Korean Federation for Environmental Movements urge Kexim Bank to end Coal Financing
27 June 2016, Korea Federation for Environmental Movements
The thirteenth meeting of the Board of the Green Climate Fund (GCF) will be held from Tuesday 28 June to Thursday 30 June 2016 in Songdo, Incheon, Korea. Civil society groups are paying close attention to whether the Korea Exim bank could be accredited of Implementing Entity of GCF. Korea Exim bank applied in June 2015 to be accredited as Implementing Entity, institutions allowed to access to GCF funds and disburse them.
There has been big concerns over Korea Exim bank’s involvement in GCF as the bank has the long record of providing financing support for coal projects. The objective of GCF is “to promote the paradigm shift towards low emission and climate-resilient development pathways by providing support to developing countries.” Korea has been praised internationally as a model on climate change and green growth as it announced the ‘low carbon and green growth’ as a national vision in 2008 and hosted GCF headquarter in Songdo.
However, Korea has provided largest amount of public finance to support overseas coal-fired power plant projects rather than support developing countries to act on climate change. Korea is the second largest OECD country in terms of export credit support for coal projects. Korea Exim bank is the biggest channel for supporting the Korean companies to develop fossil fuel resource and export coal-fired power plants to developing countries.
Korea Exim bank provided 3.8 billion USD for overseas coal-fired power plant projects in 2007-2014, which makes it is the world 5th largest financial institution in public finance for coal. In contrast, Korea Exim bank provided finance of 2.9 billion USD for climate change related projects since 1991, according its document submitted to GCF
Most worrying is that the Korean government and Korea Exim bank stick to coal, conflicting with international effort for low carbon economy. Though Korea Exim bank made a commitment to “green initiatives and sponsorship for sustainable growth”, the Korean government has not moved away from its public financing for coal through Korea Exim bank.
Korea's embrace of coal is inconsistent with its hosting of the Green Climate Fund, aimed at supporting low-carbon development of developing countries. The Korean government justifies its position by emphasizing the importance of the 'energy welfare' for the developing countries but what it really concerns is the profits of coal industry as there is clean and sustainable energy alternatives than coal.
In addition to our concerns with KEXIM's application, in general we do not believe that export credit agencies are appropriate entities to be accredited by the Green Climate Fund. Export credit agencies are created by governments with the narrow mission of promoting exports and job creation in the agency's home country. This limited mission is inconsistent with, and may be in direct conflict with, the mission and core principles of the GCF, including promoting country ownership, local sustainable development benefits, the efficient use of GCF resources, and the Fund's international competitive bidding requirements.
Korea Federation for Environmental Movements (KFEM) strongly demand the Korea Ministry of Finance and Korean Exim bank to end the financing for coal immediately. Park Geun-hye, the President of the Republic of Korea said “[Korea] will provide full support for developing nations’ endeavors to respond to climate change. In particular, it will make enhanced efforts to help the GCF take firm root as a viable establishment and make further progress.” We will keep watching the Korean government to urge it to implement its commitment with serious action.