"RE100, Low Response Expected from Non-Global Companies"

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Business Community: "Government-Led Energy Transition and Emission Reduction Mandates May Signal Burden Shift to Companies"

Park Jong-ho, the Commissioner of the Korea Forest Service, inspecting a solar power facility on June 5. (Photo by Korea Forest Service)

[Asia Economy Reporter Moon Chaeseok] Although the government has introduced five implementation measures to enforce RE100 starting next year, companies are concerned about increased costs. Unless they are global companies that must be mindful of international public opinion and pressure from civic groups or their suppliers, there is no reason to purchase renewable energy, which is more expensive and less stable in supply. While there is agreement with the principle of "ultimately taking the necessary path," experts advise that it is essential to establish a detailed system that recognizes renewable energy purchases as greenhouse gas emission reduction achievements and explicitly specify this in concrete terms.

Source: Ministry of Trade, Industry and Energy

On the 6th, the industry responded to the government's announced RE100 implementation policy with "we agree with the intent but find it burdensome." Earlier, on the 2nd, the Ministry of Trade, Industry and Energy held an online meeting on the Green New Deal policy chaired by Minister Sung Yun-mo and announced the RE100 policy, which includes reflecting greenhouse gas reduction achievements when purchasing renewable energy according to four purchase methods excluding the "green premium." RE100 is a campaign to convert 100% of electricity consumption to renewable energy by 2050.

Source: Ministry of Trade, Industry and Energy

First, the government's stance of not recognizing the green premium system as greenhouse gas reduction is a burden. Since the use of renewable energy, which is more expensive than general electricity rates, will increase, companies' demands for incentives have not been properly reflected. A Ministry of Trade, Industry and Energy official said, "The amount of power generated under the mandatory Renewable Portfolio Standard (RPS) and budget projects (FIT) is already reflected as a reduction measure in the national greenhouse gas reduction roadmap."

Data source=Korea Power Exchange Power Statistics Information System (EPSIS)

According to the Power Information Statistics System, as of May, the unit price per 1 kWh of liquefied natural gas (LNG) was 100.8 won, which is more expensive than nuclear power at 46.5 won and bituminous coal at 77.3 won. The green premium system is a scheme where Korea Electric Power Corporation imposes a green premium on renewable energy power purchased through the Renewable Portfolio Standard (RPS) or the Feed-in Tariff (FIT) system and sells it at a rate higher than the general electricity rate.

Source: Ministry of Trade, Industry and Energy

Source: Ministry of Trade, Industry and Energy

The government said it would reflect renewable energy purchase achievements as greenhouse gas reduction achievements and would disclose specific procedures and detailed recognition methods by the end of the year. In response, the industry and energy sectors say that the plan to reduce the amount of emission permits that must be purchased equivalent to the amount of renewable energy purchased should be explicitly specified.

Source=Korea Exchange

According to the Korea Exchange, the closing price of greenhouse gas emission permits on the previous trading day, the 4th, was 21,000 won, slightly lower than 22,127 won in 2018 and 29,126 won last year. However, the industry expects that as factory operating rates, which fell due to the novel coronavirus disease (COVID-19), recover to previous levels, prices will rise to the 40,000 won range. This means that a rise in emission permit trading prices is only a matter of time.

Samsung Electronics Seocho Building. / Photo by Moon Honam munonam@

An energy industry official said, "Global companies like Samsung Electronics and their suppliers may adopt RE100 due to pressure from civic groups such as Greenpeace and international public opinion, but it is uncertain whether other companies will respond positively. While the policy has meaning in creating a market to implement RE100, the reality in Korea is that costs are too high, so even if the government recognizes renewable energy purchase achievements as 'emission permit achievements,' it remains to be seen how many companies will step forward."

At the 3rd Basic Energy Plan Public Hearing held on April 19 last year at COEX in Gangnam-gu, Seoul, hosted by the Ministry of Trade, Industry and Energy, Greenpeace officials are seen holding a banner with the phrase "RE100 (Renewable Energy 100) Implementation, Corporate Power Purchase Agreement (PPA)." Photo by Mun Ho-nam munonam@

An industry insider said, "We are not unaware that the transition to renewable energy is a global trend, but the market may interpret the greenhouse gas reduction policy as a signal to rapidly shift from 'government-led' to 'corporate-led.' If companies are induced to comply with the emission trading system while also using expensive renewable energy, the burden on companies regarding renewable energy transition and greenhouse gas reduction will become too great," he pointed out.

This content was produced with the assistance of AI translation services.