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Samsung shareholder AkaP calls for end to coal investment

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By Nam Hyun-woo

AkademikerPension CEO Jens Munch Holst / Courtesy of AkademikerPension
AkademikerPension CEO Jens Munch Holst / Courtesy of AkademikerPension
AkamdemikerPension (AkaP), a Danish pension fund and a shareholder in Samsung Group companies, is calling for the conglomerate's construction unit, Samsung C&T, to end financing and construction of new coal-fired power plants across the world, joining a number of other global asset managers who are against the firm's participation in a Vietnamese coal plant project.

AkaP CEO Jens Munch Holst said in an interview with The Korea Times that Samsung's participation in the Vung Ang 2 project will "tarnish" the reputation of the group, which will continue to face strong opposition from global investors who increasingly consider support for coal mining as "a major financial risk."

"It is critical to stress that Samsung's shareholders worth trillions of dollars, want Samsung to end coal financing and construction," Holst said in the written interview. "Legal and General Investment Management, Nordea Asset Management, KLP, and now AkaP, with combined assets approaching $2 trillion, have publicly opposed the company's plans to participate in the construction of new coal plants."

AkaP, previously known as MP Pension, is a pension fund managing assets for more than 140,000 education sector members. It has $20 billion in assets under management and $63 million of that is in Samsung companies as equity investments.

AkaP is one of a number of global investors that have delivered messages to Samsung to end its participation in coal projects across the world. It recently sent a message to the conglomerate that "coal construction and financing is not consistent with climate policies" and demanded Samsung C&T stop its involvement in the Vung Ang 2 project.

Vung Ang 2 is aimed at building two 600-megawatt coal-fired power plants in Ha Tinh Province. The State-run Korea Electric Power Corp. (KEPCO) is seeking to invest in the $2.2 billion project by acquiring a 40 percent stake from China Light & Power. Samsung C&T and Doosan Heavy Industries & Construction are supposed to take part in the project's engineering, procurement and construction.

KEPCO initially planned to hold a board meeting Monday to approve its official participation into the Vung Ang 2 project, but skipped the item during the meeting. The state-run company cited "administrative matters," but this is interpreted as a response to growing opposition both in and outside of the country.

As KEPCO is spearheading the project with private companies backing it, Korea's bid is widely being described as "a team effort," thus drawing harsher criticism against not only Samsung but also the government.

"If Vung Ang 2 is considered a team project, that is a very weak argument given that a coal plant can run for 40 years and this will tarnish the reputation of Samsung and Korean actors long term if they go ahead," Holst said.

He cited an April environmental impact assessment report on Vung Ang 2 by the Environmental Law Alliance Worldwide. In the report, analysts criticized that the project had "used the wrong choice of an air pollutant dispersion model that renders meaningless predictions of air quality impacts," and "applied weaker emission standards for the project than those used internationally."

This came as a strong rebuttal to the Korean government and KEPCO's claim that it has an ultra-supercritical (USC) coal combustion technology that can minimize carbon emissions of the plant, thus it was better for Korean companies to be in charge of the project.

On Sept. 18, Minister of Trade, Industry and Energy Sung Yun-mo said "only a limited number of countries can establish USC coal plants," and "it is known that USC plants have effectiveness in reducing not only carbon emissions but also other pollutants."

"The claim that KEPCO has technology which can minimize coal emissions is so marginal that it should not be taken seriously," Holst said. "In more general terms, even if the best coal technology was applied, it has a minor impact and remains entirely incompatible with climate goals."

USC technology is aimed at raising the conversion efficiency so that it can lower CO2 emissions. According to consulting agency Ecofys, USC technology can have up to a 45 percent conversion efficiency, which emits around 740 grams to 800 grams of CO2 per kilowatt-hour. The emissions are improved from that of conventional supercritical or subcritical technologies, but are still too high to be a party to the Intergovernmental Panel on Climate Change's decarbonization pathways.

Due to doubts on the efficiency and carbon footprint in the new "more efficient" coal plants, a number of global power giants are moving to exit from investing in coal.

Last week, General Electric, one of the largest makers of coal-fired power plants, said it would not build any new coal plants, meaning its active pipeline projects ― including Vung Ang 2 ― may undergo site closures and divestitures as well as having job impacts.

"This is an increasingly common position within the global finance industry: in recent years, well over 100 major global banks, funds and insurers have divested from coal and this will only rise as climate litigation, and shareholder action grows," Holst said.

"Climate change is redefining investment strategies and we are seeing strong returns since our divestment from poor performing coal and oil companies."

Regarding President Moon Jae-in's energy policy, Holst said the leadership sees "the risks and opportunities at hand," citing the Green New Deal initiative aimed at growing renewable energy as an economic driver, while pushing coal projects outside the country.

"It is critical to bear in mind that very few countries fund coal overseas and Korea is increasingly out of step with the rest of the world," Holst said. "Korea's Parliament (National Assembly) has been debating a global coal finance ban ― brought by the ruling party's own lawmakers ― and this would support the government's promotion of the Green New Deal and the plan to close more coal plants at home. Supporting new coal undermines the live national debate."

In July, four lawmakers from the ruling Democratic Party of Korea proposed a number of revisions banning KEPCO and state-run financial organizations from investing in overseas coal projects. Should the revisions pass the Assembly, KEPCO's overseas coal projects will be suspended immediately.

"Every country must decide for itself. We commend Korea for investing billions of dollars into solar and wind at home, and that it is planning to close half of its coal plants by 2034," Holst said. "The ruling party proposed a set of bills to restrict overseas coal finance and this represents an historic opportunity for the political leadership in Korea to promote its Green New Deal and to protect the country's good reputation."

Nam Hyun-woo

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