November 14, 2018

Alex Doukas, alex [at]

Korea’s international coal finance will cause up to 27 trillion KRW in health and climate damages annually

SEOUL, KOREA — A new analysis, based on methods developed by analysts from the International Monetary Fund (IMF), finds that overseas coal-fired power plants supported by Korea’s public finance institutions could cause as much as 27 trillion KRW (nearly USD 25 billion) in annual damage to people’s health and the climate.

The damages from local air pollution could reach nearly 15 trillion KRW (USD 13.4 billion) annually – much of which would be from the negative health impacts of PM 2.5 (also commonly referred to as fine dust) – while the global damages to the climate could be as much as 12.5 trillion KRW (USD 11.2 billion) annually.

The report, published by the group Oil Change International, considers overseas coal-fired power plants supported by Korean public finance institutions, including the Export-Import Bank of Korea, the Korea Trade Insurance Corporation, and the Korea Development Bank. It considers nine already-operating overseas coal plants that received Korean public finance, as well as six plants that are slated to be completed in 2019 or 2020. The analysis builds on a methodology first developed by IMF analysts to calculate the externalities from fossil fuel combustion in 2014.

On average, KRW 1,000 in public finance for these projects could generate local air pollution health damages as high as KRW 1,670 annually, and many of these projects have lifetimes that can reach 50 years.

“Korea’s government should treat its global climate commitments seriously, and should stop providing finance for coal-fired power plants overseas, which are choking their neighbours with air pollution while trashing the climate,” said report author Alex Doukas of Oil Change International. “If the Korean government acts now, they can demonstrate leadership within the region by showing Japan and China that the era of government-backed finance for overseas coal plants is over. This can also help Korea to focus on their role as a technology and innovation leader in the rapidly accelerating global transition to clean energy.”

Geographically, the largest share of local air pollution damages occur in India and Vietnam (KRW 6.1 trillion and KRW 5.5 trillion respectively, or USD 5.5 billion and USD 4.9 billion respectively) with smaller but still significant shares in Indonesia and Turkey, and smaller damages in Chile and Morocco. The climate pollution has global effects and so is not distributed by geography in this analysis.

The authors also question whether Korea is respecting its commitment under the OECD to stop public finance for the most polluting coal-fired power plants, calling into question recent transactions for highly-polluting coal-fired power plants in Vietnam that appear to violate the spirit of the OECD Arrangement on Officially-Supported Export Credits, to which Korea is a party.

While many communities have been negatively affected by coal-fired power plants receiving Korean public finance, two of the plants which are considered in the report have been the subject of intense community protest and concern: the Tata Mundra Ultra-Mega Power Plant in India, and the Cirebon coal-fired power plant in Indonesia.

In the case of the Tata Mundra plant, protests about lack of consultation and transparency began in 2011, and groups filed multiple complaints with the Compliance Advisor Ombudsman of the IFC, the World Bank Group’s private sector arm, which also financed the project. EarthRights International, an organization that is representing affected communities in a lawsuit against the IFC, describes the devastating impacts of the project:

“For generations, the Kutch coastline has supported traditional communities who depend upon its natural resources for fishing, as well as farming, salt-panning and animal rearing. Many fishing communities depend entirely on the seasonal fish catch for their livelihood throughout the year.

“The construction and operation of the 4,150 MW coal-fired Tata Mundra Ultra Mega Power Plant – built just one mile away from another coal-fired power plant – has fundamentally altered the landscape and threatened the livelihoods, health and way of life of local communities that now live in its shadow.

“The plant takes in enormous quantities of seawater to use for cooling purposes, then discharges the hot wastewater back into the sea. The thermal pollution has already substantially changed the local marine ecosystem and led to a drastic decline in the fish catch local fishing communities depend upon. Construction of the plant’s massive outfall and intake channels has also resulted in both physical and economic displacement of local fishing communities, and has contributed to saltwater intrusion into the groundwater, destroying vital sources of drinking water and water used for irrigation in an area where fresh water is scarce.”

Notably, this case is so important that it is being heard by the US Supreme Court, challenging the World Bank Group’s claimed status of absolute immunity against lawsuits lodged by affected communities.

In the case of the Cirebon coal-fired power plant in Indonesia, protests from the community related the land acquisition for the project delayed the initial commissioning of the plant, while in December of 2016, a community organization filed a legal challenge against the project, arguing that the siting of the Cirebon 2 Unit 2 contravened local planning laws. In April, 2017, the regional court in Bandung ruled that the environmental permit for the plant had been issued illegally; despite this ruling, a revised permit was issued in July, 2017. Local reports indicate that people residing near the plant formerly relied on small-scale fishing and agriculture, yet these livelihoods have mostly disappeared due to Cirebon’s pollution and water use.

The full report can be downloaded here: