Insider News: Samsung Elec To Join Renewables Pledge As S.Korea Shifts Gears On Green Energy

Risk of Inaction

In terms of climate change, Samsung has long recognized the potential cost of inactivity, estimating that up to 25.8 trillion won ($20.6 billion), or 20%, of its business-to-business sales, such as microchips, might be lost if it does not transition to renewable energy.

"To accomplish their aims, our clients require that we create our products using 100% renewable energy," the firm noted in a statement placed on CDP's website in 2021. "If these requests are not addressed, we may see a drop in sales."

Samsung's climate-related efforts impact more than only its B2B clients, such as Apple, or its Galaxy smartphone users.

During its annual shareholders' meeting last month, BlackRock, Samsung's fourth-largest institutional stakeholder, warned that customers had limited access to the company's green policies. Furthermore, the board was chastised for being too sluggish to act on climate change problems.

Samsung Electronics' semiconductor production plants in China and the United States have already been powered entirely by renewable energy since 2019. However, this accounted for just 10.7% of the company's total energy usage in 2020.

In 2020, its chip plants in South Korea accounted for 63.5% of its global power use. The company's earnings in 2021 were $51.6 billion, although that profit was virtually completely generated by non-renewable energy sources.

Samsung is constructing a new semiconductor facility in Pyeongtaek, South Korea. The business intends to build three additional plants there. According to an opposition politician, if completed, they would consume 21.6 TWh per year, which would exceed the total power usage of Busan, South Korea's second-largest city with 3.3 million inhabitants. Samsung did not dispute the amount.

As a result, the profitability of Samsung is at stake in South Korea's energy policy.

Ecological groups believe that stronger shifts toward renewable energy are required to achieve economies of scale, but Sonn Yang-hoon, an economics professor at Incheon National University, believes Yoon's pro-nuclear stance will stabilize electricity prices and allow Samsung to achieve profitability as it transitions to renewable energy.

"Until technological advancements enable renewable energy to become more affordable," Sonn explained, "nuclear energy can buy time." "Samsung will wait till renewable energy prices fall before installing RE100 and ramping it up to full capacity." According to the Korea Energy Economics Institute, the cost of solar and wind power will be reduced by approximately 55% and 44% by 2030, respectively, from their current levels.

Yoon, South Korea's new president, who won the March 9 election by the smallest margin in the country's history, plans to increase the proportion of renewable energy to 20-25% and nuclear power to 30%-35% by 2030, compared to his predecessor's target of 70% renewable energy and only 6% nuclear power by 2050.

According to data from the Electric Power Statistics Information System, nuclear power provided 29% of the electric power generated in 2020, while renewable energy supplied 6.6%.