Can Korean Petrochemical Companies cope with International Regulations?

"Plastic pollution is like an infectious disease" said UNEA President Esfen Bas-Aide

22-26 February 2021. Nairobi

Since the Paris Agreement, we have been asked to manage the entire cycle from plastic production to disposal... Only negotiations on binding power remain. What is the trend of petrochemical companies in Korea?

UN 175 countries agree on plastic pollution control...create an executive agreement by 2024

The United Nations has agreed to create the world's first plastic pollution control agreement to block plastic pollution. In the future, companies around the world will be obliged to carry out ESG management in the environmental sector, which is responsible for the entire process of plastic production, distribution, and disposal.

UN Environmental Council Agree to End Plastic Pollution

Where?: 5th UNEA held in Nairobi, Kenya
Who?: United Nations' top environmental decision-making body
What?: End of Plastic Pollution: Internationally Binding Policy

In March this year, negotiators from 175 countries around the world approved the resolution at the 5th United Nations Conference on the Environment (UNEA). The plan is to regulate pollution by tracking the entire life cycle from plastic production to disposal. The historic resolution was attended by 1,500 online participants from 175 UN member states, including 79 ministers and 17 senior officials. Accordingly, the participating countries decided to create a legally binding treaty on plastic pollution. Details will be released later through the negotiation process.

The resolution calls for the establishment of an Intergovernmental Negotiation Committee (INC), which will begin in 2022, based on draft resolutions from various countries. It also plans to draw up a global legally binding agreement by the end of 2024. The agreement becomes a legally binding device for the management of the entire life cycle of plastic, the design of reusable and recyclable products and materials, and scientific and technical cooperation.

More Information,

My previous post about "Plastic" killing whales in the Arctic Ocean

Wet Wipes that Kill The Sea. 90% of them are Plastic...
The Whale's Scream...

Accelerating ESG operations such as petrochemical companies 

Greenhouse gas emissions from plastic production, use, and disposal are enormous. By 2050, it accounts for 15 percent of greenhouse gas emissions, which are aimed at limiting global warming to 1.5°C. In addition, more than 800 species of creatures living in the sea and coastal areas are exposed to risks such as plastic intake and entanglement.

The agreement is significant in that it is not limited to marine plastic pollution and has decided to enact a binding agreement focusing on the electro-cyclical management of plastic. If the treaty is materialized, ESG management and economic ripple effects of petrochemical companies around the world are expected to be significant.

South Korea's government and environment minister officially expressed support for the resolution.

What is the trend of Korean petrochemical companies?

As the era of carbon neutrality has begun in earnest and plastic regulations made of fossil fuels have been tightened, the Korean petrochemical industry is eager to develop "corrupting plastics" as well as recycling waste plastics. 

White bio, a rotting plastic, refers to the production of materials and energy by utilizing biological resources such as plants and biotechnology. A typical example is biodegradable bioplastics, which have a decomposition period of less than 5 years, which is eco-friendly than plastic bottles that take 450 years.

How is LG Chem, Korea's leading petrochemical company?

LG Chem plans to achieve 'Net-Zero' by 2050 by raising its carbon reduction target this year. In order for LG Chem to achieve its new goal, it is necessary to reduce a total of 20 million tons compared to its expected carbon emissions in 2050. It is the amount of carbon emitted by 8.3 million fossil fuel vehicles for a year, and it can be offset only by planting about 140 million pine trees.

LG Chem has started manufacturing and commercializing corn-based bioplastics

LG Chem has signed a major condition agreement (HOA) with Archer Daniels Midland (ADM), one of the world's four major grain processing companies, to establish a joint venture.

The two companies plan to sign the main contract in the first quarter of next year and build a 75,000-ton PLA plant and an LA plant in the U.S. by 2025.

PLA is a representative biodegradable plastic made of LA processed by presenting and refining glucose extracted from corn. It is produced from 100% bio-materials and is mainly used in food packaging containers and tableware, and is characterized by natural decomposition within months by microorganisms under certain conditions.

LG Chem plans to target the bio-plastic market based on PLA production. In particular, as part of its sustainable strategy, it plans to speed up commercialization of biodegradable resins that can contribute to coping with climate change and solving environmental problems such as waste plastic.

Leads Renewable Energy Conversion and Plastic Circulation

By the first quarter of 2024, the nation's first supercritical pyrolysis oil plant will be built in Dangjin, South Chungcheong Province, with an annual capacity of 20,000 tons. Pyrolysis oil is a renewable fuel that can be extracted from the used plastic and can be used as a raw material for making new plastic.

Meanwhile, LG Chem's stock price is...?

KRX: 051910

year-long stock trend -39.32%

Stock prices have fallen considerably due to Russia's invasion of Ukraine and the injection of LG Energy Solutions, plunging 28% in a month.

In the past month, foreigners and institutional investors have lost more than $70 million due to LG Chem. Foreigners and institutions are also suffering considerable losses as LG Chem's stock price continues to hit new low prices day after day.