30% of Large Corporations "Required to Use Renewable Energy by Global Companies"

Seoul Jung-gu Korea Chamber of Commerce and Industry. Photo by Jinhyung Kang aymsdream@

[Asia Economy Reporter Jeong Dong-hoon] Recently, as RE100 (100% renewable energy usage) has emerged as a global supply chain issue, it has been found that 3 out of 10 large domestic manufacturing companies have been directly or indirectly required by global demand companies to use renewable energy during the product manufacturing process.

According to a survey conducted by the Korea Chamber of Commerce and Industry on the 28th targeting 300 domestic manufacturing companies on the 'Current Status of Domestic Manufacturing Companies' Participation in RE100 and Policy Tasks,' 14.7% of respondent companies answered that they were 'required to use renewable energy' by global demand companies. Among them, 28.8% of large companies and 9.5% of medium-sized companies were required to use renewable energy.

The timing of being required to use renewable energy by global demand companies was most frequently 'after 2030' at 38.1%, but 'by 2025' was 33.3%, and '2026-2030' was 9.5%, indicating an urgent need for response.

RE100 is a voluntary private campaign to convert 100% of the electricity used by companies to renewable energy such as solar and wind power by 2050. The number of companies participating in the RE100 campaign has been steadily increasing, and as of August, 379 global companies including Apple, Google, and BMW are participating. In Korea, 22 companies including 7 SK affiliates, Hyundai Motor Company, and LG Energy Solution have already joined RE100, and Samsung Electronics is in the process of joining.

Currently, the RE100 campaign itself is not binding, but global companies participating in RE100 are demanding the use of renewable energy from their supply chain partners, and related domestic companies are beginning efforts to secure renewable energy. According to the '2021 Global RE100 Annual Report,' among companies participating in the RE100 campaign, 77 companies have established cooperative systems for the use of renewable energy power in their supply chains.

A representative from a domestic manufacturing company said, "Even if they are actually requested to use renewable energy by overseas companies, many companies may be reluctant to disclose this officially," and predicted, "In the future, if companies do not properly respond to RE100, there could be significant setbacks in export competitiveness."

RE100 Challenges: Cost Burden (35%), Insufficient Systems and Infrastructure (24%), Lack of Related Information (23%)

Domestic companies cited cost burden (35.0%) as the biggest challenge to participating in RE100. This was followed by insufficient related systems and infrastructure (23.7%), lack of information (23.1%), and shortage of skilled personnel (17.4%).

A representative from a medium-sized company explained, "To implement RE100, companies must either build their own renewable energy power facilities, purchase renewable energy power at a premium through the Green Premium system, or buy Renewable Energy Certificates (REC). In Korea, the costs for these three procurement methods are 1.5 to 2 times higher than in Europe. Especially, purchasing green premiums and RECs is a one-time purchase that must be made over decades, which is a significant burden for small and medium-sized enterprises."

Additionally, a manufacturing company representative said, "If a company tries to install renewable energy power facilities directly, conflicts with stakeholders such as local residents often arise, making it difficult," and suggested, "It is necessary to provide incentives for resident-linked projects with power producers and expand government-company-resident cooperative projects."

Insufficient Renewable Energy Generation... Top 5 Power-Consuming Companies' Usage (48 TWh) > Renewable Energy Generation (43 TWh)

Furthermore, the Korea Chamber of Commerce and Industry pointed out the fundamental problem of insufficient domestic renewable energy generation. Looking at the Korea Electric Power Corporation's power sales performance for the top 30 domestic high power-consuming companies in 2021, the top 5 power-consuming companies used 47.7 TWh, and the top 30 companies consumed 102.9 TWh of electricity, while the total domestic renewable energy generation in 2021 was only 43.1 TWh.

According to the 'New and Renewable Energy Supply Performance Survey' conducted by the Korea Energy Agency, the share of new and renewable energy generation in Korea in 2020 was 7.43%, the lowest among OECD countries, and far below the OECD average (about 30%).

A representative from the Korea Chamber of Commerce and Industry stated, "Although the electricity consumption of domestic RE100 member companies at the current point is less than the total renewable energy generation, it is urgent for the government to prepare policies to expand renewable energy in anticipation of increased renewable energy use by high power-consuming companies including Samsung Electronics."

Policy Tasks: Expansion of Economic Incentives (25%), Recognition of Greenhouse Gas Reduction Performance (23%), Expansion of Renewable Energy Power Infrastructure (20%) in Order

The policy tasks that companies hope for to participate in RE100 were 'Expansion of economic incentives' (25.1%) the most, followed by 'Recognition of renewable energy purchases as greenhouse gas reduction performance' (23.2%), 'Expansion of renewable energy power infrastructure' (19.8%), and 'Support for information and renewable energy business matching consulting' (16.5%). <'Reduction of incidental costs (network usage fees, commissions, etc.)' (14.9%), 'Others' (0.5%)>

Based on these survey results, the Korea Chamber of Commerce and Industry proposed six policy support tasks including ▲ providing incentives for PPA resident participation projects ▲ exemption of additional costs when purchasing green tariffs ▲ expanding private company participation in public-led large renewable energy projects ▲ minimizing additional costs of PPA. * See attached table

Meanwhile, regarding promoting CF100 instead of RE100 considering domestic renewable energy conditions, 62.2% of respondent companies answered that it is 'necessary considering domestic realities,' while 37.8% answered that it is 'ineffective.'

CF100 is a campaign to use 100% of electricity consumed 24/7 from zero-carbon energy sources such as wind, solar, and nuclear power in real-time. Unlike RE100, which covers 100% of electricity used by renewable energy, CF100 includes not only renewable energy but also zero-carbon sources such as nuclear power and fuel cells. Currently, about 70 companies including Google and Microsoft are participating.

Kim Nok-young, Director of the Carbon Neutral Center at the Korea Chamber of Commerce and Industry, emphasized, "As overseas demand companies' requirements for renewable energy use increase, the demand for renewable energy use may extend to small and medium-sized partner companies of domestic companies," and added, "Since more than 10,000 partner companies of domestic companies participating in RE100 have been identified, it is necessary to prepare for increased renewable energy use not only by large companies but also by small and medium-sized enterprises."

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