SK Innovation Introduces Internal Carbon Pricing System to Strengthen its Global Net Zero Leadership
SK Innovation said on its official website that it would strengthen its global Net Zero leadership by implementing an Internal Carbon Pricing System.
The Internal Carbon Pricing System's fundamental function is to set internal carbon pricing to reflect changes in future carbon prices and use them in investment decisions. This is to assess the economic feasibility of investments from a broader viewpoint, including future carbon values, in addition to existing investment evaluation parameters, while also actively reducing carbon emissions when supporting new businesses.
Under this scheme, reducing carbon emissions raises the “values” of investments. But on the other hand, as emissions go up, so do their "costs." This makes it possible to do a full analysis of whether or not an investment makes economic sense. In other words, since reducing carbon emissions improves the economic feasibility of investment and the increased potential carbon emissions from the expansion of new plants reduce the economic feasibility, priorities can be determined from an ESG perspective.
SK Innovation said that it had set the internal carbon price at a reasonable level, taking into account what different professional groups around the world had said about the future of carbon prices, to make the net zero roadmaps announced last year easier to put into action.
Prices will be set at USD 40 to 95 per tonne in 2025 and USD 60 to 105 per tonne in 2027 by significant regions with global business sites such as the EU, the US, and Korea by 2030. In the mid-to-long term, prices will be USD 120 per tonne in 2030 and USD 200 per tonne in 2040.
In the future, SK Innovation intends to manage global carbon credit pricing as a major indication that, together with oil prices and exchange rates, has a significant impact on business performance. To reach this goal, SK Innovation and the relevant departments of its eight subsidiaries have agreed to keep an eye on how the market changes and keep looking for ways to respond.
Meanwhile, after the declaration of the All Time Net Zero vision during the company's 60th anniversary in October this year, SK Innovation is reinforcing its ESG leadership by creating an internal carbon price system. SK Innovation has produced demonstrable achievements as of 2022 through the systematic implementation of its Net Zero strategy, cutting greenhouse gas emissions by more than 15% compared to 2019.
Kim Tae-jin, Chairman of ESG Committee, SK Innovation’s Board of Directors, said:
“The implementation of the Internal Carbon Pricing is in line with the expectations of external stakeholders. The pricing reflects future carbon prices as costs in corporate management decisions and discloses whether they are appropriately applied. The Board will do its best to improve further the current carbon reduction and overall performance of ESG efforts.”
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Source: SK Innovation