[Innovation of SKI]② 'Carbon to Green' Low-Carbon Crisis is an Opportunity

Core Tasks for Carbon Emission Responsibility... 90% Reduction by 2050
'Beyond Net Zero' Strategy... Global Carbon Reduction Target of 100 Million Tons
Accelerating Transition to Eco-Friendly Businesses like Battery and Plastic Recycling

Editor's NoteSK Innovation, regarded as the 'most successful privatization' company, will celebrate its 60th anniversary on the 13th. Starting as Korea National Oil Corporation in October 1962, it was acquired by SK Group (then Sunkyung Group) in 1980, evolving through 'Yukong' to become a core affiliate within SK Group. SK Innovation marked a decisive turning point for SK Group's business expansion from textiles to petrochemicals. Over the past 60 years, SK Innovation has grown from Korea's first oil refiner to a comprehensive energy and petrochemical company and is now seeking innovation once again. This is the so-called 'Carbon to Green' financial story, a major shift in business focus from fossil fuels to eco-friendly energy. Facing the challenge of climate change, it is growing non-refining businesses such as electric vehicle batteries, waste plastics, and eco-friendly materials as core portfolios. We review the path of innovation SK Innovation has taken and look ahead to its future vision.

SK Innovation, which started as an oil company, now focuses on 'eco-friendliness' as its new growth engine. It defines its subsidiaries as 'eco-friendly energy & materials companies' and adopts 'Carbon to Green' as its core strategy and slogan.

Responsibility for Carbon Emissions Extends Across Business Structure... 90% Reduction by 2050

According to SK Innovation on the 11th, the company has set a goal to reduce carbon emissions across the entire value chain (Scope 3) by 75% compared to 2019 levels by 2030, and by 90% by 2050.

Corporate carbon emissions are categorized by 'scopes.' ▲Scope 1 refers to emissions generated during product manufacturing ▲Scope 2 covers emissions from electricity and power generation used at business sites ▲Scope 3 includes emissions throughout the entire value chain beyond direct production, such as those from suppliers, logistics, product use, and disposal.

Last year, SK Innovation published its first net-zero special report, presenting a carbon emission roadmap by sector including Scope 3. Notably, while last year's report targeted a 45% reduction by 2030 and 75% by 2050 for Scope 3, the report released at the end of August this year significantly strengthened these targets.

Generally, companies disclose greenhouse gas emissions for Scopes 1 and 2 and provide broad reduction plans. In contrast, SK Innovation has expanded its responsibility for carbon emissions to encompass the entire business structure.

This year, the company introduced a 'Beyond Net Zero' strategy, aiming not only to achieve net zero but also to increase its contribution to global carbon reduction. Through expanding various eco-friendly and low-carbon businesses such as ▲eco-friendly bio aviation fuel ▲electric vehicle batteries ▲plastic recycling ▲battery metal recovery and reuse, SK Innovation aims to contribute to reducing over 100 million tons of carbon by 2050.

Eco-friendly Strategy Anchored on Two Pillars: Anchoring & Transformation

SK Innovation operates six business divisions: petroleum, chemicals, lubricants, information materials, batteries, and oil exploration, with eight subsidiaries under its umbrella.

The two core pillars of SK Innovation's eco-friendly strategy are 'Green Anchoring,' shifting the business portfolio center from carbon to green, and 'Green Transformation,' converting existing carbon businesses into green businesses.

Strengthened by the spin-off of SK On, the battery business pursues the Green Anchoring strategy. This means expanding the battery value chain centered on the battery business to include finished battery cells (SK On), separators (SKIET), battery recycling, and next-generation materials.

SK Innovation began serious investment in the battery business in 2017 and has risen to third place globally in cumulative orders. Its supply capacity continues to expand, with projections of 200GWh by 2025 and over 500GWh by 2030.

[Image source=Yonhap News]

At the heart of the Green Transformation strategy is the plastic recycling business. According to Samil PwC Management Research Institute, the global plastic recycling market is expected to grow from $36.8 billion in 2019 at an average annual rate of 7.4%, reaching $63.8 billion by 2027.

SK Geo Centric, SK Innovation's chemical subsidiary, is pursuing the plastic recycling business under the goal of becoming an eco-friendly 'urban oil field' company. It plans to invest approximately 600 billion KRW by 2025 and establish a recycling cluster in Ulsan.

SK Innovation has established the direction of its subsidiaries as 'portfolio designers & developers,' strengthening integrated research and development (R&D), business development, and mergers and acquisitions (M&A) capabilities to secure future growth opportunities and maintain focus. At the same time, it clearly defines its role as an intermediate holding company leading the 'Carbon to Green' transition by functioning as an expert organization.

Kim Jun, Vice Chairman of SK Innovation, said, "We will drive future growth through the development of differentiated technology-based zero-carbon and low-carbon energy and a circular economy-centered eco-friendly portfolio." He added, "We will build our portfolio focusing on electrification, where electricity becomes the core of energy, and on recycling waste and materials."