Climate Policy Engagement Overview: LOTTE Chemical appears to have limited but positive engagement with a number of climate policy areas in South Korea. The company has supported market-based renewable energy policy and energy efficiency incentives in South Korea, but has not supported elements of the Korea Emissions Trading Scheme (K-ETS). LOTTE Chemical has promoted the increased role of hydrogen in the South Korean energy mix, but often without clear conditions about decarbonizing the production of hydrogen.

Top-line Messaging on Climate Policy: LOTTE Chemical has positive top-line messaging on climate science and the need for climate action. In its 2021 Sustainability Report, published in June 2022, LOTTE Chemical supported the goal to keep global temperature rise under 1.5℃, as recommended by the IPCC. At a Ministry of Environment environmental policy meeting in February 2021, LOTTE Chemical along with other corporate representatives supported government policy in the form of R&D and investment tax credits to foster growth in emissions reduction technologies.

Engagement with Climate-Related Policy: LOTTE Chemical has limited and mostly positive engagement with climate policy in South Korea. As part of the Petrochemical Zero Carbon Committee in February 2021, LOTTE Chemical appeared to support energy efficiency tax incentive measures, and along with other industry members advocated for a ‘Voluntary Energy Efficiency Target System.’ As part of the same committee in February 2021, LOTTE Chemical also supported an industry request for policy mechanisms enabling renewable energy purchases, including third-party power purchase agreements (PPA) and renewable energy certificates (REC).

However, in its 2021 CDP Climate Change Response, LOTTE Chemical appeared to not support elements of the Korea Emissions Trading Scheme (K-ETS), arguing that the current level of allocations for the chemicals sector was too strict and would “impede the growth of chemical industry.”

Positioning on Energy Transition:LOTTE Chemical broadly supports a transition towards hydrogen and renewables in the energy mix. In its 2021 Sustainability Report, published in June 2022, LOTTE Chemical supported an expanded role for hydrogen as “essential to the carbon-neutral and green-energy market”, but did not state position on the need for decarbonizing hydrogen production. In August 2022, Financial News reported that LOTTE Chemical Managing Director Park In-cheol supported the development of CCUS (carbon capture, utilization and storage technology) to use alongside renewables in the energy mix. In May 2022, as reported by Monthly Hydrogen Economy, an executive from LOTTE Chemical supported the increased role of blue hydrogen + CCS, as well as gray hydrogen in the energy mix, and called for the amendment of the Hydrogen Act to establish the details of a clean hydrogen certification system and to potentially allow the use of by-product hydrogen.

Industry Association Governance: LOTTE Chemical listed a few of its industry association memberships through its disclosure of 'Membership Associations’ in its 2021 Sustainability Report, published in June 2022. However, the company does not clearly outline the climate change policy positions of its associations, and it has not published a review of its alignment with these groups. LOTTE Chemical disclosed on most of its indirect climate policy influence through industry associations in its 2021 CDP Climate Change disclosure, including the Korea Petrochemical Industry Association (KPIA)and the Federation of Korean Industries (FKI), and the Korea Business Council for Sustainable Development (KBCSD). Of these associations, FKI has active and negative climate policy engagement, opposing most forms of climate policy in South Korea.