Policy Financial Institutions "Actively Support Green Industry" Red Light on Overseas Nuclear Power Plant Orders

Difficulty Receiving Funds from Policy Financial Institutions Due to Non-Green Industry Classification

[Sejong=Asia Economy Reporter Ju Sang-don] As the Korea Trade Insurance Corporation, a policy export finance institution, announced its plan to more actively support green industries, a red light has been turned on for South Korea's overseas nuclear power plant orders. The government recently decided to exclude nuclear power from the Korean-style green taxonomy (K-Taxonomy), making it more difficult to receive funding from policy financial institutions. There are forecasts that the concerns of Korea Hydro & Nuclear Power, which is bidding for overseas nuclear power projects such as in Poland, will become a reality.

An official from K-Sure said on the 12th, "The basic policy is to more actively support eco-friendly projects in accordance with government policy." This statement, made after the government finalized the K-Taxonomy, implies that funding support from policy financial institutions for nuclear power may be affected. The government had previously excluded nuclear power from green industries.

The official added, "It does not mean that we will not provide guarantee support for nuclear power export projects excluded from the K-Taxonomy," but policy interest in nuclear power, classified as a non-green industry, is inevitably reduced. K-Sure's increased support efforts for green industries mean that funding support conditions such as interest rates for other projects are relatively unfavorable.

During the establishment process of the K-Taxonomy, KHNP expressed concerns that "if nuclear power is excluded from green industries, difficulties in future financing may arise, and it may negatively affect overseas nuclear power orders." In its 'Review Opinion on the Korean-style Green Taxonomy,' KHNP stated, "Export finance is a core competitiveness that enhances nuclear power order competitiveness and is an essential condition," and "If nuclear power is excluded from the K-Taxonomy, difficulties may arise in securing funds from domestic financial institutions such as the Korea Eximbank, K-Sure, policy financial institutions, and commercial banks, which are the sources of financing for nuclear power projects."

As policy financial institutions announce plans to strengthen green finance, negative impacts on nuclear power orders in the Czech Republic and Poland, pursued by KHNP and others, are inevitable. Major competitors in nuclear power exports, China and Russia, classify nuclear power as a green activity, making it easier to secure funding from domestic policy financial institutions and commercial banks with lower interest rates, but South Korea cannot do so. In particular, Poland requires that up to 49% of the project cost be financed by the nuclear power exporting country. Financing has thus emerged as a key factor in winning orders, but KHNP is facing difficulties in raising funds through green finance.

The government only repeats the basic stance that "nuclear power can also be financed through general finance." On the 11th, Environment Minister Han Jeong-ae said at a press briefing, "We are not currently blocking investment in nuclear power," and "The K-Taxonomy is intended to apply much lower interest rates when financing projects such as project financing, but it is not impossible to finance just because it is not included."

An official from the nuclear power industry pointed out, "Securing funds at a lower interest rate is necessary to increase the possibility of winning orders based on this competitiveness, even if only slightly," and criticized, "The idea that 'it is not a problem because financing is possible even if it is more expensive' is a complacent perception."

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