No insurance for coal plants
Four nonlife insurance companies — DB, Hana, Hanwha General, and Hyundai Marine & Fire — have decided to stop providing insurance for the construction and operation of new coal-fired power plants. The decision is in response to a request by Korea Beyond Coal, an alliance of domestic climatic and environmental organizations, to 11 nonlife insurers. This is the first time that underwriters have decided to discontinue insurance provisions for the building and running of new coal plants. Two of the 11 will cease to underwrite only the construction of new coal plants.
The insurance firms’ primary target is Samcheok Thermal Power Plant, one of the seven coal-fired plants under construction and with a completion rate of 40 percent, the last one scheduled to be finished. The Moon Jae-in administration has refused to stop its construction, raising doubts about its determination to attain carbon neutrality. The insurance industry accounts for about one-third of domestic coal financing, meaning that the four underwriters’ declarations will have a considerable impact.?
Last month, the National Pension Service, the biggest investor in coal-fired power generation, also approved a plan to limit investment in businesses tied to coal-fired power plants. At stake now is not whether but how fast the nation should phase out fossil fuels. It was regretful in this regard that NH Investment and Securities has set about to float Samcheok Thermal Power Plant’s corporate bonds, decelerating the nation’s decarbonization process. Five foot-dragging nonlife insurers will have to shoulder far heavier risks. This is the cost for turning a blind eye to environment, social and corporate governance (ESG) management that has emerged as a global standard. They must join in before it is too late.
Under the 2015 Paris Agreement, Korea presented a plan to reduce carbon emissions by 24.4 percent by 2030 from 2017 levels. The Moon administration has now promised to raise its reduction target. Leading countries in preventing the climate crisis have already committed to ramp up their targets by up to 50 percent by 2030. That is the minimum the world should do to avert a climate catastrophe. Korea cannot be an exception. All related sectors — the government, industry, finance and the public — should speed up decarbonization efforts. There are only eight years left.