Page 10 - AsianOil Week 35 2021

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South Korea’s oil, gas funding calls

green commitments into question

PROJECTS & SOUTH Korea provided $127bn in support
COMPANIES for overseas oil and gas projects between 2011
and 2020 as government-backed development
finance institutions (DFIs) continued to back
fossil fuels as the government talked up green
energy.
A new report from South Korean
research and advocacy organisation Solu-
tions for Our Climate (SFOC) found that
the $127bn of loans, grants and export
insurance was 13 times larger than that
provided for coal-fired generation pro-
jects abroad in the same period.
Previous research from SFOC in 2019 had
found that coal financing totalled just $10bn. “To minimise risk to the Korean economy
The country’s shipbuilding giants, which are and public funds, and to demonstrate climate
world leaders in the oil and LNG sector, are the leadership, Korea needs to rapidly stop the pipe-
biggest beneficiaries of state support. line of overseas fossil fuel projects like public
The issue at stake is that while investors, gov- institutions in the United Kingdom, Sweden and
ernments and banks have all stepped up their United States.”
commitments to renewables, sustainability and The report broke down the support into
ESG, public money is still being used to increase $32.2bn (25%) for upstream projects, $49.7bn
fossil fuel production and CO2 emissions in the (39%) for midstream and $45.1 (36%) for down-
shape of oil and gas. stream projects.
South Korea’s backing of oil and gas projects Geographically, the Middle East is the biggest
are a de facto subsidy to fossil fuels and increases host of projects financed by South Korean public
transition risk for domestic industries and funds ($35.3bn) over the past 10 years, followed
stranded asset risk for financial institutions, the by Central Asia ($10.1bn).
report found. The rest of Asia – Southeast Asia, South Asia,
The government of South Korea, one of the and East Asia – is the third largest, with $6.8bn
world’s top three international coal financiers, deployed to the region.
along with China and Japan, pledged to end In the upstream sector, Australia is the biggest
overseas coal finance at the US Leaders Summit host of projects with Korean support of $3.6bn,
on Climate in April 2021. followed by Mozambique with $2.7bn and the
The South Korean government pledged in United States with $2bn.
October 2020 to aim for a net-zero economy by One of the most polluting offshore gas pro-
2050. The country produced 28.1% of its elec- jects, the $5.6bn Barossa-Caldita in Australia, is
tricity using coal in 2020, according to data from currently under development.
the Energy Ministry. SK E&S, part of the South Korean conglom-
“The figures are shocking. South Korea has erate SK Group, holds a 37.5% stake in the pro-
long been criticised as a ‘climate villain’ for pro- ject, which arrived at a final investment decision
viding massive support to overseas coal power (FID) in March 2021 with KEXIM’s financial
projects, but the country’s newly revealed public support.
finance to overseas oil and gas completely dwarfs Within the downstream segment, 31% has
its backing of coal,” Sejong Youn, climate finance been committed to oil refining and petrochemi-
programme director at SFOC and lead author of cal projects, of which 79% was deployed to Mid-
the report said. dle East and Central Asia.
SFOC found that South Korean public finan- In terms of the biggest host country, Kuwait
ciers had supported both state-owned enter- ranked first with funds of $7.6bn, followed by
prises (SOEs) and private sector companies for Saudi Arabia ($4.3bn) and Uzbekistan ($3.7bn)
oil and gas projects abroad in the form of loans respectively.
and guarantees. The support for fossil fuels abroad contrasts
Dongjae Oh, a researcher at SFOC and co-au- with stasis at home. South Korea’s Samcheok
thor of the report, said: “Further investments in Blue Power Plant, the country’s last coal-to-
oil and gas projects go against the public’s inter- power project under development, could hit
est by contributing to climate disasters and [are] financial trouble as green activists call on the
a direct contradiction to the country’s carbon government to force the project’s financiers to
neutrality drive.” withdraw funding.™

P10 www. NEWSBASE .com Week 35 02•September•2021