LG Chem Ltd. has become the first South Korean company to buy renewable energy on a long-term basis as part of an effort to make a full switch to renewable energy by 2050.
The company has signed a 20-year contract to purchase renewable energy certificates (RECs) for 23 gigawatt-hour (GWh) of electricity generated from Korea South-East Power Co. (KOSEP)'s solar energy farm in South Gyeongsang Province.
The agreement, announced on April 24, is part of LG Chem's commitment to RE100, a multinational campaign to make a full transition to renewable energy by 2050.
Including the new supply from KOSEP, LG Chem will secure an average of 9 GWh renewables a year through 2041, totaling 180 GWh.
The sum of the power supply to be secured by 2041 will be enough to power 43,000 households for one year and create the effects of reducing carbon emissions equivalent to planting 600,000 pine trees, LG said.
The LG Group arm switched about 5% of electricity consumption from its global operations to renewables last year. It will increase the proportion to 10% this year.
To do so, it will actively secure renewable energy through various channels such as REC purchase and power purchase agreement, as well as paying a green premium, or the difference between the costs of using carbon-emitting fossil fuels and clean energy.
KOSEP belongs to the power utility Korea Electric Power Corp. Located in Samcheonpo, South Gyeongsang Province, the solar farm has an annual production capacity of 10 megawatt-hours of electricity.
Solar panels (Photo: Getty Images Bank) Several hundreds of global companies, including Apple Inc., Google LLC, Meta Platforms Inc., Microsoft Corp., Intel Corp. and Starbucks Corp., are committed to RE100, short for renewable energy 100%.
While the majority of the members are from Europe and the US, only 14 South Korean companies joined the initiative, including eight SK Group companies, LG Chem, battery maker LG Energy Solution Ltd. and Korea Zinc Inc.
To achieve RE100, its members may buy RECs from power providers on the open market. RECs are market-based instruments that certify one megawatt-hour of electricity generated from a renewable energy resource.
On Sunday, LG Energy Solution bought 23 GWh RECs from Jeju Province and Jeju Energy Corp. combined. The electricity will be generated from wind and solar farms on the island.
The world's No.2 battery maker switched 16% of electric power used at its domestic plant in Ochang, North Chungcheong Province, to renewables last year. It plans to more than triple the use of renewables to 50% this year.
Write to Kyung-Min Kang and Hyung-Kyu Kim at khk@hankyung.com Yeonhee Kim edited this article
