SK Innovation, Korea’s first oil refining company, which has grown into the nation’s top oil refinery and chemical company, has a plan to change its corporate identity “from carbon to green.” The company made the announcement at its SK Innovation Story Day, which was held in Seoul, South Korea, earlier this month. Along with over 200 domestic and foreign market participants and media officials, SK Innovation CEO & President Jun Kim and Chairman of the Board of Directors Jong-hoon Kim were in attendance.
How does an oil company go from carbon to green?
The company announced a “complete shift in the central axis of business” and stated that it plans to move from a carbon business to a green business. During its New Year’s management policy earlier this year, the company announced its new identity as a “green energy & materials company.”
Kim, along with the company’s management, shared three key strategies as to how they plan to achieve this:
1. Green Anchoring: Reinforcing a green business through batteries, battery separators, and battery metal recycle.
2. Green Transformation: Transformation to a circular economy such as 100% recycling of waste plastics.
3. Early achievement of net-zero greenhouse gas emissions.
SK Innovation announced that its current battery order backlog is “1 Terawatt + α.” The company plans to become the global number 1. The company noted in its press release that there are two companies that have won orders for more than a terawatt in the battery industry and that it is joining them.
“We are pursuing to produce the safest, fastest, longest-running battery, and safety is the most important value,” President Jee said. “This is why vehicles loaded with SK batteries have never had a battery-related fire accident and as a result orders have increased rapidly.”
The company also plans to increase its production scale. President Jee stated, “From the current 40GWh level, it is expected to reach 85GWh in 2023, 200GWh in 2025, and more than 500GWh in 2030, and in terms of EBITDA, after marking a turnaround this year, we will be able to generate 1 trillion won in 2023 and 2.5 trillion won in 2025.”
CEO & President Jun Kim added, “We will raise the EBITDA of the separator business from 300 billion won as of 2021 to 1.4 trillion won by 2025, achieving an ‘EBITDA of trillion won’ and nurturing the business as the core of green business.”
Waste Battery Recycling
The company’s Battery Metal Recycling (BMR) project developed a lithium recovery technology based on accumulated refinery technologies and applied a total of 54 patents that are related to the technology under the slogan of “picking batteries out of batteries.” This project aims to reduce carbon generated from lithium mining by 40–70%.
Trial production is expected to begin sometime in 2022, with the goal of operating a plant for commercial production at home and abroad in 2024. The company hopes to recycle 30GWh of batteries in 2025 while generating an EBITDA of around 300 billion won in the battery recycling business.
SK Innovation also announced that it will expand its business to more areas — Energy Storage Systems (ESS), electric vehicles and flying cars, robots — based on its battery leadership. This includes a Battery as a Service (BaaS) platform for the efficient management of the life cycle of batteries.
Circular Economy, Chemical Recycling, & Net Zero
CEO & President Jun Kim shared the ultimate goal of the company’s green strategy. “The ultimate goal of SK Innovation’s green strategy is to leave no trace of fossil fuel use (‘No Footprint Left Behind’) and we will recycle 100% of plastic we produce domestically in order to build a circular economy model.”
SK Innovation’s subsidiary, SK Global Chemical, is introducing a business model of “Urban Oil Field” that will produce oil from waste plastic — making plastic with raw materials from waste plastic. The company is embracing chemical recycling and sees it as eco-friendly compared to the production process of glass and steel.
“Plastic is eco-friendly in the production process compared to glass and steel, but the problem is that the recycling rate is low,” said Kyung-soo Na, CEO of SK Global Chemical, adding, “We will view the plastic issue as a growth opportunity rather than a crisis, and become a recycling and eco-friendly material company.
“Based on our own technologies and capabilities secured through global M&As, we aim to recycle 100% of plastics produced at home and abroad, or more than 2.5 million tons per year as of 2027, and reduce usage and increase the proportion of eco-friendly products to 100%.”
I recently wrote an article about chemical recycling and included a study that showed that it’s actually more harmful, so I am a bit biased against that form or recycling. However, I think that SK Innovation as an oil company is taking some major steps toward its goals here.
Compared to Shell’s greenwashing of its tanker full of fossil fuels as “carbon neutral,” the plan that SK Innovation laid out is more grounded and well thought out. The fact that we have an oil company embracing battery technology is highly notable here, and I think that it could be a blueprint for other companies such as Shell, ExxonMobil, and other leaders in the fossil fuel industry. They could follow if they truly wanted to embrace clean energy.
So far, it’s one of the best ‘”green” plans I’ve seen pitched from an oil company. The idea of petrochemicals doesn’t sit with me, but let’s face it, humans love their plastic. Plastic is everywhere — in our bodies, in our clothes, in our skincare products, in our cupboards, in our cars — it’s a versatile material that can be used for many things. To stop using it, we need to stop accepting it. Otherwise, there will always be producers.