Hyundai unit will complete final projects before quitting coal

The construction arm of Hyundai Motor Co., South Korea’s top automaker, will push ahead with a coal-fired power plant in Vietnam even as it pledges to end any new work involving the fossil fuel.

Hyundai Engineering & Construction Co. will not participate in or invest in “new build coal-fired power plants either in Korea or abroad,” after fulfilling its existing commitments, the firm said Friday in an annual sustainability report.

Investors and campaigners have criticized the unit over its continued involvement in the coal power sector, arguing it undermines the parent company’s attempts to support climate action. South Korea, which is aiming to be carbon neutral by 2050, has pressed its private sector over the issue and President Moon Jae-in said in April the country would halt state-backed financing of coal-fired power plants overseas.

The Hyundai unit is likely to face further pressure over its decision to complete the Cirebon 2 plant in Indonesia, and proceed with construction of Quang Trach 1, a 1,200-megawatt facility in Vietnam’s Quang Binh province. Mitsubishi Corp., a partner in the Vietnam project, has also had push-back from investors.

“We’ve been working on the project for the past 10 years with the Vietnamese government, but it will be our final coal plant,” Park Wonchul, a spokesman at Hyundai E&C, said by phone. “We intend to strictly follow international standards to minimize the potential environmental risks.” The company will focus in future on operations centered around renewable energy, he said.

Mitsubishi did not immediately respond to a request for comment Friday, a public holiday in Japan.

“We want to send a clear message to Hyundai E&C and Mitsubishi Corp.: if you go ahead with Quang Trach or support other coal projects, divestment could be a potential outcome,” said Kiran Aziz, a senior analyst at KLP Kapitalforvaltning AS, a major Norwegian pension fund that holds shares in both companies. “Vietnam has attractive and booming wind and solar sectors so there are no excuses.”

Hyundai’s decision to complete the Vietnam plant will tarnish its attempts to bolster its green credentials, according to Youn Sejong, climate finance program director at South Korea-based non-profit Solutions for Our Climate.

The plan “defeats the sincerity of the company’s coal exit, and contradicts its own attempts to build a reputation as a forward-thinking and sustainable company,” he said.

© 2021 Bloomberg L.P.

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