Petrochemicals giant Sasol has applied for carbon credits under the clean development mechanism (CDM) for its proposed investments to replace coal used in operations, with natural gas from Mozambique.

The firm said that it believed at the outset that the application has merit, but was also aware of certain sectors that take a different view.

Indeed, nongovernmental organisation (NGO), Earthlife Africa, has filed a formal objection with the United Nations Framework Convention on Climate Change (UNFCC) to Sasol’s application for CDM credits, and called for Sasol to withdraw its application.

“There is a strong suspicion that Sasol’s application is no more than a particularly lucrative piece of greenwash,” the NGO stated.

Sasol has submitted a detailed application for this its Sasol Natural Gas Conversion Project, meeting the information requirements of the body determining validity and value of CDM projects (The Methodology Panel), and is awaiting a response. The panel will consider inputs from various experts and interested parties, and then make a decision. Once the methodology is approved, Sasol would progress to register the project with the UNFCCC executive board, for final consideration for earning credits in terms of the agreed criteria.

Earthlife Africa questioned the additionality of the project, which is a requirement for registration as a CDM project.

Using natural gas instead of coal would reduce greenhouse gas emissions, thus Sasol’s registering the project as a CDM. Earthlife Africa maintained that the value of the carbon credits was about R1,1-billion a year.

Sasol stated that the revenue from the CDM project, if approved, was sensitive to the number of credits granted by authorities, as well as the value of credits as they were earned, thus the value was not, at this stage, clear, nor would it be appropriate to speculate as to the possible outcome.

“The area of contention deals with Sasol’s claim that if there wasn’t an option to sell carbon credits, it would not have built the pipeline, qualifying it for the CDM. This ‘additionality’ provision to the project is vital for CDM approval and is only retrospectively applied to projects from January 2000. This means that if you were planning to do a project before 01/01/2000, then you violate the ‘additionality’ clause,” explained the organisation.

Earthlife Africa said that Sasol had already mentioned exploitation of the natural gas fields in Mozambique in an annual report in 1999.

Sasol’s project would comprise a 645-km natural gas pipeline from the central processing facility in Temane, Mozambique, to the Secunda coal-to-liquids plant in South Africa, and include the required gas conversion and processing technology, and the development of natural gas fields in Mozambique.

“Not only does Sasol state in the document that it found high quality natural gas in Mozambique (a process that would have begun well before 1999), that it had a use for such gas in its Sasolburg and Secunda plants, that the gas from Mozambique was a “’viable alternative’ to locally mined coal, that it had an external market for the gas, but also that it was planning to build the pipeline. In fact, Sasol had already costed the operation and did not find it prohibitive,” noted Earthilfe Africa energy policy officer Tristen Taylor.

“This marks a cynical attempt to game the CDM system - thus earning billions in revenue and perverse ‘right’ to continue pumping greenhouse gases into the atmosphere,” the NGO emphasised.

Sasol said it was well aware of the extent of its carbon dioxide emissions, and in this regard has made several long strides to reduce the impact of its current operations, as well as further develop its technology so that future plants would be even more efficient with respect to carbon.

The Sasol Nitro project was one of South Africa’s 11 CDM projects that was up and running and generating credits. The company said it would continue to use the CDM on projects, which it believed qualified.

Sasol CEO Pat Davies also previously indicated that the company has set up an entirely new division in Sasol, focusing on ‘new energy’ - energy that has lower environmental impacts.