Over the past two years this column has directed some less than complimentary remarks at our energy planning, our climate ambition and the glacial climate inaction at Sasol. But with a month to the crucial COP26 climate negotiations, one could be forgiven for developing a cautious sense of optimism about our climate goals.
To my great pleasure, the cabinet announced last week that it has endorsed a proposal by the presidential climate commission to approve a target range for greenhouse gas (GHG) emissions of 350 to 420 megatonnes (Mt) of carbon dioxide equivalent by 2030. This is a marked improvement on the decidedly pedestrian target range of 398Mt to 440Mt originally proposed by the department of environment, forestry & fisheries earlier this year.
According to the Climate Equity Reference Project, an international research group, achieving 350Mt of CO2 emissions per annum is what is required if SA is to adopt its fair share of global emissions reductions for a 1.5°C global pathway. This is hardly the insurmountable task our fossil fuel lobbyists would have us believe.
The Energy Systems Research Group at the University of Cape Town has shown how the climate finance requirements stemming from the Integrated Resource Plan (IRP) 2019 would be reduced from between R860bn and R920bn to between R807bn and R885bn by fully implementing renewable energy and energy efficiency, while reducing emissions to between 370Mt and 390Mt of CO2 by 2030.
This merely reflects what most people in the energy planning domain have known for many years, which is that the IRP is neither the least-cost nor the most environmentally friendly set of options to secure our electricity supply.
This could, however, pose a problem as our new emissions targets are not based on a revised, cleaner IRP but on the existing, expensive dirty one, under which the Energy Systems Research Group estimates that achieving the 350Mt target would require between R900bn and R1.18-trillion in additional funds.
Fortunately, where energy policymakers continue to make opaque decisions, Sasol’s investors have at long last sent an unambiguously clear decarbonisation message to its board. A year ago Sasol (as SA’s second-worst emitter) was begrudgingly committing to a paltry 10% emissions reduction by 2030, with group CEO Fleetwood Grobler lamenting “there is no technology and no alternative feedstocks in the next five to 10 years to really say coal is no longer a feedstock that we will use”.
A year later, and after shareholders filed SA’s first climate lobbying resolution for Sasol’s annual general meeting, he is singing a very different tune. Now, all of a sudden, a 30% emissions reduction by 2030 is achievable.
“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,” Grobler says.
Obviously, this change in course is great news not only for the environment but to the long-term viability of Sasol as a going concern. However, this is where the details do become devilish. Unlike the electricity planning reform that would merely require the government to choose the least-cost (and fastest) pathway for the IRP, for Sasol to achieve its target emissions reduction from 64Mt to 45Mt of CO2 by 2030 requires transformation capital of between R15bn and R25bn.
On the surface, this a fully achievable, but it relies on the sourcing of significant quantities of fossil gas. In the question and answer session after its presentation last week, Sasol said it did not plan to invest in any of the infrastructure required to source this gas, which means it will need the state to do so, presenting a significant risk of a gas lock-in.
• Maguire holds a master’s degree in global change studies from Wits and has been developing green economy solutions for the private sector, NGOs and the state for more than a decade.
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