"Accurate National Vision Needed for Climate Finance"

Seminar on the Role of Climate Finance in Fostering Climate Tech

There was an opinion that a proper national-centered investment strategy is necessary for climate finance that supports climate response policies. The government stated that it will not spare related support, including playing the role of venture capital for climate tech. The related industry expressed hopes for investment with a long-term vision.

On the 1st, a seminar titled “The Role of Climate Finance in Fostering Climate Tech,” hosted and organized by the National Future Strategy Institute of Seoul National University and the Climate Change Center, was held at the FKI Tower in Yeouido, Seoul. At this event, Jeong Su-jong, director of the Climate Tech Center at Seoul National University (professor at the Graduate School of Environment, SNU), said that climate finance is essential to activate climate tech. Climate tech is an industry that generates profits through innovative technologies that contribute to greenhouse gas reduction while creating revenue. He introduced cases of climate tech and climate finance from various countries overseas and presented implications for revitalizing climate finance.

Director Jeong said, “A national vision is needed to simultaneously achieve the national greenhouse gas reduction target (NDC) and economic growth,” adding, “Investment accompanied by proper value assessment is necessary, not only institutional improvements for investment activation but also to ensure that climate tech can accurately impact climate response.”

It is expected that the international carbon market will be activated in the future, with particular attention on the voluntary carbon market. Kim Tae-hoon, director of the Green Climate Planning Division at the Ministry of Economy and Finance, said that an agreement related to the operation of the international carbon market is expected to be reached at next week’s COP29 (United Nations Climate Change Conference of the Parties). Quoting data from the IPCC (Intergovernmental Panel on Climate Change), Kim said that to limit global warming to below 1.5℃, carbon emissions must be halved by 2030 to achieve carbon neutrality by 2050. To this end, at least $3 trillion (approximately 4,135.5 trillion KRW) in climate finance is needed annually, but only $0.1159 trillion was invested as of 2022.

On the 1st, the seminar titled "The Role of Climate Finance in Fostering Climate Tech," hosted and organized by the National Future Strategy Institute and the Climate Change Center of Seoul National University, was held at the FKI Tower in Yeouido, Seoul.
[Photo by Oh Gyumin]

Director Kim argued that since there are limits to public funds, mobilizing private capital is necessary, and the role of the voluntary carbon market will become important. The carbon market is a market for trading carbon emission rights. Among these, the voluntary carbon market, which is not directly supervised by governments or regulatory agencies, is expected to be activated soon, with large-scale funds being established by institutions such as the World Bank, making its outlook bright.

Kim Sung-jin, head of the ESG Center at KDB Industrial Bank, explained the role of the Industrial Bank as a policy finance institution supporting climate finance. He said that to develop climate tech, financial input is needed at the early stages of the industry to enable private finance to invest at the mature stage. In particular, policy finance institutions such as the Industrial Bank will play the role of venture capital by providing subordinated loans instead of senior loans.

The industry also hoped that policy finance institutions would take on more of a venture capital nature and invest with a long-term perspective. Kim Jong-hoon, president of the Korea Industrial Technology Promotion Association, said, “There are still areas where policy finance should lead when making initial investments in facility conversion or new technologies,” adding, “Policy finance needs to have the nature of venture capital and adopt a perspective that goes beyond the existing venture investment methods.” Jang Eun-hye, head of the Climate Change Legislation Team at the Korea Legislation Research Institute, added, “Instead of the private sector, which inevitably considers efficiency and profitability, public institutions should take social responsibility, solidify uncertain areas, pave the way, and enable the private sector to follow.” Han Shin, CEO of H2, shared the story of receiving investment from the Industrial Bank for 10 years and said, “Since climate tech is only now moving into the commercialization stage, I hope investments are made with a long-term perspective rather than looking for investment recovery opportunities.”