Gov't to halt financial assistance for overseas coal power projects

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By Lee Kyung-min

State-run organizations will no longer provide financial assistance of any kind to new overseas coal-fired power plant projects starting Oct.1, according to four ministries and the financial regulator, Friday.

The joint announcement seeks to give a clear signal on decarbonization to both the public and private sectors, thereby pushing them to promptly renounce fossil fuel dependence and to forgo investment into cheap but environmentally unsustainable sources of energy.

The four are the Ministries of Economy and Finance; Trade, Industry and Energy; Foreign Affairs; and Environment; alongside the Financial Services Commission.

Support for already approved projects including Jawa Units 9 and 10 in Indonesia and Bungang 2 in Vietnam will not altogether be withdrawn considering economic and diplomatic relations. However, the scope of the assistance will be limited to support for the implementation of agreed-upon financial terms and essential business transactions.

But the government will halt everything else related to fossil fuel use that has been provided in the form of Official Development Assistance (ODA), and export finance and investments. Examples include the Economic Development Cooperation Fund (EDCF) set up in 1987 to promote economic cooperation between Korea and developing countries. Under the project, Korea helps other countries building schools, healthcare facilities and infrastructure.

International agreements will be applied later on the maintenance and repair of coal-powered generation facilities and the application of carbon dioxide capture, utilization, and storage (CCUS) technology.

Currently, a discussion is ongoing with members of the Organization for Economic Cooperation and Development (OECD) on the revision of an amendment containing specific principles and exceptions to coal policies.

The guidelines were outlined after listening to opinions from the industry and climate advocates, as well as policy discussions by the OECD.

They are a follow-up to an announcement by President Moon Jae-in who declared during a climate summit in April that the country would participate in global discussions on the matter.

This followed an earlier announcement by Moon, Oct. 28 last year, when he said that Korea would seek to reduce greenhouse gas emissions to zero by 2050.

“The government has established the new guidelines to clarify the purpose of the declaration in suspending public financial support, in a bid to actively contribute to climate crisis discussions on the global stage,” a finance ministry official said.

"We expect private firms ― the most important stakeholders ― to participate in the decision-making process, including at boards of directors meetings, and to follow suit."