Sasol Climate Change Report 2022 - Book - Page 38
INTRODUCTION
RISKS AND OPPORTUNITIES
OUR FUTURE SASOL STRATEGY
GOVERNANCE
DATA AND ASSURANCE
CAPITAL ALLOCATION AND GREEN FUNDING (CONTINUED)
The thresholds for stranded assets are highly
context-dependent and economic valuations are
different for sub-sectors of the fossil fuel industry.
Sasol undertook an assessment of the value-creating
benefits of our existing asset base considering our
Future Sasol strategy and net zero pathways and
believe that we can transition our at-risk assets for
1. IHS Markit, Super H2igh Road Scenario for South Africa
Report, 2021
Sasol can leverage existing assets in our
Southern African operations to produce
SAF for the hard-to-abate aviation sector.
By utilising existing assets, we could be a
lower-cost producer of PtL kerosene. With our
existing assets, by 2030, we could produce up
to 46% of today’s OR Tambo International
Airport jet fuel demand, making the airport a
potential SAF hub for international and
domestic airlines.
Secunda has the potential to increase SAF
production up to ~20 000 barrels per day
by reconfiguring the refinery processing units.
The pace of transition will depend on several
factors, such as the cost of green hydrogen,
sustainable carbon and renewable energy
inputs, enabling regulatory frameworks and
access to low-cost financing solutions.
~46% of today’s
OR Tambo International
Airport jet fuel demand
30 000
25 000
20 000
15 000
10 000
5 000
0
~30 000
Fossil fuel industry assets are at risk of being stranded
and losing economic viability due to the move away
from conventional resources prompted by climate
policy and targets, as well as unanticipated
technological breakthroughs, changes in consumer
preferences and physical climate change impacts. To
avoid stranded assets, research studies indicate that
accelerated decarbonisation should be pursued and
no further investments in fossil fuel infrastructure.
Sasol Energy's SAF supply potential
~12 000
Stranded assets and resources
Climate-related physical risks could also result in
our assets becoming stranded. We have conducted
detailed assessments and modelling work to determine
and ascertain the potential of more frequent and
We recognise that climate policy could also lead to
stranded assets depending on the stance a government
takes on particular areas, for example, gas, carbon
pricing and strategic considerations for growing and
limiting certain sectors. We monitor climate change
legislation in the areas where we operate (see page 48)
and participate in the process underpinning further
legislative or policy developments. For example, the
carbon tax in South Africa is yet to be confirmed,
however proposals are penalising and the Climate
Change Bill is yet to be finalised for enactment. These
legislative mechanisms will provide the guardrails for
the country’s just transition and could have
implications for our operations.
~13 950
The landscape of funding mechanisms has evolved
significantly over the last few years. Our targets
and strategy are supported by a capital allocation
framework aimed at decarbonisation and shareholder
value creation. This in turn supports access not only
to sustainability-linked and transitional financing,
but also to green financing opportunities as we
decarbonise. Sasol is exploring options in this regard
and will provide further detail in future reports.
This is largely due to the fact that methane emissions
from gas usage are also contributing to climate
change. As a result, we are aiming to incrementally
introduce 40 – 60 PJ/a of LNG, sourced from
reservoirs low in CO2 and where methane leakage
is effectively monitored and minimised, rather than
focusing only on pipeline gas. In the short-term,
managing coal quality combined with preventative
maintenance of our assets is of critical importance
to enhance operational and carbon efficiencies.
In 2021, IHS Markit’s (now part of S&P Global)
hydrogen study1 independently verified that the
economic value proposition of utilising existing
brownfields facilities at Secunda to produce green
hydrogen was more favourable than greenfields FT
facilities. The study findings also indicated that our
facilities have an inherent cost advantage, of
~US$200/ton, in the production of SAF and other
derivatives. Progressively transitioning to green
hydrogen will enable us to decarbonise and reduce
our scope 1 and 2 emissions, but also open up
opportunities for producing sustainable products
that will lead to scope 3 emission reductions.
severe physical risks materialising in the regions
where our operations are located (see pages 43 – 44).
These physical risks are assessed as part of
long-term business viability and, through our risk
management process, we implemented key
adaptation response actions and we are continually
and proactively building on these. As a result, the
probability of our existing assets becoming stranded
due to physical climate risk is being lowered given
the proactive adaptation and emergency preparedness
approaches we are adopting.
~270
Sustainability linked, transitional and
green financing
In our 2021 CCR, we undertook an
assessment that showed pipeline gas as
having a lower lifecycle carbon footprint
relative to LNG; however pipeline
gas infrastructure can have a higher
probability of becoming stranded and/
or causing infrastructure lock-in in the
long term.
Technologically, we are in an advantageous position,
as we can re-purpose both our Sasolburg and Secunda
assets to process green hydrogen and sustainable
carbon feedstocks using a large portion of our existing
asset base. Our FT technology is agnostic to the
sources of hydrogen or carbon feedstock utilised
and enables us to produce sustainable fuels and
chemicals, very much needed in a low-carbon future.
~5 680
This calculation is sensitive to oil price, currency
exchange rate, production volumes and international
chemical prices. As we progress our Future Sasol
strategy and integrate larger volumes of sustainable
fuels and chemicals, our coal exposure will accordingly
reduce.
a low-carbon future anchored on green hydrogen and
sustainable carbon feedstock use. In the short- to
medium-term our transition is based on using gas
to replace coal feedstock. Furthermore, to avoid coal
resources getting stranded, we have committed to
no investments in new coal reserves.
~8 000
Sasol’s major revenue streams emanate from a
combination of coal, natural gas and oil-based
derivatives. Over the past five years, the percentage
of revenue from coal-derived products was on average
between 38 – 40%. The Secunda Operations are
directly linked to coal and limited to the products
within the affected value chains. This translates to
more than 90% of liquid fuels and chemicals produced
in Secunda and all export coal. Note that some
chemicals produced in South Africa are from natural
gas feedstock. None of the chemicals or fuels
produced outside of South Africa is coal-derived.
Sustainable Aviation Fuel (SAF) production potential
(barrels/day)
Our coal exposure
Secunda
Sasolburg
Natref2
South African
operations
2030 potential
Secunda post
2030 potential3
OR Tambo current
jet fuel demand
2. Preliminary estimates based on co-processing of used cooking oil at Natref, with potential to produce up to ~3900 bbl/day depending on feedstock availability.
3. Requires significant modifications to Secunda’s refinery for additional SAF production.
SASOL CLIMATE CHANGE REPORT 2022 37
