Sasol Climate Change Report 2022 - Book - Page 35
INTRODUCTION
OUR FUTURE SASOL STRATEGY
RISKS AND OPPORTUNITIES
GOVERNANCE
DATA AND ASSURANCE
DECARBONISING OUR VALUE CHAINS (CONTINUED)
Using offsets
We are identifying real,
verifiable and permanent
offsets to reduce our carbon
tax liability and, in the future,
address residual emissions.
Sasol believes that carbon offsets –
if properly designed and delivered –
can play an important enabling role in
delivering our Future Sasol strategy,
addressing emissions that are either
prohibitively expensive to reduce or
technologically challenging to abate,
while at the same time realising other
environmental and social benefits. Offsets
will only be used to supplement our existing
emission-reduction activities and are not
intended to replace them.
SASOL IS PURSUING TWO TYPES
OF OFFSETTING
1
A/R Projects – “CO2 kept out of the air”
Reducing emissions from fossil sources using lower-carbon technologies without storage.
Renewable energy
(displacing fossil
fuel energy)
Low emission
cook-stoves
(fuel switching)
Transport
model shift
Methane capture
and use
Forest
management
Newer technology carbon offsets could include green hydrogen and SAF (still to be proven).
2
CDR Projects – “CO2 removed from the air”
Taking CO₂ out of the atmosphere using Nature-based Solutions (NbS)
or Technology-based Solutions (TbS) with storage.
• Avoidance/Reduction (A/R) offsets –
keeping GHGs out of the atmosphere
• Carbon Dioxide Removal (CDR) offsets
– removing residual GHGs in the
atmosphere
We have been developing a portfolio of
verifiable, credible and high-quality offset
credits aligned with our carbon offsetting
principles. We prioritise credits from
projects that realise additional social and
environmental benefits, which are
supportive of a just transition, while
simultaneously meeting our compliance
obligations and future needs.
Our recent focus has been on procuring
credits for our carbon offset allowance under
the South African Carbon Tax Act. This year,
we secured ~3,7 million credits from one
in-house and nine local offset projects,
mitigating the release of 3,7 MtCO2e,
avoiding more than R258 million in carbon
tax payments and realising additional
environmental and social benefits for
communities in South Africa. We have also
voluntarily offset our business travel
emissions for 2021.
Sasol has proactively been securing credits as a response to the proposed
extension of Phase 1 of the South African carbon tax regime and the
increased offset allowance for Phase 2. We have entered into strategic and
cost-effective long-term agreements with reputable suppliers for credible
high-quality offset credits that are eligible under the Carbon Tax Act.
In addition, we have options to purchase our first CDR credits through
forward-looking contracts, with credit delivery scheduled for 2024. To the
best of our knowledge, these are the first CDR offset projects eligible under
the South African carbon tax regime. This marks the start of our journey to
progressively shift our credit portfolio from A/R to CDR offsets.
Sasol is also strategically engaging with experienced brokers and independent
carbon offset rating agencies to be able to secure cost-effective, high-quality
and independently assured carbon offset credits for the future. Experienced
South African offset project developers, international standards organisations
and the Department of Mineral Resources and Energy (DMRE) are being
engaged to understand the potential implications of Article 61 of the Paris
Agreement on South Africa’s carbon offset regime. Sasol continues to
monitor and shape international best practices in carbon offsetting
through our membership on the Taskforce for Scaling Voluntary Carbon
Markets (TSVCM) and its successor the Integrity Council for the Voluntary
Carbon Market (ICVCM).
SASOL’S CARBON OFFSET PRINCIPLES
Biological carbon
sequestration
Soil carbon
sequestration and
improved farming
Blue carbon –
restoration of
ocean systems
Bio-energy
with CCS
DAC with
geological
storage
Net zero emissions is achieved if an equal amount of removal offsets are generated
compared to operational emissions.
Light blue bars show a reducing GHG
inventory due to on-site mitigation
• offsets must be ‘real’ (supported by robust methodologies and
independently verified), ‘additional’ (reductions would not have
occurred in the absence of the offset market) and ‘permanent’
(reductions are on-going and will not be reversed in the future,
or for which risk mitigation has been established);
3
Net zero
• offsets procured and developed must adhere to regulatory
eligibility criteria; and
• retired offsets must be transparently disclosed to ensure
no double counting of emissions.
Path to net zero
Dark blue bars
indicate A/R offsets to
compensate emissions
The following set of offset principles embed our thinking:
• offsets must be used according to Sasol’s mitigation hierarchy,
prioritising on-site mitigation and only using offsets as a last
resort to meet targets;
1
2
Offsets can uplift communities and contribute positively towards
national imperatives of alleviating poverty, unemployment and
inequality. Without rigorous governance, however, offset projects
can have unintended negative consequences. Sasol‘s offset
approach focuses investment only on credible offset credits that
are subject to a high degree of verification and assurance.
Green bars indicate
CDRs (NbS/TbS) to
neutralise emissions
SASOL CLIMATE CHANGE REPORT 2022 34
1. Article 6 refers to cooperative mechanisms under the Paris Agreement that enables parties
to cooperate in implementing their NDCs to get emission-reductions.
