfuelsthatarecurrentlyimportedforthedifferentscenarios.Dependingonthespecificscenario,biogasproductioninSouthAfricahasthepotentialtoreplacebetweenapproximately500millionlitresofdieselfueland700millionlitresofpetrolonanannualbasis.TheresultsarebasedonanestimatedbiogasproductionpotentialinSouthAfricaofaroundthreemillionNm3 per

day,ascurrentlyprojectedbytheBiogasforTransportSourcesInventory.Mervenetal.(2012)indicateafueldemandfortheSouthAfricaneconomyofapproximatelyeightand12billionlitresofpetrolanddieselfuel,respectively.Thisimpliesasubstitutionpotentialinthefuelmixofbetween4and9%,dependingonthefueltype.Toputthisintoperspective,inGermany,theshareofbiofuelsinprimaryfuelconsumptioniscurrently5.8%20.

Table 4.3.4: Biogas-for-transport substitution potential

Substitution potential for diesel

fuel (ℓ per annum)

Substitution potential for petrol

(ℓper annum)

AD/LFG 496 708 335 643 685 574

AD 546 546 691 708 271 224


Earlierinthestudy,abreakdownwasalsoprovidedoftheretailpriceofpetrolanddieselfuel.Thispriceissubjecttomonthlyorevenweeklyfluctuations.TocalculatetheoverallimpactofbiogasproductioninSouthAfricaonthetradebalance,pricesreportedforMay2005(excludinglevies)havebeenassumedandapplied.Thisyieldsthefollowingimportsubstitutionpotentialwithregardtopetrolanddieselfuelsinrand(seetablebelow).ThelowerrangeofthecalculationindicatesapotentialofaroundR3billion.AmaximumpotentialexistsatR4.4billion.

Table 4.3.5: Biogas-for-transport-related reduction in fuel imports

Reduction in fuel Imports

(rand per annum)

Reduction in fuel imports

(rand per annum)

AD/LFG 2 960 530 691 3 962 850 234

AD 3 257 582 224 4 360 471 788


20.http://www.biodeutschland.org/tl_files/content/dokumente/biothek/Bioenergy_in-Germany_2012_fnr.pdf


4.3.2 Environmental impactAnimportantcontributionofbiogasincreatingsustainabletransportliesinitsGHGmitigationpotential.TheGHGmitigationimpactofthelarge-scaleuptakeofbiogasfortransportentailsseveralaspects.Thereareanumberofeffects,bothdirectandindirect,thatworktowardsthisend.Forthereasonsdiscussedbelow,thestudywillprovidethedirectGHGmitigationeffectsrelatedtotheuptakeofbiogasfortransportbyprovidingadetailedimpactanalysis,butwillbrieflyhighlighttheindirecteffectsaswell.

ThedirectimpactonGHGemissionscomesfromthesubstitutionoffossilfuelswithbiomethaneasatransportfuelandtheassociatedreductioninemissions.WhilethecombustionofbiogasproducesCO2,justlikethecombustionofotherfuels,includingnaturalgas,thecarboncontentinbiogascomesfromorganicmatterthathaspreviouslyabsorbedthiscarbonfromatmosphericCO2.Forthisreason,theburningofbiogasisconsideredcarbon-neutralanddoesnotaddtotheoverallGHGemissionsofacountryorregion.

Thus,netcarbonemissionsarezero,orclosetozero(astheproductionofbiogasitselfwouldleadtosomeemissions,whicharenotaccountedforatthispoint–inthesamewaythatupstreamemissionsassociatedwiththeproductionoffossil-basedfuelsarenotaccountedforatthispoint).Thisisinlinewithcommoninternationalapproaches,whichexplicitlyexcludeCO2 emissions resultingfromthecombustionofbiomassorbiofuelsfromnationalGHGemissioninventories(WorldBiogasAssociation,2012).Therefore,whenbiogasisusedasasubstituteforfossilfuels,overallGHGemissionsandthenationalcarbonfootprintwillbereduced.

TheindirectGHGmitigationimpactofalarge-scaleuptakeofbiogascomesfromreducedGHGemissions(mainlyCH4andCO2)occurringnaturallyfrombiomasssources,orfromreducedemissionsresultingfromtheproductionoffossilfuelsfortransportthatarenowavoided(asnotedabove,suchindirectemissionsalsooccurwiththeproductionofbiogas,especiallyfortransport,forexampleemissionsresultingfromelectricityusedforupgradingandcompressingbiogasandrelatedCH4losses).Theseemissionsarenotpartoftheassessment,asthescopeofthisstudyisspecificallygearedtowardstransport.Moreover,internationalpracticeinGHGinventoriesaccountsfor

theseemissionsatsourceasopposedtoacradle-to-graveapproach.

DEA’sGHGMPAforSouthAfricaconsidersseveralsector-specificmarginalabatementcostcurves(MACCs)withmitigationoptionsforthreeyears:2020,2030and2050.TheseMACCseffectivelysummarisethetechnicalmitigationpotentialofmeasurestoreduceGHGemissionsandtheassociatedcostsacrosstheSouthAfricaneconomyoverthedifferenttimehorizons.

ThereportincludesestimatesoftheGHGemissionabatementpotentialofmeasuresinfivesectorsrelevanttothisstudyonthelarge-scaleuptakeofbiogasfortransport:• MSWforelectricitygenerationthroughLFG

(AppendixF)• ADof(food)wastes(AppendixF)• Municipalwastewater(MWW)(AppendixF)• Thetreatmentoflivestockwaste(AppendixG)• Thepulpandpaperindustry(AppendixD)

AnyonewishingtogainmoreelaborateinsightsintotheextentofGHGemissionsavoidedinthesesectorsasaresultofmitigationmeasuresrelatedtobiogasproductioncanconsulttheMPAReport(DepartmentofEnvironmentalAffairs,2014).ThereportoftheKreditanstaltfürWiederaufbau(KfW)(2012)alsocontainsinformationonthistopic.

CBG versus petrol and diesel, and the contribution towards reducing the national carbon footprintTheBiogasforTransportSourcesInventorycurrentlyindicatesatotalbiogasproductionpotentialofaroundthreemillionNm3 ofrawbiogasperdayfromlarge-scalesourcesinSouthAfrica.Afterupgradingandcompression,CBGcanbeusedasasubstituteforpetrolanddieselfuelconsumptionintransport.ItcanalsobeusedasasubstituteforCNGinthosecaseswherethisisalreadyusedasatransportfuel.Aspreviouslynoted,netGHGemissionsassociatedwiththecombustionofbiogasarezeroorclosetozero,sosubstitutionshouldleadtoanoverallimprovementofthecountry’scarbonfootprint.Below,thereportfirstsetsoutthetheoreticalframeworkforestimatingthedirectGHGmitigationeffectandthengoesintothespecificcalculation.

TherelativemeritsofCBG-poweredvehiclesneedtobecomparedtoalternativesintermsoftheoverall

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GHGmitigationpotential.Inpractice,CBGservesasanalternativefueltoanumberoffuelsusedintransport.Themostimportantonesarepetrol,dieselandCNG.Forthisreason,whencalculatingtheoverallGHGmitigationimpactfromswitchingtoCBG,itisnecessarytoknowthedirectcarbonemissionlevels(onaCO2 equivalentbasis)associatedwiththeconsumptionofthesefuels.The2006IntergovernmentalPanelonClimateChange(IPCC)Guidelinesprovideastandardemissionfactorforeachoftheserespectivefuels,whichisusedforthepurposesofmakingthecalculationsinthisstudy.Theyarecapturedinthetablebelow.

Table 4.3.6: Fuel emission factors

Direct emission factors Kg CO2e/GJ

Gasoline 74

Diesel 69

CNG 56

Source:AsreportedinAppendixEofSouthAfrica’sGHGMitigationPotential Analysis.

WhiledirectGHGemissionsperunitoffuelconsumedwilldifferevenwithintherelevantfuel-typecategories,theseareinternationallyacceptedaverages.Theyarecommonlyusedinthesetypesofassessmentsand,assuch,aredeemedappropriateforthepurposeofthishigh-levelassessmentaswell.BecauseCNGasatransportfueliscurrentlyonlyscarcelyusedinSouthAfrica,thereisverylimitedpotentialforsubstitutingCBGforCNG.Consequently,thisfueltypeisomittedfromtheoverallGHGmitigationcalculation.

AsecondfactoraffectingthedirectGHGemissionmitigationimpactfromswitchingtobiogasintransportistheamountofenergycontainedineachofthealternativefuels(alsoreferredtoasthecalorificvalue).Theenergycontentsofdifferentfuelscanbecomparedbycalculatingtheamountofthealternativefuelneededtoequalthecalorificvalueofonelitreofpetrolordieselfuel.ThislattermeasureisreferredtoasGLEorDLE,respectively.Generally,dieselwillhaveahigherenergycontentthanpetrolonaGLEbasis.Becauseofthis,agivenamountofenergyfrombiogasproductionwillbeabletosubstitutefewerlitresofdieselthanpetrol.

Thiseffectisamplifiedbyavaryingenginefuelefficiency.Asdiscussedabove,whichrepeatedtheresultsfroma

studybytheEnergyResearchCentreattheUniversityofCapeTownonfueleconomyfordifferenttypesofvehiclesinSouthAfrica,dieselenginesareabletoget15%more‘work’outofalitreoffuelonaveragethanpetrolenginesare.Inotherwords,thefueleconomyofdieselenginesishigher.TheassessmentoftheGHGemissionmitigationpotentialwhenswitchingtobiogasasatransportfuelmakesanadditionalcorrectionforthisfact.

Takingthesefactorsintoaccount,whatdoesthisimplyfortheGHGmitigationpotentialofswitchingtobiogasasatransportfuel?AboutthreemillionNm3 ofrawbiogasperdaycouldpotentiallybeproducedfromlarge-scalesourcesinSouthAfrica.ThisamountstoapotentialofoveronebillionNm3ofrawbiogasperannum.Ofthisproductionpotential,alittleover300 million Nm3isproducedfromMSW.BiogasfromMSWcanbeproducedasLFGbydrillingwellsintolandfills,orthroughADofthewaste.Thestudythereforedistinguishesbetweenanumberofscenarios,whicharerepresentedinthematrixbelow.

Table 4.3.7: Biogas-for-transport GHG emission mitigation

GHG emission mitigation potential

when used to substitute for diesel (tCO2e per annum)

GHG emissions mitigation potential

when used to substitute for

gasoline (tCO2e per annum)

AD/LFG 1 226 969 1 543 301

AD 1 350 080 1 698 151


Dependingonhowbiogasisproducedandwhetheritsubstitutespetrolordiesel,theGHGmitigationimpactoftheuptakeofbiogasfortransportrangesbetween 1.2and1.7milliontonnesofCO2e emissions avoided peryear.Hence,thehighestmitigationpotentialisachievedthroughAD,usingthebiogasproducedtosubstitutefullyforpetrol.Thelatterisduetotwoseparateeffects.Firstly,aswehaveseen,petrolhasahigherCO2emissionfactorperMJburntthandiesel,soreplacingitcontributesmoretomitigatingclimatechange.Secondly,petrolhasalowercalorificvalueandfueleconomy.Thisalsomeansthatreplacingitcontributesrelativelymoretoreducingemissionsthanreplacingdiesel.FromaGHGmitigationperspective,therefore,thereisadoubleeffectatworkinfavourofsubstitutingbiogasforpetrol.

CBG as a vehicle fuel and urban air pollution WhilethereislimitedlocalexperienceinSouthAfrica


withtheuseofCNGorCBGintransport,thereissubstantialinternationalexperiencewhenitcomestoadecreaseinurbanpollutionbyswitchingtoCNG-orCBG-poweredvehicles.CountrieslikeArgentina,Brazil,China,India,IranandPakistanhavesizableCNG-poweredvehiclefleets21.ExperiencesintheseplacesshowthatCNGisveryefficientasavehiclefuelandcancontributesignificantlytoareductioninlocalurbanairpollution,especiallywhenusedasasubstitutefordieselfuel,whichisusedbymostcitybussesandotherheavycommercialvehicles(seeNarainandKrupnick,2007).

Table 4.3.8: Non-GHG emission reductions (%) of new CNG compared to in-use petrol/diesel vehicles

LDV (car) LDV (truck) School bus Heavy duty truck

CNGvsgasoline CNGvsdiesel CNGvsdiesel2002 2007 2002 2007 2002 2007 2002 2007

NOX 91 34 97 91 92 76 95 88PM10 50 0 98 12 98 21 98 22

Source:ArgonneNationalLabscompletefullfuelcycleanalysisusingthelatestUSEnvironmentalProtectionAgencyfigures22

Asillustratedinthetableabove,CNG(orCBGforthatmatter)emitsfarfewerpollutantsthanconventionalfossilfuels,includingsignificantlylessparticulatematter(PM),i.e.upto50to98%reductioninPMversusolderlightpetroltoheavydieselvehicles.ThelatterisaconsiderablesourceofairpollutioninmajorurbanareaslikeJohannesburg,DurbanandCapeTown(CNGalsohasrelativelylesscarbonemissionsassociatedwithitcomparedtopetrolanddieselper100kmdriven).ThegeneralfindingsincountrieslikeIndiaandPakistanarethatswitchingtoCHG-orCBG-poweredvehiclescanimproveurbanairqualitysignificantly.CNG-orCBG-poweredvehiclesgenerallyalsohavelowermaintenancecoststhanpetrol-ordiesel-poweredvehicles.

4.4 Findings on the viability of CBG for use as transport fuelThemajorfindingsregardingtotheviabilityofCBGasatransportfuelaresummarised.Basedonthesefindings,theoptionsforpolicyinterventionsarefurtherdefinedinChapter5.

4.4.1 Competitiveness of CBG as a fuelAtthemoment,biogasismainlyusedtogenerateelectricity,eventhoughthemonetarybenefits,asanalysedinSection4.1.3,arebetterwhenprocessingbiogasfurthertoCBGasatransportfuel.WithcurrentmarketpricesofpetrolanddieselaroundR11toR14perlitre,therehasnotbeenastrongmomentumintheemergenceofabiogas-for-transportorCNG-for-transportmarket.Hence,itisevidentthat,undercurrentconditions,themarketbarriersidentifiedfurtheroninthisstudyprevail.Nevertheless,therearebiogas-for-transportprojectsnearfinancialclosure,andCNGHoldingsandNOVOEnergyhaveopenedupalimitednumberofCNGfuelstationsinGauteng,focusedonthetaxiindustry.

TheimplicitsubsidyonCBGasatransportfuel(orCNGasatransportfuelforthatmatter),wherethereisalackofanyfuelleviesortaxes,thereforeseemstobeessential.Inaddition,thecurrentincentiveprovidedbytheIDCseemstobethefinalpushrequiredtogetnewCNGfuelstationsofftheground.Ifpetrolanddieselpricesincreaseinthefuture,thecaseforCBGandCNGwillstrengthenfurtherandbecomemoreattractive.

21.http://www.iangv.org/current-ngv-stats/

22.See:http://www.ngvamerica.org/natural-gas/environmental-benefits/

59

WhencomparingCNGwithCBGfromaneconomicperspective,CNGwillprobablyremainmorecompetitive,astheGasUsers’GroupestimatesgasfromMozambiquetobeimportedbySasolatonlyR20/GJ,buttobesoldataroundR42/GJonaverage.Nevertheless,aspetrolanddieselpricesarelargelygovernedbyinternationalmarkets,whichareonlyinfluencedinaminorwaybylocalalternatives,thiswillnotbeofimportance.Aslongaspetrolanddieselpricesdonotdecreasefurther23,CBGmayonlybeviableincombinationwithcurrentinformalsubsidies,andfurtherincentivestocountermarket-entrybarriersmaybeviable.

Acknowledgingtheforegoing,theattractivenessforgovernmenttopotentiallystimulatebiogasfortransportwouldneedtolieintheappreciationofthemacro-economic,aswellastheenvironmentalimpactbiogasfortransportcanmake.

4.4.2 CNG for transport is a prerequisite for CBG as a transport fuel

AmainbarrierexperiencedbybiogasprojectdevelopersissecuringdemandforCBGforthelongerterm (10to15yearsisessentialtofinancebiogasprojects).Therefore,mostprojectdevelopersstilloptforbiogas-to-electricityaselectricityforownuse,wheelingagreementsanddeliverytothirdparties,aswellasthedeliveryofelectricitytothemunicipalgrid,seemtoprovidebetteropportunities,regardlessofcertaindifficultiesencounteredinrealisingthis.

TheparallelemergenceofatransportmarketforCNGandCBGthereforeseemsessential.WhileCBGcanbringinthedesiredgreencontent,ifmanagedwell,CNG–asalow-carbonfuel–canprovidethelonger-termsecurityandcontinuityofsupplythatthismarketneedstotakeoff.Onacriticalnote,onehastoacknowledgethattheCityofJohannesburgischoosingdual-fuelbuses(CNG/diesel)tomanagetheriskofasecurityofsupplyofCBG/CNG24.

23.http://www.macrotrends.net/1369/crude-oil-price-history-chart

24.Metrobussettogogreen,April2014:http://joburg.org.za/index.php?option=com_content&view=article&id=9049:metrobus-set-to-go-green&catid=88:news-update&Itemid=266

Consideringthelatter,itseemsessentialthatgovernment,initsoverallpolicyframework,acknowledgestheimportanceofacombinationofCNGandCBGfortransport,andfacilitatestheintroductionofpoliciesthatshouldguaranteesecurityofsupply.

4.4.3 Importance of high-volume recurring transport patterns

CNG/CBGasanalternativetodieselandpetrolcanonlyworkifsufficientfuelstationsareprovided.Atthemoment,onlyahandfulofCNGfuelstationsareoperational,andasmallnumberareunderdevelopmentinGauteng.ConsideringthelimitedrangeofCNGvehiclesversusdiesel-orpetrol-poweredvehicles,itisessentialtofocusonrecurringtransportpatternssoasnottogetmixedupina‘chickenandegg’-typedilemma.Thefollowingoptionsthereforeseemtobemostattractive:

• ThemapofbiogasfortransportsourcesinSection3.3 ofthisreportshowsthatsourcesmainlyliewithinurbanareas.MinibustaxisinmanyofSouthAfrica’smajorcitiesformasubstantialpartofurbantransportand,withapreferenceforpetrol,arerelativelyeasytoconverttobiogasorbi-fueloperation.FollowingexamplesinJohannesburgandTshwane,theselocalised transport operations can be serviced by a minimumofwell-locatedCNG/CBGservicestations.

• Long-haulcargotransportusingCNG/CBGcanpotentially be economically attractive due to a loweroverallfuelcost.Currently,themostfrequentlong-haulroutesliebetweenGauteng(Tshwane/Johannesburg)andeThekwini,aswellasGautengandCapeTown.However,trucksdrivingonCNG/CBGwillhaveamaximumradiusofaround 300to400km,andsincetheGauteng-to-CapeTownrouteisapproximately1400kmandtheGauteng-to-eThekwiniorRichardsBayrouteisapproximately570to650km.ThisliesbeyondthedistancethataCNG/CBGtruckcouldcoverwithoutrefuelling.ThisinterestingalternativeshouldthereforebeinvestigatedinconjunctionwithdevelopingCNG/CBGfuelstationsalongtheseroutes,supplied,forexample,byavirtualCNGand/orCBGpipeline.

• Publiccitytransportincludesprogrammedrecurringtransport patterns related to city bus routes and schedules.TheBiogasforTransportSourcesInventorymakesitclearthatmunicipalitiesownandoperateseverallargebiogassources,suchaslandfillsitesandwastewatertreatmentplants.These


couldpotentiallybeusedtoprovidethefuelforcitybustransportsystemsthatareownedandoperatedbythesamemunicipalities. Thenextsectionofthisreportlooksatthispotentialinmoredepth.

4.4.4 The exclusive position of municipalitiesMunicipalitiesareintheuniquepositionofbeingmostdominantinthetopfourownersofbiogas-for-transportsourcesintermsofmunicipalsolidwasteandwastewaterplants.Theyalsohaveinterestingmarketsofgeneralpublictransportandminibustaxis.Despitethisextraordinaryposition,theytendtooptforbiogas-to-electricity,whilelargermonetaryandenvironmentalbenefits(includingurbanairquality)couldbeachievedwhenusingtheseresourcesforpublictransport.

Inpractice,theuseofCBG/CNGforbussesisbeingquestionedinthecaseofdual-fuelengines(diesel/CNG).Severalstakeholdersindicatethatstop-startoperations,aswiththeJohannesburgBusRapidTransitSystem(BRT)–calledReaVaya,donotperformwellusingthedual-fueloption.Incaseofdual-fuel(diesel/CNG),oneapparentlystillrunsondieselabout20to30%ofthetimeduetothetypeofstart-stopoperation.Moreover,acitybussupposedlydrivesonly100to200kmaday,whereasaminibustaxidrivesamultipleofthisdistance.Thelatterthereforeseemstobethefirstoptionofchoice.Giventheextraordinarypositionofthelargestmunicipalities,inparticular,thereseemstobeanopportunityforJohannesburgandeThekwinitodevelopCNG-/CBG-fuelledminibustaxiandlong-haulcargofreightindustries,fuelledbyCNG/CBG

betweenJohannesburgandTshwane,andbetweenJohannesburgandeThekwini.Forthelatter,atleasttwointermediateCNG/CBGfuelstationswouldberequired.Ifthisweretoberealised,abusinesscaseforcommercialcargocouldbecreated.ThisspecificroutemightbestrengthenedbythefactthatCNGinthepipelinebetweenJohannesburgandeThekwiniwouldhaveasidebranchgoingtoPietRetief,whichcouldbeextendedtofacilitateaCNG/CBGfuelstation.

4.4.5 Comparative summary of biogas for transport

TheprevioussectionsofChapter4discussedthecostbenefits,aswellasotherelementsdeterminingthefeasibilityofconvertingtoCBGasatransportfuel.Allthesearerelevanttogovernmenttoconsiderwhenformulatinganypolicyaimedatsupportingbiogasfortransport.Themainfindingsaresummarisedinthefollowingtable,whichmakesacomparisonbetweenbiogas-to-fuelandbiogas-to-electricity,asthisisthemainalternativeagainstwhichbiogasfortransportiscompeting.

Thecomparativeanalysishasbeensubdividedintothefollowingcategories:• Economic/financial• Environmental• Socioeconomic• Infrastructural

61

Table 4.4.1: Summary of findings of biogas for transport analysis – fuel versus electricity

Biogas to fuel Biogas to electricityEconomic/financial

Taxrevenue(14%VAT)

Atwo-tothree-timeshighermonetaryvalue,meaningmoreVATincomefor

government

LowervalueperGJofenergy,resultinginlowerVATincomefor

government

R675 to R743 million per annum R225 to R248 million per annum

Forex1 R3.0 to 4.4 billion per annum Mainly domestic market

SecurityofsupplyNoissue,assupplyislargelysatisfied

byworldmarkets

Potentialof240to320MWegeneratedbybiogassourcesabovetransportthresholdof750Nm3

perhour2

Environmental

GHGmitigationpotential 1.2 to 1.7 Mt per annum3About10to47%foraCHPgenerator

efficiencyof30to40%

Air qualityPotentiallyconcentratedinurbanareas,whereairqualityhasadirecteffecton

humanhealth

Generallyconcentratedinmoreremoteareaswherelarge-scale

electricity plants are located

Valueofmitigationmeasureinportfolioofmeasures

UseofbiogasasbiofuelwouldbeoneofthefewGHGmitigationmeasures

implementedinthesector

Theelectricitysectorhasseveraloptionsformitigationandseveral

activepolicies;biogas-to-electricityisjustoneofthem

Socioeconomic

Jobcreation

Thestepstoupgradeorcompressrawbiogascouldcreateoneortwoextrajobspersizablefacility;indirectjobcreationisenvisagedthroughinvestmentsinnew

gasinfrastructure

RawbiogasisdirectlyusedinCHPandelectricityiffedtothegridorlocal

network

Infrastructural

Distribution

Thegasgridislimited,withnoexamplesofaccessforbiogas;thereisonlya

handfuloffuelstationswithCNG/CBGdispensers

Gridisavailable;accessisachievedbysomeprojects;regulatoryhurdles

can be substantive

Skills NoprojectsoperationalinSouthAfrica;theserviceindustrydeveloping

Severalprojectsareoperational; theserviceindustryisdeveloping

1 See Section 4.3.1 and Table 4.4.52. 2BasedonanapproximatepotentialofthreemillionNm3perdayofbiogas(65%CH4)andanefficiencyof30to40%forconversiontoelectricity(CHPgenerator).3 See Section 4.3.2.


Chapter 5: Policy intervention rationales and options

benefitsforthegovernmentandcountryasawhole,aswellasthebarriers–bothfinancialandnon-financial–thatgovernmentcouldalleviateifitfeelsthattheenvisagedbenefitsjustifydoingso.

5.1.1 Benefits for implementationFromtheanalysisinChapter4,itisclearthat,atthemoment,theeconomicsofbiogas-for-transportissuchthatnocommercialbusinesscasefortheimplementationofbiogassolutionswithintheSouthAfricantransportsectorexists.Ontheotherhand,Chapter4alsoindicatesthattherearesubstantialbenefitsforthecountrytodevelopabiogas-for-transportinfrastructure,evenwhencomparedtothebenefitsforthecountryfromabiogas-for-electricityperspective.Table4.4.1(Biogas-for-transportanalysis–fuelversuselectricity)providesanoverviewoftheco-benefitsincomparisontothebenefitsofuseforelectricity,butalsogivesinsightintoanumberofpracticalco-benefitsthatcouldberealisedasaresultofthedevelopmentofabiogas-for-transportsector,aswellasinfrastructuralrequirements.

However,whenlookingatthepotentialbenefitsfromamorestrategiclevel,someadditionalco-benefitscanbeidentifiedthatmightapplytotheuseofbiogasinthetransportand/orelectricitysector.Theseincludethefollowing:


3. Biogas sources


Previouschaptersofthisreportdemonstratethatwithoutgovernmentintervention,apositivebusinesscaseforbiogasinthenationaltransportsectorcurrentlydoesnotexist.Thischapterlooksatthepotentialpolicyinterventionsthatgovernmentcouldconsiderifitdecidesthattheadditionalbenefitsforthecountryasawholewouldjustifysuchanintervention.

Withoutbeingprescriptiveastowhatthepolicyinterventionstowardsthelarge-scaleuptakeforbiogasinthetransportsectorshouldbe,thischapterprovidesasummaryoverviewofthefollowing:

• Thepotentialbenefitsofimplementingsupportingpolicy interventions

• Thefinancialquantumofsuchinterventionswithinexistinggovernmentinterventions

• Basedoninternationalexperiences,wheresuchinterventionswithinthebiogas-for-transportvaluechainwouldbemoreandlesseffectiveandefficient

5.1 Overview of biogas-for-transport benefits and barriers

Beforeinvestigatingthepotentialquantumofgovernmentinterventionandtheeffectivenessandefficiencyofthedifferenttypesofinterventions,itisimportanttoobtainacoherentoverviewofthepotential

63

• Reduction of energy dependency:Withaconstantlyincreasingglobalisationoftheenergysector,thecontrolofenergyresourcesbecomesmoreandmorerelevantfromageopoliticalperspective.Bydevelopingdomesticenergyresources,suchasbiogas,acountrycanincreaseitsnationalenergysecuritybyreducingitsdependencyonforeignimportsoffossilfuels.

• Diversification of the energy mix:Byupscalingthegenerationandutilisationofbiogasasanenergysource,thecountry’sfuelmixfurtherdiversifies.InpracticaltermsforSouthAfrica,thismeansthatitsvastreservesofcoalbecomeasmallercomponentofthefuelmix,andasaresultthereof,willlastlonger,eventhough–bydefinition–sucharesourceisfinite.

• Early-mover advantage:Although–globally–biogasisusedintransportapplicationsinonlyafewisolatedcases,itispotentiallyamaterialcomponentofthetransportfuelmix.Bydevelopingsuchasectorintherealisationofthelarge-scaleapplicationofbiogasintransport,thecountrycouldoccupyauniquepositionasahubforbiogas-for-transporttechnologies,fundingmodelsandpoliciesinasimilarwayasKenyahasdoneintheareaofgeothermalenergy,andDenmarkhasdoneinthedevelopmentofwindenergy.

WhentheSouthAfricangovernmentdecideswhetherornotitisinthebestinterestofthecountrytodeveloppolicyinterventionstowardsthelarge-scaleuptakeofbiogaswithinthetransportsector,itshoulddosoagainstthebackdropofthesemorestrategicbenefits,andthemorepracticalbenefitsoutlinedinSection4.4.5,takingintoconsiderationthefinancialandnon-financialbarriersasoutlinedinthenextsectionofthisreport.

5.1.2 Barriers for implementationDuringengagementswithbothindividualstakeholdersandstakeholdergroups,severalbarrierswerepointedoutthatcouldhamperthepromotionofbiogasfortransport.ManyofthesebarriersarenotuniquetoSouthAfrica,andresembleexperiencesinothercountries.Thesectionsbelowdetailthedifferentbarriersthatwereidentified,makingadistinctionbetweenfinancial,regulatoryandotherbarriers.

Financial barriersSeveralpartieshaveindicatedthatin-principlefinancingisavailable,butthataccessingsuchfinancinginareasonableperiodoftimecanbedifficult.Someexperiencesshowthatthisisnotonlyrelatedtotherigorousfinancialprocess,whichinprincipleisgoodfinancialpractice.Thecurrentcomplexityofdevelopingprojectsinanewandemergingmarketcanprolongthejourneyofreachingabankableprojectextensively.

Whatseemstoplayaroleisthefactthat,becauseofthelargevarietyofwastestreamsandtypesoffacilitiesgeneratingthosewastestreams,projectstendtobeverydifferentinnature,requiringpartiesto(partially)embarkonanewlearningcurveforeachproject,anddealingwithrelateduncertaintiesthataffectthebusinesscase.Thiscomplexitymaterialisesbothonthesideofprojectdevelopersinrealisingbankablefeasibilitystudies,aswellasfinanciershavingtoassessthesefeasibilitystudies.

Currentfinancialandfundinginstrumentsarenotbiogas-specificor–forthatmatter–biogas-for-transport-specific.Therefore,oneneedstotargetvariouspotentialfundingandfinancingsources,andmeetavarietyoffinanciersandfunders,whoarelessfamiliarwiththespecificbiogassubjectathand.Inadditiontothis,projectdevelopersindicatethatfundingandfinancingoptionsforfeasibilitystudiesthatcanassistprojectdevelopersovercometherelativelylonglead time are scarce.

Insummary,thefollowingbarriershavebeenidentifiedwithregardtofinancing:

• Complexityanddurationofthefunding/financingprocess

• Lackofknowledgeandlowriskappetiteoffinanciers/funders

• Nodedicatedfundingforbiogasorbiogas-for-transportprojects

• Lackoffunding/financingforfeasibilitystudies

ItisinterestingtonotethattheFrenchDevelopmentAgency(AFD)issupportinganinitiativetoestablishadatabaseoffundingoptionsforbiogasprojectsbothlocally and internationally.


Non-financial barriersRegulationsandrelatedlicencesareoftenmentionedasbarriersfortheimplementationofbiogasprojects.Dependingonthetypeofwasteandsizeoftheproject,thiscanvary.Inthecaseofabattoirwaste,regulationsaremoststrict,asoneisdealingwithpotentiallyhazardouswaste,andthedestructionofpathogens,forexample,needstobeensured.Relatedlicencesneedtobeobtainedonanationallevel.Moreover,thedigestateisnotalwaysacknowledgedasbeingsafe(prion-free)andcanstillbeconsideredaswaste,limitingtheopportunities to use and sell it.

AttheNationalBiogasPlatformheldinApril2015,SABIAestimatedthatonlyaround400biodigestersarecurrentlyinstalledinSouthAfrica.Theunfamiliaritywithbiodigestionresultsinseveralbenefitsnotbeingfullyacknowledged.Thesebenefitsincludeenergysecurity,jobcreation,fertilizerproductionanddiversionfromlandfillingrelatedtobiogasproduction.Moreover,biogas-to-transportisnotfullyacknowledged.Thisplaysanimportantroleindelayingtheuptakeofbiogas.Currentoperationalprojectsdonotprovidesufficientconfidenceinthetechnicalandeconomicviabilityofbiogasprojects.SABIAhasaninformationhub/webportalunderdevelopmentwiththeaimtopartiallyaddressthis.

Variousprojectdevelopersexperienceaccesstomunicipalwastestreamsasbeingextremelydifficult.Somedevelopershavetargetedthesewastestreamsforseveralyears,andatacertainpointdecidedtogiveup.AnimportantstumblingblockformunicipalitiesistheMunicipalFinanceManagementAct(ActNo.56of2003)(MFMA)anditsamendmentsin2005,whichincludealimitationtocontractingperiods(maximumofthreeyears).Itisgearedtowardsprudentprocurementandnotsales.ThesolutionsthatmunicipalitieshaveappliedindealingwiththeMFMAinrespectofwaste-to-energyprojectsvaryfromalternativeprojectstructures,requestinganexemptionontheMFMA,orfocusingonbeingcompliantwiththeobjective(s)oftheMFMAratherthanonthedetailedproceduresandrequirements(EcoMetrix/SACN,2014).Nevertheless,thisoftenresultsinlongdelays.

Abiogas-for-transport-specificbarrieristhatmunicipalities(whentheysucceedindevelopingwaste-to-energyprojects)seemtodedicatetheirwastesources

towaste-to-electricityinparticular.Partofthispreferenceforelectricitystemsfromthefactthatsomeinitiativeswerelaunchedyearsbeforethebiogas-for-transportoptioncameontheagenda.Threelargerbiogas-to-electricityinitiativescanbementionedinparticular:

• CityofCapeTown:Plansareunderwaytodevelopseverallandfillgas-to-electricityprojects(includingtwotothreesites)underacarboncreditprogrammeoftheCity

• CityofJohannesburg:- TheJohannesburgLandfillGas-to-electricity

Programme,incorporatinguptofivelandfills- JohannesburgWaterisimplementingCHP

facilitiesatNorthernWaterWorks,Bushkoppie,Goudkoppie,OlifantsvleiandDriefontein

• eThekwini:AnLFG-to-electricityprogrammehasbeeninitiated,whichencompassestheextractionofCH4fromthreeCouncil-ownedlandfillsites(Mariannhill,LaMercyandBisasarRoad)forelectricitygenerationandsale.TheBisasarRoadlandfillisthelargestontheAfricancontinent.

GasinSouthAfricaonlyplaysamarginalroleintheenergymixand–assuch–thereisverylimitedtransportandretailinfrastructureinplace.AsdetailedinSection4.2,itwillbeimportantthatnaturalgasandbiogas-for-transportgohandinhandtocircumventissuesaroundriskofsupplyandforcingabreakthroughina‘chicken-and-egg’,supply-and-demandsituation,therebyunlockingdemand.Inthisregard,itcouldbeofimportancetorequestNERSAtoarrangeaccesstothegasgridanddevelopstandardsandlegislationtoalsomakethispracticallypossible.

Last,butnotleast,thecurrentregulatoryuncertaintyaroundthecontinuationofCNGasatransportfuelnotbeingclassifiedasafuellevygood(inotherwords,beingimplicitlyexemptfromfuel-relatedleviesandtaxes)limitspossibilitiestofullybankontherelatedfinancialadvantagesoverconventionalfuels.

Insummary,thefollowingnon-financialbarriershavebeenidentified:

• Licensingandregulationsarecomplexandonerous• Unfamiliaritywithbiogasanditsadvantages• AccesstomunicipalwasteandtheMFMAhampering

longer-termcommitments• Thecurrentpreferenceofmunicipalitiesforwaste-to-

electricityprojects

65

• Lackofgasinfrastructure,skillsandmarket• Lackofregulatorycertaintyregardingfuel-relatedleviesandtaxes

5.2 Strategic framework for policy developmentThehigh-levelframeworksetoutinthissectiononpolicydevelopmentdealswiththeperspectiveofSouthAfricaasasociety,andhowSouthAfrica–consideringitsstrengths,weaknessesanditsneedsasacountry–couldbenefitfromthedevelopmentofbiogasasatransportfuel.Settingthestage,usingastrengths,weaknesses,opportunitiesandthreats (SWOT)assessment,policyoptions,effectivenessandinternationalexperiencesarecovered,concludingwithspecificrecommendationsforSouthAfrica.

5.2.1 SWOT on a national levelAlthoughthemostcommonuseofaSWOTanalysisisincorporatestrategydevelopment,theuseofSWOTanalysesinthecontextofnationalpolicy(orclimatechangepolicyforthatmatter)iscertainlynotunique.AninterestingexampleistheScottishGovernmentusingaSWOTanalysistodeveloppoliciesaimedatreducingGHGemissionsresultingfromenergyconsumption(seeboxbelow).

Box 5.2.1: Scottish Energy Study – SWOT on CO2 Reduction Strategy for the Transport Sector

AspartoftheScottishEnergyStudy(ScottishGovernment,2009),athoroughSWOTanalysishasbeenappliedtothedifferentsectorsinthecontextoftheobjectiveofreducingenergyconsumptionandrelatedCO2 emissions. Thisincludedthetransportsectorbeingclosetothesubjectathandinthisstudy.

ThedefinitionofthefourfactorsintheSWOTanalysisare:

• Strengths:attributesoftheorganisation,whicharehelpfultoachievingtheobjective• Weaknesses:attributesoftheorganisation,whichareharmfultoachievingtheobjective• Opportunities:externalconditions,whicharehelpfultoachievingtheobjective• Threats:externalconditions,whichcoulddodamagetothebusiness’sperformance

CentraltotheuseofaSWOTanalysisisthedefinitionoftheobjectivetobeaccomplished.Withoutthis,itishardtojudgeifaspecificfactorofinfluenceishelpfulorharmful.

Objective - Scottish Strategy to reduce energy and CO2 emissions from transport

Helpful to meeting the objective Harmful to meeting the objective

Internalfactors

Strengths• ESSACNetworktoinfluencetravelchoicesforhouseholds

• Existingprogrammessupportmodeshift• ClimateChangeActtargetsrequirechange• Carbonbudgetingwillinformfuturetransportprojectdecisions

• Planningcaninfluencetheneedforandmodeoffuturetravel

Weaknesses• Limitstofundingavailable• Limiteddevolvedpowers(e.g.planningdevolved,butnotvehicleandfuelduty)

• Pressuretoprovidekeyroadinfrastructureprojects

Externalfactors

Opportunities• ESSACNetworktoinfluencetravelchoicesforhouseholds.

• Existingprogammessupportmodeshift• ClimateChangeActtargetsrequiredchange.• Carbonbudgetingwillinformfuturetransportprojectdecisions

• Planningcaninfluencetheneedforandmodeoffuturetravel

Threats• Carownershipandusecontinuetogrow• Air travel is predicted to double by 2020• Difficulty/costinfluencingtwomilliondrivers• Drivingembeddedasmostpractical/convenient• Congestioncreatesnewroaddemand• Publictransportinruralareasisexpensive• Access to competitive transport options is essentialforbusiness


CentraltousingtheSWOTanalysisisthedefinitionofaclearobjectivetobeaccomplished.Thestrengthsandopportunitiesareattributesorconditionsintheinternalandexternalenvironment,whicharehelpfulinachievingtheobjective.Incontrast,theweaknessesandthreatsareattributesorconditionsintheinternalandexternalenvironmentthatareharmfultomeetingtheobjective.

AlthoughtheSWOTanalysis,asatool,inprincipleprovidesasimplemethodofanalysis,oneneedstoadheretotheframeworksetinordertogetusefulresults.Besidesaclearobjective,itisimportanttoclearlydistinguishbetweenco-benefitsandstrengths.Whileastrengthisanattributethatishelpfultomeetingtheobjective,aco-benefitcanbepartofwhatoneaimstoachieve,whileinessenceitdoesnotcontributetorealisingtheobjective.

Forexample,inthecaseoftheScottishTransportStrategy,withafocusonpublictransport,aco-benefitiseasingcongestionintheregion.Nevertheless,thisco-benefitisnotmentionedasastrength(seeBox5.2.1),asitdoesnotassistintheprocessofhouseholdersmakingthemodalshiftfromcartobusortrain.Rather,theEuropeanScience,SupportandAdvisoryCommittee(ESSAC)Networkismentionedasastrength.Thisnetworkdeliversenergyadvicetoandcaninfluencethedecision-makingofhouseholders,communitiesandbusinessesintermsofhowtosavemoney,reduceenergyusageandmakeanimpactontheenvironment.

ThefollowingsectionofthisreportappliestheSWOTframeworktothecaseathandinthewaydescribedabove.

5.2.2 Analysis of the case for South AfricaTheSWOTanalysisinthecontextofthisstudyisappliedonanationalleveldealingwithpublic-andprivate-sectororganisationsandhowthesecanworktogethertoachievetheobjectiveof‘transformingtoCBGasatransportfuel’.Externalfactorsinthissensearefactorsoutsidethecontrolofpublic-andprivate-sectororganisations,whileinternalfactorsdealwiththestrengthsandweaknessesofthepublicandprivatesector.

InlinewiththeSWOTframeworkassetoutinthepreviousparagraph,theco-benefitsareconsideredpartofthewiderobjectiveand,assuch,arenotrepeatedasstrengths.ThebarrierssummarisedunderweaknesseshavealreadybeenidentifiedanddiscussedunderSection5.1.3and,assuch,arenotfurtherdetailed.

Anoverallsummarybasedonananalysisoftheinternalandexternalenvironment,aswellastheengagementwithstakeholders,ispresentedinthefigurebelow.Subsequently,theresultsoftheSWOTanalysisarediscussedinmoredetail.InordertomakethelinkwiththeSWOTresultssummarisedinFigure5.2.1clearer,themainkeywordsarehighlightedinthetext.

67

Helpfulinmeetingtheobjective

WEAKNESSES• Regulatoryuncertainty• Limitedgasinfrastructure

and demand• Competitionpower/heat• Insufficientlocalskills• Licencesandstandards

STRENGTHS• NoleviesonCNG/CBG• Carbontaxoffsets• R/GJhigherthanpower/heat• Nationalgreenfunds/financing• Feedstockfor0.5-0.7billion

litresoffuel• Supportivenetworks/

associations

OPPORTUNITIES• Newglobalclimatedeal• Transport sector second in

GHGs• Technologyadvancements• Globaloil/gasprices↑• Internationalskills/standards

THREATS• Powercrunchcontinuing• Competitionliquidbiofuels• Globaloil/gasprices↓Ex

tern

alno

con

trol

Inte

rnal

withincontrol

Harmfulinmeetingtheobjective

Case for South Africa – CBG as a transport fuel

Figure 5.2.1: A SWOT analysis of the case for CBG as a transport fuel in South Africa

Strengths and weaknesses – financial perspectiveAcurrentkeystrength,whichhasassistedintheemergenceofthefirstCNG/CBGfortransportinitiativesinthecountry,isthefactthatno fuel-related taxes and levies are charged on CNG/CBG,whichprovidesacompetitiveadvantageoverregulardieselandpetrol.Thenagain,thisadvantageisrequiredinordertocompensateforthefactthat,generallyspeaking,CBGismorecostlytoproducethanCNG.Theregulatoryuncertaintyaroundwhethertheexemptionfromthevariousfuel-relatedtaxesandlevieswillbecontinuedis,however,hamperingCBGbusinesscasestobecomebankableandtakethefullbenefitofthisexemption.Longer-termcertaintyonthecontributionoffuel-relatedtaxesandleviestoprofitabilityisrequired(say10to 15years)inordertotakethisexemptionfullyintoaccount,andtherebystrengthenthebusinesscaseandenhancecapabilitytopaybackacommercialloan.

Thecarbon taxthatisenvisagedtobeimplementedin2016anditscarbonoffsetcomponentcouldalsoprovideafinancialstimulus.AlthoughexposedindirectlythroughrefinerieswithinthebordersofSouthAfricathatarebeingtaxed,thetransportsectorisnotdirectlyincludedinthetaxnet(NationalTreasury,2013;2014)and,assuch,canprovideoffsetsonaprojectbasiswhendevelopingandimplementinginitiativesunderoneofthecarbonstandardseligibleforcarbontax.Any

remaininguncertaintyaboutthisinstrumentwilllargelydisappearuponimplementationofthetaxanditsoffsetcomponents.

Althoughbiogas-for-transportisin competition with the conversion to biogas-for-electricity and heat,thereiscurrentlyastrongfinancialupsidewhenconvertingandsellingitasafuel,ashasbeenillustratedinSection4.1ofthisreport.

Opportunities and threats – financial perspectiveHowfuelandelectricitypriceswilldevelopinthefutureremains uncertain. Continuation of the electricity crunch maydriveelectricitypricesupand,accordingly,drivebusinessestogeneratetheirownelectricityusingbiogastoavoidfurtherelectricitypriceincreases,andtomakethemselvesmoreself-sufficient.Howlongtheelectricitycrunchwillcontinueandhowthepriceofelectricitywilldevelopremainsuncertainandhardtobankon.Thesameuncertaintycomesintoplayregardingthedevelopmentofinternational oil/gas prices incombinationwithrand-dollar exchange rates,whichintheendwilldeterminethecostoffuel.

Technological advancementsmaylowerthecostofproducingbiogasfortransport.However,oneneedstotakeintoaccountthattheADofbiomassisarelativelymaturetechnologyandhasbeenaroundforalong


time.Generallyspeaking,breakthroughschangingthegamearenotlikelyinthatcase.However,iftherearebreakthroughswithasubstantialpositiveimpactonproductioncost,thequestioniswhatthetimetomarketofthesetechnologieswillbe.Forthesereasons,technologicaladvancementshavebeenleftoutofthescopeofthisstudy.Asglobalbiogasmarketsdevelop,optimisationsmaybeexpected.However,itremainstobeseentowhatextentthiswillhappen.

WhatwedoknowisthatthebiogasindustryinSouthAfrica,althoughsmall,isatthestartofitsdevelopment,withenvironmental,aswellasco-benefitsmobilisingbothlocalandinternationalsupport,whetherintermsoffunding/financingortechnicalassistance.Anew climate dealduringthenextUnitedNationsClimateChangeConferenceoftheParties(COP)inParison21December2015couldprovidefurtherstimulus.Asthetransport sector is the second-largest source of emissionsintheGHGInventoryforSouthAfrica2000–2010,itiscertainlyasectorthatwillreceivefurtherattentionwhenimplementingplanstoreducethenationalcarbonfootprint,asdefinedintheNationalClimateChangeResponseWhitePaperanditstransportflagshipprogramme(RepublicofSouthAfrica,2011).

Strengths and weaknesses – non-financial perspectiveSeveralorganisationsandprojectshaveemergedinsupportofthedevelopmentofthebiogassectoringeneral.Althoughnotspecificallysupportingbiogasfortransport,theyarebeneficialinsupportingthebiogasindustryoverall.Gainingmoremomentumwiththedevelopmentofbiogasfortransportprojects,itislikelythatitwillalsobepossibletoobtainsupportfromtheseorganisationsinthecasefortransport.

Currentmaininitiativessupportingbiogasarethefollowing:

• National Biogas Platform25:Establishedin2013,theNationalBiogasPlatformcomprisesrepresentativesfromdonoragencies,industry,local/nationalgovernment,academiaandresearchinstitutions.TheGermanGesellschaftfürInternationale

25.http://www.energy.gov.za/files/biogas/nationalBiogasPlatform.html

Zusammenarbeit(GIZ)isthefacilitatoroftheplatformonbehalfofDoEandSABIA.Theplatformfocusesonregulatory requirements, information gathering and financing optionsforbiogasprojects.

• The South African Biogas Association26:Thisassociationwasformedin2013/14byacoregroupofinterestedandaffectedpartiesoutofacommonneedforactiverepresentationofthebiogasindustryinSouthAfrica.SABIAisfocusedonindustrialparties,andincludedaround35officialmembersin2014.Theassociationsupportsthebiogasindustryoverall,irrespectiveofthefinalapplicationintheformofheat,electricityand/orfuel.

• The United Nations Industrial Development Organisation (UNIDO)-Global Environment Facility (GEF) Project – Promoting organic waste-to-energy in small, medium and micro enterprises (SMMEs): Accelerating biogas market development (UNIDO-GEF, 2015):Thisisafour-yearUS$36millionprojectrunninguntil2018,whichisfocusedonpromotingthemarket-basedadoptionofintegratedbiogastechnologyinSMMEsinSouthAfrica.Itincludesthecomponentsofcapacity building, regulatory framework and demonstration.Thelattercomponentinvolvesco-fundingandsupporttofivetonineselectedbiogasprojects.Currently,onlyfivebiogas-to-electricityprojectshavebeenselected.

Theseinitiativesshowthatalotofattentionisalreadygoingtowardsaddressingimplementationhurdlesrelatedtoregulations.GIZiscurrentlysupportingastudyregardingregulationsandlicenseswhendevelopingbiogasprojects.IthasalsobeensuggestedwithintheNationalBiogasPlatformthatalistoflicencesshouldbedefinedagainstwhichfundersandfinancierscanassesstheregulatorycomplianceofbiogasprojectsthatareseekingfunding/financing.TheregulatoryframeworkisalsopartoftheUNIDO-GEFproject,whichaddressesthisissueinapracticalmanneraspartofselecteddemonstrationprojects.

Theaforementionedinitiativesalsoaddresscapacitybuilding,supportingthedevelopmentoflocalskillsthroughdemonstrationprojects,educationalcurricula,informationsharingandworkinggroupsoncertaintopics.Inthatsense,theweaknessesidentified

26.http://biogasassociation.co.za/

69

regardinglicences/standardsandlocalskillsalreadyseemtobewellmitigated.

Opportunities and threats – non-financial perspectiveApartfromanenvisagedincreaseinfundingandfinancingopportunitiesasaresultofpositivedevelopmentsintheglobalclimatechangenegotiationsinthecontextoftheUnitedNationsFrameworkConventiononClimateChange(UNFCCC),astrongerinfluxofinternationalskillsandtechnicalassistancecanalsobeexpected.SeveralcountriesinEuropehaveextensiveexperienceinrelationtoAD,processingdifferenttypesoffeedstockandusingbiogasindifferentways(forexample,electricity,heatandtransportfuel).Uponanewglobalclimatedeal,includingenvisagedcommitmentsfromindustrialisedcountriestoassistdevelopingcountriesintermoftechnicalassistanceandfunding/financing,currentsupportcouldincreaseifthisgoestogetherwithgoodprogrammingandplanningwithintheSouthAfricanpublicandprivatesector.

5.2.3 Types of policy instrumentsTheprevioussectionprovidedinsightsintothestrengths,weaknesses,opportunitiesandthreatsofthecaseforthelarge-scaleuptakeofbiogasinSouthAfrica.ASWOTanalysis,assuch,isausefultoolforstrategydevelopmenttowardsthefuture.Havinganalysedthebiogas-for-transportvaluechain,identifiedsignificantsourcesinthecountryandexaminedthefeasibilityofbiogasfortransportinthepreviouschapters,thenextstepinvolvesdesigningaconceptualpolicyframeworkinsupportofthelarge-scaleuptakeofbiogasfortransport.

Wehaveseenthatacertainlevelofsupportislikelytobenecessaryatleastinthenearfuture.Inthisregard,animportantquestionbecomeshowbesttoimplementsuchsupportthroughanappropriategovernmentpolicy.

Generallyspeaking,themaineconomicfunctionsofmoderngovernmentarethreefold:• Allocation functionofprovidingpublicgoods

andpreventingharm,forexampleinthecaseofenvironmentaldegradationwhencertaincostshavenotbeeninternalised(aso-calledexternality).

• Distribution functiontoaffectincomeandwealthdistribution,andensureamoredesirableandfairoutcome.

• Stabilisation functionofreducingbusiness-cyclefluctuationsthroughappropriatemonetaryandfiscalpolicies.

Designingasuitableenvironmentaland/orenergypolicylieswellwithintheconfinesofthefirstofthethreeobjectivesofgovernmentasdefinedabove.Toaffectoutcomesinthisregard,the(international)publicfinanceliteratureidentifiesanumberofpolicyoptionsatthedisposalofgovernment.Thesecanbecategorisedintothreeprimarytypesofmeasures:• Subsidies• Taxation• Regulation

Intheenvironmentalrealm,thisgivesrisetoawiderangeofpossiblepolicyalternatives.Someofthesearemarket-basedinstrumentsinthattheyusemarkets,pricesandothereconomicvariablestoaffectbehaviourthroughincentives.Moreover,someofthesearetransparent,likeadirectsubsidyintheformofacashtransfer.Othersareindirect,likeataxincentive.Asecondsetofpolicymeasurescanbecategorisedasso-calledcommand-and-controlstrategies,whichaimtosteerbehaviourthroughdirectregulationandmandatorystandardsthatdictatecertainrules.Thefollowingtableprovidesanindicativeoverviewofpotentialpolicymeasures.


Table 5.2.1: Taxonomy of different types of policy instruments

Subsidies Taxation Regulation

Cashtransferstoproducersorconsumers

Preferentialtaxrates (incometaxorVAT)

Pricecontrols(pricefloors/ceilingsorfeed-intariffs)

Low-interest,preferentialloansorgovernmentguarantees

Tax-baseexemptionsordeductionsforcertainactivitiesortransactions(accelerateddepreciation,carryback/forward,orexemptionfrom

incometaxorVAT)

Demandguarantees

Governmentservicesprovidedatlessthanfullmarket-basedcosts(e.g.publicinvestmentininfrastructureorresearchand

development)

Taxcredits(percentagereductionofincometaxpayable)

Mandated deployment rates (blendingrequirements)

Pigoviantaxes(acarbonorfueltax) Limitsonmarketaccess

Traderestrictions(intheformoftariffsattheborder)

Controlsoveraccesstoresources/planningconsent

GatefeesTraderestrictions(quotaand

technicalrestrictions)

continuetopolluteandpaythetax.Overall,thesameamountofemissionreductionswouldbeachieved,butatarelativelylowercost,inthelattercase,thanintheformer.

Thesamegoesforrulesandregulationsversusmarket-basedfinancialincentivesinthetransportsector.Rulesthatapplyequallytoeveryone,likeafueleconomystandardforcars,arelikelytoyieldalessefficientoutcome,whilelettingthemarketdoitsworkthroughasystemof(fuel)taxesorsubsidiesshould,intheory,generateanefficientresult.

Furthermore,allotherthingsbeingequal,on-budgetpolicyinstrumentslikeadirectsubsidyshould(theoretically)havepreferenceoverindirect,off-budgetmeasureslikeataxbenefit.Off-budgetincentivesdonotappearonnationalaccountsasgovernmentexpenditure.Typically,thismeansthattransparencyandaccountabilitysuffer.Althoughsomecountrieshaveso-calledtaxexpenditurebudgetstoreigninfinanceministersandkeepbudgetsundercontrol,thisisnotcommon practice.

Ontheotherhand,politicalrealitiesoftenpromptgovernmentstofavouroff-budgetinstrumentsexactlyforthisreason.Thepracticabilityofgrantinganindirecttaxbenefitisgenerallyhigherthanaccountingforanexplicitdirectsubsidy.Moreover,subsidyallocationoftencostsalotoftimeandresources.Evenifpeoplearewellintended,theallocationmaynotgoasdesired.

Asonecansee,thelistofpotentialpolicyoptionsisextensiveandwide-ranging.Itincludesbothpositiveandnegativefinancialincentivesthroughsubsidiesandtaxes,aswellasregulatorymeasures.Forobviousreasons,thereisunlikelytobea‘one-size-fits-all’policyinstrumentthatisbestusedinallsituations.Differentcircumstancesandscenarioswillrequiredifferentsolutions.However,anumberofthingscanbesaidinfavourofmarket-basedfinancialincentivesingeneral.

Incontrasttoamarket-basedincentivelikeataxorsubsidy,acommand-and-controlstrategysimplymandatesaruleorstandard.Thereisanentirerangeofeconomicliteraturethatcomparesbothtypesofpolicies.Thegeneralconsensusamongeconomistsisthatmarket-basedfinancialinstrumentsaremoreefficient(partlybecauseprivatepartiesgenerallyhavemoredetailedinformationthanregulatorybodiesandarebetterabletomakedecisionsprovidedtheincentivesaresetright)andcarrylessriskofregulatorycapture(wheretheregulatorcolludeswiththeregulatedandthepublicinterestisdisregarded).

Astothefirstpoint,forexample,becausedifferentproductionplantshavedifferentmarginalabatementcosts,acommand-and-controltypeofrulemandatingeveryplanttoreducecarbonemissionsequallywouldbeinefficient.Ontheotherhand,auniformcarbontaxorcap-and-tradesystemwouldincentivisemodernplantswithlowabatementcoststocutrelativelymorewhileolderplantswithhigherabatementcostswould

71

Ataxincentiveiseasiertoimplement.Inadditiontothis,itisimportanttotakeconsiderationofthelevelofinstitutionalcapacity.Hence,whethertochooseasubsidyortaxisultimatelyapoliticalchoice.Thenextsectionwillthereforefocusonbothon-andoff-budgetfinancialincentives.

5.2.4 Position of interventions across the value chainThetheoreticalframeworkprovidedabovegivesrisetoanumberofpolicyinterventionoptionswithinthebiogas-for-transportvaluechaintoincentiviseproduction.Notallpolicyinstruments(subsidies,taxesorregulation)willbeequallyapplicableateachstageinthevaluechain.Thiswill,amongotherthings,dependonthespecificactivitiesatthatstageinthevaluechain,andfactorssuchaswhethertheactivityiscapital-intensiveorlabour-intensive,orwhetherthestageisalreadysubjecttoanexistingregulatoryframework.

Intheanalysisbelow,wewillapplythetheoreticalframeworkofpolicyinterventionoptionstothebiogas-for-transportvaluechain,asdepictedinFigure5.2.2.Foreachstage,themainoptionsforpolicyinterventionarehighlightedwiththeaimofstimulatingbiogas-for-transportproduction.

1. Biogas sources

2. Upstream logistics

5. Downstream logistics

3. Biogas production

4. Biogas upgrading

6. Biogas consumption

Figure 5.2.2: Various options for policy intervention within the biogas-for-transport value chain

1. Thefirststageinvolvesthecollectionorproductionofbiomass(sincewearenotconsideringcrop-to-fuelhere,thelatterisnotrelevantatthispoint).Themainpolicyinstrumentonecouldconsideratthisstagecomesintheformofhighergatefeesthatshould,allthingsbeingequal,provideanincentivetofindalternativeusesforwaste,forexample,intheformofbiogasproduction.Regulationcanalsocomeintoplay,forinstance,inthecaseofabattoirsorchickenfarmswherethereisstrictgovernmentoversightofon-sitewastehandling.Biogasinthesesectorscanbepromotedbyadaptingtheregulatoryenvironmentinawaythatstilladequatelyguaranteespublichealthandsafety,butisneverthelessmoreconducivetotheproductionofbiogasfromwastes.

2. Upstreamlogisticsdealswithgettingthebiomassfromthesourcetothebiogasproductionplant.Thelattercanbeon-siteoroff-site.Thisstageisrathercapital-intensiveandcostsofon-siteandoff-sitecollectionandtransport(so-calledfirsttransportandprocessing,andtransporttodestination)areimportantfactors.Varioustaxincentives,likeaccelerateddepreciationfortrucksandmachineryusedatthisstage,canreducecosts.Lowerfueltaxesforoperatingvehiclesisanotherexample.

3. Thebiogasproductionstageismostlyaboutcapitalexpenditure(capex)andoperationalexpenditure(opex)foroperatingthedigesterandrelatedequipmenttoprocessthebiomass.

Low-interestloansorguaranteesforbuildingthecapitalequipmentcanbeused,aswellasvariouscapitaltaxincentives.Inthelattercase,oneshouldkeepinmindthat,especiallyinthestart-upphase,theremightnotyetbe(sufficient)taxableincomeagainstwhichtooffsetthetaxincentive,althoughtherearewaystoworkaroundthis,forexamplebygrantingarefundabletaxcredit.Insuchacase,thetaxtreatmentshouldallowforsufficientlylenientrulesforcarrybackandcarryforward.Theoretically,lowerlabourtaxesforworkersemployedinthissectorcouldreducecostsandstimulatehiring.SincelabourcostsandtaxesarerelativelylowinSouthAfrica,itisnotclearwhethertheeffectfromthelattermeasurewouldbesignificant.

4. Therawbiogasproductionstageisfollowedbythehighlycapital-intensiveupgradingstage.Again,low-interestloansorguarantees,andcapitaltaxincentivescouldplayanimportantroleinstimulatingbiogasproduction.Sincetheupgradingphaseisthecrucialstepinthesupplychainwhenitcomestousingbiogasfortransport(andthusnotgeneratingheatandelectricitythroughCHP),measuresatthisstagemightbeespeciallyeffectiveinpromotingbiogasfortransport.Otherthanthat,notmuchlabourisusedatthisstage,makingmeasurestargetingtheworkforcelikelytobelesseffectiveatprovidinganoverallincentivefortheproductionofbiogas.


5. Downstreamlogisticsisaboutcompression,storageandtransporttotheenvisagedoff-taker(e.g.throughtheactualorvirtualpipeline).Again,thisphaseishighlycapital-intensive,makingallthefactorsmentionedintheabovepointapplicable.Inaddition,government-providedservicesandpublicinvestmentcouldprovideasignificantboostatthisstage.Aswehaveseen,thepresentnetworkofnaturalgaspipelinesinSouthAfricaisrelativelyunder-developed.Directinfrastructureinvestmentwouldmakenaturalgasmorewidelyavailablethroughoutthecountry,andwouldencouragetheuptakeofbiogasfortransportsignificantly(providedbiogasproducerscantapintothenetwork).

6. Thelaststageofthesupplychainiswheretheoff-takeofthebiomethaneactuallytakesplace.Thatis,wheretheCBGisconsumedbyfleetownersorretailusers.Here,severalmeasurescanbecontemplated.Firstoffall,thisstageiswheretheactualtaxburdenoffuel-relatedleviesandtaxes,aswellasVAT,falls.Exemptionfromoneormoreoftheseconsumptiontaxesisarealisticoption.Guaranteedoff-takeagreementsintheformofdemandguaranteesisasecondcategoryofmeasuresthatareworthlookingat.Inthatcase,fleetownersand/orgovernmentguaranteesacertainoff-takeandtherebyreducesriskfortheproducerofbiogas.Thirdly,governmentisinthepositiontograntlicencestobuildservicestationsthatareequippedtodistributebiomethaneatstrategiclocationsthroughoutthecountry.Lastly,mandatory-blendingrequirements/regulationscanbeusedtostimulatetheoff-takeofbiomethaneatthepump.

Fromatheoreticalperspective,thisgivesawide-rangingmixofpolicyinstrumentsthatcanbeconsideredwhenpromotingbiogasfortransport.Furthermore,severaloftheseoptionscanbeappliedatmultiplestagesthroughoutthevaluechain.Thatbeingsaid,someinstrumentsarelikelytobemoreeffectiveorpracticaltoimplementthanothers.Togetageneralideaofwhatisandwhatisnotpracticable,thenextsectionlooksatsomeofthemaininternationalexperiencesinthisregard.

5.3 International policy experience

Thissectionofthereporthighlightsanumberofinternationalexperienceswithregardtogovernmentintervention,withtheaimofstimulatingtheuptakeofbiogasanditseffectiveness,asaprecursortoconclusionsandrecommendationsregardingpotentialSouthAfricansupportmeasures.

5.3.1 International policy overviewWhilethereisalotofinternationalexperiencewhenitcomestopoliciespromotingbiofuelslikebioethanolandbiodiesel,policyinterventionswithregardtobiogasarelesscommon.ThemaincountriesthatprovideusefullessonsareAustria,Denmark,Germany,Sweden,TheNetherlandsandtheUnitedKingdom.Ofthesecountries,Germany,SwedenandTheNetherlandsfeatureinthetopthreeoftheEuropeanBiogasAssociation,intermsofthetotalnumberofbiomethaneplants27.Thegovernmentsofallcountriesmentionedabovehavearelativelylonghistoryofpromotingbiogasproduction.Moreover,andpartlybecauseofthis,theyhaverelativelylargeanddevelopedbiogasmarkets.

Inpractice,itisoftenthecasethatpolicymeasuresaimedatpromotingbiogasgohandinhandwithpoliciesorlegislationpromotingbiofuelsorrenewableenergymoregenerally.Theanalysisisthereforenecessarilybroad.However,itiseasytoimaginethatmeasuresaimedatbiofuelsorrenewableenergyingeneralcouldalsobeappliedmorespecificallytothecaseofbiogas.Thefollowingtableprovidesanoverviewofthelegislationaimedattheuptakeofbiofuelsfortransportintherelevant countries.

27.http://european-biogas.eu/wp-content/uploads/2014/12/Biomethane-graph-20131.png

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Table 5.3.1: Measures aimed at promoting the uptake of biogas for transport in selected countries

Country Measure Measure

AustriaTax-incentivemechanism

Fuelsfromaminimumcontentof4.6to6.6%(dependingonthetype)ofbiogenicmaterial

aresubjecttoalowerfueltax.Mineraloilsolelyfrombiogenicmaterialisfullyexempt.

Biofuelquota/blendingrequirementBiofuelshavetomakeupadefinedpercentageofproducers’/importers’totalannualfuelsales.

Denmark

Tax-incentivemechanismEnergyproductsaretaxedacertainamount.Thisamountisreducedforfuelsblendedwith

biofuels.

Biofuelquota/blendingrequirementBiofuelshavetomakeupadefinedpercentageofproducers’/importers’totalannualfuelsales.

PromotionofRenewableEnergyActDetailedfeed-intariffsforbiomass/biogasand

otherrenewableenergysources.

Germany

Biofuelquota/GHGreductionquotaBiofuelshavetomakeupadefinedpercentageofproducers’/importers’totalannualfuelsales.

Tax-incentivemechanism

TheEnergyTaxActobligesproducers/importersofenergyproductstopayadefinedamountoftax.Taxreliefforbiofuelsexists

dependingonthetypeofbiofuel.

KfWRenewableEnergiesProgrammeProgrammethat,amongotherthings,

comprisesreduced-interestloansforupto100%oftheinvestmentcosts.

The Netherlands

Tax-incentivemechanism(EnvironmentalInvestmentRebate(MIA)/andArbitrary

DepreciationofEnvironmentalInvestments(Vamil)schemes)

Extradeductionofinvestmentcostfromthetaxableprofitforinvestmentsinbiofuels.

Tax-incentivemechanism(EnergyInvestmentAllowance(EIA)scheme)

Taxbenefitenablescompaniestowriteoffinvestmentsaimedattheeffectiveuseof

energy.

BiofuelquotaBiofuelshavetomakeupadefinedpercentageofproducers’/importers’totalannualfuelsales.

Sweden Tax-incentivemechanismFossilfuelsaretaxedwithenergyandcarbonlevies.Biofuelsareexemptfromthesetaxes.

The United Kingdom

RenewableTransportFuelsObligationLong-termmechanismrequiringtransportfuelsupplierstoensurethatasetpercentageoftheirsalesarefromarenewablesource.

Source:RESLegalandEcoMetrixAfricateamanalysis


Thetableaboveshowsthatmostcountriestypicallyrelyonataxincentivescheme,wherebybiofuelsaretaxedatalowerratethanfossilfuels,orarecompletelyexemptedfromregularconsumption/fueltaxes.TheUKistheonlyexception,inthatitdoesnotusethetaxsystemtopromotebiogas.Amandatoryblendingrequirement/quotasystemisthesecond-mostreliedonmeasure.Inaddition,Germanyhasapolicyinplacethatprovideslow-costloansforbiogasinvestmentsthroughtheKfWRenewableEnergiesProgramme.Ofthesixcountries,TheNetherlandsistheonlyonethatdoessomethingwithaninvestmenttaxbenefitinitsincometaxsystem.

5.3.2 Policy effectiveness experiencesToevaluatewhetherthesemeasureshavebeeneffectiveinstimulatingtheuptakeofbiogasfortransport,onewouldnotonlyneedtolookatthespecificpolicymeasuretoseewhethertherehasbeenanincreaseintheproductionandconsumptionofCBG.Onewouldalsohavetoestablishacausalrelationshipbetweenthetwovariables.Whilethisisinteresting,itisveryhardtodo,andonlyafewdedicatedstudieshavebeenidentifiedthathavedonethissuccessfully.

Therearemanydynamicsatwork.Itwouldrequiresubstantialdatatoestablishvalidandrobustresults.Thisisespeciallytrueinthecaseofbiogas,where,inpractice,manydifferentfeedstocksareused,withvariousyieldsunderdifferentcircumstances.Baselineemissionfactorsdifferperwaste-relatedfeedstock,aswellasthespecificenergysourcedisplacedandthetypeofbiomassandupgradingtechnologyapplied.Itisgenerallyacknowledgedthat,evenforcountrieswherelotsofdataiscollectedandtransparencyishighontheagenda,suchasincaseofGermany,TheNetherlandsandtheUnitedKingdom,itishardtocomebythenecessaryinformation.

However,internationalstudiesareavailableontheeffectsofsupportmeasuresforrenewableenergies,including,forexample,reductionsandexemptionsinenergytaxesandlevies(seeBeatonandMoerenhout,2012;Rosenbergetal.,2011;Varadarajanetal.,2012).Generally,thesestudiesfindpositiveresultswithregardtotheuseofgovernmentpolicytopromoterenewableenergyandthepotentialtomobiliseprivateinvestmentandsubstantiallyexpandtherenewableenergyindustry.Forexample,aninterestingstudyassessesthecost-

effectivenessofrenewableenergydeploymentsubsidiesforbiomasspowerintheUnitedKingdomandGermany.AnotherstudylooksmoregenerallyattheeffectofpolicyonrenewablesinrelevantEuropeanUnioncountriesandtheUSA.Athirdstudyontheimpactoftaxexemptionsandlevyreductionsontheproductionofenergyfrombiomassfindsthattheeffectissignificant.

Overall,theseresultsaresupportiveofusingfinancialincentivesincombinationwithotherpolicymeasurestopromotebiogasfortransport.TheredoesnotseemtobeanycompellingreasonwhythisshouldbedifferentinthecaseofSouthAfrica.Asaresult,itseemssafetoconcludethatgovernmentincentivescanplayapivotalroleinpromotingtheuptakeofbiogasfortransportinSouthAfricaaswell.

5.4 South African policy conclusions and recommendations

FromSection5.1.1andearlierchaptersinthisreport,itbecomesclearthatthedirecteconomicbenefitsdonotoutweighthedirecteconomiccostsinthecaseofbiogasfortransport.However,iftheSouthAfricangovernmentfeelsthattheco-benefits,assummarisedinSection5.2andelaboratedoninpreviouschapters,justifysupportingthedevelopmentoftheSouthAfricanbiogas-for-transportsector,thenitshouldfirstsupporttheeconomicviabilityofthecase.Secondly,itcandosobystructurallyalleviatingthebarriersforimplementationas outlined in Section 5.1.3.

5.4.1 CBG policy rationaleWhenlookingpurelyattheeconomiccaseforbiogas,itbecomesclearthatoneorseveralincentivepoliciesshouldbeimplementedtomakeitsuccessful,buildingoninternationalexperiencesasto(theeffectivenessof)differenttypesofincentives.Beforeidentifyingtheoptimalincentivemodel,itisusefultoidentifythesizeofthefinancialincentivethatcouldbeapplied.Onerationaletodeterminethe‘level’offinancialsupportisbylookingatdomesticandinternationalexamplesandexistinglevelsofsupportinrelationtothedifferentco-benefits.

Figure5.4.1providesagraphicrepresentationofhowthedifferentlevelsofsupportcompare,ifconvertedtorandperGJofbiogasatthepump.Thisfigureisfollowedbyanelaborationofthedifferentsupportlevels.

75

283ZAR/GJ

1.8ZAR/GJ

115ZAR/GJ

South African cost of

transport mitigation

Climate change mitigation

Domestic Domestic Domestic

Employment Market Combined

The South African carbon

tax

The cost of climate change, the Stern Review

Job creation EU green-field subsidy programmes

US green-fuel subsidy programmes

Spread across rationales

69.3ZAR/GJ3.6ZAR/GJ

94.6ZAR/GJ

29.4ZAR/GJ 46.1ZAR/GJ

166ZAR/GJ

87.2ZAR/GJ

137ZAR/GJ

198ZAR/GJ

283 ZAR/GJ

1.8 ZAR/GJ

International International International

Figure 5.4.1: Biogas-for-transport incentive rationale range

Asisapparentfromtheabovefigure,thedifferentdomesticandinternationalrationalesareeitherdrivenbyclimatechangemitigation,employmentormarket-basedfactors.Thefollowingsixrationaleswereapplied:

• South African cost of transport mitigation (climate change mitigation):TheGHGMPA(DepartmentofEnvironmentalAffairs,2014)estimatesthatthemitigationcostsforsecond-generation(organicwaste-based)biofuelswithinthecountry’stransportsectorliesintherangeofR936toR1554/tCO2e between2020and2050.Atacarbonintensityofpetrolat74kgCO2e/GJ,thiswouldequatetoR69,30toR115,00/GJ.

• The South African carbon tax (climate change mitigation): InMay2013,NationalTreasuryreleasedtheCarbonTaxPolicyPaper(NationalTreasury,2013)forpubliccomment.Atthetimeofwritingthisreport,thedraftcarbontaxlegislationbasedonthepolicypaperwasbeingreviewedbyCabinet.Inessence,theproposedcarbontaxappliesa R120/tCO2eonanumberofcarbon-intensivesectors.Thetaxisproposedtobeimplementedin2016andappliesanumberofdiscountsdependingon,amongotherthings,theprofileofthetaxedentity.Assuch,itresultsinaneffective‘costofemission’thatliesintherangeofR24/tCO2etoR48/

tCO2e.Althoughthetransportsectoriscurrentlyexcludedfromcarbontaxandthetaxconstitutesacostandnotanincentive,itcouldprovidearationaleforthepotentialbiogas-for-transportsubsidy.ConvertedintorandperGJ,thissubsidywouldlieintherangeofR1,80toR3,60/GJ.

• Job creation (employment): UndertheGro-EScheme(theIDC’sfundaimedatdrivingjobcreation28),abenchmarkofaroundR500000investedshouldresultinonejobcreatedasaresultoftheinvestment.AsdetailedinSection4.3.1,alongthebiogas-for-transportvaluechain,therealisationofthefullbiogaspotentialwithinthecountrycouldresultinbetweenalowerrangeof2 324 and an upperrangeof14248additionalfull-timejobs.Atanenergycontentof23MJ/Nm3,thisrelatestoanincentiveintherangeofR46,10toR282,90/GJ.

• The cost of climate change, the Stern Review (climate change mitigation): In2006,theBritishgovernmentpublishedtheSternReviewontheEconomicsofClimateChange(Stern,2006).Thereport,statesthatthecostsofstabilisingtheclimatearesignificant,butmanageable,andthat

28.http://www.capricornfm.co.za/ads_html/idc/Creating%20jobs%20through%20efficiency.html


delaywouldbedangerousandmuchcostlier.Viaanumberofiterations,thereportindicatesthatthecostofmitigationformeaningfulactionshouldliesomewhereintherangeofUS$32/tCO2e to US$103/tCO2e.Applyingarand-dollarexchange rateof12.41andacarbonintensityofpetrolof 74kgCO2e/GJ,arangeofR29,40toR94,60/GJiscalculated.

• EU Green Fuel subsidy programmes (market): AcrosstheEuropeanUnion,thereisawiderangeofsubsidiesfordifferenttypesof‘greenfuels,’suchasbioethanolandbiodiesel.Accordingtothe2010updateofastudyonbiofuelsubsidiesintheEuropeanUnionfortheGlobalSubsidiesInitiative(GSI)oftheInternationalInstituteforSustainableDevelopment(IISD)(Jung,2010),governmentsupportfromtheEUanditsmemberstatesequatedtoapproximately€0,24and€0,22perlitreconsumedin2008.Convertedtoarand-per-GJequivalent,thiswouldindicatesupportintherangeofR137/GJtoR189/GJ.

• US Green Fuel subsidy programmes (market):Atastateand/orfederallevel,theUSAhasimplementedarangeofGreenFuelsubsidyprogrammes,predominatelyforethanolandbiodiesel.Oneofthestudies,partofaseriesofreportsaddressingsubsidiesforbiofuelsinselectedOrganisationforEconomicCooperationandDevelopment(OECD)countries(Koplow,2007),indicatesthatthesubsidiesperunitofenergyforthedifferenttypesofgreenfuelsfluctuatebetweenUS$11/GJandUS$14.50/GJ,dependingonwhatbenchmarkyear

between2006and2012isreviewed.Atarand-dollarexchangerateof12.41,thiswouldequatetoasetofsubsidiesintherangeofR136,50/GJtoR198,40/GJ.

Whenlookingattheabove,thelevelofsupportthattheSouthAfricangovernmentcouldprovidetowardsthedevelopmentofbiogasforthetransportsectorcouldlieintherangeofR1,80/GJtoR282,90/GJwhen‘pegged’withintherangeofdomesticorinternationalrationalesthatexist.IfthisrandperunitofenergybasisweretobetranslatedintoarandperGHGemissionrange,thiswouldequatetobetweenR24/tCO2eandR3800/tCO2e. However,inunderstandingthesefigures,itisimportanttoconsiderthattheyincludeseveralnon-GHGmitigationco-benefits,nowexpressedasGHGmitigationbenefits.

5.4.2 CBG stimulus scenarioAsindicated,thedirecteconomicbenefitsdonotoutweighthedirecteconomiccostsinthecaseofbiogasfortransport.If,consideringtheco-benefitsasdescribedinSection5.1.2,theSouthAfricangovernmentdecidesthatthereissufficientcausetoincentiviseandsupportthedevelopmentofthebiogas-for-transportsector,thenCBGshouldbemadecompetitiveatthepumpincomparisontopetrolandCNG.ThiscanberealisedbyapplyingthesameincentivesthatarecurrentlyinplaceforCNG,inwhichCNGismadecompetitiveincomparisontopetrol.Theseincentivescanbeextendedwithoneorseveralincentivesthatpurelytargetthedevelopmentofthebiogas-for-transportsector.Thefollowingfigureprovidesaschematicoverviewofthesestaggeredincentives.

77

CNGincentives

Totals

CBGincentives

(471) (83)

(39)(350) (1.8) (348) (142) (283)

(207)

(67)

Application of CNG incentives to CBG Low incentive Medium incentive High incentive

CNG gross price

CNG informaltax

incentive

CNG vehicle

conversion subsidy

CNG pump price

equivalent

CBGlowrationale incentive

Low incentive

CBG pump price

equivalent

CBGmedium rationale incentive

Medium incentive

CBG pump price

equivalent

CBGhighrationale incentive

High incentive

CBG pump price

equivalent

Figure 5.4.2: Biogas-for-transport incentive rationale range

Itisoutsidethemandateofthisstudytodescribethemagnitudeofthepotentialstimulusmeasuresthatarespecificforbiomass-for-transportutilisation.However,thefigureaboveappliestherangeastakenfromSection5.4.1toprovideanindicationofwhattheminimumandmaximumlevelsofstimuluscouldbeiftheSouthAfricangovernmentdecidestoapplyanincentivethatlieswiththedomesticandinternationalrationale.

5.4.3 Envisaged policy interventionsGivenalloftheabove,acompellingcasecanbemadeforgovernmentinterventiontopromotetheuptakeofbiogasfortransportanddevelopasustainableandthrivingbiogasindustryinSouthAfrica.Thereareanumberofelementstothis.Firstofall,theeconomicandsocialupsideofapolicytothisendneedstobesufficientlylargetojustifyanypolicyintervention.Aswehaveseen,therearesubstantialco-benefitstotheSouthAfricaneconomyregardingtheuptakeofbiogasfortransport.Theseneednotonlyrelatetotheoverallmitigationpotential,additionaljobscreatedandfuelimportssubstituted,andhencerelianceonforexreduced.Theycanalsoincludeenhancedenergysecurity,diversificationoftheenergymixandaclearfirst-moveradvantage.Moreover,atalocallevel,considerableimprovementsinurbanairqualitycouldbeachieved.

Asecondaspectinvolvesthetypeofpolicyinstrumentused.Here,onecanbuildforwardonthehigh-leveltheoreticalframeworkforpolicyinstrumentsdevelopedinthisstudy.Itisimportanttotakeintoaccounttherelevantinternationalexperienceinthisregard.Governmentsrelyondirectsubsidies,taxmeasuresand/orregulationtoaffect(market)outcomes.Theaboveanalysisindicatesthatfuel/consumptiontaxreductionsorexemptionsarethemostcommonlyusedmeasuresinternationally.Theyarealsoeffectiveintermsoftheultimateresult.Moreover,animportantfeatureofpositivetaxincentivesisperhapsthatthesearemorepracticaltoimplement.InternationalexperiencedemonstratesthatitisoftenpoliticallyeasiertogetpositivetaxincentivesthroughParliamentthandirectsubsidies,thelatterbeingonbudgetwithahighervisibilityvis-à-visothergovernmentexpenditures.Theseinstrumentsarealsomarket-basedandtherefore,inmanycases,preferredtoregulationintermsoftheoveralleconomicefficiencyofthepolicy.

Thethirdconsiderationrevolvesaroundthesizeofthestimulusprovided.HeretheanalysisshowswhatisnecessarytoplaceCBGonacompetitivefootingcomparedtopetrolanddieselatthepump.AnexemptionforCBGfromroadtaxandotherfuellevies,


butincludingVAT,asiscurrentlythecaseforCNG,anda10%subsidyforvehicleconversion,ascurrentlyprovidedbytheIDC,couldbesufficienttoachievethatgoal.Inadditiontothis,theanalysisindicatesthat(further)incentivisationofuptoR283/GJwouldbeinlinewithdomesticandinternationaloutlaysforsustainabledevelopmentinthetransportsector(seeFigure5.4.1).

Importanttonoteinthisregardisthatexemptionfromfuel-relatedtaxesandlevieswillnotbesufficientintheabsenceofregulatoryuncertaintyarounditscontinuation.Becauseitconcernslong-terminvestments,boththesizeoftheincentive,aswellasforhowlongtheincentivewillbeinplace,mustbeclearfromtheonset.Thisisanotherreasonwhyataxincentiveispreferableoverasubsidy.Thelatterismorefrequentlysubjecttochangewhenbudgetschange,forexamplewhenanewgovernmentcomestopower.Hence,whilebothpolicyinstrumentsshouldbeabletoprovidethesamekindofstimulus,ataxincentivewillgenerallydosowithlessregulatoryuncertaintyfortheinvestor.

Allthingsconsidered,thecaseforbiogasfortransportaprioricouldbeviewedasastrongone.Theinternationalevidenceissupportiveofmeasurespromotingbiogasanditseffectiveness.ThebenefitstotheSouthAfricaneconomyanditssociety,asanalysed,aresubstantial.Thisleavesuswithafinalpoint,whichconcernsthebroaderenvironmentandconditionssurroundingthecreationofasuccessfulbiogasindustryandmarketinSouthAfrica.

Toseizetheopportunityandfullyreapthebenefits,ahands-onapproachiscalledforfromallstakeholdersinvolved.Thebiogasmarketislikelytotakeoffandevolvequicklywiththecompletionofafewsuccessfulprojects.Forthis,interactionandconstructivecollaborationbetweentheprivateandpublicsectoris essential. Forums like SABIA are ideally suited to providethenecessaryinputsandconsultationstocometoasensibleandworkableapproach.Thetechnologyisthere.Variousstakeholderengagementsshowthatthewillisalsothere.ThisshouldallbutguaranteeunlockingthefullpotentialofbiogasfortransportinSouthAfrica.

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Appendix – List of stakeholdersDuringthecourseofthisstudy,severalstakeholderswerecontactedfromboththeprivateandpublicsector,includingthefollowing:

• BronkhorstspruitBiogasPlant• BiogasPlatform• BiogasPower• BiogasSA• CapeAdvancedEngineering• CityofCapeTown• CityofeThekwini• CityofJohannesburg• CityofTshwane• ClarkeEnergySouthAfrica• CNGHoldings• DepartmentofEnergy• DepartmentofEnvironmentalAffairs• DepartmentofTransport• DeutscheGesellschaftfürInternationale

Zusammenarbeit(GIZ)• EBFGroupofCompanies• ElginFruitJuices• Ener-GSystems• Gas2Power• IndustrialDevelopmentCooperation• JohannesburgWater

• Mondi• NationalBiogasPlatform• NOVOEnergy• OceanaGroup• PaperManufacturersAssociationofSouthAfrica• Pikitup• ProvincialVeterinaryServices• Re-energiseAfrica• SAPPI• SASOL• Selectra• SouthAfricanBiogasIndustryAssociation• SouthAfricanCaneGrowersAssociation• SouthAfricanCitiesNetwork(SACN)• SouthAfricanFruitJuiceAssociation(SAFJA)• SouthAfricanLocalGovernmentAssociation• SouthAfricanNationalEnergyDevelopmentInstitute• SouthAfricanSugarAssociation• Trade plus Aid• UhuruEnergy• UNIDO/GEFWaste-to-EnergyBiogasProject• Xergi

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