Carbon to Green Strategy
On June 24, Kim Jun, vice chairman of SK innovation, emphasized at the SK Innovation Global Forum held in San Jose, California, “This year must be the year when the ‘Carbon to Green’ strategy materializes in the market.”
SK innovation, South Korea’s first oil refining company, is accelerating the green transition of its mainstay refining and chemical business as the battery business, which requires large-scale investment, finds stability. It has brought forward the goal of a 70% green asset ratio by a year, and has undertaken a paid-in capital increase of approximately 1 trillion won for substantial investment. The investment targets demonstrate a strong commitment to decarbonization, with green new businesses such as next-generation Small Modular Reactors (SMRs), hydrogen, and ammonia.
SK innovation initially proposed its Carbon to Green strategy in 2021, announcing it would invest 30 trillion won (US$23 billion) in green businesses by 2025. Since then, it has been making multifaceted investments to materialize its green business strategies. The company has invested US$55 million in PureCycle, a U.S. specialist in recycled plastics, and US$80 million in the U.S.-based ammonia hydrogen fuel cell system specialist Amogy, thereby securing stakes and ramping up efforts to acquire new business technologies.
As a result, the proportion of green assets, which was only 30% in 2021, has risen to 61% this year. The 70% target set for 2025 has been brought forward by a year, with the company showing confidence in achieving sales from 2025.
From the second half of this year, SK innovation is set to expand its investment in areas such as SMRs, hydrogen and ammonia, energy recovery from waste, and Carbon Capture, Utilization and Storage (CCUS). For this purpose, it has also carried out a paid-in capital increase of approximately 1.18 trillion won.
So far, SK innovation’s capital-raising efforts have focused on the battery business of its subsidiary SK on, but this time it is different. Especially considering the physical split of SK on around 2025-2026, the need to nurture SK Innovation’s own business has become even more significant.
However, it is anticipated that there will be a time lag before new businesses become profitable. Revenue recognition is projected at the earliest between 2025 and 2030. Nevertheless, the large-scale recycling cluster being built in Ulsan is moving quickly to secure tangible results, including securing sales outlets even before its completion in 2025. It is reported that pre-sales agreements have been signed with three global consumer goods companies for a total of 50,000 tons.