South Korea’s financial flows remain misaligned with its climate commitments. Despite global clean energy investment surpassing fossil fuels in 2023, Korea continues to channel USD 130 billion (KRW 173.7 trillion) into fossil fuels, including USD 57.8 billion into coal, while renewable investment reached only USD 18.4 billion. Coal still supplies over 30% of electricity, among the highest shares in the OECD. Such an imbalance exposes the economy to stranded assets, lost competitiveness, and missed growth opportunities.

Key lessons from international experience:

• The UK de-risked offshore wind through public finance and stable revenue guarantees, becoming a world leader.

• Germany scaled renewables and supported former coal regions with legal certainty and targeted public finance.

• Spain mobilized capital and secured social support through sovereign green bonds and just transition agreements.

Korea faces major gaps, such as weak ETS carbon pricing, untapped potential in the offshore wind sector (>600 GW), and the need to support coal-dependent regions such as Chungnam and Gangwon in the transition. To align finance with an early coal phase-out, Korea could implement binding fossil fuel exclusions and redirect KDB and KEXIM lending toward clean energy, particularly offshore wind, or consider establishing a dedicated coal transition facility to finance just transition and regional redevelopment in coal-dependent areas. Korea could also reform the K-Taxonomy and ETS for net-zero alignment and meaningful carbon pricing and track progress via an Energy Supply Investment Ratio to enhance accountability and guide capital toward renewables, competitiveness, and fair community transition.