SK Holdings creates hydrogen investment business unit
SK anticipates the hydrogen business will generate net assets valuing 30 trillion won ($27 billion) by 2025.
Apart from its role as the conglomerate’s holding company, SK Holdings also develops future growth engines including mergers with smaller firms in fields the conglomerate is unfamiliar with. This is the first time, however, that the company has set up a business unit dedicated to one segment.
The team at the moment consists of around 20 employees, mainly from oil refiner SK Innovation and SK E&S, an SK Holdings subsidiary that manages city gas, liquefied natural gas (LNG) and renewable energy, but is likely to grow. The new unit, expected to operate for at least five years, will coordinate SK’s hydrogen businesses and liaise with energy affiliates.
“The fact that this team is directly run by the group is a signal that SK Holding’s investments will speed up its transition to an eco-friendly portfolio,” said an SK Holdings spokesman.
SK Holding’s first objective is for the group to become a mass supplier of hydrogen in Korea. The current goal is to establish facilities to mass produce 30,000 tons of liquefied hydrogen from 2023 and distribute it to the Seoul Metropolitan area.
Transporting hydrogen in liquid form instead of gas has its merits, said SK Holdings, such as higher efficiency and stability in transportation. SK E&S will take charge of the facility transforming hydrogen into the liquid form, using hydrogen gas supplied by SK Innovation. Hydrogen is a byproduct in the oil refining process and is often discarded.
Moving beyond production, SK Holdings also plans to engage in distribution and complete a “hydrogen value chain” based on its affiliates’ experience and existing infrastructure in oil and LNG.
According to the company, the local hydrogen market lacks sufficient transport and charging infrastructure, which results in a shortage of hydrogen-powered vehicles. This again leads to the sluggish attitude of private companies willing to actively invest in hydrogen production facilities.
“The plan is to reach a production capacity of 28 tons by 2025 and establish hubs specializing in hydrogen transportation at SK Energy’s oil stations and rest areas for cargo trucks,” SK Holdings said.
While developing opportunities domestically, SK Holdings will also find partners overseas with a focus on launching hydrogen businesses in Asia first. That includes partnerships and investments in foreign companies.
The group’s stronger emphasis on hydrogen is part of its ESG initiative — short for environment, society and governance.
Last month, eight SK affiliates including SK Holdings, SK Telecom and SK hynix joined the RE100, an initiative launched by British non-profit The Climate Group to realize a 100 percent renewable energy goal by 2050.
“Our efforts to boost ESG management come as governments around the world expand green policies and higher anticipation that the U.S. administration would enforce eco-friendly policies under President-elect Joe Biden,” SK Holdings said.
“We’re hoping the launch of our hydrogen businesses will strengthen our ESG initiative and generate economic value along the way.”
BY SONG KYOUNG-SON [firstname.lastname@example.org]