Halting Public Financing for New Overseas Coal Power Plants... Impact on Private Financing Too

President Moon's Commitment to Strengthened Climate Action for Achieving '2050 Carbon Neutrality'
"Suspension of Public Financial Support for New Overseas Coal Power Plants"

[Asia Economy Reporter Park Sun-mi] As policy financial institutions have stopped financial support for new overseas coal-fired power plants in accordance with government guidelines, the trend of coal phase-out is expected to expand in the private financial sector as well.

According to the government and financial authorities on the 24th, President Moon Jae-in recently pledged at the Climate Summit to strengthen climate response actions to achieve '2050 Carbon Neutrality,' announcing the suspension of public financial support for new overseas coal power plants and a ban on additional new coal power plant permits domestically.

This declaration to suspend public financial support applies to newly promoted overseas coal power projects in the future and directly concerns policy financial institutions such as the Export-Import Bank of Korea and the Korea Development Bank.

The background for South Korea's declaration to suspend public financial support for new overseas coal power plants includes the strengthening global trend to halt investments in coal power and the recognition that coal phase-out is an essential task to realize a carbon-neutral society. Among the 20 major countries (G20) and 41 countries in the Organisation for Economic Co-operation and Development (OECD), 11 countries have already declared the suspension of public financial support for overseas coal power plants, and international financial institutions such as the World Bank, European Investment Bank, and Asian Development Bank have also announced the cessation of investments in coal power.

Although the declaration to suspend financial support for overseas coal power plants primarily applies to public financial support, it is expected to impact private finance as well. Financial authorities have clarified that the suspension of public financial support directly applies to policy financial institutions such as the Korea Trade Insurance Corporation, Korea Export Insurance Corporation, and Korea Development Bank, but they also plan to create conditions for voluntary expansion to private financial companies in the future. There is already strong demand for 'coal phase-out' in the selection of local government financial depositories.

Many private financial companies are declaring coal phase-out, supporting the government's efforts to achieve '2050 Carbon Neutrality.' Shinhan Financial Group and KB Financial Group recently participated as founding signatories of the global environmental initiative 'Net-Zero Banking Alliance (NZBA),' and Hana Financial Group declared carbon neutrality and coal phase-out last month, announcing a transition to a low-carbon economy and is pursuing membership in the Equator Principles this year.

This content was produced with the assistance of AI translation services.