E5 implementation may cost South African refiners ‘billions’

South African oil refineries have estimated the cost of updating facilities as ‘billions’ as calls to move up from E2 to E5 biofuel.

The country currently uses fuel that contains 2% ethanol made primarily from sugarcane and maize crops. While the upgrade has be estimated as reducing vehicle greenhouse gas emissions by around 40%, the government proposal is at the mercy of the industry which has to make the investments.

'It will cost R41 billion (€3.9 billion) to change our refineries to refine to the level of E5,' said transport ministry special adviser on climate change Thamsanga Mohlomi to an environmental affairs portfolio committee.

Mohlomi agreed that South Africa still producing and using E2 fuel in its transport sector is seen as a drawback as it is one of the country’s fastest-growing sources of greenhouse gases, but he also told the committee that the main resistance from the oil industry was ‘purely financial’.

The environmental department is to hold talks with the national treasury about the realistic chance of offering incentives to the affected companies, in particular potential tax relief.