Competitiveness hinges on climate action Must seek innovative ways toward carbon-free production The new Global Risks Report for this year was disclosed by the World Economic Forum this month. It contains leading insights on the evolving global risks landscape from 1,490 experts across academia, business, government, the international community and civil society. Similar to the 2023 report, climate-related risks - extreme weather events, critical changes to Earth systems, and biodiversity loss and ecosystem collapse - again were the top three risks in terms of severity over a 10-year period. This implies that the competitiveness of global corporations is contingent on improved climate action. Setting the world on a path to reaching climate targets to secure a habitable planet for ourselves and our children, requires that corporations enhance energy efficiency and make an expeditious shift from reliance on fossil fuels to embracing renewable energy sources in order to curb all greenhouse gas (GHG) emissio ns as fast and as ambitiously as possible. On Monday, the Korean government unveiled plans to build a colossal 622 trillion won ($471 billion) mega chip cluster in Gyeonggi Province. This ambitious endeavor aims to solidify Korea's position as a global hub for semiconductor manufacturing and innovation. Within what will probably be the world's largest semiconductor cluster if completed, Samsung Electronics is slated to build six new fabs in Yongin, with an investment totaling 360 trillion won. The No. 1 memory chipmaker also plans to build three more fabs in Pyeongtaek with an investment of 120 trillion won, and an additional three research fabrication plants at an R and D center in the Giheung District of Yongin, incurring a cost of 20 trillion won. SK Hynix, the No. 2 memory chipmaker, is already constructing four fabs situated in Yongin with an investment of 122 trillion won. Although the scale of this initiative is noteworthy, it is crucial to scrutinize its implications concerning electricity use and consequently, GHG emissions. Samsung Electronics and SK hynix are the top 2 electricity users in Korea, consuming 32 terawatt-hours (TWh) in 2022, with 22 TWh attributed to Samsung Electronics and 10 TWh to SK hynix. Since the total electricity demand of Denmark in 2022 was 36 TWh, one can easily imagine how big the total power demand of the two chipmakers really is. The total power consumption of the two semiconductor companies more than doubled from 2015 to 2022. Due to the fact that fossil fuels, particularly coal and gas, constitute over 60 percent of electricity production in Korea, the GHG emissions of Samsung Electronics and SK hynix saw a corresponding rise of 123 percent and 78 percent, respectively, during the same period. Even though the Korean government introduced the Korean Emission Trading Scheme (K-ETS) as the main tool to reduce national GHG emissions, it largely failed to curb the emissions. In fact, the two Korean chipmakers were the top two climate villains under the Korea Emissions Tra ding Scheme (K-ETS) because they increased their emissions the most among the top 30 emitters under the scheme. However, due to increasing pressure from their business clients, investors, consumers and civil society, both SK hynix and Samsung Electronics announced their vision for climate action and joined the global RE100 (renewable electricity 100 percent) initiative to increase their renewable electricity procurement and set a goal of achieving 100 percent renewable electricity procurement by 2050. Nevertheless, the 2050 RE100 goals set by the two Korean chipmakers remain critically insufficient in their contributions to global climate action. Furthermore, these goals are considerably less ambitious compared to the average target year of RE100 members, which is 2031. Despite this, the global community welcomed the small progress made by these companies, seen as a positive step forward in the context of climate efforts. Yet, there is no serious and substantial consideration of the climate in the seemingl y ambitious government plans for the world's largest semiconductor cluster. President Yoon Suk Yeol said, "Nuclear power plants in the country will provide a stable power supply to the new chip cluster." However, regardless of whether it is possible to increase the additional nuclear power (by more than 10GW) in time - in a country, which already has the world's highest density of nuclear power - the president's nuclear dream is not helping the two Korean chipmakers' strategy as they try to respond to the increasing pressure from their clients, investors and consumers for more renewable electricity procurement. While the two Korean chipmakers are struggling to procure high-impact renewable power, their rival, TSMC of Taiwan, is staying ahead of the competition to produce the first carbon-free chip with better support and vision by its government and society. The absence of a comprehensive plan to utilize carbon-free renewable electricity is a glaring oversight. The Korean government must rethink its strateg y, incorporating a robust commitment to renewable energy. Also, the chipmakers themselves must find innovative ways and proactively invest in meeting their RE100 targets and therefore climate commitments. Source: Yonhap News Agency
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