Polluting Sasol off the hook

Shares in Sasol surged on Monday, by the most since November 2022, after the energy and chemical group was successful in its appeal to have emissions at its prized asset, Secunda, measured differently.

The ruling opens the door for potential legal challenges from environmental activists.

The Secunda plant is regarded as the world’s largest single-point emitter of greenhouse gas.

Panic gripped the group last year when the national air quality officer rejected its request to have sulphur dioxide emissions from its Secunda boiler plant measured differently, putting the petrochemical giant at risk of violating the country’s air quality laws and facing legal consequences.

The group’s share price jumped the most in about 16 months, up 7.54% to R165.08, on Monday after it announced that environment minister Barbara Creecy upheld its appeal, allowing Sasol to switch to measuring its emissions on load of emission rather than the concentration of particles.

“We will engage with the minister to finalise the regulatory requirements for the decision to take full effect, following which our atmospheric emission licence will have to be varied accordingly,” Sasol said.

According to Sasol’s data, the Secunda plant accounts for 83.7% of its scope 1 and 2 emissions, followed by Sasolburg with 8.4%.

Unique to SA, synthetic fuel production from coal is the single major contributor to scope 1 greenhouse gas emissions in the liquid fuel supply industry.

The Secunda facility converts about 40-million tonnes of coal a year into 150,000 barrels of crude oil a day of liquid synthetic fuels.

In July 2023, SA’s national air quality officer, who oversees the enforcement of the Air Quality Act, rejected Sasol’s request to measure sulphur dioxide emissions from its Secunda boiler plant by rate or load of emission rather than the concentration of particles.

This prompted it to launch an appeal on the grounds that the measurement approach it suggested presented a better solution for the company and the communities surrounding the plant.

The rejection raised questions about the sustainability of Sasol, which said in its 2022 annual report that noncompliance with the minimum emission standards could have a “material adverse impact” on its business and lead to fines, criminal charges or being asked to cease operations.

At the annual meeting in January, Sasol executive vice-president for strategy, sustainability and integrated services Vuyo Kahla told investors that the company believed there were strong merits for the appeal to be successful, especially when taking into account that the solution Sasol proposed allowed it to deal with sulphur dioxide emissions and addressed carbon dioxide emissions and other particular matter.

Shareholder activist group Just Share, which opposed Sasol’s appeal, said the minister’s decision meant the government has permitted a private company to set its own pollution limits.

This makes “a mockery of pollution laws and constitutional rights, and of any claim by the government to take public health seriously”, said Just Share director for climate change engagement Robyn Hugo.

“The minister’s upholding of Sasol’s appeal will result in emissions significantly above those permitted by the minimum emission standards, which are already weaker than comparative standards around the world. The negative air quality and health impacts of these emissions are significant.”

She told Business Day that Just Share was evaluating a possible judicial review of the minister’s decision, pointing out that it is held in abeyance pending a final determination of the appropriate daily concentration-based sulphur dioxide limits that will be applied to Sasol.

“Sasol is required to motivate its suggested daily concentration limit within 10 days of April 5 and Just Share and the national air quality officer then have an opportunity to provide input.

“The National Environmental Consultative and Advisory Forum will then consider and advise on this issue, whereafter the minister will decide on the appropriate concentration-based limit,” Hugo said.

Sasol, she said, was included in a list published as part of a recent report by Carbon Majors which identified the private companies that were responsible for the majority of global emissions since 2016.

According to the report, Sasol was listed at number 47 of the 57 companies directly responsible for 80% of greenhouse gas emissions in the period 2016 to 2022.

With Kabelo Khumalo

Update: April 8 2024
This story has been updated with the share price and additional information.

mackenziej@arena.africa
erasmusd@businesslive.co.za