Sasol Limited Climate Change Report 2021 - Book - Page 25
1
2
3
4
A NET ZERO AMBITION
Sasol's climate scenarios
Development of Sasol's climate scenarios
In light of prevailing uncertainties and complexities, it is difficult to accurately predict the global response to climate change. To inform our approach, we
have undertaken rigorous modelling through plausible long-term scenarios to assess Future Sasol’s strategic imperatives, test robustness and inform
potential responses to mitigate risks. This includes alignment with the 1,5°C scenario and addressing associated physical risks.
Global oil price assumptions
for each scenario in 2030
High level overview of the global total primary
High level overview of the global total primary
energy
consumption in each of the scenarios in 2030
energy consumption in each of the scenarios in 2030
In 2021, Sasol revised our previous scenarios,
considering new developments in the global
landscape. Three almost new scenarios were
constructed, which we named the Current Pathway,
Cooperative World and Accelerating to 1,5°C.
The updated scenarios are much more challenging
than the previous year and are not comparable to
last year's assessment. Changes made to our current
scenarios include:
Current pathway
Analysis of the information sources revealed
differences in the storylines necessitating further
interpretation and assessment. Our scenarios
OUR SCENARIOS
1
Cooperative world
• Economic challenges are disproportionately
distributed across the globe, with a few
countries prospering more than others
• Approximate temperature range
2,5°C - 3,2°C
• Climate action gains momentum in more
prosperous regions like Europe, United
States and China, and slower progress in
economically challenged countries
• New technologies assist the energy
transition but with stark regional differences.
Electric vehicle penetration in Europe, United
States and China reduces global gasoline
demand; in other areas, progress is
hampered by affordability and infrastructure
roll-out. Global transport fuel demand peaks
in the mid-2030s. Global fossil jet fuel still
grows but slower than pre-COVID-19, due
to efficiency improvements, as well as new
aviation fuel options. These fuels start to
influence the industry later in the period
• Global demand for petrochemicals increase
due to rising population and the growing
middle class
• Financing and funding opportunities are
available for transition activities
• The world is on track to overshoot the 1,5°C
temperature goal. Much more effort on
adaptation is required
Importantly, the Accelerating to 1,5°C scenario, as
highlighted above, is aspirational. It was developed
taking an endpoint of 1,5°C as the basis and working it
back to today.
Accelerating to 1,5°C
3
• All countries are working to achieve the 1,5°C
temperature goal, in support of the Paris Agreement.
Progress towards 1,5oC accelerates post 2030, as new
technologies are implemented and effects become visible
• Maximum use of available technologies, with innovation
towards developing new technology options, including
CCUS to assist in reducing emissions
• Approximate temperature range 1,5°C - 1,7°C
• Consumption patterns are modified by strong legislation,
high penalties and significant behaviour change towards
sustainability
• Large investments in the new energy sector and sharing
of technologies, with a larger reliance on green electricity
to drive the transition
• Fossil fuel consumption is under severe pressure and
global liquids demand for transport peaks in 2019. This is
driven by high penetration of electric, hybrid and fuel-cell
vehicles. Fossil jet fuel demand is reduced by behaviour
change and strong penetration of SAF, including PtL
• Demand for petrochemicals is dampened by strong
recycling and circular economy options
• Demand for coal and liquid fuels decrease rapidly,
replaced by renewables growth and adoption
• Much stronger technological, financial and capacity
building support for transition activities
• All countries are investing extensively in mitigation
efforts, resulting in fewer adaptation requirements
57
48
50
0
Coal
Gas
24
Sasol Climate Change Report 2021
153
166
196
Oil
Nuclear
Hydro
Current position 2020
Current Pathway 2030
Cooperative World 2030
Accelerating to 1.5°C
Renewables
Sasol's physical risk modelling
Two GHG emission scenarios were modelled to understand physical impacts on our
operations. The IPCC’s high emission scenarios (referred to as “Representative Concentration
Pathway (RCP)” 8,5) and an intermediate emission scenario (RCP 4,5). RCP 4,5 and 8,5 were
chosen based on the wide range of changes in GHG emissions. These pathways informed
the development of downscaled climate models developed by the Council for Scientific and
Industrial Research (CSIR), providing an 8 km spatial resolution for Southern Africa and 50 km
for the United States. Our prioritised sites for understanding physical weather impacts were
the Central Processing Facility (CPF) (Mozambique), Secunda and Sasolburg (South Africa) and
Lake Charles (United States).
We supplemented and bias-corrected the modelling with site-specific historical weather
data. Our modelling simulations spanned 1960 to 2099, which encompasses the timeframe
for Future Sasol's strategy. In general, the modelling indicated that surface temperatures
will increase by 1 - 4 °C by 2050, with an increasing number of extreme hot days. Projected
rainfall patterns differ between the sites. For the Energy Business in Mozambique, rainfall
is projected to increase, while for sites in South Africa, no change in average rainfall is
projected, but rather an increase in intensity and frequency of extreme rainfall events.
For the International Chemicals Business in the United States, a similar rainfall trend to
South Africa is likely to be experienced. Specific to Mozambique and United States, cyclones
and hurricanes are expected to become more intense. These results have informed
the development of proactive climate change responses. In addition, the downscaled
modelling results have been incorporated into our scenarios:
• Accelerating to 1,5°C: Weather-related impacts on Sasol’s people, communities and
assets are lower, with fewer production losses and lower costs for adaptation measures;
• Cooperative World: Sasol's people, communities and assets are exposed to some
physical impacts of climate change and would have to invest in more adaptation
measures; and
• Current Pathway: Sasol's investment costs in adaptation are higher to build resilience
of our people, communities and assets.
Our Energy Business incorporates adaptation response measures, such as emergency
preparedness, updating design specifications and tailored maintenance schedules.
These measures incur additional costs when compared to our United States assets,
due to their age and not having been built with a rapidly changing climate in mind (for
further information on our risk exposure please see Risk management page 44).
1.The IEA Net Zero scenario was not included due to its release date but will be included in future scenario updates
and related disclosures.
2. Lightweighting refers to replacing heavier components with light weighted plastic materials.
Fast transformation
100
128
128
128
100
100
112
130
130
67
100
101
90
100
108
104
91
100
94
100
74
Accelerating to
1,5°C
36
150
54
Oil price
($/bbl,
real 2021)
200
100 Current Pathway Case
Given the vulnerabilities of the Energy Business to
shifts in micro- and macro-trends, we also spent time
building scenario views of the local context - how
industry sectors could be impacted and what new
sectors could emerge. This was particularly important
for our FT sustainable solutions business and
development of the green hydrogen economy.
2
• More global climate action cooperation than today
but not universal
• A faster, green transition, driven by strengthened
policy, legislation and more behaviour change
• Approximate temperature range 1,7°C - 2°C
• Rapid technology advances and transfer of
technology to developing regions resulting in cost
decreases
• Global coal consumption comes under higher
pressure and global liquids demand for transport
peaks in ~2025, driven by increased penetration
of new technology vehicles where affordability is
spurred by technology sharing and subsidies. Fossil
jet fuel demand is flatter due to changing behaviour,
increases in consumption efficiency and penetration
of SAF
• Demand for petrochemicals is tempered by
increased recycling, somewhat offset by
lightweighting2 of materials
• Higher efficiency gains and lifestyle changes
• Increased reliance on electricity networks to
provide the main source of energy, with a higher
contribution of solar, wind and new technologies
• Increased technological, financial and capacity
building support for transition activities
• The world slightly misses the 1,5°C temperature
goal but physical impacts are less marked due to
higher mitigation efforts
Slower transformation
stretched the range of potential outcomes from
favourable to unfavourable for us, with potential
futures ranging from a world wrestling to recover
from the economic challenges of COVID-19 to
one strongly focused on curbing climate change.
Key characteristics of each scenario are detailed
below.
Current pathway
• much lower oil prices;
• reduced market demand for products;
• transformed and new industry structures, such
as electric vehicles and related infrastructure,
solar and wind power and hydrogen economy
developments; and
• new refineries with higher chemical yield.
We considered various sources including the 2020
IEA Sustainable Development Scenario (SDS)1,
supplemented by other 1,5°C-type scenarios to
develop our Accelerating to 1,5°C scenario. The
future is uncertain and there are still many unknowns
in terms of technology availability and readiness,
adoption rates, affordability and government and
personal priorities. Our scenarios are therefore
regularly reviewed and updated as required.
Cooperative
world
(indexed: 100 Current Pathway Case)
Annually, Sasol undertakes detailed analysis to
develop a bottom-up view of the global energy
landscape. This includes a full global value chain
analysis from upstream supply to chemical feedstock
production, and chemicals and fuels market demand,
such as customer preferences, buying patterns and
industry plant utilisation. From this analysis, we
determine price sets for coal, oil, refined products,
gas and chemicals, to name a few. These are key
inputs used in our scenario process.