Eximbank to Promote Green Finance at IMF
By Lee Hyo-sik
Staff Reporter
The Export-Import Bank of Korea (Korea Eximbank) CEO Kim Dong-soo will fly to Istanbul, Turkey, to take part in the 2009 Annual Meeting of the International Monetary Fund (IMF) and the World Bank on Oct. 6 and 7.
While meeting with policymakers and financial leaders from 186 IMF member economies, he plans to promote Korea's ``low-carbon and green growth'' policies and the bank's endeavors to transform the country into a green economic power capitalizing on new economic opportunities created by global climate change.
The bank has recently launched a ``carbon fund'' worth 100 billion won to help local companies cut greenhouse gases in a more cost-effective and efficient manner. It has also been active in extending credits to cash-strapped small-and medium-sized enterprises (SMEs) over the past year to help them tide over the current economic slump. The bank plans to remain as a main policy bank that caters to diverse financial and operational needs of small businesses here.
Carbon Fund
On Sept. 29, the bank officially launched the nation's first carbon fund capitalized at 100 billion won to purchase emission reductions from Clean Development Mechanism (CDM) projects developed and implemented by Korean entities.
Eximbank will invest 15 billion won, while the remaining 85 billion won comes from energy-related public firms and private businesses interested in the CDM, including Daewoo International and Doosan Heavy Industries. The Korea Investment Trust Management Company was chosen as a fund manager.
The CDM is an arrangement under the Kyoto Protocol allowing advanced economies with greenhouse gas reduction commitments to help developing countries to slash greenhouse gases instead.
``We signed a contract with 12 entities to establish the fund, which will purchase carbon credits generated by Korean companies investing in CDM projects in developing economies. It will serve as a stepping stone for the establishment of the carbon trading market here and the promotion of ``green'' financing,'' Eximbank CEO Kim Dong-soo said.
Kim said by the end of this year, the size of the fund will grow to 150 billion won, with several more businesses showing interest in the carbon fund.
Eximbank plans to acquire rights to emit 450,000 tons of CO2 from a hydroelectric dam to be constructed by Korea Water Resources Corp. in Pakistan for eight billion won.
It has placed a top priority on CDM projects to assist developing countries achieve sustainable development and to prepare for the Post-Kyoto Regime, considered an extension of the Kyoto Protocol with a new set of rules that will likely oblige Korea to reduce greenhouse gases.
The lender utilizes its solid network with the governments of developing countries to facilitate the development of CDM projects by Korean firms. Furthermore, it uses a diversity of financial instruments to provide optimized financial solutions for the projects.
In the global scene, green finance has been rapidly growing. Advanced countries such as the U.S. and Europe have driven the growth of the carbon market through emission trading, carbon funds and other mechanisms since the Kyoto Protocol.
According to the World Bank and the Korea Capital Market Institute (KCMI), global emission trading markets are expected to grow to $150 billion in 2010 from approximately $64 billion in 2007.
Advanced countries have developed diverse financial services for the emission trading market, such as carbon funds, carbon asset management, emission trading insurance and carbon banks. Currently, there are over 30 carbon funds around the world with assets of some $2.5 billion.
Korean firms are coming under increasing pressure from their trading partners, particularly in Europe, who say they need to do more to cut greenhouse gas emissions and help avert the ongoing climate change.
As an alternative to more expensive emission reductions here, many local businesses are seeking to invest in projects that reduce emissions in developing countries, as well as to earn credit to emit CO2 and other greenhouse gases at home. Under the CDM, companies can also sell credits in the open market.
Financing SMEs
Additionally, Eximbank CEO Kim said the bank will continue to provide necessary capital to small enterprises for the remainder of the year amid the continuing financial market jitters at home and abroad.
``In preparation for a possible reoccurrence of the global credit crunch, we will continue to pump money into small businesses. In particular, we will select and nurture 300 blue chip small companies over the next 10 years to turn them into Korea's export warriors,'' he stressed.
The Eximbank plans to extend credits totaling 53 trillion won this year, up 6 trillion won from the initial 47 trillion won. In the first six months of the year, it provided 30 trillion won in loans.