Tax break and subsidy boost Sasol pollution, institute says
Fuel maker said to benefit from government emissions policy and fuel price regulation technology
Sasol received a $490m (R8bn) profit boost in 2019 thanks to SA’s fuel subsidies and its exemption from an SA carbon tax, the International Institute for Sustainable Development (IISD) says.
The institute says in a report that though Sasol’s proprietary coal-to-fuel technology is a big source of greenhouse gases from its Secunda plant it still benefits from government policy on emissions and fuel price regulation.
The company’s biggest shareholder is the Public Investment Corporation, the fund manager that oversees state worker pensions.
The fuel and chemicals company received a carbon tax exemption of R6.5bn in 2019 as well as R1.6bn in direct subsidies through SA’s regulated fuel price, according to the report.
The researchers were unable to calculate Sasol’s production cost vs fuel refined from crude oil, but note the process of using coal creates 2.5 times more emissions than the conventional method per unit produced.
Sasol is SA’s second-biggest producer of greenhouse gases after state power utility Eskom. Secunda, which supplies about a third of the motor fuel produced in SA, is the world’s biggest single-site emitter of the pollutants.
The company as well as the energy and environment departments did not immediately respond to requests for comment.
Sasol plans to reduce greenhouse gas emissions by at least 10% by 2030. The company is seeking bids for two 10MW solar power plants, and recent asset sales, spurred by a need to cut debt, will reduce its total emissions.
Still, the subsidies are hindering efforts to move the country’s transportation sector away from reliance on coal, according to the group, which is based in Canada and funded by a number of governments, UN agencies and private sector donors.
“SA’s reliance on coal is already badly polluting local air in several cities,” Mostafa Mostafa, an IISD policy adviser, said. “Subsidising Sasol adds to the pollution burden and hurts consumers.”
The ministry of transport should focus on aligning energy policy with social and environmental objectives, which “will promote a shift to cleaner energy sources and gradually reform pricing policies to stop subsidies”, the report reads.
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