Coal, Emissions, News, Policy & Regulations

South Korea’s KEPCO cancels foreign coal power investment

South Korea’s majority state-owned utility KEPCO plans to cancel or convert to LNG two remaining overseas coal power projects in its pipeline, which includes the 630MW Thabametsi plant in South Africa and the 1,000MW Sual 2 project in the Philippines.

According to a media statement from Solutions for Our Climate, a Seoul-based nongovernmental organisation, KEPCO CEO Kim Jong-gap revealed this news during an annual governmental audit hearing by the Korean National Assembly. Kim Jong-gap further underlined that the company has “no plans to pursue overseas coal power projects in the future.”

South African environmental organisations have previously expressed concerns with regards to the impact of the Thabametsi coal-fired power station on climate change. According to their impact assessments, emissions from the Thabametsi coal plant could be 60% higher than that of Medupi and Kusile.

Kim Jong-gap’s address comes after the minister of trade, industry and energy’s announcement that KEPCO currently has no more overseas coal power projects in the pipeline after Vung Ang 2 in Vietnam.

Early October, KEPCO announced that it will invest $190 million in the Vung Ang No. 2 coal plant. Globally, investors and politicians responded negatively to this decision.

Global investors including Blackrock, Legal & General Investment Management, APG, and the Church Commissioners for England have warned the South Korean utility to drop coal power projects, citing financial and environmental concerns.

South Korea remains one of the top three public financiers of overseas coal power, providing approximately $10 billion to overseas coal power projects between 2008 and 2018 according to a 2019 study.

Coal power projects in Indonesia and Vietnam

South Korea’s recent coal power projects in Indonesia and Vietnam have been met with widespread international criticism, especially given the Moon administration’s drive with the Korean Green New Deal, which aims for a “net-zero emissions society,” earlier this year, and more recently, the Korean legislature’s adoption of a climate crisis declaration last month.

Commenting on the development, Sejong Youn, director of the overseas coal finance program at Seoul-based NGO Solutions for Our Climate, said: “We welcome that KEPCO has finally stopped the Sual project in its tracks. This is a major victory for the Sual community’s health and our climate. It is not too late for KEPCO to take the same approach for its recent investment in Jawa 9, 10 in Indonesia and Vung Ang 2 in Vietnam. Both of these countries have adopted ambitious renewable energy plans, and converting these coal projects into gas or renewables will be far more beneficial for all parties involved.”

There has also been much local opposition to the Sual 2 project, as well as the 1,200MW Sual-1 Power Station, which has been operating since 1999. On October 13th, activists from the Save Sual Movement, Philippine Movement for Climate Justice, and Asian Peoples’ Movement on Debt and Development held a rally in front of the Korean embassy in the Philippines, voicing their opposition to the project. Activists also held a demonstration in Sual on the day of the National Assembly hearing on KEPCO as well.

Assemblywoman Lee Su-jin questioned KEPCO president Kim Jong-gap on the overseas coal investments, leading to the following admission from Kim:

“Kim Jong-gap: Out of the four [overseas coal power plants] projects, we decided to go ahead with two, and transition the other two to gas or cancel them at this point. KEPCO and its subsidiaries will not be pursuing new overseas coal power projects.”

The former two projects referred are Jawa 9, 10 in Indonesia, which was approved in June, and Vung Ang 2 in Vietnam, approved by the KEPCO board in October.

The 1,000MW Sual 2 coal power project is estimated to cost $1.8 billion. According to KEPCO’s submission to the National Assembly, KEPCO was considering Doosan Heavy Industries & Construction as the tentative engineering, procurement, and construction (EPC) contractor of the project, and was in the course of arranging the financial investors.