Sasol CEO Simon Baloyi has suggested a revision of the petrochemical giant’s carbon emissions target, saying the company — which has come under sustained attack from climate activists — should rather set a moving target of between 25% and 35% greenhouse gas emission reduction, instead of a hard target of 30% by 2030.
South Africa still generates the bulk of its electricity using coal, and should not transition to cleaner energy sources in an irresponsible manner because it produces the least carbon emissions of the most industrialised nations, he said. It would be unwise to embark on a mass switch-off of coal-fired power stations to satisfy international climate change commitments.
“This country cannot be irresponsible. You saw what happened when we shut down Komati [power station]. That was terrible. You can go back and check that community now. It was a vibrant community. People are now not working, people are so angry, they don’t want to hear anything. We can’t do that to the whole country,” said Baloyi.
The 800MW Komati plant in Mpumalanga was decommissioned in 2022 after the World Bank approved a $497m loan to repurpose it to house renewables and battery storage. The move was widely criticised after it led to widespread job losses in the area. It later prompted a decision by the Eskom board to delay the decommissioning of the Camden, Grootvlei and Hendrina power stations to 2030.
Sasol — whose massive plant in Secunda, Mpumalanga, converts low-grade coal into synthetic fuels and chemicals for supply to local and international markets — is South Africa’s second biggest greenhouse gas emitter after Eskom. It was ranked 56 out of 57 major companies responsible for 80% of the world’s carbon dioxide emissions in a report compiled from the Carbon Majors database earlier this year.
This country cannot be irresponsible. You saw what happened when we shut down Komati [power station]. That was terrible. You can go back and check that community now. It was a vibrant community. People are now not working, people are so angry, they don’t want to hear anything
In 2021, Baloyi’s predecessor Fleetwood Grobler unveiled Sasol’s commitment to reducing carbon emissions by 30% in 2030 and to achieve net zero by 2050. But the company has come under fire from climate group Just Share; and also faced shareholder pushback for slow progress in achieving emissions targets.
Last year, Old Mutual — which holds a 3% stake in the company — criticised it for its “vague” decarbonisation blueprint.
Baloyi told Business Times that instead of committing to a 30% reduction target, he would advise shareholders on Capital Markets Day to consider setting a target range of possibly between 25% and 35%, which is more realistic than choosing a single number.
“If you choose one number, what happens if something changes? Let’s say there is no grid and you cannot do this. Are you going to shut down your plants to achieve that number? That is why a range is better.”
Transitioning from fossil fuels to renewable energy as a baseload is an expensive exercise that would require trillions of rands. The $8.5bn in loans and concession financing advanced to South Africa by a range of funding partners, including Germany, France and the US, was not enough to get South Africa to completely abandon coal.
“To have a full transition the country needs anything [from] R1.5- R2-trillion, it is a massive amount of money that is required. The $8.5bn will not cut it if you convert it to power. That money will build only 3 gigawatts of power. You need more than 140 gigawatts, it’s a long journey.
“Today, the country is a coal-based economy. It’s not about trying to shut down and move away from coal. It is about what we’re going to build. We must have a clear picture of what we’re going to build and build it. You will need the coal base to fund the new. Otherwise, you are going to go back to Europe. They might give you a loan, but it is not enough.”
While Sasol, Eskom and other high carbon emitters in the country had a responsibility to embrace the just energy transition, fossil fuels would remain part of the future energy mix for some time. “As South Africa, Sasol and Eskom, we need to transition our energy systems.
That is hard work. However, you can’t say no to the use of fossil fuels. Gas will always be with us for up to 2050. There’s no life without hydrocarbons, you will need hydrocarbons, but (eventually) energy, electricity, and mobility will move to renewables.”
Baloyi noted that Sasol was still South Africa’s biggest taxpayer, 30,000 [staff], with 23,000 of them working in its local operations and the rest spread across its sites around the globe.
Weighed down by the low-price environment for the year ended June , Sasol’s turnover of R275bn was 5% lower than a year earlier. It reported a R27bn loss on the back of a R74.9bn gross impairment of its assets, including those in Secunda.
Baloyi said the group had weathered severe storms — including a plunge in its share price during the Covid outbreak which halted the movement of people, impacting diesel and petrol sales — and delays in the construction of its Lake Charles Chemical Complex in the US.
While the government of national unity was showing promising signs of attending to what has caused the stagnation of the economy, business and foreign investors need to see faster progress, driven by all sectors of government instead of just the Presidency.
“The country does need foreign direct investment. The mere fact this is [led by] the president is good, but every time you centralise things, it’s not good for you. Work needs to be done by the people that must do it. Companies and associations must also want to work with relevant ministers. We must all pull in one [direction].”
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