Sasol Climate Change Report 2022 - Book - Page 26
INTRODUCTION
RISKS AND OPPORTUNITIES
OUR FUTURE SASOL STRATEGY
GOVERNANCE
DATA AND ASSURANCE
DECARBONISING OUR OPERATIONS (CONTINUED)
Progressing our emission-reduction roadmaps (continued)
Transforming our operations with gas
Natural gas is a critical transition energy source to decarbonise
the Southern African region and meet net zero commitments.
Even though it is a fossil fuel, gas is a bridge for coal economies.
We see gas and renewable energy, together with sustainable
carbon sources, as springboards to green hydrogen, which can
be used to fully decarbonise our operations.
Last year, we adopted a gas sourcing strategy aimed at meeting
future gas demand and ensuring the sourcing of low-GHG LNG.
This strategy also seeks to enable us to pivot quickly once green
hydrogen is economically viable, such that we do not make
long-term balance sheet commitments that could expose us to
redundant infrastructure.
This year, we completed a study that found that while gas supplied
via pipeline from Rovuma (northern Mozambique) is likely to be the
most cost-effective and the lowest GHG emissions from a lifecycle
perspective, the project is not deemed feasible over the mediumterm due to geopolitical, execution and infrastructure lock-in risks.
To ensure optionality, we are nevertheless continuing to engage
with potential investors.
Sasol has a large industrial customer base that is dependent on gas
into the future for hard-to-abate industries. We have commenced
an analysis to expand our existing exploration and development
opportunities to reduce the blended cost of gas to South Africa,
while also diversifying the sources of gas supply. Securing additional
sources of gas, including LNG, as a transition feedstock remains a
strategically optimal pathway due to the inherent flexibility it offers
to ramp down supply post 2040 and to minimise the risk of stranded
assets and gas infrastructure lock-in. We have developed a multi-hub
approach with floating storage and regasification units (FSRUs)
being assessed in Matola (Mozambique) and Richards Bay (South
Africa). These have been prioritised over developments in Coega and
Saldanha to meet our predominantly inland and South Africa east
coast demand needs. In addition, it is critically important that a
reliable gas feedstock be sourced for peaking requirements in the
power sector.
We are continuing to work with relevant parties to explore near-field
developments adjacent to our current gas fields, aimed at sharing
risks and rewards in development and marketing. Given the higher
price of LNG relative to current gas in the market, we are engaging
with customers to understand their appetite to transition to
re-gasified LNG in the future. At the same time, we are exploring
various opportunities to develop and grow the market. Sasol supports
the proposed development of a Richards Bay LNG terminal, as we
believe that this will play an important role in sustaining and growing
the gas market thereby ensuring energy security for key industries.
REDUCE, TRANSFORM and SHIFT
Unlocking the potential of green hydrogen
The Southern African energy transition and Sasol’s
decarbonisation strategy are interwoven. We are taking a
strategic long-term investment view of green hydrogen.
We are also playing a leading role in shaping and
enabling this economy, supported by green hydrogen
production and enabling infrastructure, skills, industry
development and end-user application markets.
Green hydrogen is acknowledged as a critical enabler to achieving global
net zero commitments and is seen as an important source of potential
competitive energy differentiation for Southern Africa. The region
has valuable endowments of renewable energy, as well as some of the
world’s largest deposits of platinum group metals (PGMs). Green hydrogen
can potentially be produced here on a cost-competitive basis and
support PGM beneficiation through supporting industries, such as
fuel cell manufacture. Given its well-developed industries,
financial markets and infrastructure, the region also offers
geopolitical benefits as a supplier of green hydrogen to Atlantic
and Pacific markets.
Sasol is uniquely positioned to lead the transition to green hydrogen in
Southern Africa, leveraging our existing assets, technical and project
expertise and downstream technologies, as well as our FT technology
which is agnostic to the source of carbon or hydrogen. While the initial
supply infrastructure will be anchored on global offtake, servicing local
demand will be essential for Southern Africa’s energy security and to
improve the competitiveness of industry to enable a just transition.
The green hydrogen economy holds exciting potential to create high
quality jobs, further beneficiate natural resources and create new value
pools for the region, Sasol and our host communities. In addition green
hydrogen can significantly decarbonise our operations and help us
achieve our net zero ambition. Given our green hydrogen demand,
we are able to be an anchor for market development in South Africa.
PROGRESS ON OUR AMBITION TO REPURPOSE OUR FACILITIES USING
GREEN HYDROGEN AND SUSTAINABLE CARBON
REPURPOSING SECUNDA TO PRODUCE
SUSTAINABLE PRODUCTS
REPURPOSING SASOLBURG TO PRODUCE
GREEN HYDROGEN
Demonstrate SAF capability and firm-up demand for air transport
Stimulate and anchor local demand and demonstrate
capabilities
The HyShiFT SAF project, developed in partnership with Linde,
Enertrag and Hydrogen, is progressing well, targeting first SAF
production in 2025. The project involves transitioning our Secunda
asset from predominantly using coal to progressively integrating
sustainable feedstocks, over time, to produce SAF for Germany.
FID approved in March 2022 to produce green
hydrogen from existing chlor-alkali electrolysers in
Sasolburg towards the end of 2023.
Transitioning this facility to only using sustainable feedstocks will
require more than 20 GW of electrolysis capacity, which will take
time. This project is the first step toward a fossil fuel-free vision
and will use 200 MW of electrolysis capacity and 400 MW of
renewables to produce ~50 000 tons of SAF per annum, depending
on sustainable carbon feedstock. A simultaneous co-feed of fossil fuel
and sustainable feedstocks will need to be undertaken as the transition
takes place. However, the proposed EU regulations under RED II limit
market access (see page 48 for more details); we are actively engaging
to advocate for a level playing field.
Studies to produce lower-carbon waxes, SAF,
methanol and ammonia are progressing well. There are
also further integration possibilities with Natref that are
being explored to accelerate the production of both
sustainable fuels and chemicals.
We have identified specific focus areas within the SAF value chain to become a global
low-cost producer of SAF
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