[Exclusive] Korea Eximbank's Clean Energy Financing Only 30% of Fossil Fuels Over Past Decade

Data from Lee Soyoung's Office
Fossil Fuel Support Remains High Despite Decarbonization Trend
Growing Concerns Over Stranded Asset Risks

The Export-Import Bank of Korea's proportion of overseas financial support for fossil fuels remains higher than that for clean energy. As leading global banks are halting financial support for fossil fuels due to profitability concerns, there are calls for the Export-Import Bank to adjust its portfolio accordingly.

20.5 Billion Dollars for Fossil Fuels vs. 1 Billion Dollars for Clean Energy

According to data received from the Export-Import Bank by the office of Lee Soyoung, a member of the Planning and Finance Committee of the National Assembly, the number of approved overseas fossil fuel projects from 2015 to September 30 of this year was 41. During the same period, the number of clean energy projects was only 12. The gap in contract size was even greater. The total amount of support for fossil fuel projects, including both loans and guarantees, reached approximately 20.5 billion dollars (29.44 trillion won). In contrast, support for clean energy projects amounted to 1.072 billion dollars (about 1.53 trillion won), which is only about 5% of the amount allocated to fossil fuels.

The Export-Import Bank of Korea, as an official export credit agency, provides policy-based support for long-term and high-risk export projects that commercial banks find difficult to handle. When Korean companies expand overseas, the bank not only offers direct loans and credit but also provides risk guarantees and insurance services for the projects.

Even after Korea declared an end to financial support for overseas coal-fired power plant construction in 2021, the Export-Import Bank's proportion of fossil fuel financial support remained high. From 2022 to September of this year, there were 13 cases of financial support for fossil fuels and 8 for clean energy. The respective amounts were approximately 9.4 billion dollars and 800 million dollars, showing a significant disparity.

During this period, the most approved projects in fossil fuel infrastructure were power plant construction projects. These included the Guam gas combined cycle power project in the United States, the cogeneration power project in Saudi Arabia, the desalination power project in Qatar, and another gas combined cycle power project in Saudi Arabia, with contract amounts totaling nearly 3 billion dollars. In the clean energy sector, solar power projects were the most common, with seven projects (in Taiwan, Chile, Mexico, Oman, UAE, and Saudi Arabia).

Fossil Fuels Also Dominate Ship Financing... Concerns Over Stranded Asset Risks

In the field of ship financing (where financial institutions provide funds when shipping companies cannot build vessels with their own capital), the share of fossil fuel-related projects was also high. Over the past ten years, the Export-Import Bank approved 314 cases of ship financing for fossil fuel carriers, totaling 14.55 trillion won. Among these, 120 cases were related to liquefied natural gas (LNG), amounting to 8.9884 trillion won-more than half of the total. In contrast, support for ammonia carriers, which are relatively classified as eco-friendly, was limited to four cases (157.5 billion won).

According to "Analysis of Korea's Shipping Stranded Asset Risk Exposure," a report by the climate advocacy group Solutions for Our Climate citing research from the University College London (UCL) Energy Institute, about 65% of the Export-Import Bank's ship portfolio consists of oil and gas carriers, making it one of the few financial institutions whose portfolio is dominated by fossil fuel carriers. The UCL research team warned, "If the transition to decarbonization accelerates in response to the climate crisis, the profitability of fossil fuel carriers is likely to decline," adding, "For Korea, if such risks materialize, both the public and private financial sectors could be severely affected."

This excessive concentration of financial support for fossil fuels by the Export-Import Bank was also criticized during the National Assembly audit. At the Planning and Finance Committee audit held on the 27th, Assemblywoman Lee Soyoung stated, "Major overseas financial institutions are halting investments in fossil fuels due to economic rationality," and pointed out, "Nevertheless, the Export-Import Bank is reviewing 45 new fossil fuel projects for which it has issued letters of intent." In response, Ahn Jonghyuk, Acting President of the Export-Import Bank, said, "In fact, the Export-Import Bank does not make decisions solely based on profitability," and added, "While there is a clear rationale for transitioning to renewable energy given our manufacturing-centered industrial structure, how quickly we can achieve that transition is also an important consideration."