Welcome to Second Take. The show that focuses on the issues behind the news. Financially and environmentally-pleaded energy and chemicals group Cecil is working to reset its business, a low carbon world. Terrence Greenmatch wants me to discuss the emerging strategy. Hi Terrence. Hi Cecil. Now Cecil is currently a large common emitter and has acknowledged that climate change is a top risk. Yes Cecil is a huge carbon emitter as a business. Most of its carbon emissions about 66 million tonnes a year are emitted in South Africa and of those, most of those are centered around the sequin complex in Pumalanga. So it's got a big problem in terms of the world moving towards a lower carbon economies around the world and its business has to be reshaped and reset as they say for that new environment and therefore it has a process underway called Future Cecil where it's looking to reduce its carbon footprint materially. And pressure is mounting on the group from shareholders and stakeholders? Yes. For years and years environmental groups have been unhappy with Cecil's carbon emission performance, its emission performance. Much like ischem comes under a lot of criticism as well as our biggest carbon emitter. Capital 2 is a big area of focus and we've had environmental activists looking at Cecil very closely. The new trend though is that there's now shareholder activists that are coming into AGMs and raising the issue very, very forcefully as has been the case with many energy companies around the world. Cecil's tended to rebuff these request for votes and did again this year with just share and the Ray Foundation looking for a vote this year and they've sort of kicked that can down the road and we'll have a non-binding vote on their climate strategy only at the 2021 AGM and if shareholders reject this kind of strategy it's going to then have to do a rethink, well they've committed to rethink. But this company which is a large carbon emitter is coming under intense pressure as all energy companies around the world are moving quite aggressively we see some of the major oil majors are looking at saying that they no longer international world companies but they want to be international energy companies and likewise Cecil is having to transform itself. And what is it doing to change Gaulson is it enough? Well the main thing is it has this three-pronged strategy of reducing emissions and then transforming the way it does business and then ultimately wanting to shift its portfolio, its product portfolio to a low carbon world that's the sort of overarching strategy but within that the focus is on the feedstock so at the moment coal is the main feedstock they convert that coal into hydrogen and then they put that hydrogen through a process called Fischer drops to produce fuels and chemicals that process of producing that hydrogen is where all the carbon most of the carbon emissions arise in Sequoena. Cecilberg has already converted to Mozambique gas so they've had that conversion and immediate focus seems to be to replace as much coal as possible with gas. Now that's a difficulty because Cecil does have gas in Mozambique and gas does flow through the pipeline at the moment but those dependent on the minefields are depleting and they haven't really been able to find in southern Mozambique enough gas to replace it so there will be a supposed strategy to import gas through LNG through Polymaputo to keep that flow into both Cecilberg and Sequoena increasingly if possible and they are looking at a major position also in the Ravuma basin they aren't directly involved as other international energy companies or the ones that are really involved there and they have flattered again this idea of a mega-part plan from northern Mozambique down to its operations but it couldn't be the salt off-taker because it would have to be a really large pipeline to make sense and that is a long way off I think the strategy is to have more gas but I think the immediate focus will be probably to import more LNG and the issue there is all about economics so that's the one strategy the other is to have a scale up of renewable energy across its group and we see they've got this plan to invest in 600 megawatts of renewable energy into its operations to displace carbon-based electricity and linked to that is very much ultimately is to they're wanting to become a green hydrogen leader in South Africa we know there are a global hydrogen leader because they produce hydrogen from coal coal doesn't it isn't a great source of hydrogen but the world is shifting to a place where you can start producing green hydrogen using low-cost renewable electricity putting that through to combining with that with water and an electrolyzer to produce carbon-free hydrogen, green hydrogen and that they wanting to be a major leader in this space and we know that the rest of the world too people that have got good solar and wind resources countries such as Australia are looking to become a green hydrogen superpowers and we definitely a South Africa lagging in this battle to be a hydrogen superpower we too have formidable wind and solar resources we've got the land and the renewable electricity is now the cheapest form of electricity in South Africa and the key here will be then to plug that in to a falling cost of electrolyzers and that's the big next component can the electrolyzers come in cross-components of the at this stage, Cecil claims it's current and therefore they have this big gas focus and a potential mega-parplan but that gas has a bridging fuel to a low carbon economy that bridge seems to be getting shorter by the day and the world is turning against gas quite aggressively so I think we ask with it enough I think that the Cecils I think eventually embraced the green hydrogen approach they know that they can make power fuels because they really make through the fishatrop process fuels from synthetic fuels they know they can do that but I think they're still more comfortable with gas I think that this is again where I think climate activists and even climate shareholders are going to have a say I think there's going to be a push for them to do more on the green hydrogen front to be more ambitious and to be maybe less ambitious in terms of a massive pipeline from it's a very far away at the distance to northern Bozambique to Secunda is sort of the distance between Casablanca and London it's not just right next door it's a it would be a major pipeline so I think that will be an interesting discussion with the Cecils doing enough on the green hydrogen front and is putting too many of its eggs in the shift from a feedstock fossil fuel very dirty fossil fuel feedstock in the form of coal to a less dirty but yet still dirty fossil fuel feedstock and gas and whether it shouldn't be more ambitious on the green hydrogen front thanks speaking to those terrorists that's it for today join us next week for more news and analysis and don't forget to listen to the audio version of our engineering news daily email newsletter