By Byungwook Kim

(Reuters) – Samsung Electronics (OTC) will join as soon next month a group global corporations committed 100% renewable energy. A person who is familiar with the matter stated that partners like Apple Inc (NASDAQ) are pushing it to take action on climate change.

Samsung (KS), the world’s largest chipmaker is behind the green power promise. It has taken two years for SK Hynix to join the RE100 initiative. The RE100 initiative sets a target of 100% renewable electricity by 2050. However, global competitors such as Apple (NASDAQ:), TSMC (NASDAQ:), and Intel (NASDAQ 🙂 have already joined its 350 members.

It is expected that the company will announce its arrival as soon as South Korea’s president is inaugurated on May 10. This announcement comes at a time when the country’s energy policy has undergone a major change: from an aggressive push towards renewables by the previous administration to a more pro-nuclear position.

According to a source with direct knowledge, “It will also be a groupwide announcement that includes affiliates like Samsung Display.”

Sources say that “the entire group will announce its climate targets including RE100 at the start of the new administration.” The source declined to speak on the subject due to the sensitive nature.

Sources said that Samsung had spoken with Yoon Suk-yeol, President-elect of Korea’s Transition Committee about regulations and obstacles to discourage the use renewable energy.

Samsung did not respond to our request for comment. However, the CDP (an environmental non-profit organization that connects companies who want to join RE100) stated that they were expecting an announcement this year.

Kim Tae-han (a senior researcher from the CDP Korean committee) told Reuters that Samsung Electronics had informed foreign investors it will join them and would announce RE100 in this year.

Yoon also tapped Han Hwajin (a Samsung outside director and climate specialist) as the environment minister for his government.

The appointment of Han’s replacement on Samsung’s board could affect the timing of Samsung’s RE100 Announcement.

Lee Jong-oh (director at Korea Sustainability Investing Forum) stated that Samsung requires the approval of outside directors to approve the announcement.

RISK OF INACTION

Samsung is well aware of the danger of climate change. Based on its 2020 revenues, Samsung estimates that as much as 25.8 trillion won ($20.6billion), 20% of its chips business could be lost to inaction on renewable energy.

Our customers want products that are 100% made from renewable energy in order to meet their needs. Samsung stated in a 2021 statement that there is a risk of sales being affected by not meeting these requirements.

Not just Apple’s B2B customers who order its chips or Samsung Galaxy users who own its smartphones are worried about Samsung’s actions on climate change.

BlackRock (NYSE :), fourth-largest institution investor in Samsung, according to Eikon Data, stated last month in a ballot bulletin that shareholders had limited access to information regarding Samsung’s green policies. BlackRock (NYSE:), the fourth-largest institutional investor in Samsung, also attacked the board’s lack of urgency regarding climate issues.

Samsung Electronics already runs its chips factories in China, the United States and 100% using renewable electricity from 2019, however they only accounted for 10.7% of global energy consumption in 2020.

Its South Korean chip factories were responsible for 63% of global electricity usage in 2020. The majority of its $51.6 million in profits last year came from South Korea, which ran nearly entirely on nonrenewable power.

The company is currently building its third chip plant in Pyeongtaek (South Korea), and plans to build three more. An opposition lawmaker claims that they will use 21.6 TWh annually once completed. That is far more electricity than Busan which has 3.3million inhabitants, South Korea’s largest city. Samsung refuted the number.

Samsung’s profitability in South Korea’s energy policy is at risk.

Although environmental groups claim that it is essential to shift aggressively to renewables to increase economies of scale, Sonn Yang’hoon (an economics professor at Incheon National University) said Yoon’s pro-nuclear, more prudent approach would stabilize electricity prices, and allow Samsung to continue profitability, while shifting towards renewables.

Sonn stated that nuclear power would buy the time before renewable energy becomes cheaper through technological advances. “Samsung is going to wait until the prices of renewable energy drop before it goes full throttle with RE100.”

Korea Energy Economics Institute predicts that the prices of wind and solar energy will decline by 55% to 44% between 2020-2030.

Yoon won the March 9 election as president by the narrowest margin in South Korea’s democratic history. He aims to have an energy mix that is 20-25% renewable and 30-35% nucleus by 2030. This compares with the 70% renewable and 6% nuclear targets of his predecessor.

According to Electric Power Statistics Information System data, 29% of the world’s electricity came from nuclear power and 6.6% were generated by renewable energy in 2020.

($1 = 1,251.8800 won)