LX International disclosed detailed climate scenario analysis results through its sustainability report on the 5th, quantifying potential carbon costs under different regulatory environments. The global resources and infrastructure company projected carbon emission trading costs could reach up to 53.9 billion won annually in the long term (2032-2050) under the Announced Pledges Scenario (APS), where governments implement their declared greenhouse gas reduction commitments. The disclosure provides shareholders with concrete financial figures on business risks, translating climate uncertainties into controllable financial projections to enhance earnings predictability and corporate value stability.
LX International Projects Carbon Costs Across Three Timeframes Under APS Scenario
Under the APS scenario, which assumes a 40% emissions reduction by 2040 compared to 2018 levels, LX International calculated emission permit purchase costs resulting from reduced free allocations under emissions trading systems. Short-term costs for 2026 were estimated at 5.1 billion won. Mid-term costs (2027-2031) averaged 18.6 billion won annually. Long-term projections (2032-2050) showed annual costs reaching up to 53.9 billion won.
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LX International's carbon cost projections by climate scenario [Source: LX International]
Regulatory Scenarios Show Cost Variations From 30.6 to 53.9 Billion Won Annually
Under the STEPS scenario, which maintains current global environmental policy trends with 11.4% emissions reduction by 2030 compared to 2018, long-term annual average costs remained at 30.6 billion won. The Net Zero Emissions (NZE) scenario, targeting approximately 80% industrial sector emissions reduction by 2050 compared to 2018, projected long-term annual costs of 49.4 billion won.
The APS scenario showed higher cost projections than the most stringent NZE scenario. Under NZE conditions, companies proactively modify processes to substantially reduce carbon emissions. Ambiguous regulations slow down reduction transitions, resulting in companies bearing full cost burdens for continued carbon output.
Carbon Cost Disclosure Sets New Transparency Standard in Resources Industry
The risk disclosure established a new transparency benchmark in the domestic resources sector. The company converted uncertainties into controllable financial figures from a shareholder value perspective, enhancing earnings predictability. The transparent risk disclosure prevents valuation discounts related to climate variables and strengthens corporate value stability.
Maintaining existing coal-centered operations would require hundreds of billions of won in annual carbon costs, suggesting that facility and new business investments are preferable to emission permit purchases. The quantified costs provide justification for completing new business transitions before carbon regulatory costs directly erode margins.
CEO Emphasizes Sustainable Management as Survival Strategy
CEO Koo Hyuk-seo stated, "Sustainable management is not a choice, but an essential strategy for corporate survival and growth." He emphasized, "Now, beyond carbon neutrality, 'responsible management' that considers biodiversity conservation and natural capital resilience is a core contemporary value we must practice."
![LX International CEO Koo Hyuk-seo]()
LX International CEO Koo Hyuk-seo [Source: LX International]
FAQ
What carbon costs did LX International project under the APS scenario?
LX International projected carbon emission permit purchase costs of 5.1 billion won in the short term (2026), an annual average of 18.6 billion won in the mid-term (2027-2031), and up to 53.9 billion won annually in the long term (2032-2050) under the Announced Pledges Scenario.
Why does the APS scenario show higher costs than the Net Zero Emissions scenario?
Under the NZE scenario, companies proactively modify processes to substantially reduce carbon emissions. The APS scenario's ambiguous regulations slow down reduction transitions, causing companies to bear full cost burdens for continued carbon output, resulting in higher projected costs than the more stringent NZE scenario.
How does LX International's climate disclosure benefit shareholders?
The disclosure converts climate uncertainties into controllable financial figures, enhancing earnings predictability and preventing valuation discounts related to climate variables, thereby strengthening corporate value stability for shareholders.
