How GHG consultants guide green solutions: an interview with Cho Jeaun

As companies strive to achieve net-zero goals, they often communicate with consulting firms specialized in such areas. This extensive interview with InnerGen's director Cho Jeaun introduced the intricate collaboration and a vital role that consulting firms play in leading corporations to a net-zero goal. It was impressive to learn the contributions of a greenhouse gas consulting firm, particularly the specific consulting cases that exhibited effects beyond emission reduction and made humanitarian impact.

Could you first introduce the company?

Our company is called Innergen. Innergen primarily functions as a consulting firm, supporting other companies' operations. We help companies calculate their greenhouse gas emissions and support them in complying with disclosure requirements, global initiatives, or national reporting formats. We also assist with tasks related to Korea's target management system and emissions trading scheme, enabling large companies to report their emissions to the government. 

Regarding greenhouse gas reduction performance evaluation, if companies demonstrate efforts to reduce their greenhouse gas emissions, we help them register methodologies that can be verified and validated nationally or globally to confirm their reduction methods. Alternatively, once the methodology is registered, we prepare reports detailing how much emissions the company has reduced.

What types of companies primarily seek this reduction performance evaluation or respond to greenhouse gas emission regulations?

Looking at the companies we support, we assist many large corporations in Korea. Among them, a recent notable example is SK e-move, a lubricant oil manufacturer. As we transition into the electric vehicle era, they are shifting towards utilizing lubricants in digital data centers. Yes, this approach reduces electricity consumption. So, they are now requesting the development of methodologies for this. With the advent of the AI era, the technology for this is being developed, and companies are emerging that develop methodologies for reducing electricity usage and greenhouse gas emissions based on this technological advancement. Traditionally, chemical companies used high-emission fuels like bunker fuel. Now, some chemical companies are requesting proof of emission reductions when switching to LNG or hydrogen. And for a more familiar example like Samsung Electronics, when we recently changed our electronics, we have apps like SmartThings or DingQ that tell us we're at the top energy efficiency grade. So, by developing technology for new refrigerators or new air conditioners, we're saving a certain amount of electricity per unit, reducing greenhouse gas emissions by this much. We're doing that through the app, and that's how we're achieving reductions in that area. Semiconductor companies like SK Hynix are also striving to develop new technologies to create more efficient semiconductors than in previous years. Domestic conglomerates primarily engage in projects where they develop methodologies for registering these efforts, then register the corresponding performance to obtain credits. Now, semiconductor companies, chemical companies, petroleum and lubricant companies, or AI-related enterprises are showing significant interest in developing new methodologies or approaches.

How are these methodologies created?

In our country, methodologies regulated by the government, specifically the Ministry of Environment, have registration conditions. One method involves developing a methodology according to these conditions and obtaining approval from the Ministry of Environment. Or, hold on a moment. I erased a few slides, so I deleted this part. In our country, when developing these methodologies, we create a principles-based report outlining how we will monitor, how reductions will be achieved, and how we will track reduction methods annually or biennially over several years. We then register with companies that voluntarily recognize these reduction methods, such as the Korean government, Europe, or internationally with VERA or Global Standard. emission reduction efforts. 

Then you must have many consulting cases. Among them, is there a case that stands out most in your memory or where you think the best methodology was developed?

Our company has developed various methodologies. Earlier, we discussed one for a chemical company utilizing byproduct hydrogen for hydrogen production, among others. What stands out most in my memory is a recent project in Tanzania, Africa, involving cashews. We have something like peanuts. The shells left over after eating these nuts contain a lot of oil. Burning them releases significant greenhouse gases into the atmosphere. However, instead of burning them, we use a process called pyrolysis. This involves heating them at high temperatures for an extended period, turning them into something like charcoal. We call this charcoal biochar. When this biochar is produced instead of burning the cashew shells, the carbon and CO2 are trapped within the biochar. For 100 or 200 years, this organic matter remains trapped in the biochar instead of being released as CO2 into the atmosphere. We can then use this biochar as soil or fertilizer. Turning cashew shells into biochar benefits farmers, reduces emissions, and increases cashew tree yields through this fertilizer. Developing such methodologies and actually implementing them in the field is a very positive endeavor. It contributes to economic development not just in developed countries like ours, but also in very poor nations, providing new opportunities for those people. and also contributes to economic development in very poor countries, giving those people new opportunities. Developing this methodology and actually going to the field to inspect it like this is a desirable thing. Although this project hasn't been registered 100% yet, we are using a methodology that has already been established. So biochar technology is considered one of the most promising technologies globally, ranking around second place. Yes, so instead of releasing it into the atmosphere, we create biochar through hot pyrolysis. While its application may vary depending on where the biochar is used, the process of making biochar itself seems to hold significant future potential.  It's a relatively new technology that wasn't widely used before, making this one of the most memorable consulting projects. 

So, how was this case implemented? Was it by a large Korean corporation?

It was a Korean company, but a small SME based in Korea. Future Green Chemical, this small SME, was thinking about what kind of business they could do in Tanzania or trading. As I mentioned earlier, cashew shells contain a lot of oil, so burning them produces a lot of CO2. They thought, ‘What if we extract that oil and sell it?’ After selling the oil, they started wondering what to do with the leftover shells. They realized that instead of burning them, they could make biochar and try to get carbon credits. That's how this approach began. So, the scale isn't large enough for a major corporation to approach, generating billions in emission credits. It's still at a very small, nascent stage. Currently in Africa, people burn the shells at home to crack open the cashews. Yes. When the cashew shells open, they eat the cashews inside and just discard the shells on the ground. Or, lacking processing technology, they export the whole cashews to places like Vietnam. 

Wow, this project seems to have produced very tangible results. 

Yes, this business has future scalability and offers a sense of fulfillment, which is why I became more interested in it. 

Then, in measuring corporate emissions and providing related consulting, what are the more challenging aspects you've encountered, or areas you hope will improve in the future? 

This part isn't so much difficult as it is a concern we have while working. The more emissions a company produces, the more effort they should make to reduce them, but that part isn't easy. This is because it requires significant investment. Historically, these were businesses that could generate substantial profits. But with the introduction of the emissions trading system, it's become like paying a tax—money that wasn't previously spent suddenly has to be paid. Consequently, companies inevitably focus less on investment or opportunity and more on how to reduce this cost, how to minimize the current expenditure. It's a situation where companies suddenly have to buy more emission credits each year because the emissions trading system was introduced, or because our country is strengthening it globally. So, how to respond to this varies depending on each company's position. Some companies actively advocate for clear recognition of our situation and exploring ways to obtain additional credits. However, the challenge is that many companies remain passive. Additionally, there are differing stances between the US and Europe. Immediately after President Trump's election, the US declared this system a scam. and declared that the U.S. would withdraw from it. This significant gap in approach leaves companies uncertain whether to respond proactively or explore other directions. Moreover, for industries like petrochemicals, which emit the largest volume of emissions, it's not straightforward to shift to a different business that doesn't generate emissions. They've invested trillions of won in facilities costing hundreds of billions or even tens of trillions of won. Moreover, there isn't a clear-cut technology available for that purpose at present.

So what I can do now is primarily support companies in securing favorable allocations to minimize their emissions risk. If they're overestimating their emissions and reporting high figures, I help them find ways to correct and report lower amounts. But at some point, this could become an enormous financial burden. So while we tell them they must respond this way, the companies themselves are increasingly troubled. This business inherently generates high emissions. It's difficult to abandon it, but continuing to monitor it means emissions keep growing. So, they're stuck in this situation where they don't know what to do.

The situation will only worsen going forward. That's why, whenever we provide consulting, we don't start from scratch each time. We assist as needed, tailoring our support to the situation. When a company is lacking, we help them quickly acquire solutions at a low cost. Or, when it's time to report, we help them report effectively. That's precisely the limit of what a consulting firm can do.

Since we're not the owner company, we can offer advice, but decisions, risk-taking, or seizing opportunities are ultimately up to the company. From the company's perspective, they hired us for help, but if we keep pushing for big investments, they might think, “Why pay for consulting? I can handle this myself.” We strive to provide benefits to the company in this middle ground, but we can't bring about substantial, large-scale change. This is somewhat disappointing and feels like a limitation.

You seem to be playing an important role. Earlier, on the petition website, there was mention of the emissions trading system and the target management system. I'm curious about how they interact and how they differ.

First, to put it simply, target managers, as the name suggests, set targets and can be seen as a preparatory stage. The emissions trading system, on the other hand, is the actual market where emissions allowances are traded. Of course, the target management system is a less stringent regulatory framework for companies whose emissions are around 25,000 tons—meaning they aren't large enough to enter the emissions trading system. It's a preliminary, educational step where companies are encouraged to set targets and try reducing emissions. In contrast, the emissions trading system involves the government setting specific emission allowances for each company.

If a company emits less than its allocated amount, it gains the right to sell the surplus to other companies. Thus, reducing emissions allows companies to earn money by selling their surplus allowances. Conversely, companies that exceed their allocated emissions must purchase allowances from others in the market. This system operates like a real market, similar to the stock market. The purpose of this trading system is twofold: to make companies recognize that emitting more means they must pay to buy allowances, thereby incentivizing them to reduce emissions, and to encourage the investment in equipment needed to achieve those reductions. This emissions trading system was created to establish two key incentives: encouraging companies to make efforts and invest in equipment to reduce emissions, and creating a market where surplus credits can be sold.

Regarding the establishment of a carbon neutrality strategy, is this meant to help companies achieve carbon neutrality as a long-term goal?

Yes, while this isn't my primary area of expertise, carbon neutrality strategies involve companies declaring net-zero status and achieving initiatives like the ARIBAK initiative. This means all electricity used in production is zero. They develop strategies to declare, “We emit no greenhouse gases.” Since achieving this immediately next year is impossible, they set mid-term goals like “We will achieve this by 2035” or “We will achieve it by 2050.” Our role is to design the strategies our company must implement at each intermediate stage to ensure we emit no carbon dioxide greenhouse gases. The primary focus is supporting companies in easily procuring renewable electricity to offset emissions from their power usage. This stems from our extensive consulting experience with power generators and emission reduction projects. We help establish strategies detailing specific timelines and approaches, with renewable energy procurement currently serving as the primary means to achieve these goals.

So, do you present these various methods to each company that requests consulting?

Yes. For carbon neutrality consulting, we first assess each company's specific situation to estimate their emissions level. This is typically divided into Scope 1 and Scope 2 emissions. We compare whether the company uses a significant amount of fuel for direct combustion or consumes a large amount of electricity. Based on this comparison, we develop tailored response strategies for each company.