South Korea has been castigated by environmentalists and international investors for failing to follow Japan in slashing funding for coal power overseas.

The criticism was levelled as Moon Jae-in’s government touted investment in clean energy as part of a Green New Deal, a vital component of an unprecedented $233bn stimulus that was pledged in the wake of the economic damage wrought by coronavirus.

Tokyo last month announced it would cut most state support for coal-fired power plants. The move followed years of campaigning by environmentalists over concerns that cheap Japanese loans spurred decades of fossil fuel dependency in developing countries.

The pressure on South Korea to follow suit comes after rising investor concern about carbon emissions and climate change: state-backed Korea Electric Power Corp alongside Korean banks have been targeted by activists over involvement in coal projects in south-east Asia.

Park Yoo-kyung, an adviser at APG Asset Management, the Dutch pension fund, said South Korea had fallen behind other OECD countries in taking “sincere” action to comply with the Paris climate.