The Inconsistent “Coal-Free Pledge” of Korea’s National Pension Service

An analysis on the air pollution and health damage caused by the NPS’ coal investment

Among fossil fuels, coal is one of the main culprits of the climate crisis due to its high concentrations of greenhouse gasses (GHG). Coal-fired generation is also one of the main causes of air pollution that consequently has adverse effects on health, such as cardiovascular and respiratory diseases. 

This first-of-its-kind study from the Centre for Research on Energy and Clean Air and Solutions for Our Climate (SFOC) analyzes the air pollution and health impacts of the Korean National Pension Service’s national coal investment, and the consequent economic losses over the past two years since their coal-free declaration in 2021 that has yet to be implemented.

In South Korea, the National Pension Service (NPS) recognizes the issues related to coal power generation and the necessity of reducing carbon emissions. In May 2021, the NPS, which has significant influence in the financial markets and on ESG investment and governance policies of companies, made a “coal-free declaration”(Ministry of Health and Welfare, 2021). Yet, as of today, the NPS continues to invest in coal power generation without developing concrete exclusion policies.

The operational coal fleet in South Korea caused an estimated 1,968 deaths in the country between 2021 and 2022. Of this, approximately 220 deaths could be attributed to NPS’ share of the power plants, that being 11.2% of all deaths across the country for two years. The total cost of all health impacts on the economy for the two years is estimated at USD 9.6 billion (KRW 12,400 billion). Again, over 11% — or USD 1.1 billion (KRW 1,400 billion) — of the total health costs to society can be linked to NPS’ share of the power plants. 

Other health impacts occur as a result of coal-fired pollution in South Korea. An estimated 2,760 children suffered from asthma due to pollution exposure in 2021 and 2022 combined, of which 315 can be attributed to NPS’ linkage with the power plants. 589 new cases of asthma in children arose in the two years with 67 linked to NPS, and a further 285 preterm births occurred, 32 of which linked to NPS. Over 2,000 years lived with disability due to chronic obstructive pulmonary disease, diabetes or stroke of which an estimated 260 were linked to NPS. Additionally, there were approximately 809,000 work absences as a result of people having to take sick leave days due to numerous pollution-related health issues, of which over 90,000 cases can be ascribed to NPS. 

Key findings of the report

  • The National Pension Service (NPS) has yet to establish a specific policy to limit its coal investments, more than two years after coal divestment declaration in May 2021. Meanwhile, the NPS continues to invest large amounts of capital directly and indirectly in South Korean coal-fired power plants (CFPPs). 
  • This study analyzes the air pollution and health impacts caused by the NPS’ investment in domestic CFPPs based on the CALPUFF modeling system, an industry-standard emission diffusion model. It also estimated the resulting economic losses. 
  • Between 2021 and 2022, exposure to air pollution from CFPPs in South Korea is estimated to have caused approximately 1,970 deaths1. Approximately 11.2%, 2202, can be linked to the NPS through its investment in domestic coal power plants. 
  • Health and economic impacts as a result of air pollution from coal in the country also include approximately 580 new cases of asthma in children, 280 preterm births, over 800,000 days of work absence (sick leave days), and 560 asthma-related emergency room visits in South Korea for 2021 and 2022 combined. Of these, the NPS-linked number of cases is 67 new cases of asthma in children, 32 preterm births, 90,690 days of work absence, and approximately 63 asthma emergency room visits. 
  • The total costs of exposure to air pollution from CFPPs in South Korea between 2021 and 2022 amounted to approximately USD 10 billion3 (KRW 12.9 trillion4) in healthcare and welfare expenditures. Of these, around USD 1.1 billion5 (KRW 1.4 trillion6) can be attributed to the NPS’ investment in domestic coal. 
  • In terms of regions, the largest health and economic impacts were found to be in Chungcheongnam-do, where the Taean and Dangjin coal power plants are located, and Incheon Metropolitan City, where the Yeongheung power plant operates. The annual deaths linked to the NPS for these plants were estimated at 26, 23 and 18 annual deaths in 2022. Furthermore, the total NPS-linked costs caused by these plants are USD 120 million7 (KRW 155 billion8), USD 110 million (KRW 142 billion10), and USD 87 million11 (KRW 113 billion12), respectively. 

As the Ministry of Health and Welfare of South Korea (MOHW) oversees the NPS and is also responsible for public health, it seems imperative to identify the current situation regarding public health related to coal-linked emissions and prepare countermeasures at the national health level. However, related research and policies seem to be lacking. 

Policy recommendations

  • As a public pension fund, the NPS should actively engage in climate action to remain within the 1.5°C degree limit set out in the Paris Climate Agreement. 
  • Expand the definition of the coal industry to include the entire coal value chain. 
  • The quantitative criteria for classifying coal companies should be set at a minimum of 30% by revenue (or, in the case of power generation companies, by electricity generation). The criteria must be progressively strengthened. 
  • Establish standards for active stewardship activities and enhance transparency for coal companies.
This report is also available on the Solutions for Our Climate (SFOC) website in Korean.

Lauri Myllyvirta, CREA; Erika Uusivuori, CREA; Jamie Kelly, CREA; Sooyoun Han, SFOC; Eleonora Fasan, SFOC

Partners: Solutions for Our Climate (SFOC)

South Korea