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Sasol made a profit increase of $ 490 million (R8.08 billion) last year thanks to the country’s fuel subsidies and its exemption from South Africa’s carbon tax, according to the International Institute for Sustainable Development.
In a report, the institute says Sasol’s proprietary coal-to-fuel technology is a significant source of greenhouse gases from its Secunda plant, but still benefits from government policy on emissions and fuel price regulation. The company’s largest shareholder is the fund manager that oversees state workers’ pensions, Public Investment Corp.
Read: Climate risk continues to weigh on Sasol – Old Mutual
The fuels and chemicals company received a carbon tax exemption of R6.5 billion ($ 394 million) last year, as well as R1.6 billion in direct subsidies through South Africa’s regulated fuel price, according to The report. The researchers were unable to calculate the cost of producing Sasol compared to fuel refined from crude oil, but note that the process of using coal generates 2.5 times more emissions than the conventional method per unit produced.
Sasol is South Africa’s second largest greenhouse gas producer after state power company Eskom Holdings. Secunda, which supplies about a third of the motor fuel produced in South Africa, is the world’s largest single-site pollutant emitter.
The company and South Africa’s 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 10-megawatt solar power plants and recent asset sales, driven by the need to reduce debt, will reduce your total emissions.
Still, the subsidies are hampering efforts to shift the country’s transportation sector away from dependence on coal, according to the group, which is based in Canada and funded by various governments, United Nations agencies and private sector donors. .
“South Africa’s dependence on coal is already seriously polluting the local air in several cities,” Mostafa Mostafa, an IISD policy adviser, said in a statement. “Subsidizing Sasol increases the pollution burden and hurts consumers.”
The South African Ministry of Transport should focus on aligning energy policy with social and environmental objectives, which “will promote a shift towards cleaner energy sources and gradually reform pricing policies to stop subsidies,” the report recommended.
© 2020 Bloomberg
