According to the “IPCC Special Report on Global Warming of 1.5°C” for setting action goals in response to the Paris Agreement, in order to limit global temperature increase to 1.5°C to minimize damage from climate change, “carbon neutrality (net zero)” has to be accomplished by year 2050. Therefore, major countries have set reduction of coal-powered thermal power plants, which are the main cause of carbon-dioxide emissions in power generation, as a priority task and are implementing corrective measures accordingly.

The Korean government has prohibited granting permission for new coal-powered thermal power plants in Korea and for the early shutdown of decrepit coal-powered thermal power plants to promote the phasing out of coal in power generation, but it continues to receive criticism from overseas that it continues to invest in coal power in neglect of its duties as a signatory to the Paris Agreement.  Currently, Korea and Japan are the only OECD member countries to provide government funding for overseas coal projects and as such, face strong criticism from the international community that such funding is an irresponsible action that defeats global efforts to counter climate change. Overseas coal investment by government-funded financial institutions weaken Korea’s position in climate diplomacy and weaken the meaning and legitimacy of various climate change response measures implemented domestically.

Moreover, due to the increase in environment costs and decrease in unit cost of renewable energy internationally, there is an increased awareness in the international financial market of the risk of coal investment becoming “stranded assets,” such that private and public finance in most major countries have officially declared an end to coal investment. Public institutions and finance in Korea, however, overlooked the financial risk of coal power and continued to invest in overseas coal power, which calls for measures to prevent such investment to ensure the financial solvency of public financial institutions.

Therefore, this proposal aims to newly insert a provision excluding the implementation or financial support of overseas coal power projects from the business scope of public enterprises such as the Korea Electric Power Corporation and public financial institutions such as the Korea Development Bank, Export-Import Bank of Korea and the Korea Trade Insurance Corporation, thereby providing a legal basis to prohibit public enterprises and finance from participating in overseas coal power projects (Article 53-5, newly inserted).

Details

Prescribe that when the Korea Trade Insurance Corporation supports overseas projects, it shall consider environmental impacts such as greenhouse gas emissions, economic feasibility, financial risks, etc., to ensure that no support in the form of insurance, etc., is provided for projects such as construction of coal powered thermal power plants (Article 53-5, newly inserted).

Limitation of Business (Article 53-5)