Hyundai Motor has a climate dilemma at one of world's top car plants

Hyundai Motor will study alternatives to a gas-fired power station for one of the world's biggest automobile plants after criticism the decision contradicts pledges to shift entirely to clean energy

Hyundai Motor Co. will study alternatives to a gas-fired power station for one of the world’s biggest automobile plants after criticism the decision contradicts pledges to shift entirely to clean energy.
 

The South Korean automaker signaled it aims to construct a liquefied natural gas facility to supply electricity to the Ulsan factory, which can churn out around 1.4 million vehicles a year and accounts for about a quarter of the company’s production.

Those proposals came after the company said in April that four key units, including Hyundai Motor and Kia Corp., would aim to move to 100% renewables as soon as 2040 and join the RE100 initiative, under which companies commit to end their use of fossil fuels. 

Climate-focused campaign groups including Greenpeace and Action Speaks Louder argue the LNG plant won’t align with the Hyundai’s announcements on climate action, and say there’s a risk the power station would become a stranded asset because of the volatility in gas prices and the declining cost of renewable energy. 

“Hyundai is fully committed to its carbon neutrality goal and global sustainability targets,” the company said in an emailed response to questions. “We will review the plan and look to see if there are any viable alternative options.” Hyundai plans to zero out emissions from its operations by 2045.

The company’s struggle to satisfy climate-focused investors and campaigners is another illustration of the difficulties energy-hungry manufacturers face in South Korea. Fossil fuels accounted for more than 60% of the country’s electricity generation in 2020, and major companies like Samsung Electronics Co. have highlighted the challenges to transition to cleaner power sources.

Floating solar panels manufactured by Hanwha on the Hapcheon Dam. (Photo: Bloomberg)

South Korea is aiming to zero out emissions by mid-century, though has been struggling to ramp up its use of renewables because of a lack of space and unfavorable environment for solar and wind.

Hyundai has considered LNG as it’s less polluting than coal, and intends to examine prospects to reduce the emissions further by co-firing natural gas with hydrogen, Kim Dong Wook, executive vice president at the company’s business coordination team, told reporters last week on the sidelines of the 2022 World Gas Conference in Daegu.

“It’s a matter of deciding whether we should continue to depend on the national grid, which heavily depends on coal, or source our own electricity with the cleanest form of fossil fuels,” Kim said.