Sasol Limited Climate Change Report 2021 - Book - Page 44
CLIMATE CHANGE IN BUSINESS PROCESSES
Engaging on climate policy: positions and industry associations
Implications of national climate change policies
Sasol monitors and consults on emerging and current climate change legislation, using a risk-based lens. Non-compliance against future legislation could result in
fines, penalties or even the loss of our operating licences for our businesses.
Our climate change advocacy is centred on supporting the objectives of the Paris Agreement and ensuring a conducive policy environment for a just transition to a
We are participating in the update of South Africa’s NDC ahead of COP 26. This update will potentially impact allocated emission budgets and could also have
carbon tax implications for Sasol. We supported an increase in South Africa’s emission-reduction ambition from that which was proposed in the first draft by
government. Our support was prefaced on access to requisite international support for the ambition to enable reductions at a pace and scale for a just transition.
In South Africa a key piece of legislation is the draft Climate Change Bill, which is the first holistic legal framework for the country’s mitigation and adaptation
response. Sasol is supportive of a climate change management framework against which to accelerate action, cognisant of our national priorities. We are an active
participant in the commenting process and will be participating in the second voluntary carbon budget process until the policy is enacted.
The Climate Change Bill proposes an aligned carbon budget and tax mechanism as the preferred tool for reducing GHG emissions post 2022. To date government
has advanced a budget design, whereby large emitters will be penalised by a higher tax for emissions that exceed the budget cap. In addition, a low level carbon
tax will also apply to all emissions as is currently implemented through the Carbon Tax Act. In South Africa, carbon tax price certainty is known until 2022,
thereafter, government is integrating the carbon budget and tax into one mechanism, which is in the process of being designed. A key design principle adopted by
government is to implement the carbon tax gradually, complemented by effective and efficient revenue recycling to contribute to emission reductions, allowing
companies to recognise the policy signal and progressively prepare for the medium to long term change. We expect government to increase the carbon tax rate
consistent with reductions needed to meet the updated NDC for the country. In this regard, we remain of the view that a fair and equitable approach will be
followed to set the new carbon tax rate. Government consultations with stakeholders are on-going.
For the period 2016 - 2020, Sasol has been operating under a GHG emissions budget cap, issued by the regulator in South Africa. Sasol emitted a total of 282,8 Mt
CO2e over this five year period, 8% below our allocated 301,7 Mt CO2e budget.
Sasol’s Energy Business in South Africa is also in compliance with the requirement to submit a Pollution Prevention Plan (PPP) to the regulator. We submitted a
plan to reduce 3,16 Mt CO2e by 2020 from 2016, and exceeded this by achieving 3,22 Mt CO2e.
We also paid our first carbon tax liability in 2020 of R320 million for the first seven-month period since the gazetting of the Carbon Tax Act. In 2021, we paid
R579 million after offsets and electricity levies. The tax is applicable to an entity’s scope 1 emissions for each calendar year.
Our strategic approach to reduce our carbon tax exposure for the Energy Business entails:
• An accurate and audited scope 1 emissions baseline aligned with international best practices;
• Implementing mitigation projects to meaningfully reduce our scope 1 GHG emissions and increase our energy efficiency;
• Remaining abreast of future carbon budget and tax policy developments by actively engaging with our stakeholders;
• Advocating for an economically efficient carbon pricing mechanism supported by other policy enablers for accelerated deployment of climate solutions; and
• Accessing flexibility mechanisms, such as carbon offsets, within a carbon mitigation hierarchy.
Europe and North
Recent announcements in Europe on the "Green Deal" for climate neutrality are also being closely tracked. In the United States changes relating to the Biden
Administration are expected in the short to medium term. Our International Chemicals Business roadmaps position us to meet more stringent compliance
requirements over time.
The impending European Union Carbon Border Tax Adjustment Mechanism could have impacts for our products from South Africa, if extended beyond the
current prioritised sectors. Future Sasol and our focus on producing sustainable fuels and chemicals is well-suited to harness the opportunities created by an
environment not in favour of fossil-fuel products.
Sasol Climate Change Report 2021