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S.Korea eyes cheap loans for eco-friendly projects

14 Mar 2007 05:28:55 GMT
Source: Reuters

SEOUL, March 14 (Reuters) - South Korean companies will be eligible for cheap loans when they build facilities aimed at cutting greenhouse gas emissions, the energy ministry said on Wednesday, joining a global fight against climate change.

The loans will be provided by eight major commercial banks, including Kookmin Bank <060000.KS> and Industrial Bank of Korea <024110.KS>, at an annual interest rate of 2.5 percent, lower than the usual rate of 4.5 percent, it said in a statement.

The government will pay the difference in interest income for lenders out of a 30 billion won ($31.68 million) state-run fund designed to finance projects aimed at cutting greenhouse gas emissions, the ministry said in a statement.

The move comes about a month after the ministry said it would give cash rewards to firms reducing greenhouse gas emissions, a plan which it estimates will help cut at least 1 million tonnes of emissions per year.

It also follows a decision by European Union leaders last Friday to set targets for cutting greenhouse gas emissions blamed for global warming, developing renewable energy sources, boosting energy efficiency and using biofuels.

As a developing country signatory to the United Nations' Kyoto Protocol, South Korea is not bound by the agreement but has been introducing ways to cut emissions prior to full membership of the protocol.

South Korea, whose economy is the world's 11th-largest, is reliant on heavily energy-consuming manufacturing sectors such as steel and petrochemicals and ranks 10th in the world for greenhouse gas emissions.

The Kyoto Protocol obliges about 35 industrialised nations to cut CO2 emissions by an overall 5.2 percent below 1990 levels by 2012. Negotiators are now discussing new, tougher targets for the second phase from 2013 to 2017. ($1=946.9 Won)

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Last updated:Wed Mar 14 05:30:06 2007