One of South Korea’s largest conglomerates faces backlash from activist groups after finalizing major Australian liquefied natural gas deal months after pledging to end new overseas oil and gas investment .
The close scrutiny of the SK Group, one of Asia’s leading oil producers, electric vehicle batteries and computer chips, comes as activists turn to overseas oil and gas projects estimated at more than $ 100 billion in the wake of successful campaigns prevent companies and countries from investing in coal.
Environmental groups have claimed that SK’s decision in March to spend $ 1.4 billion to develop the offshore Barossa-Caldita gas field contradicts a commitment made in November to abandon new investments in fossil fuels. The promise from SK, Korea’s third largest conglomerate, was part of a pivot towards environmental, social and governance investments led by Chey Tae-won, its chairman and largest shareholder.
“The huge amount of greenhouse gases from the Barossa-Caldita project will raise serious doubts about the SK Group’s ESG initiative, and more importantly, it will undermine global efforts to mitigate climate change by reducing gas emissions. greenhouse, ”said a letter sent to Chey. by dozens of South Korean, Australian and international environmental groups, including Greenpeace.
SK’s energy unit said the development would reduce “almost all” carbon emissions by using carbon capture and storage, a nascent technology which traps CO2 and directs it to deep underground reservoirs, as well as through the purchase of carbon credits.
“Our investment was made on the condition that LNG is developed in an environmentally friendly and low-carbon manner,” said SK E&S.
Chey, who controls the group’s assets of more than $ 200 billion, oversaw a multi-year program SK portfolio readjustment, including divestments of billions of dollars of oil and gas exploration and retail assets.
Barossa-Caldita, the Timor Sea project led by Australian producer Santos, is expected to deliver LNG to South Korea for 20 years from 2025. SK argued that Barossa-Caldita should not be seen as a new development, noting that he has spent $ 600 million on the project since 2012.
Activists described SK’s claims about carbon-free LNG, which is natural gas that has been refrigerated so that it can be transported on ships, as “blatant green laundering”.
“So-called CO2-free LNG. . . is not only grossly misleading but also lacks economic or technical feasibility. . . any attempt to green fossil fuel development with unverified CCS plans devoid of technological or economic feasibility is unacceptable, ”the letter said.
The dispute comes amid mounting pressure on the oil and gas sector as governments promise to reduce carbon emissions.
The International Energy Agency warned last month that to bring global warming under control, all new oil and gas exploration projects must stop this year; and that a trillion-dollar increase in spending on low-carbon technologies is urgently needed.
South Korea was the eighth carbon emitter last year and only gets 5% of its electricity from renewable sources. The country is hard to demonstrate how it will deliver on President Moon Jae-in’s pledge to achieve carbon neutrality by 2050.
Many companies and policymakers believe that LNG is a crucial transitional fuel for economies heavily dependent on coal, like South Korea.
However, environmentalists have said that beyond the carbon emitted during final consumption, LNG also releases significant amounts of greenhouse gases during processes such as mining, processing and transportation.
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