Korea facing net-zero stampede as Samsung Electronics signs on

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Korea facing net-zero stampede as Samsung Electronics signs on

Samsung Electronics signing on to the RE100 initiative is less than ideal for some companies.
RE100 is a global campaign to replace all electricity generated by fossil fuels with renewable energy by 2050. Samsung Electronics joined the initiative on Sept. 15.  
Its participation is expected to increase the demand for renewable energy and related infrastructure in Korea, which the country severely lacks.  
"Samsung Electronics increasing its use of renewables in the country by even one percent will raise the price of renewable energy certificate, causing a hassle across all industries," said a spokesperson for a large company that has joined the RE100 initiatives.
The average price of a single renewable energy certificate (REC) was 34,667 won ($24.07) last year. It rose to 46,211 won in January and to 62,160 won in August this year.  
Samsung Electronics had been actively promoting environmental businesses in recent years, upping its efforts from 2020 when other companies started to adopt carbon-neutral schemes.  
Signing on to the RE100 initiative has been seen as compulsory to cater to clients' requests in the United States and Europe, but the lack of local infrastructures related to renewables in Korea became a hurdle.  
The company has been able to source renewables for the electricity they use at its business sites in the United States, Europe and China, but not in Korea.
"Samsung Electronics had been looking for the best timing to join the RE100 initiative even after being fully prepared," said an energy expert.
"It would have been harder for them to decide as the new government's renewable goal is now down to 21.5 percent from the previous 30.2 percent."
Renewables accounted for 8.6 percent of the total energy mix in the country last year, according to energy research firm Enerdata.
In Saudi Arabia, 0.1 percent of energy is renewable, Kuwait 0.2 percent, Algeria 0.8 percent and Iran 2.3 percent. Taiwan is 6.5 percent and Korea comes next.  
The total amount of electricity generated from renewables reached 43,096 gigawatt-hours (GWh) in Korea last year. But this is not even close to the total amount of electricity used by the top 10 companies in terms of industrial power usage, which totals 65,451 GWh last year.  
To achieve the goals of the RE100 initiatives, direct production of renewable energy, implementation of green pricing, purchase of RECs and direct power purchase agreement (PPA) are mentioned. Industry insiders say Samsung Electronics will need to go for REC transactions and green pricing as their options in order to achieve the RE100 initiative.
Last year, the company purchased 490 GWh of energy through the green pricing scheme for domestic business only, which accounted for 2.6 percent of the total amount of electricity (18,412 GWh) used in its local business sites.    
"In the case of the United States and Europe, there is no pressure in increasing the use of renewables as the prices for this energy have been comparable to that of fossil fuels for a long time," said Lee Keun-dae, a senior research fellow at Korea Energy Economics Institute.
"Korea and Japan are pressured to join the trend despite the lack of infrastructures, and this could eventually worsen industry competitiveness."
Implementing caps on the system marginal price (SMP) could further shrink the renewable market, industry insiders say.
The government is currently promoting a pricing system that caps the SMP payable to power generation companies to reduce prices when purchasing power from the Korea Electric Power Corporation (Kepco).  
The price of PPAs can also be doubled if Kepco charges additional fees, such as network charges, as the country's transmission and distribution of electricity in the country is monopolized by Kepco.  
"The power transmission and distribution network wholly operated by Kepco should be opened and the government should allow retail competition," said Kim Kyung-sik, director of the Steel Scrap Research Center.
"If competition between private businesses becomes possible, investments related to the energy storage system (ESS) will increase and technology will further advance."

BY KO SUK-HYUN, CHO JUNG-WOO [cho.jungwoo1@joongang.co.kr]
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