Transitioning Secunda, Sasolburg and South Africa’s Petrochemical Value Chain.

South African petrochemicals industrial facility Secunda, owned by the listed company Sasol, is the largest point source of greenhouse gas emissions in the world. Reducing Secunda’s emissions, along with those from the company’s Sasolburg facility, to meet global, national and corporate net-zero decarbonisation ambitions has complex implications across value chains, the economy and society. This project asks ‘What do we need to understand about these complexities to make optimal decisions as a country over the coming years?’

The project focuses on decarbonization of the Secunda and Sasolburg industrial facilities, as well as the facilities’ upstream inputs and downstream products. It explores why Secunda and Sasolburg were chosen, and a high-level overview of the facilities and the value chain.

    The project seeks to expand the dominant climate policy view on the decarbonisation challenge beyond the techno-economic. It works towards situating this perspective together with others to assist in decision making. An adapted version of the PESTEL framework, originating in business planning and shown here, is used for this purpose. This framework has been widely used to help structure the understanding of perspectives that have the potential to impact on organisations and industries in a range of contexts.

    It is with this perspective in mind that the key insights from this project for policy and decision-makers are presented.

    Sasol’s decarbonisation options are anything but straightforward. This study demonstrates it is just not yet possible to identify ‘transition paths’ for the assets with any degree of confidence, nor indeed to know whether its best for South Africa that they are shut down and when.

    The possibility does exist for Sasol’s existing infrastructure to pivot, allowing it to align with these targets. In doing so it could significantly support the advancement of South Africa’s net zero economy, by procuring large volumes of renewables it needs for its transition at scale, producing green fuels for aviation and potentially shipping, as well as organic and inorganic green chemicals. But whilst there is technical potential to shift production to greener alternatives over time, there are myriad uncertainties, contingencies and unknowns to making this shift. Not least of which is whether a wholly green product slate is ultimately technically and commercially achievable. The many feedstock dynamics and favourable economics required enroute are highly contingent on factors outside of the company’s control.

    Despite these uncertainties some high-level markers can be identified. Based on the consensus of South Africa’s leading climate mitigation modelling studies, Sasol’s alignment to the goals set by the Paris Agreement will require at least a halving of Secunda’s coal feedstock by mid 2030s, and complete phase out by late 2040s. Even if gas can be sourced at a sufficiently low cost to act as an interim feedstock this too will have to be phased out by 2050. Green hydrogen and large-scale sustainable carbon sources will be required from the early 2030s if gas cannot be secured as an interim measure.

    Given that the societally optimal future for Sasol cannot yet be known, how do we as a society proceed? To ensure that the decisions that are taken around Sasol’s future are robust and account for the wide range of considerations, such as those highlighted here, coordinated decision processes are critical. These decision processes need to factor in the multiple uncertainties in such long-term planning and must be supported by sound quantitative information and transparent analysis. Decision outcomes then need to be supported by clear and robust policy, not only directly related to the assets themselves, but also to the broader value chains in which they operate – such as policy that supports uptake of electric vehicles and establishment of the hydrogen economy.

    The transition challenges faced by Secunda and Sasolburg in the context of both national and globalisation decarbonisation drivers and development requirements are echoed for many large emitting assets globally. As the world engages with the objectives of a just transition it is unlikely that their fate can be determined in simple, once-off closure or divestment decisions. High quality governance processes and tools are needed to govern the transition pathways of these assets, for utilisation by policymakers, investors and managers of these facilities.