Sasol Climate Change Report 2022 - Book - Page 9
INTRODUCTION
RISKS AND OPPORTUNITIES
OUR FUTURE SASOL STRATEGY
GOVERNANCE
DATA AND ASSURANCE
SASOL’S COMMITMENT TO CLIMATE ACTION
SUPPORTING THE PARIS AGREEMENT MEANS:
OUR CLIMATE CHANGE POSITION:
▪ aligned with the goal of limiting global warming to well
below 2°C and pursuing efforts to limit the temperature
increase to 1,5°C;
▪ support the Paris Agreement;
▪ accept mainstream climate science assessed by the IPCC for net zero CO2 emissions to be reached by 2050;
▪ undertaking measures based on mitigation potential and our
fair share responsibility;
▪ acknowledge that business has a role to play in managing the risks of climate change, as well as realising the
opportunities in the transition to unlock societal value; and
▪ incorporating national circumstances and the just transition;
▪ recognise the importance of adaptation and resilience to a changing climate.
▪ setting science-based targets; and
Accordingly, we are reducing our GHG emissions and have placed ourselves on an accelerated path to take action
and progressively improve our performance.
▪ progressing towards a net zero ambition by 20501.
Applying a science-based approach
Leveraging global approaches
Aligning with the temperature goal of the Paris Agreement
Taking our large emissions profile into account and the need
to give comfort to our stakeholders, we assessed the Science
Based Target initiative (SBTi)2, which is increasingly becoming a
standard against which corporate GHG targets are being
assessed. Sasol operates a relatively unique business that does
not fall within the available methodologies of the SBTi toolkit.
For the Oil and Gas and Chemical sectors3 methodologies have not
yet been finalised and previous assessments for companies
specifically in the Oil and Gas sector, where applied, have been
paused. Once appropriate methodologies are available, we will
assess their applicability for Sasol (see below for our view on
SBTi). In the absence of this, and similar to other Oil and Gas and
Chemical companies, an SBTi-based independent assessment of
our alignment with the Paris Agreement is unable to be
undertaken. We therefore applied a Sasol developed
methodology for this purpose.
Using an absolute contraction approach from the IEA and a flat rate of 2,5%
reduction per year, Sasol’s expected reduction by 2030 is ~30%. On this basis,
our interim 2030 target of a 30% reduction is considered to be well below 2°C
aligned with the Paris Agreement. If Sasol were to adopt a fully 1,5°C aligned
target by 2030, using a flat rate of 4,2% reduction per year, our target would
need to be ~43%. However, to achieve a 43% reduction by 2030 we would need
mitigation to be available, which it is not and would therefore mean a turndown
of significant portions of the operations to achieve the target. This would have
serious implications for the country from a socio-economic perspective and
hinder our just transition.
Articles 2 and 4 of the Paris Agreement, together with the preamble, recognise the
need for different sectors and actors to move at different speeds, reflecting their unique
opportunities and constraints. Developing country actors may require more flexibility on
their pathway to net zero as countries need to balance increasing access to energy while
reducing emissions. This may impair the ability of developing countries to halve their
emissions by 2030. Race to Zero5 recognises regional and sectoral disparities and expects
targets to account for such factors. Within the context of a just transition, this is an
absolute imperative.
Our target setting and roadmap development was informed
by three broad elements: benchmarking, top-down modelling
and a bottom-up analysis. Top-down modelling was undertaken
using science-based approaches, including absolute
contraction, International Energy Agency’s (IEA) pathways and
fair share models to determine ambition levels for input into the
bottom-up techno-economic analyses. Two Fair Share
science-based models were assessed, Climate Action Tracker
(CAT) and Climate Equity Reference Calculator (CERC). These
models provided national indicative trajectories based on
factors, such as responsibility for historical emissions, economic
development, per capita emissions and financial, technological
and other capacity to reduce emissions.
Our absolute contraction work was supplemented by taking additional
views on the country’s latest NDC expectations. This aided in benchmarking
given the significance of Sasol South Africa’s emissions (~12% of national
emissions). In October 2021, South Africa adopted an ambitious NDC range of
420 – 350 MtCO2e, with the lower bound of 350 MtCO2e being close to 1,5°C
aligned4. This new updated NDC makes South Africa one of the few countries
with a close to 1,5°C aligned target. Subsequently, the updated NDC target was
welcomed by many developed country partners and was the main reason
for the country receiving a first of its kind Just Energy Transition Partnership
(JETP) facility announced at COP26. Taking a proportional allocation approach,
the lower bound (350 MtCO2e) would imply an ~27% reduction for Sasol to
support achievement of the NDC.
Based on all assessments undertaken, including Fair Share modelling, NDC
comparison and absolute contraction, we see our 2030 interim target of a 30%
reduction as being aligned with global commitments “to limit global warming
to well below 2°C”. Given that most of our emissions are generated in South
Africa, a developing country, this target is considered within this context.
1. Our net zero ambition incorporates the latest available science and the findings from the IPCC 1,5°C Special Report.
2. The SBTi is a partnership between CDP, the United Nations Global Compact, World Resources Institute (WRI) and the World
Wide Fund for Nature (WWF). The SBTi’s call to action is one of the We Mean Business Coalition commitments. https://
sciencebasedtargets.org/about-us
3. https://sciencebasedtargets.org/sectors/oil-and-gas#company-commitments-removed-from-the-sb-ti-websiteunder-the-policy-update
4. https://climateactiontracker.org/blog/south-africas-presidential-climate-commission-recommends-strongermitigation-target-range-for-updated-ndc-close-to-15c-compatible/
5. https://racetozero.unfccc.int/wp-content/uploads/2021/04/Race-to-Zero-EPRG-Criteria-Interpretation-Guide.pdf
6. https://sciencebasedtargets.org/resources/files/Net-Zero-Standard.pdf
Our 2050 net zero ambition supports the 1,5°C temperature goal. This is aligned with the
findings of the IPCC 1,5°C Special Report1, which states that society must stop adding to
the total global GHG emissions by 2050. For net zero, we have developed several
pathways to achieve this ambition. Our preferred pathway is the fossil-fuel-free vision,
which aims for zero scope 1 and 2 emissions for the Secunda and Sasolburg facilities and
supports the SBTi Net Zero methodology6. On the other hand, the worst emission case
scenario for net zero by 2050 will result in ~37 MtCO2e, which will need to be neutralised
with CDR solutions.
Our bottom-up analysis focused on mitigation potential (plotted as marginal abatement
cost curves (MACC)). The MACC highlighted abatement size, cost and associated
implementation time frames. Through this, we determined the gap between science-based
target reductions, mitigation potential and technology availability. The overall analysis
confirmed our assertion that year-on-year reductions are not possible for Sasol, with
reductions needing to be executed in a step-wise fashion as large capital projects come
online. The consequence of this is that we are not able to follow a smooth GHG
emission-reduction trajectory to 2030 and 2050, which typically underpins global climate
models. Nonetheless, with the planned execution of large-scale projects to reduce
emissions significantly, we aim to transform Secunda and Sasolburg to sustainable
value-generating businesses for a low-carbon future.
SASOL’S POSITION ON SBTi
SBTi takes a sectoral approach to decarbonisation,
which assumes that all companies within a specific
sector can follow the same reduction trajectory
irrespective of their national context.
We believe that target setting should take into account
national circumstances. We continue to engage
SBTi on this matter.
SASOL CLIMATE CHANGE REPORT 2022
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At this stage, Sasol is not able to assess the applicability
of adopting an SBTi standard as the Oil and Gas and
Chemicals sector methodologies have not been finalised.
Sasol uses FT-based technologies, which do not operate
in the same way as a conventional oil refinery. Therefore,
we should not be categorised within the oil and gas sector.
We continue to engage SBTi on this matter.