LG Chem to purchase renewable energy from China

The company has concluded an agreement to supply 140 GWh of renewable energy from Yunfengxin Energy

To achieve carbon-neutral growth by 2050 on its global operation sites, LG Chem has concluded an agreement to supply 140 GWh of renewable energy for the cathode materials factory (Leyou New Energy Materials) in Wuxi, Jiangsu Province, China from the local wind and solar power sales company Yunfengxin Energy.

The deal was reached as a power purchase agreement (PPA), in which eco-friendly electricity generated through wind and solar power is supplied directly to the factory without an intermediary. LG Chem is the first Korean company operating in China to use this form of agreement.

The capacity of 140 GWh can power approximately 30,000 households for a year, which can supply all electricity required by the cathode materials factory in Wuxi.

LG Chem’s Wuxi cathode material factory is projected to operate solely using renewable energy from 2021, reducing 100,000 tons of carbon emissions compared to the conventional use of industrial power.

While reducing emissions at a rate equivalent to planting 1.7 million trees, this measure will also boost cost-efficiency vis-à-vis using the conventional form of industrial electricity.

To achieve over 90% carbon neutrality in China for battery materials, including precursors and cathodes, LG Chem plans to review the transition of its precursor factory in Zhejiang Province to renewable energy through a PPA by 2021, in addition to the Wuxi cathode materials factory this year.

“Since the manufacturing processes for precursors and cathodes produce minimal carbon emissions, we can achieve over 90% carbon neutrality by transitioning the power source to renewable energy,” explained an LG Chem associate.

To respond to the rapidly increasing demand for battery materials with the growth of the electric vehicle market, LG Chem has collaborated with Huayou Cobalt, the No. 1 cobalt refining company in the world, to establish a precursor factory in Quzhou, Zhejiang Province, and a cathode materials factory in Wuxi, Jiangsu Province with an annual production capacity of 40,000 tons. Both factories started full operations at the end of 2019.

Meanwhile, in July, LG Chem became the first company in the Korean chemicals industry to declare and act on the carbon-neutral growth plan, which seeks to reduce the net increase of carbon emissions down to zero by 2050. In November, it also concluded a strategic partnership agreement with Neste of Finland, the world’s largest biodiesel company, to manufacture eco-friendly resin using biomaterials. 

“The conclusion of this PPA in China is a key strategic move towards LG Chem’s promise of achieving carbon-neutral growth by 2050,” remarked CEO Hak Cheol Shin. “To achieve RE100, we will continue to solidify our standing as a pioneer in sustainability by actively promoting efforts to secure renewable energy in Korea and abroad,” he added.