Samsung Elec to join renewables pledge as S.Korea shifts gears on green energy

The source added that Samsung had discussed with President-elect Yoon Suk-yeol’s transition committee the regulations and hurdles that discourage the use of renewable energy.

Samsung declined to comment, while the CDP, an environmental non-profit organisation that brings together companies seeking to join RE100, said only that an announcement was expected this year.

“Samsung Electronics told us that it has notified its foreign investors that it would join and announce RE100 within this year,” Kim Tae-han, a senior researcher at the CDP Korean committee, told Reuters.

Yoon has also tapped Han Hwa-jin, a climate specialist and outside director at Samsung, to serve as his government’s environment minister.

The timing of Samsung’s RE100 announcement could depend in part on the appointment of Han’s replacement on the board.

“Samsung needs the legitimacy of all outside directors being present and approving the announcement,” said Lee Jong-oh, director at Korea Sustainability Investing Forum.

Samsung has long acknowledged the risk of inaction on climate change, estimating based on 2020 revenue that up to 25.8 trillion won ($20.6 billion), or 20 percent, of its business-to-business sales such as chips could be lost if it does not switch to renewable energy.

It’s not just B2B customers like Apple, which buys its chips, or consumers who buy its Galaxy smartphones who are concerned about Samsung’s action on climate.

BlackRock, the fourth-largest institutional investor in Samsung according to Eikon data, said in a voting bulletin at its annual shareholders’ meeting last month that investors had only limited access to information on Samsung’s green strategies. It also criticised the board for a lack of urgency on climate issues.

Samsung Electronics has already been running its chip factories in China and the United States 100 percent with renewable electricity since 2019, but they accounted for just 10.7 percent of its total global energy consumption in 2020.

Its chip factories in South Korea accounted for 63.5 percent of its total global electricity use in 2020, and most of its $51.6 billion in profit last year, but ran almost entirely on non-renewable power.

It is building its third chip factory in Pyeongtaek, South Korea, and three more are planned for the city. Once completed, they are projected to consume 21.6 TWh per year, exceeding the entire electricity consumption of Busan, South Korea’s second-largest city with 3.3 million people, according to an opposition lawmaker. Samsung did not dispute the figure.

While environmental groups have argued that an aggressive shift to renewables is necessary to promote economies of scale, Sonn Yang-hoon, an economics professor at Incheon National University, said Yoon’s more cautious, pro-nuclear approach would help to stabilise electricity prices and let Samsung sustain profitability while moving towards renewables.

The Korea Energy Economics Institute estimates the price of solar and wind power will fall as much as 55 percent and 44 percent, respectively, by 2030 from 2020.

Yoon, who won the March 9 presidential election by the smallest margin in South Korea’s democratic history, aims for an energy mix of 20-25 percent renewables and 30-35 percent nuclear by 2030, compared with his predecessor’s target of 70 percent from renewables and only 6 percent from nuclear by 2050.