SK Inno introduces 'Internal Carbon Pricing'... "Converting Carbon Emissions into Costs"

Mid-November Board Report Completed... Full Implementation Ahead

[Asia Economy Reporter Choi Seoyoon] SK Innovation announced on the 27th that it will introduce an 'Internal Carbon Pricing' system that independently sets a price (cost) for carbon emissions.

The core of the internal carbon pricing system is to internally set carbon prices reflecting future carbon price changes and apply them during investment proposal reviews.

Investments that reduce carbon emissions are reflected as 'value,' while those that increase emissions are reflected as 'cost,' allowing a comprehensive review of investment economics.

In other words, investments that reduce carbon emissions see an increase in economic feasibility, whereas investments expected to emit more carbon due to new plant expansions see a decrease in economic feasibility, enabling prioritization of execution from an ESG perspective.

The proposed system improvement was reported to the board of directors in mid-month and is about to be fully implemented.

SK Innovation stated that, from the perspective of enhancing the execution of the net-zero roadmap announced last year, it set internal carbon prices at a reasonable level by considering future carbon price scenarios predicted by various global specialized institutions.

Until 2030, prices are diversified by major regions where global business sites are located, such as the European Union (EU), the United States, and Korea, set at $40?95 per ton in 2025, $60?105 in 2027, with mid- to long-term prices set at $120 in 2030 and $200 in 2040.

SK Innovation plans to include global carbon emission allowance prices as key indicators that significantly impact management performance, alongside oil prices and exchange rates.

To this end, SK Innovation and related departments of its eight subsidiary business companies will closely monitor market trends and continuously seek management and response measures.

Kim Taejin, Chair of SK Innovation’s Board ESG Committee, said, “The introduction of internal carbon pricing reflects future carbon prices as costs in management decision-making and aligns with external stakeholders’ expectations to disclose whether it is introduced.” He added, “The board will do its best to sustain current achievements in carbon reduction and overall ESG.”