What does the World Bank financing the Medupi Coal Plant mean for the climate movement?



  1. 0 Votes
    On April 8th, 2010, the World Bank board of directors voted to help finance construction of the fourth largest power plant in the world: South Africa’s proposed Medupi Power Plant, which will run by burning coal and emit 25 million tons of global warming pollutioninto the atmosphere each year.  This decision came despite international protest against the loan – which began in South Africa and spread to the United States, Britain, Norway, and other countries.  It’s clear that the World Bank deciding to finance this giant coal plant is a bad thing for the Earth’s climate, and casts it into doubt how serious the World Bank is about helping the developing world transition to a sustainable future.  Yet though the decision itself was bad news for the environmental community, international criticism over the loan has helped shine a light on the World Bank’s role in the fight against global warming and could reduce the likelihood of similar loans getting approved in the future.  Here are just a few of the implications of this World Bank loan for the environmental movement and the people of South Africa:
    South Africa’s “climate debt” is growing even larger
    In contrast to most other African countries, which are responsible for very low levels of greenhouse gas emissions, South Africa is quickly developing a fossil fuel-based economy.  As a result, the country’s contribution to global warming is growing rapidly.  Only six percent of Africa’s population lives in South Africa, but the country is already responsible for more than forty percent of the continent’s emissions of greenhouse gases.  This has led many people to point out that South Africa owes a “climate debt”to other African countries which stand to feel the negative effects of an altered climate.  Just as the United States bears a special responsibility to toward the rest of the world for contributing a disproportionate amount to global warming, so South Africa has a responsibility to curb the growth of its greenhouse emissions to save its neighbors on the African continent.  The new Medupi Coal Plant will increase this climate debt even more.  When completed, the power plant is expected to emit a volume of greenhouse gases every year equal to around half to total emissions from the nation of Norway.
    The World Bank is failing to lead on climate issues
    As international concern over global warming increases, the World Bank has made commitments to help finance the global transition to a clean energy future – on paper, at least.  Yet last week’s approval of the loan for the Medupi Coal Plant suggests the bank has yet to really get serious about switching to clean energy investments.  It’s true that World Bank loans to help fund renewable energy and energy efficiency projects have increased dramatically in the last few years– but by approving the Medupi loan, the bank has shown it is still not taking the climate challenge seriously.  The problem is that as long as the World Bank continues to fund giant fossil fuel projects like Medupi, it will be impossible for the institution to become a positive force for the climate.  A single really huge coal plant like Medupi effective negates millions or billions of dollars’ worth of investments in clean energy, as well as some of the efforts of developed countries in North America and Europe to reduce their greenhouse gas emissions.  It’s for this reason think tanks like the Center for American Progress have argued that the World Bank must immediately curb loans to high-carbon projects to avoid catastrophic global warming.
    Developing countries have become centers of climate activism
    For years, environmental problems in the developing world have been portrayed as an issue of poor and impoverished populations with no time to worry about long-term effects exploiting natural resources, with little regard for the future.  However the story of the Medupi Coal Plant loan has shattered the myth that people in the developing world are necessarily less concerned about the environment.  Indeed, international opposition to the Medupi loan was partly triggered by South African activists themselves reaching out to environmental groups in the United States and other developed countries.  Within South Africa, a coalition of dozens of faith, environmental, and social justice groups opposed the coal plant loan on the grounds that it was bad for the poor of South Africa as well as for the planet.  Despite World Bank arguments that the coal plant is part of a strategy to bring affordable electricity to South Africa, it turns out the utility building the plant actually plans to increase electricity rates significantlyin order to pay back the World Bank loan.  Critics of the project within South Africa charged that the Medupi loan is more about providing electricity to energy-intensive industry in South Africa than it is about helping the poor.
    South Africa’s government may not be looking out for the poor
    Despite such widespread opposition to the Medupi loan from South African citizens, the national government of South Africa continued to support the project and requested the World Bank loan to finance it.  This is problematic because South Africa’s dominant political party, the African National Congress (ANC), is poised to make a profit off the World Bank loan.  The African National Congress is an investor in the company preparing to manufacture turbines for the new plant, and the ANC will likely make about one billion dollarsfrom the construction of Medupi going forward.  Further, much of the perceived need for new energy sources in South African is actually due to the energy-guzzling habits of the bauxite mining industry– leading to charges that the Medupi loan is really about financing and export industry which reaps large profits for foreign corporations while providing few real benefits for ordinary South Africans.  It’s definitely troubling that the needs of the mining industry and a conflict of interest within the government have been allowed to influence energy policy in South Africa.
    Momentum to end coal financing is growing
    Though the World Bank voted to approve the loan for the Medupi Coal Plant, the project met with enough opposition that bank officials may hesitate before bringing another such loan up for a vote anytime soon.  Official representatives from several important World Bank member countries, including the United States, expressed serious concerns about the loan because of its impact on the climate.  The United States, United Kingdom, Italy, and the Netherlands all abstained from voting on the loan– basically a way of showing disapproval, though all four countries stopped short of actually blocking the loan with a “no” vote.  Meanwhile Norway stated it would have liked to vote against the loan, but was unable to do so because Norway is bound as part of a multi-country voting bloc in the World Bank.  In its official statement on the Medupi Coal Plant loan, the US Treasury Department cited climate concerns as its main reason for abstaining from the vote, and stated rather curtly that “We expect that the World Bank will not bring forward similar coal projects from middle-income countries in the future without a plan to ensure there is no net increase in carbon emissions.”  The US could have gone even further by moving to actually block the loan, but it’s encouraging that the US and other countries seem anxious that the World Bank refrain from bringing proposals like this forward in the future.
Please signup or login to answer this question.

Sorry,At this time user registration is disabled. We will open registration soon!