LG Chem, First Domestic Company to Directly Purchase Renewable Energy in China

[Asia Economy Reporter Hwang Yoon-joo] LG Chem is actively introducing renewable energy, known as "clean electricity," to its global sites to achieve carbon-neutral growth by 2050.

On the 13th, LG Chem announced that its cathode material plant in Wuxi, Jiangsu Province, China, signed a contract to procure approximately 140 GWh of renewable energy annually from Yoonpung New Energy, a local wind/solar power seller. The 140 GWh amount is enough to supply electricity for over 30,000 households for one year and can cover all the power needs of the Wuxi cathode material plant.

This contract is based on a PPA (Power Purchase Agreement) method, where eco-friendly electricity generated from wind and solar power is supplied directly to the factory without intermediaries. LG Chem is the first Korean company operating in China to apply this method. The PPA is a system where renewable energy producers and consumers sign direct contracts to procure electricity at a fixed price.

Compared to other renewable energy supply methods such as purchasing RECs (Renewable Energy Certificates) or self-generation, the PPA allows stable procurement at a more cost-effective price. It also has the advantage of universality, as it is recognized globally as a carbon reduction activity.

In fact, since 2021, LG Chem’s Wuxi cathode material plant has been operating solely on renewable energy, which is expected to reduce carbon emissions by 100,000 tons compared to conventional industrial power. This carbon reduction effect is equivalent to planting 1.7 million pine trees annually, and it proactively responds to carbon emission regulations in China while also improving economic efficiency compared to using traditional industrial electricity.

◆ Achieving over 90% Carbon Neutrality in Battery Materials in China through 'Precursor-Cathode Material' Chain

Following the Wuxi cathode material plant, LG Chem plans to convert its precursor plant in Zhejiang Province to renewable energy power through PPA by next year, aiming to achieve over 90% carbon neutrality in the battery materials sector in China through the 'precursor-cathode material' chain.

An LG Chem official stated, "Since there is almost no direct carbon emission in the production process of precursors and cathode materials, switching only the power used in production to renewable energy can achieve over 90% carbon neutrality." To meet the rapidly increasing demand for battery materials due to the expansion of electric vehicle adoption, LG Chem established a precursor plant in Quzhou, Zhejiang Province, and a cathode material plant in Wuxi, Jiangsu Province, each with an annual capacity of 40,000 tons, in partnership with Huayou Cobalt, the world's largest cobalt refiner. Both plants have been in full operation since the end of October this year.

Precursors are raw materials for cathode materials, manufactured by combining cobalt, nickel, manganese, and others. When lithium is combined with precursors, it becomes cathode material, a core battery component. All precursors and cathode materials produced at LG Chem’s Quzhou and Wuxi plants are supplied to its subsidiary LG Energy Solution’s battery plants in Nanjing (for small batteries, electric vehicles, and ESS) and in Wroclaw, Poland (for electric vehicles).

Meanwhile, in July, LG Chem became the first chemical company in Korea to declare ‘Carbon Neutral Growth’ by 2050, aiming to make net carbon emissions zero and actively pursuing carbon reduction.

LG Chem is the first Korean company to declare and actively promote ‘RE100 (Renewable Energy 100),’ replacing 100% of the energy used at all its global sites with renewable energy. It is also accelerating product development for the virtuous cycle of waste plastic resources, including eco-friendly PCR (Post-Consumer Recycled) plastics and biodegradable plastic materials.

Last month, LG Chem signed a strategic partnership with Neste, the world’s largest biodiesel company based in Finland, to produce eco-friendly resins from bio-based raw materials.

Vice Chairman Shin Hak-cheol said, "The PPA initiative in China is one of the important strategies to realize LG Chem’s promised 2050 carbon-neutral growth. We will continue to actively secure renewable energy both domestically and internationally to achieve RE100 and firmly establish our position as a leading sustainability company."