RE100 was launched back in 2014 as a voluntary global initiative wherein participating electricity consumers voluntarily declare to source 100% of their electricity consumption needs from renewable energy sources.  As of July 2019, a total of 185 global companies, including Google, Apple and BMW, are participating in the initiative. 

In response to the effects of climate change, Korea has implemented an emissions trading system aiming to reduce carbon emissions.  However, even until now, Korean companies have not been able to participate in the RE100 initiative due to the lack of an institutional framework to support RE100 in Korea.  As major global companies are participating in this global campaign, and as a result encouraging their business partners to use renewable sources to meet their energy needs, we expect a series of systems to be introduced that will allow the purchase of electricity generated from new renewable sources.  In this regard, it appears that the time is ripe to seriously consider switching to renewable energy.  Recently, the Ministry of Trade, Industry and Energy has announced that it will prepare relevant systems to finally introduce the RE100 initiative in Korea. 

By using renewable energy, businesses can increase their corporate value. 

Participation in RE100 is not just limited to manufacturers, and any other company using electricity can also participate in RE100.  These days, environmental issues are no longer confined just to companies that generate air, water and soil pollutants.  In fact, a company’s use of renewable energy may serve as an indicator on how much attention the company is paying to issues concerning climate change and sustainable growth, which may potentially affect the behavior of Korean consumers who are sensitive about environmental issues. 

Moreover, if the use of renewable energy becomes an assessment factor for the ESG (Environment, Social and Governance) rating, it will certainly influence investors’ decision-making.  For major global companies that have joined RE100, the use of renewable sources will serve as an important factor in selecting business partners.  Ultimately, from the business perspective, companies will benefit from the use of renewable energy. 

There are still many challenges to overcome to expand the use of renewable energy. 

In Korea, Korea Electric Power Corporation (“KEPCO”) has the exclusive right to sell electricity.  Until recently, there was no system in Korea that enabled consumers to purchase electricity generated from renewable sources.  However, since November 2019, the government has implemented a pilot program named “green pricing system,” whereby “certificates of origin” (also referred to as renewable energy guarantee of origin certificates, or REGOs) are issued for electricity derived solely from renewable sources.  As such, the government is making efforts to lay an institutional foundation to declare their commitments to RE100. 

Under the “green pricing system,” which is scheduled to become available from next year, certificates of origin are issued for the purchase of renewable energy by adding a certain level of premium to existing electricity prices.  In addition, the government is considering to introduce other systems through which consumers and renewable power producers can directly or indirectly transact with one another. 

It is expected that discussions will take place as to matters concerning institutional improvement, encompassing additional amendments to applicable laws, improvement of KEPCO’s power generation structure, and subsidies to support producers of renewable energy.  In this regard, we believe that it is necessary to monitor institutional changes and to make sure that the opinions of companies, who are in fact potential participants in the newly created system, are appropriately reflected in the aforesaid discussions.