The comparative financial feasibility analysis and the environmental impacts of sugarcane-based bioethanol production in South Africa

Abstract

The objective of this paper was to determine the financial feasibility and environmental implications of bioethanol production from sugarcane in South Africa. The financial feasibility objectives was achieved using two capital budgeting techniques, namely, the Net Present Value (NPV) and Benefit-Cost Ratio (BCR) under four scenarios considerations: all sugarcane is used for biofuel production (I), all sugarcane destined for the sugar export market is used to produce bioethanol, II), All sugarcane is crushed into cane juice which is then transported into the refinery (III) and IV) Export designated sugarcane is transported by farmers to the refinery in the form of a cane juice. The environmental implications were determined using the Input-output and multiplier analysis. The NPV and BCR) results indicated that it is not feasible to produce bioethanol from sugarcane without a government subsidy. The production of sugarcane-based bioethanol however had environmental benefits as it was estimated to results to an average Green House Gases (GHGs) emission reduction of 28% related to petrol, of which 84% of the GHGs emission savings was from Carbon Dioxide (CO2). For bioethanol production to be financially feasible the financial support from private investors and government is recommended in subsidising the cost of feedstock.