Samsung Elec to join renewables pledge as S.Korea shifts gears on green energy

By Byungwook Kim

(Reuters) – Samsung Electronics plans to hitch as quickly as subsequent month a gaggle of world companies dedicated to 100% renewable vitality, an individual conversant in the matter mentioned, as companions comparable to Apple Inc push it for motion in opposition to local weather change.

Samsung, the world’s largest chipmaker, is late to the inexperienced energy pledge: It has been two years since hometown rival SK Hynix joined the RE100 initiative, which units a 2050 goal for 100% renewable electrical energy, whereas international friends together with Apple, TSMC and Intel are already amongst its 350 members.

The timing of the cautious firm’s announcement, anticipated as early because the Could 10 inauguration of South Korea’s new president, will deliver it on board simply because the nation’s vitality coverage is about for a grand U-turn: away from the prior administration’s aggressive push into renewables, and in the direction of a pro-nuclear stance.

“It will likely be a group-wide announcement that additionally contains associates comparable to Samsung Show,” mentioned an individual with direct data of the matter.

“Your entire group will announce its local weather targets together with RE100 round when the brand new administration kicks off,” the supply mentioned, asking to not be recognized because of the sensitivity of the difficulty.

The supply added that Samsung had mentioned with President-elect Yoon Suk-yeol’s transition committee the laws and hurdles that discourage the usage of renewable vitality.

Samsung declined to remark, whereas the CDP, an environmental non-profit organisation that brings collectively firms in search of to hitch RE100, mentioned solely that an announcement was anticipated this yr.

“Samsung Electronics informed us that it has notified its international traders that it might be a part of and announce RE100 inside this yr,” Kim Tae-han, a senior researcher on the CDP Korean committee, informed Reuters.

Yoon has additionally tapped Han Hwa-jin, a local weather specialist and out of doors director at Samsung, to function his authorities’s surroundings minister.

The timing of Samsung’s RE100 announcement might rely partly on the appointment of Han’s substitute on the board.

“Samsung wants the legitimacy of all outdoors administrators being current and approving the announcement,” mentioned Lee Jong-oh, director at Korea Sustainability Investing Discussion board.

RISK OF INACTION

Samsung has lengthy acknowledged the chance of inaction on local weather change, estimating primarily based on 2020 income that as much as 25.8 trillion gained ($20.6 billion), or 20%, of its business-to-business gross sales comparable to chips might be misplaced if it doesn’t swap to renewable vitality.

“Our clients are demanding to provide merchandise utilizing 100% renewable vitality to attain their targets. There’s an evident threat that our gross sales could also be affected if these calls for will not be met,” Samsung mentioned in an announcement posted on CDP’s web site in 2021.

It is not simply B2B clients like Apple, which buys its chips, or shoppers who purchase its Galaxy smartphones who’re involved about Samsung’s motion on local weather.

BlackRock, the fourth-largest institutional investor in Samsung in response to Eikon knowledge, mentioned in a voting bulletin at its annual shareholders’ assembly final month that traders had solely restricted entry to info on Samsung’s inexperienced methods. It additionally criticised the board for an absence of urgency on local weather points.

Samsung Electronics has already been operating its chip factories in China and the US 100% with renewable electrical energy since 2019, however they accounted for simply 10.7% of its complete international vitality consumption in 2020.

Its chip factories in South Korea accounted for 63.5% of its complete international electrical energy use in 2020, and most of its $51.6 billion in revenue final yr, however ran nearly totally on non-renewable energy.

It’s constructing its third chip manufacturing unit in Pyeongtaek, South Korea, and three extra are deliberate for the town. As soon as accomplished, they’re projected to eat 21.6 TWh per yr, exceeding all the electrical energy consumption of Busan, South Korea’s second-largest metropolis with 3.3 million individuals, in response to an opposition lawmaker. Samsung didn’t dispute the determine.

This raises the stakes for Samsung’s profitability in South Korea’s vitality coverage.

Whereas environmental teams have argued that an aggressive shift to renewables is important to advertise economies of scale, Sonn Yang-hoon, an economics professor at Incheon Nationwide College, mentioned Yoon’s extra cautious, pro-nuclear strategy would assist to stabilise electrical energy costs and let Samsung maintain profitability whereas transferring in the direction of renewables.

“Nuclear energy will purchase time till renewable vitality will get cheaper with technological breakthroughs,” Sonn mentioned. “Samsung will bide its time till renewable vitality costs drop earlier than it carries out RE100 at full throttle.”

The Korea Vitality Economics Institute estimates the value of photo voltaic and wind energy will fall as a lot as 55% and 44%, respectively, by 2030 from 2020.

Yoon, who gained the March 9 presidential election by the smallest margin in South Korea’s democratic historical past, goals for an vitality mixture of 20-25% renewables and 30-35% nuclear by 2030, in contrast along with his predecessor’s goal of 70% from renewables and solely 6% from nuclear by 2050.

Nuclear energy accounted for 29% and renewable vitality 6.6% in 2020, Electrical Energy Statistics Data System knowledge confirmed.

($1 = 1,251.8800 gained)

(Reporting by Byungwook Kim; Further reporting by Heekyong Yang; Enhancing by Miyoung Kim and Edmund Klamann)