Biofuel implications of a green economy transition in the Western Cape Province of South Africa: a system dynamics modelling approach to biofuel

This study investigates the implications of producing biofuel as part of a green economy transition in the Western Cape Province of South-Africa. Biofuel production was identified as a complex system and different methodologies were reviewed to find the most appropriate technique to analyse complex systems. System Dynamics was identified and used to build a model simulating the effects and potential of biofuel production within the Province, under certain project and policy considerations. The biofuel model was built with a generic structure that can simulate both bioethanol and biodiesel with different parameters. The model assumes a bioethanol plant, capable of producing 160 million litres per annum to be completed in 2018, using triticale as feedstock. A biodiesel plant with a capacity of 35 million litres per annum will also completed in 2018, using canola as production feedstock. Different scenarios regarding the energy use of biofuel production were simulated in order to evaluate the feasibility and identify the strategic intervention points, which could strengthen the business case of biofuel production. The national mandatory biofuel blending policy leads to alternative scenarios being simulated, in which the Western Cape Province is externally supplied with biofuel. Recommendations are made on the best approach to follow for the Province to form part of the blending policy, based on pre-determined indicators within the three pillars of sustainability, namely: the economy, environment and social considerations. From the model, it was deduced that feedstock availability and the high capital and operating costs are the major constraining factors in biofuel production. Recommendations are made to mitigate and improve the identified constraints. A feasible business case (operating without subsidy) was established for bioethanol production within the Province. Under the model assumptions for locally producing bioethanol (using biomass as energy source), an internal rate of return of 23% is estimated, while emissions are reduced by 63% when compared to using coal as the energy source. A medium-large scale biodiesel production facility was not feasible (subsidy of R4.30 per litre) as the adverse effects of emissions and employment creation does not justify the high costs involved. Alternative biodiesel solutions are then proposed, like encouraging the establishment of numerous small-scale on-site biodiesel production facilities. In conclusion, the study limitations and recommendations for future research are discussed. The applicability and effectiveness of using system dynamics for this study is discussed and some recommendations are made to indicate the context in which system dynamics would best be applied.National Research Foundatio