Editor's Note

On November 13, 2020, the EAI and Brookings institution jointly held the 2nd online seminar of the series titled "Prospects for U.S.-South Korea Cooperation in an Era of U.S.-China Strategic Competition". In session 2: economy, energy, and environment, Jeffrey Ball addressed that the world is witnessing a race of pledges on de-carbonization or carbon neutrality, including President Moon Jae-in’s recent announcement to go carbon neutral by 2050 as well as pledges made by leaders of Japan, China, Europe and more. What really matters is to translate such pledges into action, and in order to operationalize such goals, geopolitical strategies need to be established and economic incentives should be provided. Many of the developed countries that announced to reduce their carbon consumption are indeed investing heavily in coal infrastructure businesses in developing countries like Vietnam. The pledges therefore should not only be limited to the domestic level, but also be expanded to the global level. Countries need to shift economic incentives so that various key players in the traditional energy sector including multinational corporations and international-development bank, can foresee profits from clean energy that are as alluring as those they have long have inked from dirty energy.

Quotes from the Paper

In late October 2020, South Korean President Moon Jae-In announced that his country would become net “carbon-neutral” by 2050. His vow came two days after a similar promise from Japan, a month after one from China, and a year after one from the European Union. South Korea, Moon promised, would work “with the international community” to achieve its ecological goal.

That won’t be easy, because Moon’s government continues to work with the international community in the opposite direction. South Korea is, by at least one count, the world’s third-largest exporter of technology to build coal-fired power plants in emerging economies. South Korea generates 40% of its electricity by burning coal, and its biggest banks and industrial firms earn an outsized portion of their profits by selling machinery to turn the black rock into juice. Just three weeks before Moon’s climate pronouncement, South Korea’s government-owned utility, Korea Electric Power Corp., or Kepco, announced it would spend $189 million for a 40% slice of a 1,200-megawatt coal-fired power-plant project in Vietnam.  Kepco will acquire the stake from China Power & Light, a Hong Kong-based firm that, in a sign of the times, announced in December 2019 that it would stop investing in coal-fired electricity, concluding the sector was both environmentally untenable and economically unappealing. Kepco’s board voted to buy into the deal despite vocal objections not just from a raft of environmental groups but also from shareholders including some of the world’s whitest-shoe institutional investors, among them Switzerland’s UBS Asset Management and the Netherlands’ APG Asset Management.

Why would the Moon government’s power-producing firm invest in solidifying coal’s hold on the developing world just days before Moon was to pledge his country’s deep commitment to slashing planet-warming emissions? One clue is the roster of South Korean financial behemoths that stand to profit from the Vietnam plant, Vung Ang 2. The list includes Samsung C&T Corp. and Doosan Heavy Industries & Construction Co., two lions of the South Korean industrial establishment, which will oversee the project’s construction; the government-controlled Export-Import Bank of Korea, which will provide loans for the deal; and the Korea Trade Insurance Corp., also a government firm, which will proffer financing guarantees.

Author’s Biography

■ Jeffrey Ball, a writer whose work focuses on energy and the environment, is scholar-in-residence at Stanford University’s Steyer-Taylor Center for Energy Policy and Finance and a lecturer at Stanford Law School. He also is a nonresident senior fellow in the Brookings Institution's Energy Security and Climate Initiative. Ball’s writing has appeared in Fortune, Texas Monthly, Mother Jones, the New Republic, Foreign Affairs, Joule, The Atlantic, The Wall Street Journal, and The New York Times, among other publications. At the Stanford center, a joint initiative of Stanford’s law and business schools, Ball heads a project assessing the climate implications of infrastructure investment by major economies including China, the world’s largest carbon emitter, coal burner, and renewable-energy producer. Among Ball’s writing honors were two in 2019: He won a New York Press Club Award for Journalism and was named a finalist for a Gerald Loeb Award for Distinguished Business and Financial Journalism for “Lone Star Rising,” a 2018 long-form story he wrote in Fortune on how a renewed oil boom in West Texas’ Permian Basin, one of the world’s biggest oil-producing areas, is reshaping both the region and the global energy system. Ball was the primary author of a 2017 Stanford report that assessed countries’ comparative advantages in the globalizing clean-energy sector. That report, The New Solar System, was released in March 2017 and laid out a strategy to boost solar energy to a level that would contribute meaningfully to global carbon reductions. Ball came to Stanford in 2011 from The Wall Street Journal, where he was the paper’s environment editor and before that was a columnist and reporter focusing on energy and the environment. He graduated from Yale University, where he was editor-in-chief of the Yale Daily News. Follow him on Twitter at @jeff_ball.