Rhein on Energy and Climate

On April 9th the World Bank Board will have to decide on a $ 3.75 billion loan request from South Africa for increasing its electricity capacity. More than 90 percent of that loan will finance the construction of a new 4.800 MW coal-fired power plant, the remainder for the building of 200 MW wind and solar parks, a railway from the coal mine to the power plant and investments in energy efficiency

This project is highly controversial in South Africa because of its negative impact on the climate. Understandably, the South African government does not want to find itself confronted with power shortages as in 2007-08. But adding 4.800 MW of coal-fired capacity that are bound to stay operational until 2050 is not what South Africa or any other country should decide in 2010! It is therefore not surprising that civil society groups have appealed to the USA, the biggest share holder of the World Bank, to withhold its approval of the loan request.

The World Bank affirms that all options have been carefully examined. But its reasoning does not sound very convincing:

At least part of the additional capacity could be through gas-fired power plants which emit only half the amount of C02 per kWh and can be built in no time.

Up to 500 MW of the additional capacity could be wind and solar power plants, for which South Africa possesses ideal conditions.

Rather than expanding its capacity, South Africa should exploit its huge untapped potential for energy efficiency. The recently decided doubling of electricity rates until 2012 should give the necessary incentives to that end.

Last not least, by 2020 carbon capture and storage should have reached the stage of operational feasibility, thanks to intensive testing of pilot plants and investments in the USA, China and Europe.

For all these reasons, the EU should not approve the $ 3.75 billion loan request by the World Bank in its totality. It should, of course, give green light to the wind and solar installations, the railway line and the improvement of efficiency. But it should not approve more than a 2400 MW of coal-fired capacity, and only under the condition that the power plant will provide for CCS installations to be added by 2025 latest.

This strict EU line would, of course, be more consistent if all member states also renounced to build new coal-fired power plants.

In any event, whatever the outcome of the vote on April 9th the EU should make sure that the World Bank completely ceases lending for any new coal-fired power plants.

Brussels 31.03.10 Eberhard Rhein

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