[NEWS IN FOCUS] For Korea’s nuclear commercial ambitions, it’s all in the taxonomy

A nuclear reactor in Barakah, United Arab Emirates [YONHAP]

The “K taxonomy” may help Korea sign nuclear power projects overseas, but the green power classification may not be enough for investors.

A green taxonomy is a list of economic activities considered environmentally sustainable. It describes activities and assets that can be defined as green. Since ambiguity over these definitions has long acted as a barrier to the expansion of green finance, it will help banks and investors determine which companies or financial products are considered environmentally friendly.

Amid the once shunned global return to nuclear power, Korea’s version of the taxonomy will be announced as early as September and is expected to have a significant effect on Korea’s plan to sell 10 nuclear power plants by 2030.

During a policy meeting with President Yoon Suk-yeol on July 22, Environment Minister Han Hwa-jin said the ministry “will include nuclear energy in Korea’s green taxonomy to attract green investment from the sector.” financial”.

The first draft of Korean taxonomy guidelines was released in December last year under the Moon Jae-in administration, but nuclear energy was not included in the list. Yoon’s transition committee pledged in March to abandon the former president’s nuclear exit policy and include nuclear power as a green investment.

The ministry’s original plan was to publish the final draft by September and reflect the taxonomy directive in the Basic Plan for Electricity Supply and Demand – a government-designed two-year roadmap that sets out the comprehensive energy plan for the next 15 years – in December. But the environment minister hinted it could take longer than expected to discuss details.

The key question is whether the local version of the green taxonomy will follow the example of the EU classification, and to what extent.

The European Parliament voted on July 6 in favor of the decision of the European Commission to grant the green label to nuclear energy provided that an operational final storage center is built by 2050 for highly radioactive waste, and switch to a tolerant fuel by 2025.

Minister Han said on July 18 that “Korea plans to include conditions related to the high-level waste disposal facility and accident-resistant fuel, but the conditions may start to be applied later than in Europe given the internal situation”.

In July, Korea released a 1.4 trillion won ($1.04 billion) plan to build an interim storage facility for high-level nuclear waste by 2043 and a disposal facility for nuclear waste. ‘by 2060. Its final disposal facility development deadline is 10 years behind schedule. the EU standard, which means that Korea’s nuclear power sector may not be able to attract loans or equity investments from European assets without higher standards.

At this stage, Finland is the only country with a final disposal facility. The country’s deep geological repository is expected to come on stream in 2024. The Swedish government approved a plan to build one in January, and France plans to submit its permit application later this year.

Korea does not yet have an interim storage facility for highly radioactive waste. Most highly radioactive spent fuel is stacked in cooling pools.

Since the signing in 2009 of the agreement on the Barakah nuclear power plant project in the United Arab Emirates, worth 20 billion dollars, Korea has not been able to win a single power plant contract. The government is eager to change that, aiming to sell 10 nuclear power plant projects overseas over the next eight years.

Korea is competing with the United States and France for an 8 trillion won nuclear program in Dukovany, Czech Republic, and is also bidding on a 40 trillion won project to build a 6,000 to 9,000 megawatts in Poland. Korea Hydro & Nuclear Energy Corporation was selected as the sole bidder to supply parts for Egypt’s El-Dabaa nuclear power plant project in January as well.

Korea’s strength over its rivals – France, the United States, China, Russia and others – lies in its cost competitiveness. According to the International Energy Agency’s 2020 report, it costs Korea $2,157 per electric kilowatt (kWe) to build a nuclear power plant. The price is $4,013 per kWe for France, $4,250 for the United States, $2,271 for Russia and $2,500 for China.

Korea lags behind competitors like China and France in terms of financing capabilities.

Financing capacity is essential to winning a multi-billion dollar nuclear power plant contract. The construction of a nuclear power plant takes at least five years, requires significant capital and is exposed to political risks. While traditional large-scale public financing is not a viable option for some countries or has lost its appeal due to high risk, vendor financing has become increasingly common in the global marketplace.

The Polish government hopes its partner for its 48.5 billion euro ($48.2 billion) nuclear program will take a 49% stake to co-finance the project.

Looser requirements could undermine its financing capabilities in the sale of nuclear power plants in European countries.

Park Ho-jeong, professor of resource and energy economics at Korea University, said that “the revision of the K taxonomy guideline should help us not only to attract foreign investment, but also to expand our investments abroad”.

Park added that “when the K taxonomy is aligned with the EU taxonomy, it would help expand the market and the collaborative response on the Carbon Border Adjustment Mechanism in terms of international cooperation.”

BY SHIN HA-NEE [[email protected]]

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