SASOL, the JSE-listed petrochemicals giant is tripling its 2030, scope 1 and 2 greenhouse gas (GHG) emission reduction target, from an initial 10 percent for its southern African operations, announced last year, to 30 percent for the energy and chemicals businesses, off a 2017 baseline.
Sasol, South Africa’s biggest polluter after Eskom, has ambitions to be net zero by 2050. The group said up to 2030, about 10 to 15 percent of all capital would be spent on achieving these GHG reduction targets, and post 2030, a more significant portion of capital, to achieve the net zero ambition.
Speaking to investors at the virtual capital markets day, chief executive Fleetwood Grobler, said Sasol had concrete plans to directly reduce emissions by 25 percent, through known and available technologies.
“With additional improvements in technology, efficiencies in our process and the introduction of lower-carbon feedstocks, we are confident, that more reductions are possible to achieve the full 30 percent target,” he said.
Grobler said based on detailed assessments and modelling, this ambitious target can be delivered without divestments and offsets, but through the direct decarbonisation of our existing assets.
“This will be done through a mix of energy and process efficiencies, investments in renewables and a shift to incremental natural gas as a transition feedstock for our southern African value chain,” he said.
Sasol said in the short to medium term, the first phase up to 2025 its focus was to strengthen its balance sheet, while improving cost-competitiveness and ability to increase cash flow generation in a low oil price scenario. The group aims to improve return on invested capital (RIOC) to between 12 and 15 percent in this period.
The second phase in the short to medium term up to 2030 prioritised the balance between returns and investing in Sasol’s transition plan.
Chief financial officer Paul Victor said in this period up to 2030, Sasol planned to invest between R20 and R25 billion per annum to maintain its asset base, comply with all relevant environmental and air quality regulations, as well as fund the transition to reach the 30 percent GHG emissions reduction target. This included a total of R15 to R25bn in aggregate transformation capital up to 2030, while targeted ROIC was anticipated to be above 15 percent.
Victor said the capital required to achieve the first key step of reducing GHG emissions by 30 percent by 2030 was moderate and manageable and did not come at the expense of improved financial returns.
“So, it’s a win-win for all,” he said.
Victor said the group planned to continue to reduce debt and restore the dividend soon, achieve investment grade metrics by the 2023 financial year and fully deliver Sasol 2.0 strategy by 2025.
The group also yesterday unveiled a new business unit, Sasol ecoFT, that would focus on developing technology applications including greener aviation fuels.
“We have the technology to produce clean aviation fuel at scale not only for South Africa but the globe. We have the technology to produce green ammonia for example and we have the technology to ensure that South Africa moves from being coal-based to becoming hydrogen-based and we can export the hydrogen to global markets,” said Victor.
Greenpeace Africa Climate and Energy Campaigner Thandile Chinyavanhu said: “In the context of South Africa’s unemployment crisis, we must ask Sasol why it does not create job opportunities now by pursuing renewable energy, when the need is so immediate. That is a question for the whole fossil fuel industry. Sasol is not the great innovator that it wants South Africans to believe it is. Investing in renewable energy while the government drags its feet would be the true innovation.”
dineo.faku@inl.co.za
BUSINESS REPORT