LG Chem announced on Sunday that it had signed a 20-year long-term purchase contract for renewable energy certificates (REC) at Samcheonpo Thermal Power Plant with Korea South-East Power to ensure a stable supply of renewable energy.
This deal makes LG Chem the first Korean firm to enter into a long-term REC supply agreement.
A REC is a certificate that is issued as a result of the generation of renewable energy. Companies that purchase the certificate are certified for using environmentally friendly electricity and reducing greenhouse gas emissions. As governments around the world lay out emission reduction plans, corporate demand for REC has increased.
Under the deal, LG Chem has secured an average of 9 GWh of renewable energy per year for the next 20 years, totaling 180 GWh of electricity from now until 2041. The amount of electricity is equivalent to the power consumed by 43,000 households for a year, and it can reduce carbon emissions by the same quantity as planting 600,000 pine trees.
In 2020, the South Korean chemical company announced that it will reduce 30 million metric tonnes of carbon emissions by 2050 from the projected 40 million tonnes, offsetting carbon emissions to the level of 10 million tonnes. To offset the 30 million tonnes, LG Chem’s global business sites will have to manufacture products entirely from renewable energy.
Also, for its booming battery business, the company plans to recycle dead EV batteries from automaker clients and reuse them in energy storage systems at EV charging stations.
LG Chem’s transition to renewable energy is well underway across its global business locations. The company switched to renewable energy for 5% of its total electricity usage at its global operations sites last year. This year, the company intends to increase the amount to 10%, which will be double that of last year.
LG Chem plans to achieve the goal by purchasing RECs, paying a green premium, and entering into power purchase agreements (PPA).
“LG Chem will transition even the core pillars of its businesses to ESG so that it can leap into a global sustainable science company,” said Yu Jiyung, Chief Sustainability Officer of LG Chem, adding that the company will take a lead in securing renewable energies to achieve net zero by 2050.