Breakingviews -product of Seoul’s

The Wall, a 105-inch micro-LED 8K television, is displayed in the Samsung Electronics booth during the 2020 CES in Las Vegas, Nevada, U.S. January 7, 2020. REUTERS/Steve Marcus – RC28BE9D5MZ7

HONG KONG, Sept 20 (Reuters Breakingviews) – Seoul’s foot-dragging on climate change is holding back Korea Inc. Last week the country’s top conglomerate, Samsung Electronics (005930.KS), unveiled an underwhelming net-zero carbon emissions target. Blame South Korea’s power-market monopoly and regressive renewables policies.

The world’s largest chip and mobile-phone maker lags on decarbonisation. Apple (AAPL.O), both a rival and a customer, intends to achieve carbon neutrality for its supply chain and products by 2030; Japan’s Sony (6758.T) and TSMC (2330.TW) in Taiwan recently committed to the same goal by 2040 and 2050 respectively. The $274 billion South Korean group is only targeting emissions from its own operations – and by 2050, a decade later than Intel’s (INTC.O) similar pledge.

It’s not entirely Samsung’s fault. Its semiconductor and components business accounted for 90% of the company’s 17.4 million tonnes of greenhouse gases emitted last year. Most of that is probably from electricity for factories in South Korea, where renewable power is scarce. Solar and wind generated just 26.9 terawatt hours of electricity in 2021, a paltry 4.7% of the total and roughly equivalent to Samsung’s needs.

One culprit is government-backed Korea Electric Power Corporation, or Kepco, which dominates power generation, transmission and distribution. Despite years of shareholder pressure, the $9 billion utility remains addicted to fossil fuels, which made up over 70% of its total capacity as of June. Some of its power-generating units are even slashing renewable investments, the Korea Times reports, as first-half losses at Kepco balloon to a whopping $7.7 billion.

The government this year started allowing firms to buy from renewable-energy producers via direct power purchase agreements. Cutting out Kepco is a good step, but companies still must pay the utility incidental and network costs; these can total as much as 45% of current electricity prices, according to environmental group Solutions for Our Climate. Red tape around securing renewable project approvals has also pushed up prices.

As the country’s top exporter, Samsung should be in strong position to lobby for change. The company warned that if it does not meet its corporate customers’ demands of using 100% renewable energy, some 25.8 trillion won ($18.5 billion), or a fifth of business-to-business sales, based on 2020 results, are at risk. Yet President Yoon Suk-yeol’s administration plans to lower its renewable-energy target for 2030, favouring nuclear power instead. Samsung’s corporate heft will be put to test.

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(The author is a Reuters Breakingviews columnist. The opinions expressed are her own.)

CONTEXT NEWS

South Korea’s Samsung Electronics on Sept. 15 announced a new environmental strategy that includes a commitment to achieve net-zero carbon emissions in its own operations by 2050. As part of the initiative, it will invest over 7 trillion won ($5 billion) by 2030 in technology that it hopes, for example, will filter out greenhouse gases and capture carbon dioxide generated during chip production.

The company has also joined RE100, a group of global corporations including Apple, Intel and TSMC that are committed to using 100% renewable energy across their own operations.

Separately, South Korea’s government wants to lower its renewable energy target for 2030, according to a draft electricity demand and supply plan from the Ministry of Trade, Industry and Energy on Aug. 30. Renewable energy will account for 21.5% of generation capacity by 2030, down from the previous target of 30.2%.

Editing by Antony Currie and Katrina Hamlin

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