'Nuclear Power Plants Cannot Receive Green Finance Support'... Ministry of Environment Finally Excludes Them from Green Taxonomy

Ministry of Environment Reports 'K-Taxonomy' Excluding Nuclear Power to Carbon Neutrality Committee
Does Not Recognize Nuclear Power as Green Economic Activity
Nuclear Industry Faces Investment Difficulties... Backlash Calls It a "Nail in the Coffin"

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[Sejong=Asia Economy Reporter Joo Sang-don] It has been confirmed that the Ministry of Environment has finalized the Korean-style green classification system (K-Taxonomy) that does not recognize nuclear power generation as a green economic activity. This is effectively a government declaration that "nuclear power is not an eco-friendly energy source," and a backlash is expected mainly from the nuclear power industry. This is because financing through green finance has become impossible.

A Ministry of Environment official said on the 17th, "We reported the K-Taxonomy containing this content to the Carbon Neutrality Committee yesterday," adding, "Since taxonomy is not a matter for the Carbon Neutrality Committee’s deliberation and resolution, the reported draft is the final version." The Ministry of Environment plans to announce the final K-Taxonomy as early as the 23rd through the 'Emergency Economic Central Countermeasures Headquarters Meeting.'

The government began developing the K-Taxonomy last year, created a first draft in February this year through expert committees, and established the fourth and final draft in August. Afterwards, it was distributed to related agencies to collect final opinions.

With the government effectively finalizing the draft, strong opposition is expected mainly from the political sphere and the nuclear power industry. Taxonomy is a guideline defining green economic activities and determines whether financing through green finance is possible. The National Pension Service, with assets totaling 850 trillion won, plans to use the K-Taxonomy for investment decisions starting next year, making it difficult for the nuclear industry to attract investment. According to the securities industry, the scale of green bonds issued domestically this year until the 14th has reached 12.6 trillion won. This means the issuance scale, which was about 1 trillion won last year, has been issued monthly.

Senior Research Fellow Hwang Se-woon of the Korea Capital Market Institute said, "Although green finance is still smaller in scale compared to general finance, it is growing rapidly and relatively offers lower interest rates," adding, "From a corporate perspective, if they cannot use green finance, their funding costs will increase."

A nuclear industry official criticized, "The nuclear industry is already on the brink of collapse due to the phase-out policy, and the taxonomy is driving the final nail into the coffin," adding, "Just like when the phase-out policy was established, the government is thoroughly ignoring the nuclear industry's opinions during the taxonomy establishment process."

In particular, criticism is expected as South Korea rushed to decide while the European Union (EU), which is leading carbon neutrality, has yet to decide whether to recognize nuclear power as an eco-friendly energy source.

At the 'World Nuclear Exhibition (WNE),' the largest event for nuclear companies and institutions held on the 30th of last month, the EU Energy Commissioner said, "Next year, we will see significant structural changes in the nuclear sector." This can be interpreted as the EU possibly recognizing nuclear power as an eco-friendly energy source.

Professor Jung Dong-wook of the Department of Energy Systems Engineering at Chung-Ang University pointed out, "Taxonomy is a guideline for sustainable finance and must align with international trends," adding, "The EU plans to announce whether to include nuclear power in its taxonomy on the 22nd, and with the global possibility of changing stances on nuclear power, if Korea finalizes the K-Taxonomy excluding nuclear power, it will fail to respond to changes in external conditions." He continued, "Implementation according to taxonomy will ultimately be the responsibility of the next government, and if the EU defines nuclear power as an eco-friendly energy source, the next government may have to reverse this decision, which could cause confusion."