On Sept. 20, President Yoon Suk-yeol proposed the formation of a “Carbon Free Alliance” to the international community during the United Nations General Assembly held in New York. This proposal includes bringing forward Carbon-Free Energy (CFE), which encompasses nuclear power and hydrogen energy, as an international agenda. The proposal also aims to complement “RE100,” which strives to meet all industrial power needs through renewable energy, by presenting a practical approach to achieve carbon neutrality. Considering South Korea’s challenging conditions for renewable energy, the global expansion of CFE appears to strengthen our companies’ competitiveness as well.
According to The Climate Group, a multinational nonprofit organization, on Sept. 24, 27 companies worldwide have newly joined RE100 as of this year. This figure falls short of half the total of 58 new member companies that joined last year. Considering that there are less than ten days left in the third quarter, it can be observed that the enthusiasm for new memberships is lower compared to the previous year. The same trend is noticed in South Korea. Unlike the competitive trend from 2020, starting with six companies in the SK Group and continuing through last year, where companies like Samsung, Hyundai Motor, LG, and Lotte eagerly joined, only seven companies have declared RE100 commitments this year.
Participation from the energy-intensive manufacturing industry has been relatively low. Looking at the companies that declared RE100 commitments this year, the financial, communication, and IT sectors have taken the lead. Among the seven domestic companies that recently joined, only LG Electronics and Lotte Chemical are manufacturers. The other five companies belong to industries with relatively lower energy consumption burdens compared to manufacturing, such as financial institutions. Achieving RE100 entails a practical challenge of sourcing power solely from solar, wind, and hydropower, leading to questions about its feasibility.
According to data from the Korea National Statistical Office, South Korea has the lowest share of renewable energy among the 37 OECD member countries. Despite significant investments in solar and wind energy over the past decade, South Korea’s renewable energy share stands at a mere 3.4 percent. This is a stark contrast to the top-ranked Iceland with a renewable energy share of 81.1 percent, representing a 24-fold difference. South Korea also lags behind the OECD average by nearly seven times. Superficially, it may appear that South Korea has been neglecting investment in renewable energy. However, in reality, that is not the case. It’s important to note that this comparison is based solely on the proportion of renewable energy, regardless of each country’s overall electricity production. Even manufacturing powerhouses in Europe like Germany, the U.K., and France fall below the OECD average in this regard. The United States and Japan also rank among the lower performers.
South Korea’s export activities are centered around energy-intensive industries like semiconductors, batteries, and steel. The country has limited landmass, with most of it being mountainous terrain. In terms of efficient land use, it is challenging to realistically implement large-scale solar power plants similar to those in North America and Australia. While deserts benefit from substantial day and night temperature differences that result in abundant wind energy, South Korea, with its predominantly mountainous terrain, faces additional disadvantages. Despite being surrounded by sea on three sides, the country experiences relatively weak winds. Notwithstanding these challenges, efforts to generate renewable energy have continued, but there are limitations. South Korea still relies on cost-effective and abundant electricity produced from nuclear power, which supports its competitiveness in export markets.
Businesses are reluctant to join RE100 while maintaining empathy for transitioning to a carbon-free society. This reluctance is driven by concerns about the impact on corporate competitiveness as well as the potential decline in export competitiveness. This sentiment is even shared among companies that have already declared their commitment to RE100. Among the major domestic companies that have declared RE100 commitments, LG Energy Solution is the only company that has a renewable energy procurement rate of over 50 percent. Samsung Electronics in the second position and SK hynix in the third position have procurement rates of around 30 percent. Meanwhile, LG Electronics in the fourth position and Hyundai Motor in the fifth position have procurement rates in the single digits. As of 2021, the total capacity of renewable energy generation in South Korea is 43 TWh. It is indeed challenging to meet the demands of the top four electricity-consuming companies: Samsung Electronics, SK hynix, Hyundai Steel, and Samsung Display.
A representative from the business community pointed out, “When it comes to just reducing carbon emissions, CF100 might be more advantageous than RE100. RE100 encourages companies to procure electricity through renewable sources while also requiring them to purchase Renewable Energy Certificates (RECs) to account for electricity consumed from coal and thermal power generation. In contrast, CF100 includes carbon-free sources such as nuclear power, eliminating the need to purchase RECs.”
He added, “Recently, President Yoon’s proposal for establishing an international platform for CFE at the U.N. General Assembly is undoubtedly a realistic alternative for humanity’s transition to a carbon-neutral society. From the perspective of our companies, which are compelled to join RE100 due to strong demand from North American and European customers, we hope that the international community will move forward as President Yoon proposed. However, differences in each country’s stance on nuclear power could play a crucial role in whether CF100 replaces RE100.”