Inside Merck's 16 MW Renewable Energy Deal in South Korea

Merck, the German life sciences and electronics giant, has signed a 20-year Power Purchase Agreement with SK Innovation E&S to supply 16 megawatts of renewable electricity capacity to its life science manufacturing sites in Daejeon and Songdo, South Korea.

The agreement represents the company's longest renewable energy commitment in the Asia-Pacific region and is scheduled to become operational in December 2027.

Once active, the PPA will deliver approximately 21,000 megawatt-hours of electricity annually, covering around 75% of the electricity demand for Merck's life science operations in South Korea.

"This agreement reflects our long-term commitment to manufacturing sustainability," says Tim Jaeger, Chief Strategy and Transformation Officer for Merck's Life Science business.

"By adding renewable electricity to the grid for our operations in South Korea, we are taking further measures to reduce our environmental impact and enabling our customers do the same."

The deal forms part of Merck's expanding global renewable energy portfolio, which includes virtual PPAs across Europe and North America alongside various onsite installations worldwide.

Merck's 2030 sustainability targets

Merck's new agreement in South Korea will support the company's 2030 sustainability target of sourcing 80% of purchased electricity from renewable sources, a goal the firm now expects to hit well ahead of schedule.

Merck first established its group-wide sustainability strategy in 2020 and aligned all of its commitments with the United Nations' Sustainable Development Goals, having its targets ratified by the SBTi along the way.

The strategy centres on three core commitments:

• Advancing human progress for more than one billion people through sustainable science and technology by 2030
• Fully integrating sustainability into value chains by 2030
• Achieving climate neutrality whilst reducing resource consumption by 2040

Importantly, Merck's commitment to climate neutrality extends across Scope 1, 2 and 3 emissions, with interim targets of a 50% reduction in Scope 1 and 2 emissions and a 30% reduction in Scope 3 emissions by 2030, compared to a 2020 baseline.

How is Merck performing against its targets?

Merck's 2024 data shows 182 metric kilotons of CO₂ equivalent in combined Scope 1 and 2 emissions, representing a 43% reduction compared to 2020 levels.

However, Scope 3 emissions stood at 1,538 metric kilotons of CO₂ equivalent in 2024, marking only a 2% reduction from the 2020 baseline.

The disparity in progress between Scope 1 and 2 emissions versus Scope 3 emissions highlights the greater challenge companies face in reducing indirect emissions across their value chains compared to direct operational emissions.

Merck's broader sustainability framework includes commitments to sustainable product innovation, with a target for 10% of its portfolio to consist of 'Greener Alternative Products' by 2030.

The company employs SHAPE, its design for sustainability framework, alongside DOZN, a freely available online green chemistry evaluator tool, to assess and improve the sustainability profile of chemicals and products throughout their life cycle.

How Merck approaches supply chain sustainability

Beyond emissions reduction, Merck's sustainability strategy encompasses supply chain transparency and packaging improvements.

By 2030, the company aims for a 10% reduction in packaging weight per unit sales compared to baseline figures, with all new packaging designed following circularity principles and all fibre-based packaging sourced from deforestation-free materials.

The South Korea PPA adds renewable capacity directly to the grid, a model that differs from purely financial virtual PPAs by creating new clean energy infrastructure that benefits the broader electricity network.

This approach aligns with growing emphasis on "additionality" in corporate renewable energy procurement, where companies prioritise agreements that result in new renewable generation capacity rather than merely purchasing certificates from existing projects.

Merck generated sales of €21.2bn (US$24.4bn) across 65 countries in 2024, with operations spanning life science, healthcare and electronics sectors employing over 62,000 people globally.