Korean RE100 companies falling behind on commitments

Thirteen out of 25 RE100 member companies in Korea have no record of purchasing renewable electricity, and only one company — LG Energy Solution — purchased a renewable energy certificate (REC).

Solar panels installed in Jocheon-eup on Jeju Island [YONHAP]

Half of the 25 companies that joined the RE100 initiative in Korea have not purchased renewable energy this year.

Thirteen out of 25 RE100 member companies in Korea have no record of purchasing renewable electricity, and only one company — LG Energy Solution — purchased a renewable energy certificate (REC), according to data from Korea Electric Power Corp (Kepco). and Korea Energy Agency compiled by People Power Party lawmaker Ku Ja-keun’s office.

RE100 is a global campaign to replace all electricity generated by fossil fuels with renewable energy by 2050.

In Korea, a total of 27 companies — including SK Materials, which was merged into SK Inc. in Dec. 2021 — have signed on RE100.

Companies can source renewable energy-powered electricity essentially in four ways: installing renewable energy generation facilities; paying a “green premium” to Kepco; purchasing a renewable energy certificate (REC); and signing a power purchase agreement (PPA) to purchase renewable energy from electricity generators.

In the green premium system, companies pay Kepco a price higher than the regular charge for renewable energy-sourced electricity through a bidding process twice a year.

A REC is a tradable instrument that represents 1 megawatt-hour of renewable electricity generated.

As installing a power generation facility is inefficient, other methods are more widely used.

In Korea, 13 of RE100 member companies, including Hyundai Motor, KT, Naver, Samsung SDI and KB Financial Group, had no record of paying a green premium, purchasing a REC, or sourcing electricity through the PPA this year.

This means that though they have pledged to achieve 100 percent renewable energy adoption, the companies have done nothing so far.

“As renewable energy is costly and lacks infrastructure in Korea, we began renewable energy transition in the overseas factories first,” said a Hyundai Motor spokesperson.

“Sourcing renewable energy in Korea is not an easy task,” according to a spokesperson at a battery company. “Since we have some time left until the target year, we are still setting up our plans at this point.”

The other RE100 member companies mostly paid the green premium to Kepco.

The green premium is more widely preferred due to its low price. The green premium costs companies about 10,000 won ($7.7) per megawatt-hour of electricity on average, which is one-sixth the price of a single REC.

Unlike the REC purchases, Kepco’s green premium system is not recognized as a carbon-reduction effort internationally. It may undermine Korea’s competitiveness in exports when the European Union and the United States begin to impose a carbon border tax on countries with looser regulations on carbon emissions.

Trading RECs is not an easy option in Korea, due to the immaturity of the marketplace.

“We purchased RECs to diversify our portfolio,” said a spokesperson for LG Energy Solution, which is the only company that purchased an REC.

“Energy generators put their RECs on the marketplace, but corporations that need to buy a considerable number of RECs have difficulties collecting all the RECs they need.”

Last year, Korea’s renewable energy generation capacity stood at 43,096 gigawatt-hours, which fell short of 65,351 gigawatt-hours that the 10 largest companies in Korea consumed for a year.

“The price of renewable energy is higher in Korea compared to the European countries and Australia,” said lawmaker Ku. “That may hurt competitiveness.”

Yoo Seung-hoon, a professor of energy policy at Seoul National University of Science and Technology, called for an active role of the government in building infrastructure and facilitating energy trading.

“Offering tax benefits for companies may result in trade disputes, so lowering the renewable energy price is the most viable option,” said Yoo.

BY KO SUK-HYUN [shin.hanee@joongang.co.kr]