After power and petrochemicals, the transport sector is one of the highest emitting sectors in South Africa. Consequently, to achieve Net Zero by 2050, the sector will need to be decarbonised or, more accurately “defossilised”. Naturally these changes will have a significant impact on the liquid fuels industry, the question is how, and when?

The use of liquid fuels can be generally understood as follows: cars and light vehicles use petrol (mainly), trucks, heavy vehicles and industry use diesel, most aeroplanes use jet fuel and ships burn bunker fuel.

It is easily appreciated that electric vehicles (EVs) will replace cars and light vehicles, reducing demand for petrol. As alternative fuels and energy sources for heavy vehicles, aeroplanes and ships are developed, so the demand for diesel, jet fuel and bunker fuel will also decrease.

At present, in the global context, there are several options being considered as alternative fuels: for heavy vehicles, batteries (using solar/wind to recharge) and fuel cells (using green hydrogen as the fuel) are being explored. In the aviation sector the production of Sustainable Aviation Fuel from biomass and green hydrogen is already being produced in small quantities while for ships the possible use of natural gas, hydrogen or ammonia is being considered.

The liquid fuels industry comprises the following sectors –

• Product procurement means either refining imported crude oil, production from coal or gas, or directly importing refined products.
• Distribution and Storage involves moving refined product from the production facilities or import ports to bulk storage facilities and to customers.
• Product Sales occur through service stations that serve the public, or commercial customers that purchase in bulk.

In the product procurement sector, South Africa has already seen the closure of refineries or liquid fuel production facilities. Engen and Shell/BP have closed their refineries and PetroSA has shut down its gas to liquid plant. The Astron refinery is currently not operating, although plans are in place for it to be back in operation in the third quarter of 2022. Sasol recently announced that it would not be economically viable to convert NATREF to produce fuel that enables meeting the Clean Fuels 2 emission specifications. A decision on its future status is expected imminently.

This means that, for the time being, the Sasol coal to liquids plant at Secunda could be one of the only facilities producing liquid fuels locally, and there is considerable pressure on the Secunda facility to change its mode of operation, or shut down altogether, due to its significant contribution to South Africa’s overall emissions.

Consequently, because of these refinery closures, and even with Sasol continuing to produce liquid fuels at current levels, the volume of imported refined products will increase significantly (approximately threefold) to meet current demand, putting additional pressure on the country’s ports to avoid a disruption in fuel supply to the South African market.

For South Africa to meet its climate commitments, a significant increase in EVs is needed. However, at present the penetration of EVs in the country is very low (and advances in other transport sectors are even slower) so the demand for liquid fuels remains unchanged.

It is not yet certain when penetration of EVs will have significant impact on the liquid fuels sector, but major changes can be expected in the coming decades, as demand for fossil fuels decreases due to alternative fuels and means of transportation become available in the market.