Sasol Climate Change Report 2023 - Book - Page 17
INTRODUCTION
TRANSFORMING FOR RESILIENCE
GOVERNANCE
CLIMATE ADVOCACY AND POLICY
DATA AND ASSURANCE
RISKS AND OPPORTUNITIES CONTINUED
Policy and regulatory challenges
creating risks and opportunities
OTHER HIGH-LEVEL TRANSITION RISKS //
RISK EVENT
HOW WE ARE RESPONDING
Not delivering on
decarbonisation plans
• Concerted, planned and deliberate actions towards achievement of the 2030
targets and laying the groundwork for longer-term actions (see pages 4 – 5)
• Pursuing decarbonisation initiatives while preserving value from
existing assets
Policy and associated
regulatory frameworks
imposing more onerous
compliance requirements,
impacting our ability to
decarbonise and grow
• Refer to initiatives covered alongside under Policy and Regulatory challenges
creating risks and opportunities
Feedstock switching from
coal to gas resulting in
value erosion
• Exploring alternative feedstocks, if economically viable, and optimising
options to minimise value erosion from the current business while driving
initiatives to meet sustainability transformation requirements
• Assessing market positioning against emerging trends, setting targets,
transforming the product portfolio, maintaining product supply, meeting
customer needs and focusing/delivering on our base business targets
• Minimising costs, including a reassessment of the timing of LNG as a gas
feedstock option
• Extending Mozambique gas supplies by pushing out the gas plateau to 2028
• Maintaining a healthy funnel of opportunities
• Coal briquetting and external coal purchase programme to sustain our
current business
Inability to secure sufficient
volumes of gas timeously
• Maximising Mozambique gas supplies by extending plateau production
• Developing a prioritised regional approach
Inability to develop new
sustainable business
opportunities and revenue
streams
• Actively pursuing opportunities through proof-of-concept projects and
maximising on available global incentives
• Actively pursuing public and private partnerships across the sustainableopportunities value chain
• Securing funding options, including grants
• Corporate venture capital fund (see pages 3 and 28)
• Topsoe JV (see page 40)
• Future-focused R&D (see page 35)
Not being seen as a credible
stakeholder
• Entering into partnerships with key stakeholders to achieve greater
decarbonisation at pace, increased resilience, unlocking of costly technology
options and accessing finance.
• Engaging with key stakeholders and third parties to improve service delivery
and support affected municipalities
• Constantly balancing economic and social considerations with climate
objectives to meet the interests of all stakeholders
Climate change policies and regulations are
evolving rapidly, presenting numerous
risks and opportunities for Sasol. We are
committed to maintaining compliance with all
regulations in the regions where we operate.
To this end, we assess how policy and regulatory
aspects may impact the Future Sasol strategy.
Governments worldwide are implementing policies
and regulations to address climate change, impacting
decarbonisation efforts. Compliance must be ensured,
together with proactive adaptation of operations and
market offerings, to align with changing policy
landscapes. It is necessary to leverage the
policy environment to grow low-carbon business
opportunities. However, proposed, newly
implemented and changing regulations can make it
more challenging to decarbonise and ensure a just
transition. Such challenges include:
Carbon tax and carbon budget
In South Africa, Sasol is proactively addressing the
implications of a carbon tax and a carbon budget by
integrating climate risk management and sustainable
practices into our business strategy. This includes
scenario analyses (see pages 20 – 24) and risk
assessments to understand the potential financial
and operational impacts of carbon pricing, with
appropriate strategies for mitigation. For these
mitigation strategies to be effective, coordination and
alignment between policies is essential.
Regulatory challenges for exports
While affordability in South Africa is challenged,
developed markets such as the United States, the
European Union and United Kingdom offer key
sustainable product-placement opportunities for our
premium sustainable products. It is therefore essential
that cross-border enabling policies be implemented to
stimulate green industries in developing countries to
create an enabling export environment, particularly given
the Paris Agreement’s imperative to support countries
on their decarbonisation journeys. Developed markets
are critical for the growth of the green-hydrogen sector
in developing markets. Specifically for Sasol, an enabling
regulatory environment is needed to accelerate the
development of our low-carbon initiatives using existing
assets. A viable export market in which sustainable
product premiums can be accessed, avoiding restrictive
regulatory burdens for ‘third countries’ while channelling
the benefits to South Africa (in which a just transition is
being pursued) is of the utmost importance.
Weather-related events creating
adaptation risks and opportunities
As hard as we work to mitigate our GHG
emissions, we are cognisant of the need to
adapt our operations and value chains to adverse,
extreme weather conditions (see page 49).
Our operating environments have dramatically changed
over our facilities’ lifetimes, shifting operating envelopes
and design specifications. This is the reality in which we
operate our plants on a day-to-day basis. We face several
adaptation risks with implications for our operations,
supply chains and overall business resilience.
Carbon border taxes
Carbon border tax regulations are being implemented
by developed countries and are emerging as a new
risk. Sasol is navigating the evolving landscape of
carbon border taxes such as the recently published
Carbon Border Adjustment Mechanism (CBAM) in the
European Union. This work includes understanding
the requirements of different trading partners,
phase-out of free allowances under the Emissions
Trading System and addressing competitiveness in
key markets. We are investigating opportunities to
expand our existing reporting systems to
demonstrate and verify the embedded emissions of
our exported goods.
SASOL CLIMATE CHANGE REPORT 2023
16
MITIGATING PHYSICAL RISKS TO ENSURE
BUSINESS CONTINUITY FOR OWN
OPERATIONS AND OUR SUPPLY CHAINS
INVOLVES:
conducting climate vulnerability assessments;
enhancing infrastructure resilience;
ensuring appropriate emergency
preparedness for weather-related
impacts; and
reviewing, refining and updating adaptation
measures such as seasonal forecasting,
lightning protection, flooding prevention and
wind rating of equipment.