Sasol, South Africa’s second-largest emitter, wants to buy renewable energy, but it’s still wedded to fossil fuels.
The coal-to-synthetic fuel and chemical industry aspires to reach net zero by 2050. Activists and analysts call the strategy unclear and unattainable. In light of increasing oil prices, which determine Sasol’s product value, some energy companies may reconsider their green targets after OPEC’s unexpected output decrease.
Sasol’s biggest plant emits more greenhouse gas than BP Plc or Marathon Petroleum Corp.’s global operations, making emission reduction difficult. CEO Fleetwood Grobler said the company wants a green future but needs profitability to get there.
Since 1950, the company’s lifeblood has been the dirtiest fossil fuel, making its Secunda factory in central South Africa the world’s most polluting site.
Despite the recent upswing, oil price volatility worries Grobler, especially if prices fall towards $40 a barrel. He stated he would be worried. Sasol’s plan to reduce emissions by 30% by 2030 includes replacing fossil fuels. Grobler said finding enough natural gas, which is more efficient and produces less pollutants, will allow it to cut its annual coal use by 25%.
The company only developed a green transition plan in early 2021, but Grobler said investors will be able to track its progress over the next five years. Sasol’s 537-mile Rompco pipeline delivers natural gas from its Mozambique fields at the lowest cost.
Grobler says Sasol’s main facility, the Secunda complex 130 kilometres (209 miles) from Johannesburg, which emits more climate-warming gases than Portugal or Norway, will need to more than double petrol consumption from 7%.
Sasol will pay more for carbon as it transforms. The corporation, which operates in the US and Europe, only pays a carbon tax in South Africa, Grobler notes. Hanre Rossouw, CFO, cautioned that the levies could hurt the business and its green transformation.
Renewable electricity will help the corporation meet its 2030 goal. Sasol has agreements with developers including Air Liquide SA and TotalEnergies SE for approximately half of its 1.2-gigawatt renewable objective.
Increasing renewables is hard. South Africa’s scheme to buy electricity from private clean energy projects has stalled due to unprecedented power disruptions and a shortage of grid connections. Grobler said Eskom Holdings SOC Ltd. decides which stations get plugged in.
Sasol is also investigating a green hydrogen project on South Africa’s west coast to replace natural gas with a cleaner fuel. Transnet would build a port in Boegoebaai.