Sasol commits to net zero ambition by 2050, triples 2030 GHG emission reduction targets
PR91851
JOHANNESBURG, Sept. 22, 2021 /PRNewswire=KYODO JBN/ --
Sasol Limited (Sasol) today announced its updated strategy that commits it to
be at net zero emissions by 2050. This is in line with Sasol's commitment to
accelerate its transition to a low carbon world in support of the objectives of
the Paris Agreement.
In aligning with its 2050 ambition, Sasol has stepped up its 2030 scope 1 and 2
greenhouse gas (GHG) emission reduction target, from an initial 10% for its
South African operations, announced last year, to 30% for its Energy and
Chemicals businesses, off a 2017 baseline. The company is also introducing a
scope 3 reduction target, for its Energy Business, off a 2019 baseline. This
is consistent with what its peers have committed to.
"Based on detailed assessments and modelling, our 2030 target can be delivered
without divestments and offsets, but through the direct decarbonisation of our
existing assets," said Fleetwood Grobler, President and Chief Executive Officer
of Sasol.
"This will be done through a mix of energy and process efficiencies,
investments in renewables and a shift to incremental natural gas as a
transition feedstock for our Southern African value chain. These solutions are
well known and mostly under our control, and the investments required are
cost-effective, preserving strong returns in our business, above the cost of
capital."
Beyond 2030, Sasol has more than one viable pathway to get to its net zero
ambition by 2050, with different options to transform its Southern Africa value
chain by progressively shifting its feedstock away from coal, towards more
transition gas, and then, green hydrogen and sustainable carbon over the longer
term, as economics improve for these options.
"In an uncertain future, this approach offers agility and enables us to pivot
as cost effective mitigation levers become available. We are also avoiding
infrastructure lock-in and regret capital spend," said Grobler.
Sasol's proprietary Fischer-Tropsch (FT) technology, in particular, is well
suited to play a meaningful role, in a low carbon future, with attractive new
and emerging value pools.
"Against this backdrop, we are setting up a new business, Sasol ecoFT, with the
intent to build on our technology leadership, to establish a significant market
position internationally. One of the first applications for the technology is
likely to be sustainable aviation fuels (SAF), where new regulations are
driving demand and existing technology and feedstocks, have limitations that FT
can address."
A just transition
As global economies transform their energy systems, this will disrupt industry,
shift value pools and job markets, and require diverse skills and capabilities
in different geographies. Sasol will progress a just transition across its
geographical footprint, with the aim of protecting and fostering employment
opportunities by accelerating the development of new energy value pools.
South Africa in particular, holds significant promise for renewables and
low-cost green hydrogen production for own use and export opportunities. This
will require national plans to be established by industry stakeholder and
government to develop opportunities, maximise localisation opportunities to
create jobs and economic wealth.
"While the workforce impact is likely to be after 2030 – this needs to be
anticipated now, with the right long term human capital plans – managing a
natural transition of people involved in fossil fuels related activities and
investing in reskilling for the needs of a low carbon economy in the future,"
said Grobler.
Future Sasol's businesses
Sasol's Energy business is positioned to lead the energy transition in Southern
Africa through its advantaged asset base with a cash breakeven oil price below
US$35 dollars per barrel. As one of the world's largest producers of grey
hydrogen, Sasol aims to leverage this expertise to decarbonise through lower
carbon feedstocks and increase production of cost-competitive sustainable fuels
and energy.
Chemicals will pursue growth opportunities through its unique chemistry,
specifically in FT and Ziegler-Alumina-Guerbet technologies. With its Lake
Charles plants now fully operational, Sasol has clear pathways to generate
attractive cash flows, as capacity ramps up. It will accelerate growth in more
specialty solutions and sustainable chemicals, particularly Essential Care
Chemicals and Advanced Materials, where Sasol already has leading market
positions.
Sasol ecoFT, will focus on building new sustainable businesses by leveraging FT
technology. Currently, FT uses fossil-fuel based sources of hydrogen and
carbon. This technology has the potential to use green hydrogen and sustainable
sources of carbon feedstock, such as biomass, carbon captured from carbon
intensive processes and eventually direct air capture.
"Our FT technology, at the heart of our Southern Africa value chain, positions
us well, to decarbonise through lower carbon feedstocks and to ramp-up the
production of cost competitive sustainable fuels and chemicals," said Grobler.
Self-funding the transition, while delivering sustainable returns
Sasol's refocused strategy is underpinned by a financial framework that will
enable the company to grow shared value, while accelerating its transition, as
sustainable and resilient dividends are restored to our shareholders.
"Through our clear and updated capital allocation framework and governance
structure, we will ensure effective and efficient decision making to navigate
all the capital decisions we face in delivering Future Sasol," said Paul
Victor, Group Chief Financial Officer of Sasol.
In the short to medium term, the first phase up to 2025 will see Sasol
strengthen its balance sheet, while improving cost-competitiveness and ability
to increase cash flow generation in a low oil price scenario. Sasol targets to
improve return on invested capital (ROIC) to between 12 and 15% in this period.
The second phase in the short to medium term up to 2030 prioritises the balance
between returns and investing in Sasol's transition plan. In this period up to
2030, Sasol plans to invest between R20 to R25 billion per annum to maintain
its asset base, comply with all relevant environmental and air quality
regulations, as well as fund the transition to reach the 30% GHG emissions
reduction target. This includes a total of R15 to R25 billion in aggregate
transformation capital up to 2030, while targeted ROIC is anticipated to be
above 15%.
"The overall Sasol group return profile will continue to improve significantly
and remains attractive – there is a clear pathway through to higher returns
while we achieve our climate change objectives," added Victor.
Dividends will be resumed once key triggers are reached and there is confidence
that these returns delivered to shareholders are sustainable based on the
prevailing outlook at that time. The minimum pay-out of 2,8 times or 36% of
Core Headline Earnings Per Share (CHEPS) will be triggered when a leverage
ratio of 1,5 times Net Debt to EBITDA is reached and the absolute debt
level is below US$5 billion. The step-up to 2,5 times or 40% of Core HEPS will
follow when absolute net debt levels reduce to below US$4 billion. The regular
dividend will be maintained in this range.
Issued by:
Matebello Motloung, Manager: Group Media Relations
Direct telephone: +27 (0) 10 344 9256; Mobile: +27 (0) 82 773 9457
matebello.motloung@sasol.com
About Sasol:
Sasol is a global chemicals and energy company. We harness our knowledge and
expertise to integrate sophisticated technologies and processes into
world-scale operating facilities.
We safely and sustainably source, produce and market a range of high-quality
products in 27 countries, creating value for stakeholders. Our Purpose
'Innovating for a better world' compels us to deliver on the triple bottom line
outcomes of People, Planet and Profit, responsibly and always with the intent
to be a force for good.
We have prioritised four Sustainable Development Goals to ensure our business
is environmentally, socially and economically sustainable.
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Source: Sasol Limited
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