The National Growth Fund’s Investment in Gas Power Generation:
A Penny-Wise, Pound-Foolish Blunder

ㅣKarl Yang, Founder & Executive Director of KoSIF ㅣ

The government is concretizing plans to mobilize the 150 trillion won "National Growth Fund" to construct a gas (LNG) cogeneration power plant in the Yongin Semiconductor Cluster. Although presented as a desperate measure to secure power supply for an advanced tech industry, this decision directly contradicts the foundational purpose of the fund. Furthermore, it is a penny-wise, pound-foolish blunder that offers no real benefit to the companies involved.

Proponents of the project offer a realist argument centered on "stable power supply." They argue that using immediately available gas power generation as an energy transition "stepping stone" to operate semiconductor factories aligns with the fund’s objective of supporting industry.

However, this is 20th-century thinking, trapped solely in the "quantity" of growth. The true value that the National Growth Fund must pursue is not simple infrastructure expansion, but securing "sustainable competitiveness" that aligns with global standards.

      Driving Global Companies into Exile

Most importantly, this investment overlooks the fact that it could turn our companies into "orphans" in the global market. Forcing gas power—a fossil fuel infrastructure—onto South Korean semiconductor companies that have already declared RE100 targets will undermine their commitment to achieving RE100. Ultimately, it will betray the trust of international society and foreign buyers.

If expanding fossil fuel use leads to the revocation of RE100 credentials or results in a "greenwashing" label, global clients like Apple and Google will ruthlessly remove our companies from their supply chains. It would be a catastrophic trade-off: losing semiconductor exports just to secure electricity for data centers.

From a financial perspective, this decision also runs entirely counter to the fund's original purpose. At a time when carbon regulations like the Carbon Border Adjustment Mechanism (CBAM) are sharpening their blades, a gas power plant built today is destined to become a "stranded asset" that cannot even be operated in the near future.

Indeed, a study published in Nature Sustainability analyzed 16,438 fossil fuel power plants worldwide. Under a 2°C scenario, it identified the Korea Electric Power Corporation (KEPCO) as a top-tier company exposed to stranded asset risks worth approximately $22 billion to $33 billion (roughly 32 to 49 trillion KRW).

Consequently, the investment returns of the National Growth Fund will inevitably plummet. If a fund backed by taxpayers' money and precious investments is used as a channel to generate massive future "liabilities" rather than assets, how can it ever be called a "growth" fund?

      A Call for True "Transition Finance"

This investment plan is a self-contradictory decision that undermines the National Growth Fund's very reason for being. True growth does not mean leaning back on the fossil fuels of the past; it means building a "green ladder" that enables companies to ride the massive wave of the carbon-neutral transition.

The government must resist the easy temptation of gas power. Instead, it must concentrate on true, future-oriented "transition finance" that helps our companies perfectly satisfy global survival conditions like RE100—such as smart grids and Energy Storage Systems (ESS).

Ultimately, investing the National Growth Fund into gas power generation is a counterproductive move. It jeopardizes the fund's investment yields while piling risks onto the very companies it aims to support. True growth does not rely on immediate convenience; it removes future uncertainties.

If the direction of growth is wrong, its speed becomes completely meaningless. Will the National Growth Fund fall into the swamp of fossil fuels and become a "regressive fund" that suffocates businesses, or will it become an "innovation fund" that drives sustainable growth? Even now, it is time to turn the compass of the National Growth Fund away from fossil fuels and back toward a sustainable future.