When people around the world think of South Korea, the country is generally perceived with positivity and enthusiasm. Just a mention of the country’s name brings to mind buzzwords like K-Pop, K-Drama and K-Food, positive images which evoke a sense of national pride. However, at a time where climate change is causing catastrophic events across the globe, a South Korea’s image is being damaged due to heavy criticism over its role in financing overseas projects with massive GHG emissions.

South Korea is a signatory of the Paris Agreement, committed to limiting global warming to well below 2°C and pursuing efforts to stay within 1.5°C. In December 2020, the country declared its goal of carbon neutrality by 2050. In 2021, South Korea announced through its Nationally Determined Contribution (NDC) that by 2030, it would reduce greenhouse gas emissions by 40% compared to 2018 levels - a reduction of roughly 727.6 million tonnes of CO2 equivalent (MtCO2eq) – a unit used to measure and compare greenhouse gas emissions relative to their global warming potential (GWP). In layman’s terms, that’s equivalent to the annual emissions produced by 14 cities the size of New York City.

Despite these commitments being welcomed by the international community, heads tilt to the side when discussing the country’s fossil fuel financing addiction, carried out through its Export Credit Agencies.  

What are Export Credit Agencies (ECA)? 

Signage in front of KEXIM headquarters. Photo courtesy of TFX News.

An export credit agency is a public financial institution which provides financial support to help domestic companies trade their goods and services in overseas markets. They do this in large infrastructure projects, such as fossil fuel projects, where costs are huge and risk is high. Finance is provided in the form of loans, guarantees, insurance policies, and credit to stakeholders in these projects, allowing them to make the large financial commitments required to “seal the deal”. ECAs offer their services in cases where the private sector is not willing to participate due to high financial risk. In Korea, these ECAs are the Export-Import Bank of Korea (KEXIM) and the Korea Trade Insurance Corporation (K-SURE); they are government bodies that use public funds. 

To understand how ECAs support gas projects, let’s consider the example of a major gas discovery. Developing such a project requires a wide range of specialized inputs throughout the entire gas value chain—from engineering services for installing upstream infrastructure and extracting gas from the ground, to midstream where liquefaction plants, liquified natural gas (LNG) carriers and pipelines transform and transport gas to its destination, all the way to the downstream stage, which includes end uses such as in petrochemical or power plants. Because projects of this scale and complexity involve significant financial risk, particularly in unstable regions, commercial banks that fund the export of these goods and services often rely on ECAs for financial assistance. 

This can include guarantees that protect against risks such as borrower default—allowing banks to recover their funds from the ECA if the companies are not paid by their business partners - or ECAs might offer a loan to business ventures so that they can afford to sign expensive contracts for infrastructure development which require massive capital expenditure.

This is exactly the role of KEXIM: it supports overseas business activities by providing loans for large-scale projects which in turn make payments to Korean companies. KEXIM also provides guarantees to Korean exporters or overseas lenders who provide financing for the business, so they are protected from financial loss. K-SURE specializes in providing potential loss insurance for parties to the deal, in a case where for example= they are not paid for their export. By doing this, and assuming financial risks that others don’t want to take, KEXIM and K-SURE allow foreign countries and companies to contract Korean companies for multiple products and services required for their projects worldwide. 

Countries around the world are committing to stop fossil fuel finance.

Across the globe, countries are becoming increasingly aware of the harms related to financing of fossil fuels. In 2021, for example, OECD countries, including Korea, committed to halting public finance for new coal fired power plants. Countries are progressively restricting investments in new oil and gas projects as well.

Since 2022, 43 countries and institutions have signed on to the Clean Energy Transition Partnership (CETP), committing to end international public finance for fossil fuels and prioritizing support for clean energy by aligning export finance policies with global climate goals. While Korea continues to finance fossil fuels through KEXIM and K-SURE, countries such as the United Kingdom, Canada, New Zealand, France, Finland, Belgium, Sweden and most recently, Australia, have made commitments to stop financing fossil fuels through the CETP commitment or a 2022 commitment by the G7. As a result, fossil fuel financing by CETP members fell by two-thirds, reaching just 5.2 billion dollars in 2023. While Japan made a commitment in 2022, it is yet to be implemented.

Korea ranks 63rd on the CCPI Ranking 2025 in this graph filtered down to the world's top 10 GHG emitters. Photo courtesy of CCPI.

According to the International Energy Agency (IEA), South Korea is the world’s 9th largest GHG emitter, and is ranked 63rd - barely missing the bottom – on the 2025 Climate Change Performance Index (CCPI). This means South Korea ranks very low in all CCPI categories: Climate Policy, Energy Use, Renewable Energy, and GHG Emissions.  

To make matters worse, out of the countries that have yet to commit to transitioning finance to clean energy, South Korea remains the largest provider of fossil fuel export finance among the G20. In the 3 years leading up to 2022, the country provided a staggering 10 billion dollars yearly on average to these projects (see figure below). In contrast, Korea’s clean financing over the same period was extremely low – averaging just USD 805 million annually – making it less than even Japan (USD 2.3 billion per year on average).

Canada takes the top spot in the public financing of fossil fuels, providing over $11 billion in oil and gas support alone. Korea follows up at number two (see figure below). Canada, however, has already made a commitment to not finance fossil fuel any further, meaning Korea is expected to take first place very soon. As such, South Korea has been openly shamed as a country contributing to the blocking of a “globally just and equitable transition to clean energy”.

Top 5 G20 Country Providers of international public finance for fossil fuels compared to clean energy (annual average, 2020-2022) in USD billion. Graph courtesy of Energy Finance.

Moreover, countries party to the OECD's Export Credit Arrangement met in 2024 to consider a proposal to expand the agreement’s restrictions on coal to prohibit public financing for all fossil fuels. Korea emerged as the most vocal opponent, insisting on the continued financing of these harmful emitting projects. The agreement’s unanimous consent requirement meant South Korea’s – accompanied only by Türkiye’s - opposition alone directly blocked the proposal’s passage. Korea was, understandably, heavily criticized for blocking this negotiation. 

More bad decisions – this time in Mozambique.

Overhead view of Coral South FLNG at night. Photo courtesy of ENI.

In alignment with South Korea’s “pro-fossil fuel financing” stance, KEXIM and K-SURE are planning to finance the Coral North FLNG Project in Mozambique, a country in southeastern Africa where multiple gas wells have been discovered.  There is already one offshore gas project in operation in the area – Coral South – as well as the onshore Mozambique LNG project, which is currently on hold due to local insurgency attacks.  Projects at Coral North and Rovuma are currently in the planning phase, with the financial investment decision (FID) for Coral North set to be announced within the year. Upon completion, Coral North is expected to produce around 3.5 MTPA (million tonnes per annum) of LNG. 

The Coral North project is expected to be financed by Korean ECAs, which serve to facilitate international trade by Korean companies participating in the project. KOGAS owns a 10% stake in the project, and Samsung Heavy Industries is set to participate in the construction of the production vessel. KEXIM and K-SURE are set to provide 1.8 billion dollars in additional financing.

Overview of LNG projects in Mozambique.

If Coral North gets the green light on the FID, it is projected to have devastating impacts on a climate, environmental and social level. The Coral North project is anticipated to generate 489 million tonnes of greenhouse gas emissions over its lifetime—comparable to Türkiye’s annual emissions—posing a significant threat to global climate goals.

Coral North is set to be located along Mozambique’s northeastern Cabo Delgado coast, a region rich in marine biodiversity. However, the Environmental Impact Assessment (EIA) failed to adequately consider the project’s effects on crucial marine species, leaving the full extent of potential damage unknown and unmitigated. This endangers not only fragile ecosystems, but also the livelihoods of local fishing communities, who rely on healthy marine environments and unrestricted access to fishing grounds. Despite contributing just 0.21% to global emissions in 2019, Mozambique remains highly vulnerable to climate change impacts, with its citizens facing increased displacement and livelihood disruption due to extreme weather events intensified by projects like Coral North.

Accountability is key. 

The IEA confirms that no additional LNG projects are required to meet projected gas demand under scenarios in which countries implement their current climate commitments, reducing reliance on fossil fuels. At the same time, the IPCC warns that current LNG infrastructure is already pushing us beyond the 1.5°C point. Financing this project will lead to harm for all global citizens, and Korea will have to take responsibility. 

KOGAS, with its 10% stake, has been sued twice in relation to its participation in the Coral North project. The first administrative lawsuit seeks to reveal the project’s expected profits, as KOGAS appears unwilling to disclose whether there is sound reasoning behind investing in Coral North. The second legal proceeding is an ongoing injunction against KOGAS’s decision to sign on the project’s FID. 

As of May 29th, 2025,  KEXIM and K-SURE have also been sued, with an injunction filed against them prohibiting them from making any financial commitments—including  loan contracts, letters of commitment, guarantees, or insurance—related to the Coral North project, on the grounds that such actions would violate Korea’s constitutional and statutory obligations, threaten global and local environmental rights and result in irreversible climate damage with no sufficient public interest justification. 

South Korea has lots of room for improvement. 

National Assembly members are also recognizing South Korea’s need to transition away from fossil fuel finance in favor of supporting green exports that expedite the global energy transition.

Leading up to the 2024 OECD negotiations, National Assembly member Kim Sung-hwan criticized the current situation, stating“while other advanced countries, excluding South Korea, are racing ahead with renewable energy and green industries, it is problematic that public financial institutions, which should be supporting and nurturing these industries, are instead blocking them. This is tantamount to abandoning the future of South Korea's industry and regional economies.” National Assembly member Jin Seong-joon further commented that “the recent revision of the OECD Export Credit Agreement requires public financial institutions to at least verify whether new fossil fuel investments align with the Paris Agreement's goals. Opposing this revision is tantamount to rejecting the Paris Agreement itself.”

The choices ECAs make as to where and how public funds are spent must be made consciously, diligently and in absolute alignment with Paris Agreement commitments. South Korean ECAs have a major role to play in supporting Korean companies that seek opportunities to export their clean technologies. South Korea has potential to become a leader in the renewable energy industry, and ECAs will be a crucial part of this. 

With the Democratic Party – which previously ended public support for coal projects – in power once more, decision makers must not lose sight of the climate commitments and responsibility South Korea holds. The Lee Jae-myung administration has the potential to “turn the page on the previous government’s “blocker” role on international climate issues” by joining the CETP and ensuring that KEXIM and K-SURE redirect fossil fuel finance towards renewable energy investments. Such actions will not simply help improve Korea’s international reputation in the climate sphere but also represent tangible steps towards a clean future for the world.