Sasol Form 20-F for the year ended 30 June 2021 - Book - Page 22
but which may not be available in alignment with the
proposed timeline.
find parts of their portfolios, or potentially their entire
business model, becoming unsustainable over time.
Through scenario analysis, Sasol stress tests the
potential areas where our business might become less
sustainable due to further changes in demand patterns,
regulations or technology changes. Sasol uses a set of
scenarios that considers how market conditions,
technology, political and other influences interact to
produce vastly different future outcomes for
development of our GHG reduction roadmaps, which
have steered Sasol toward ambitious targets for 2030
and 2050.
Further, climate change poses a significant risk
for both our South African and global business as it
relates to potential physical impacts, including change
in weather patterns, water scarcity and extreme weather
events, such as cyclones/hurricanes, tornadoes, flooding
and sea level rise. In this regard, work continues to be
refined into our operational strategies and responses for
the identified key priority regions such as the US Gulf
Coast, Mozambique, and South African operations
(Secunda and Sasolburg). Ongoing monitoring efforts
guide our interventions to improve our maintenance,
asset integrity processes and response procedures. The
ongoing COVID-19 pandemic has sharpened our focus
on managing these risks as we expect that the effects of
changing climate could exacerbate potential future
pandemics.
Nevertheless, we cannot assure you that our
stress testing will be successful in implementing our
transition to a low-carbon business.There are risks
associated with accuracy, completeness and correctness
of various assumptions that are used as inputs to the
scenario analysis work undertaken by Sasol, including
scenarios developed to test resilience to climate change
threats. In addition, the estimates of required or
available capital and other assumptions underpinning
necessary investments to make our business sustainable
for the long term could prove to be incorrect and lead to
delays or infeasibility of capital expenditure projects.
Should all or some of these assumptions prove to be
inaccurate, incomplete or incorrect, this could
potentially significantly impact our resilience and longterm sustainability.
Further, climate change-related laws and
regulations may threaten our licence to operate and
substantially increase the cost of doing business
because of the imposition of higher carbon taxes or
similar taxes. Replacement of coal with natural gas,
sustainably verified biomass and green hydrogen as
sustainable feedstocks for our operations in Secunda are
likely to increase the cost of production and reduce our
profitability significantly. Current information indicates
that imported liquified natural gas, biomass and green
hydrogen are more costly feedstocks than coal for our
operations in Secunda. In transitioning to these low
GHG intensity feedstocks there will be an impact on
the margin of some of our products. These climate
change-related effects could have a material adverse
effect particularly on our South African business,
operating results, cash flows, financial condition and
future growth. Our relatively high carbon emissions and
the use of coal as a key feedstock could also impact
negatively on our potential base of shareholders and our
ability to source financing in capital and/or bank
markets and/or increase our cost of capital.
We are targeting a 30% scope 1 and 2 GHG
emission reduction by 2030 in support of accelerated
action to curb climate change. We have concrete plans
to directly reduce emissions by approximately 25%,
through known, available technologies. We also have
an interdependent energy efficiency improvement target
of 30% by 2030, off a 2005 baseline. Our ambition is
for net zero emissions by 2050. Our targets and
ambitions are supported by roadmaps detailing the
interventions we intend leveraging to achieve our
targets and ambition. The primary risks associated with
achieving the 2030 GHG reduction targets are the
unavailability and unaffordability of gas as feedstock or
as a source of energy and the potential prohibitive costs
of green hydrogen, electrolysers and the lack of
enabling legal frameworks. Meeting the energy
efficiency target is dependent on continued stable
operations. We can provide no assurances that Sasol’s
plans to reduce GHG emissions as per our set targets
and ambition will be viable or successful, but we are
assessing and mitigating the associated risks which
would include capital availability and technology
advancement at a pace and a scale in line with the target
Our international operations are less carbonintensive and have been operating for some time in a
more mature GHG regulatory regime. However,
enhanced focus on issues concerning the environment,
human rights and climate change may result not only in
a more complex regulatory environment, but also
additional legal risk to the extent that compensation for
damages relating to climate change and other
environmental impacts are brought into judicial systems
around the world. In addition, our permits and
operational licences are subject to public comment
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