[Column] Ministry of Environment Ultimately Ignores Demand to Include Nuclear Power in K-Taxonomy

Concerns Over Funding Disruptions for Nuclear Power Export and SMR Development
Inevitable Resurgence of Controversy After Next Year’s Presidential Election

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[Sejong=Asia Economy Reporter Joo Sang-don] The government has ultimately finalized the Korean Green Taxonomy (K-Taxonomy) excluding nuclear power. While the European Union (EU), which leads international climate change policies, has yet to make a final decision on whether to include nuclear power, our government has preemptively declared that "nuclear power is not an eco-friendly industry." The opinion of Korea Hydro & Nuclear Power, a state-run nuclear operator that appealed during the K-Taxonomy establishment process that "nuclear power is a full lifecycle ultra-low carbon energy source," was also not accepted. Due to the anti-nuclear policy, the already struggling nuclear industry now faces growing concerns over funding disruptions for nuclear power exports and small modular reactor (SMR) development.

The Ministry of Environment has left room for reconsideration, stating that it will review the matter depending on whether the EU includes nuclear power or based on domestic public opinion. The EU had planned to decide on nuclear inclusion on the 22nd but postponed the decision to mid-next month due to disagreements among member states.

Taxonomy sets the standards for "what constitutes green economic activities." From a corporate perspective, recognition as a green economic activity allows access to financing through green finance with lower interest rates. The Ministry of Environment stated that the main purpose of the K-Taxonomy is "to facilitate funding" and that "exclusion does not mean penalties."

The aftershocks are just beginning. First, if the EU includes nuclear power in the taxonomy currently being drafted, domestic controversy over nuclear inclusion will inevitably continue. Above all, public pension funds such as the National Pension Service, which manages assets worth 850 trillion won, will use the K-Taxonomy for investment decisions starting next year. Amid ongoing controversy, the nuclear industry will face immediate investment constraints. If pension funds like the National Pension Service hesitate to invest in nuclear power, it will be difficult for policy banks to provide funding for nuclear projects. Overseas projects will also lose credibility.

Leading presidential candidates have expressed positions to either abandon the anti-nuclear policy or at least support the necessity of SMRs. The government also says it may revise the taxonomy in a year. However, for the nuclear industry, which has endured difficulties over the past five years, challenges in attracting investment could be fatal. No one is speaking about the tangible and intangible losses that may occur over the next year.

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