Subscribe
E-Paper
 |
| Samsung Electronics' plant in Pyeongtaek, Gyeonggi Province / Courtesy of Samsung Electronics |
By Nam Hyun-woo
The rapidly expanding "RE 100" campaign, meaning running operations at factories and offices among others on 100 percent renewable energy, is throwing up new challenges for Korean firms that are part of global supply chains, with Apple, Google, BMW and other big name clients demanding their suppliers join the movement.
According to the Climate Group, an international environmental organization leading the RE100 campaign, Taiwan's TSMC announced July 27 that it would use 100 percent renewable energy for electricity demand at its plants worldwide by the end of 2050.
"TSMC is taking tangible action to drive green manufacturing, lower the impact of its operations on climate, and has committed to using 100 percent renewable energy by the end of 2050," TSMC Chairman Mark Liu said in a statement.
"As the world's first semiconductor company to join RE100, TSMC hopes to call the industry to action and push sustainability forward together, answering the United Nation's Sustainable Development Goals and working hand in hand to overcome the difficult challenges that humanity faces."
TSMC is the largest semiconductor company in the world in terms of market capitalization, leading the global foundry business with a market share of 54.1 percent in the first quarter of the year. Samsung Electronics, the largest global memory chip maker, lags behind with a 15.9 percent share.
To comply with its own promise, earlier this month TSMC signed a power purchase agreement (PPA) for electricity from the Greater Changhua offshore wind farm being developed in the Taiwan Strait. With the deal guaranteeing a fixed price for two decades, it is expected to generate annual carbon savings of over 2 million tons.
TSMC's joining of RE100 came a week after its major client Apple announced that it aims to have a carbon neutral supply chain by 2030. According to Apple, it is already powering its operations in the U.S., China and 21 other countries with 100 percent renewable energy.
Amid Apple's move, its suppliers including Lens Technology and Solvay Specialty Polymers recently announced their commitment to clean energy, an apparent effort to follow their client's move.
The campaign is spreading fast across global industries. According to the Climate Group, 242 companies have announced their commitment to go 100 percent renewable within self-set timeframes. They include Apple, Google, IKEA, General Motors, BMW, Goldman Sachs and a slew of others among the best known in the world.
Market watchers are already questioning whether TSMC's RE100 participation will affect Samsung Electronics.
"As TSMC become the first semiconductor firm to join RE100, Samsung Electronics is expected to see growing pressure to use renewable energy," said Kim Tae-han, a senior researcher at the Korea Sustainability Investing Forum. "With the gap in foundry market share between TSMC and Samsung Electronics remaining wide, RE100 clients such as Apple will prefer companies that have joined the campaign such as TSMC over Samsung. This is a challenge not only for Samsung but also for other Korean companies in global supply chains."
 |
| gettyimagesbank |
Despite the growing pressure, industry officials say the chances are slim for Samsung or other big name Korean companies to immediately set target dates for becoming 100 percent renewable due to the current tough business conditions.
Samsung Electronics already promised to source renewable electricity at its plants in 2018, but exempted those in Korea. Samsung Electronics' Korean plants account for approximately 65 percent of the company's total power use worldwide.
Also this year, semiconductor giant SK hynix said it would seek to go 100 percent renewable at its overseas plants.
Industry officials said these are attributable to the absence of a PPA system in the country. PPA is a direct contract between electricity seller and buyer, enabling the buyer to purchase electricity generated only from renewable sources.
In Korea, the state-run Korea Electric Power Corp. (KEPCO) is the only power distributor, which collects electricity generated by its subsidiaries and independent power companies, and sells it as a single source provider. Due to this structure, some form of PPA will be necessary to allow companies to independently purchase power from solar farms or other renewable power producers.
"Since KEPCO is the single source distributing electricity, companies cannot purchase electricity generated only from renewable resources," an industry official said. "RE100 will eventually be an indicator gauging corporate competitiveness. And introducing a PPA scheme is the first step for Korean companies to join the RE100 campaign."
Due to this, rechargeable battery firms are expanding their overseas plants to meet client demand.
LG Chem plans to expand the total yearly output of its battery plant in Poland up to 60 gigawatt hours from the current 15 gigawatt hours. The plant itself runs 100 percent on renewable energy. LG Chem is supplying batteries for Volkswagen's electric vehicles. Similarly, BMW, a Samsung SDI client, has demanded batteries be manufactured at plants using renewable power sources.
Last month, LG Chem announced it will reduce annual carbon emissions to 10 million tons by 2050, as well as "pursuing RE100 across all businesses." Though the company set 2050 as the target year for emissions reduction, it did not set a target year for RE100, due to the domestic PPA issues.
"The company aims to become a part of RE100, and will launch preparatory work for this as soon as a PPA and other regulatory issues are resolved," an LG Chem official said.
Recently, the government is also moving to introduce PPA contracts. Upon announcing the Korean New Deal investment policies, the administration said it will revise relevant laws to enable PPAs between private companies and power producers, to help more companies join the RE100 campaign.
