Sasol Climate Change Report 2023 - Book - Page 21
INTRODUCTION
TRANSFORMING FOR RESILIENCE
GOVERNANCE
CLIMATE ADVOCACY AND POLICY
DATA AND ASSURANCE
RESILIENCE OF OUR PORTFOLIO CONTINUED
Scenario updates
Updates to our scenarios focused
on revisions to the short to medium
term globally and locally.
Compared to the period 2000-2010,
global economic growth, including
all three drivers of labour,
investment and productivity, have
weakened in the past decade.
According to the World Bank,
overall global economic growth
could potentially weaken even
further in the coming decade in the
absence of tough policy and
focused implementation.
Our global economic outlook has been updated to
reflect this view. This included short- to mediumterm volatility owing to the COVID-19 pandemic
and uncertainties over the Russia-Ukraine war and
population, investment and productivity dynamics.
According to this view, shrinking working-age
populations and rising dependency ratios are offset
to some extent by global productivity gains. Some
nations struggle with high debt burdens, trade
frictions and monetary policy normalisation,
resulting in uneven gross domestic product (GDP)
growth across different regions.
Our approach, however, is to use a single global GDP
forecast across all key scenarios, which is similar to
the approaches of the IEA and bp. Global oil and
refined-products demand, along with price, have
been updated, taking into account geopolitical
tensions, risk premiums and changes in product
flows. Although more work is required, an in-depth
review of the structure of the global refining industry
has been initiated, with a view to understand how
this industry would transform to accommodate
increased demand for naphtha versus reducing
demand for gasoline.
Future views also look at developments such as new
crude-to-chemical refineries and the role these would
play in expanding chemical production to cater for
growing population and middle-class needs.
In general, chemical feedstock supply from new
non-fossil-derived sources is required, particularly
in the Cooperative and Net Zero worlds (see following
page), to supplement declining global supply of oil
and liquids. Here, some form of policy and regulatory
support will be required to assist the transition and
reduce price impacts on consumers as developing
technologies shape new products and markets.
A deep dive was also performed into new developments
in the aviation fuel sector to understand policy and
regulatory support for industry transformation.
These results informed our robustness testing and
impacted our outlook for Sasol ecoFT and Energy.
The global gas industry review considered the role of
gas under each scenario, as well as supporting policy
and regulation to enable gas's role as a transition
fuel. This review feeds into updates in the United
States ethane and natural gas liquids outlooks.
South African economic circumstances in each scenario
set the scene for the energy transition. The local
mobility landscape was dissected in detail to expand
on the drivers of change. A key component in
commuter transportation is affordability. Other
elements include new-technology vehicle availability,
infrastructure roll-out, supportive policy and
regulation as well as consumer willingness to
transform. Transforming freight transport is strongly
reliant on new transport technologies but also the
availability of rail. Each scenario describes the
role of particular modes of transport and how they
will shape the way forward.
Electricity affordability, access and availability are
key to local economic progress and, hence, also the
energy transition. Overall electricity demand in each
of our scenarios was projected using economic
growth, price and population growth. The respective
scenario storylines drive the composition of the
electricity generation mix, industry structure and
grid expansion considerations.
It should be noted that scenarios are not predictions
or forecasts, but rather tools to assist in managing
Sasol’s responses to future uncertainty. Scenarios
are hypotheses of the future, informed by data from
various sources, constructed using models, and
contain insights from experts in relevant fields.
All scenarios should preferably be read together
as representing a complete picture of the future, told
along different storylines. It is unlikely that a single
scenario will materialise on its own.
The Sasol scenarios consist of two different
approaches: ‘explorative’ (Current Pathway,
Cooperative World and Fragmented World) and
‘normative’ scenarios (Net Zero World). The Net Zero
World is therefore developed taking an end-point
target of 2050 and built backwards.
Current
Pathway
Sasol-derived data points for robustness testing1
Ethylene plant, Sasolburg, South Africa
2050
2050
2050
2050
3,4%
1%
1,9%
77
2,8%
0,8%
1,4%
92
2,8%
0,8%
1,1%
82
2,8%
0,8%
2,6%
116
2,8%
0,8%
3,5%
142
MACROECONOMIC
OIL
Global oil demand (MMbpd)2
JET FUEL
Global jet fuel demand (000 bpd)
SAF4
Global SAF demand (000 bpd)
8
1 555
NATURAL GAS
Global natural gas demand (bcm)2
4 042
3 968
SOUTH AFRICAN
POWER MARKET
Power demand growth (average % pa 2021-2022; average % pa 2023-2050)2
Renewables share of electricity generation capacity (%)2
Coal share of electricity generation capacity (%)2
-2,8%
7%
86%
0,6%
71%
25%
~1%
40%
% electric vehicles (EVs)2
1. Leveraging external data sources eg IEA NZ, S&P Global, World Bank, etc.
2. Internal Sasol calculations.
SASOL CLIMATE CHANGE REPORT 2023
101
96
105
59
29
6 740
6 372
8 132
3 992
1 544
492
2 344
2 867
4 285
3 383
1 549
0,3%
30%
51%
1,1%
81%
0%
1,9%
91%
0%
53%
80%
100%
3. Population: United Nations (UN) population data.
4. Sustainable aviation fuel.
20
Net
Zero World
2022
Global GDP growth (% pa)2
Global population growth (% pa)3
SA GDP growth (% pa)
SA GDP/cap (000 ZAR)
SOUTH AFRICA
MOBILITY
Fragmented Cooperative
World
World