Small and medium-sized and mid-tier companies looking to install greenhouse gas reduction facilities will be able to handle assessment, guarantee and lending in one flow rather than going through each step separately. The Korea Technology Finance Corporation (KIBO), NH Nonghyup Bank and Woori Bank signed a business agreement on green policy finance interest subsidy support agreement guarantees on the 25th of last month. The three institutions specified in the agreement an integrated support system linking the assessment, guarantee and lending procedures into one.
KIBO takes on carbon value assessment, assessment of greenhouse gas reduction effects, confirmation of conformity with the Korean Green Taxonomy (K-Taxonomy), and guarantee screening. The two banks execute green policy finance interest subsidy agreement loans on the basis of that assessment and guarantee.
Where the reduction effect is confirmed to exceed the baseline and to fit the K-Taxonomy, preferential financing is applied to facility funds for installing carbon reduction equipment. Interest support and preferential rates are differentiated according to company size and greenhouse gas reduction rate, and guarantee fee support using the agreement guarantee certificate is attached as well.
The figures companies actually need in order to weigh the terms were not included in the text of the agreement. Those include how many basis points the rate reduction comes to, what the guarantee fee support rate is, and where the differentiated brackets by size and reduction rate divide. The phrase "reduction effect above a certain level" has also not been converted into quantitative criteria such as tCO2e or a reduction rate.
KIBO's green guarantee products themselves were not newly created this time. Carbon value assessment guarantees and taxonomy assessment guarantees have been operated with contributions from the Ministry of Climate, Energy and Environment as their funding source, and KIBO has used its in-house carbon value assessment model and K-Taxonomy assessment system to expand green finance. What this agreement adds is a channel connecting assessment results directly to commercial bank lending terms.
Lee Jae-pil, standing director of the Korea Technology Finance Corporation, Eom Eul-yong, deputy president of NH Nonghyup Bank's corporate finance division, and Bae Yeon-soo, head of Woori Bank's corporate group, attended the signing ceremony. The three institutions are led by KIBO Chairman Kim Jong-ho, Nonghyup Bank President Kang Tae-young and Woori Bank President Chung Jin-wan. The parties to the agreement said they would jointly pursue the discovery of companies with strong carbon reduction records and an expansion in the scale of green policy finance support.
The point at which effectiveness can be measured is the execution stage. The range of eligible companies will vary depending on the level at which the reduction baseline is set, and only once the scale of interest subsidy funding is fixed will it be clear how many firms a year actually receive the preferential rate. Small and medium-sized manufacturers considering facility replacement would do better to compare the terms after the start date and application channels have been settled. The two banks have not released detailed product terms.
