On April 8, 2010, the World Bank approved a controversial $3.75 billion loan to South Africa, most of it to help build 4,800 MW of coal power capacity – the world’s seventh largest coal plant. The Medupi plant will be Africa’s first supercritical power station but is still expected to annually spew an estimated 25 million metric tons of carbon dioxide emissions into the atmosphere. The loan has been made to Eskom, South Africa’s public utility which says that it will consider carbon capture and sequestration, should the option become viable.
The decision was made amidst powerful dissent from many environmentalists and economists who condemned it as “one of those stereotypical development disaster stories” that would exacerbate climate change and, in the long term, do nothing for poverty alleviation. Many South African activists have also charged that the Medupi power plant will not reduce electricity prices for the poor, but flood money into the pockets of corporations that have “sweetheart” deals with Eskom, and are currently being provided the cheapest electricity in the world.
The South African government, on the other hand, has been fiercely defending the loan as critical for the future economic growth prospects of not only the nation but also that of its neighbors – more than 60% of the electricity in the sub-Saharan region is produced by South Africa, with Botswana, Lesotho, Namibia, Swaziland and Zimbabwe, depending on Eskom for their electric power. South Africa, a more advanced nation in the region, has been repeatedly wracked by power outages in 2007-2008 and over 25% of its population still has no access to electricity.
According to a recent report by the Environment Defense Fund, the World Bank and other international public financial institutions have, over the past 15 years, helped to fund about 88 coal plants, spending over $37 billion dollars. In fact, most of these institutions have, as a trend, increased their funding for fossil fuel over the years.
The balancing act: Economic Growth vis-à-vis Climate Change
The Medupi debate illustrates the challenges faced by developing nations struggling between two critical objectives – providing affordable energy to haul their citizens out of poverty and yet maintaining the commitment to preserve the planet.
South Africa’s pressing energy needs and the lack of near-term feasible low-carbon alternatives, in many ways, justifies the Medupi project. Contemplate not having access to electricity – considering only the most fundamental needs, it would mean no access to clean-drinking water; using primitive means to cook, and keep warm; and “turning on” lamps for lighting. This energy-paucity not only makes life harder but also takes a human toll. According to a report by the world-health organization, indoor air pollution (largely due to use of primitive bio-fuels such as wood, waste, coal etc.), leads to 1.6 million deaths annually. In another assessment, waterborne diseases are the leading cause of death accounting for over 3.4 million lives annually.
Affordable electricity is necessary to exit from this course of poverty and death. But affordable electricity, as we know it today, is not clean. Without access to clean and at the same time cheap energy technologies, developing nations like South Africa (which incidentally, also has large coal reserves) will continue to turn to coal.
The dilemma, of course, is that such poverty alleviation efforts driven by coal energy are short-lived and could prove to be a recipe for an even more vulnerable future – especially since climate change is expected to have a worse impact on the least developed countries first. A country like South Africa, rich in solar and wind potential, should perhaps be first prodded by the World Bank to explore and initiate sustainable long term development projects that do not compromise its future. And this is a course that every nation across the globe should take. However, perhaps it is here that we all falter.
Global Climate Battle…
Although both the United States and Britain abstained from voting, they expressed unequivocally that this should be the “World Bank’s final coal battle.” Earlier this year, the U.S. also wrote to the World Bank recommending it to stop funding coal power in developing economies. This has been seen by many as duplicitous since both the developed economies are still building coal power plants in their countries.
The U.S. finances coal power through U.S. Department of Agriculture’s (USDA) Rural Utilities Service (RUS) and the Department of Energy. Currently it has 600 coal plants which provide almost half of its electricity. Although the net capacity of coal plants in the U.S. has changed little, the total output has increased over the years (27% between 1990 and 2007). Additionally, 60 new coal plants have been proposed and are in various stages of planning.
The Medupi debate has deepened further the fissure formed at Copenhagen between the developed and the developing world. Moreover, it underscores the larger struggle in defining responsibilities that countries – both industrialized and those growing – need to take-on to mitigate climate change.