[The Editors' Verdict] Misconceptions and Truths About RE100 for Carbon Neutrality

Recently, the focus of corporate management has been ESG (Environmental, Social, and Governance). Non-financial factors such as eco-friendliness, social responsibility, and governance have emerged as core elements of management. The origin of considering these non-financial factors in investment dates back to the Pax World Fund, which prohibited investments of U.S. church funds in companies profiting from the Vietnam War. Subsequently, social issues like racial discrimination were added, and the 1989 Exxon Valdez oil spill, the worst marine environmental disaster in history, became a catalyst for demanding environmental responsibility management. In the 2000s, this evolved into a core ESG indicator, manifesting as demands for corporate climate change response. A representative example is the Norwegian Government Pension Fund, the world's largest sovereign wealth fund, including Korea Electric Power Corporation (KEPCO), which operates coal businesses, in its list of prohibited investments.

RE100 is a method to comply with ESG demands for climate change response. It means supplying 100% of a company's required energy from renewable sources. To claim RE100 membership, companies must submit an implementation plan to the RE100 Project Committee, a private organization, and report their annual performance. Currently, 298 companies, including Apple and Google, are members. In Korea, SK Group became the first to join last year. Participation in RE100 not only enhances a company's eco-friendly image but also serves as a management strategy to cope with anticipated trade barriers such as carbon border taxes.

RE100 requires annual performance recognition. There are two ways to be recognized by RE100. One is to generate power independently through wind or solar energy or purchase it directly. Buying renewable energy certificates from power producers is another method. The essence of RE100 lies in prioritizing renewable energy sources such as wind and solar, whether self-produced or purchased. The second method is using electricity generated from hydropower, geothermal power, or other energy sources that do not emit greenhouse gases. Therefore, although not explicitly stated, using nuclear power can also meet RE100 requirements. Since RE100 is based on carbon neutrality to address climate change, it embraces any energy source that does not emit greenhouse gases. Hence, the claim that only 100% renewable energy must be used to be recognized for RE100 implementation is a misunderstanding.

In 2018, Google announced its policy of using carbon-free energy, admitting that while RE100 can be satisfied with solar and wind power alone, achieving ultimate carbon neutrality is not possible. To offset electricity purchased from thermal power plants during nighttime or windless periods, they over-purchase renewable energy during daytime or windy days, superficially achieving RE100 but not practically avoiding carbon emissions. Google proposed a carbon-free energy policy including nuclear power to exclude greenhouse gas energy, supplying round-the-clock power to data centers requiring 24-hour electricity. This is possible because RE100 recognizes nuclear power as a carbon-free energy source.

If RE100 is considered the exclusive domain of solar and wind power, it will be extremely difficult for Korean companies to achieve RE100. The solution is simple: expand direct electricity trading so that companies pursuing RE100 can purchase electricity generated by nuclear power directly. Last month, the National Assembly amended the Electricity Business Act to allow companies to purchase renewable energy directly from sources other than Korea Electric Power Corporation (KEPCO), but this alone is insufficient to achieve RE100. The dogma of "only renewable energy" must be set aside not only for the social imperative of responding to the climate crisis but also for corporate survival.

Jung Dong-wook, Professor, Department of Energy Systems Engineering, Chung-Ang University