South Korea’s pledge to end coal finance a gamechanger for global efforts to phase out coal power generation

Members of the Powering Past Coal Alliance (PPCA) are very encouraged by yesterday’s announcement by Korean President Moon Jae-in to ban new public financial support for overseas coal-fired power investments at the Leaders Summit on Climate. PPCA members look forward to working together with South Korea to further strengthen their coal phase out efforts in the lead up to COP26.

South Korea’s pledge to end coal finance a gamechanger for global efforts to phase out coal power generation
South Korea’s pledge to end coal finance a gamechanger for global efforts to phase out coal power generation

The new commitment is an important step forward, as so far, South Korea has been one of the top three world’s financiers of coal, alongside China and Japan. Through yesterday’s announcement, the country shows leadership in building a carbon-neutral, climate-resilient world and injects momentum in the global efforts to phase out emissions from coal power generation ahead of COP26.

PPCA members are ready to share their experiences and partner with South Korea to further strengthen their coal phase out efforts. To meet the Paris Agreement goals, OECD countries, including South Korea, must immediately stop construction of any new coal power plants and phase out domestic coal power generation by 2030. The UN Secretary General called on all OECD countries to commit to this phase out at the G7 June Summit at the latest.

Jonathan Wilkinson, Canada’s Environment and Climate Change Minister and Co-Chair of the Powering Past Coal Alliance said:

"Phasing out coal-fired power globally is the first and most important step we can take to achieve the goals of the Paris Agreement and work towards net-zero by 2050. Canada commends South Korea for this important announcement, and we look forward to building on our long history of collaboration on energy and the environment to advance this essential cause."

Anne-Marie Trevelyan, UK Energy Minister and Co-Chair of the Powering Past Coal Alliance said:

Yesterday’s announcement proves that collective diplomatic action across governments and international organisations, including the United Nations, the United States, the European Union and the Powering Past Coal Alliance, is key to accelerate the phase out of unabated coal power. PPCA finance and government members built the ground for Korea's pledge, by encouraging Korean financial institutions to cease new investments in unabated coal-fired power and sign up to the PPCA Finance Principles.

The announcement was also spurred by sustained efforts of five subnational government PPCA members in South Korea: South Chungcheong (Chungnam), Seoul, Gyeonggi, Incheon and Jeju, representing over half of the country’s population and half of its coal generation, who have been strongly advocating for a move away from coal in the country [1].

Yang Seung-jo, South Chungcheong Governor, South Korea said:

“I welcome the announcement made by the Korean government on a moratorium on overseas coal financing at the Leaders Summit on Climate. Transitioning away from coal is essential if the world is to have any chance of keeping below 1.5 degrees of warming. South Korea’s decision to end overseas coal finance is therefore an important step and fits in with plans to achieve net zero emissions by 2050 or earlier.

At the local level, Chungnam Province has done its utmost to help communities take climate action. Therefore the Korean government’s pledge will be a boost for us to realign our initiatives with the national ones. Chungnam Province is committed to moving towards net-zero by 2050.”

With this announcement, South Korea joins the fast-increasing number of government and private sector financial institutions around the world committed to ending emissions from coal power. Its pledge paves the way for similar ambition from Japan and China who are becoming the coal lenders of last resort [2]. For the first time at the Leaders Summit yesterday, China signalled its intentions to move away from coal, by committing to gradually reduce coal consumption during the 15th Five-Year Plan period (2026-2030).


Notes:

For more information, please contact:

Anna Drazkiewicz, Communications Manager, Powering Past Coal Alliance Secretariat, anna.drazkiewicz@poweringpastcoal.org, 00 32 487 324 562

The Powering Past Coal Alliance was formed by Canada and the UK in 2017 to bring together national and subnational governments and the private sector to accelerate the phase-out of unabated coal power. Since then, the Alliance has grown to 122 members who are at the forefront of accelerating real-world action on coal power phase-out.

Coal phase-out progress has been accelerating across the OECD and EU28. 56% (411GW) of operating coal has either retired since 2010, or is scheduled to retire by 2030, including 147GW within members of the PPCA.

[1] The PPCA’s South Korean subnational members work closely together to advocate for accelerated action at national level. As an example, South Chungcheong province has been very active in pressing for coal phase-out using the levers they have available (e.g., around air pollution) and have prevented the life extension of several existing plants, even though they do not have the responsibility for permitting. South Chungcheong also led an initiative of 56 subnational administrations, accounting for ~US$133 billion in depository business, to add "coal phase-out" in their selection criteria for depository banks.

[2] The shift in finance away from coal and towards clean energy reflects an increasing rejection of new coal power by client countries, including policy changes flagged by governments in Vietnam, Indonesia and Bangladesh, and a full moratorium on new coal plants in the Philippines.