Sasol Climate Change Report 2022 - Book - Page 18
INTRODUCTION
RISKS AND OPPORTUNITIES
OUR FUTURE SASOL STRATEGY
GOVERNANCE
DATA AND ASSURANCE
RESILIENCE OF OUR PORTFOLIO (CONTINUED)
Sasol’s climate scenarios (continued)
SASOL-DERIVED DATA POINTS FOR ROBUSTNESS TESTING1
Current Pathway
• The world is on track to overshoot the 1,5°C temperature goal
reaching 2 – 3°C. More effort is focused on dealing with adaptation
issues resulting from a changing climate. There is continued uneven
regional economic recovery post the COVID-19 pandemic, with
economic challenges disproportionately distributed across the globe.
• Climate change mitigation continues to progress in more developed
countries like Germany and the United States. Many other countries
lag behind and make intermittent progress, favouring economic
recovery over climate change goals. Since the COVID-19 pandemic
and the Russia/Ukraine conflict, the supply chain and energy
security have become key concerns, with some countries
developing new relationships based on the supply and demand
of energy, other commodities and components. Many developing
countries are also facing food shortages, which need to be
addressed in the short term.
• Technology development continues to progress and assist in
the energy transition in certain regions. Certain countries are
progressing with electric vehicle roll-out and related infrastructure.
Affordability continues to hamper progress in other economically
challenged regions.
• Favourable financing and funding opportunities are available to
some countries and regions for energy transition activities
• Petrochemical demand increases due to a rising population
and growing middle class, softened to some extent by recycling
and reuse.
• Global transport fuel demand peaks only in the early 2030s. Oilderived jet fuel recovers slightly after the pandemic relative to
pre-COVID-19 levels. By 2030 however, oil-derived jet fuel demand
starts to decline due to efficiency improvements and new aviation
fuel options.
• Natural gas starts to replace coal demand in the power sector in
developing countries, with renewables generally showing improved
price competitiveness over gas. Affordability and access to
infrastructure remains key, with global gas demand peaking in
the late 2030s.
• Greater investments are required in adaptation efforts, which are
projected to increase over time.
Macroeconomic
Global GDP growth (% pa)
Global population growth (% pa)3
Oil
Global oil demand (MMbpd)2
Natural gas
Global gas demand (bcm)2
Green hydrogen
Global hydrogen demand (MMtoe)4
South African
power market
2
SA power demand growth (average % pa 2000-2021
then average % pa 2022-2050% pa)2
Renewables share of electricity generation (%)2
Coal share of electricity generation (%)2
1. Leveraging external data sets such as IEA SDS and net zero scenarios
2. Internal Sasol calculations
Current
Pathway
History
Fragmented Cooperative
World
World
Net Zero
2021
2050
2050
2050
2050
3,9%
1%
3,2%
0,8%
3,2%
0,8%
3,2%
0,8%
3,2%
0,8%
100
90
105
59
29
4084
3968
4285
3383
1553
6
280
6
555
728
0,6%
1%
2%
3%
1%
3%
83%
65%
20%
63%
0%
75%
0%
94%
0%
3. Population: UN population data
4. Green hydrogen: S&P Global
Fragmented World
• Reaching the 1,5°C temperature goal remains aspirational, with geopolitical divisions and economic challenges preventing requisite
technology transfer and funding availability.
• Many countries are concerned with energy security and ensuring that supply chains are sufficiently robust. Self-sufficiency increases
in importance.
• New geographic trade partnerships are set up to increase security of supply for energy and other commodities and components. This
increases the cost of minerals and metals that are key to the energy transition, which further increases affordability challenges for
certain countries. Trade partnerships disadvantage progress in some countries.
• Many countries focus on local economic challenges, which delays progress towards climate change targets. Technology cost increases also
create barriers to progress and local and regional tensions further contribute to slowing climate action.
• Global liquids demand peaks in the late 2030s, with jet fuel showing some growth to 2040, after which it starts to decline.
• Electricity demand increases and transitions to greener generation options. There are, however, challenges in accessing technology
improvements at the required price, as well as the necessary metals and minerals to manufacture key components.
• Natural gas replaces coal in power generation but challenges exist with availability and costs of materials required for renewables, further
increasing gas demand.
• Petrochemical demand continues to rise, with some recycling and reuse. Technology development is, however, slower and developing regions
still struggle with implementing systems to reduce demand.
• Some financing is available for transition activities, but access is challenged by changing requirements.
• Adaptation requirements and costs are significant related to more frequent and severe extreme weather events for both developed and
developing countries. Developed countries will continue ensuring their own resilience at the expense of providing support to developing
countries.
SASOL UNDERTAKES ROBUSTNESS TESTING OF THE BUSINESSES WITHIN OUR PORTFOLIO
Our approach focuses on:
• market demand;
• feedstock acceptability;
• consumer preferences;
• executability of the strategy; and
• stakeholder acceptance; and
• just transition implications.
• affordability and ability to mitigate;
This approach ties back to risk management detailed on page 13, with robustness
testing results reflected on the next page.
SASOL CLIMATE CHANGE REPORT 2022 17