Published on
The Guardian/UK

World Bank's $3.75bn Coal Plant Loan Defies Environment Criticism

Suzanne Goldenberg

The World Bank approved a controversial $3.75bn loan to build one of the world's largest coal plants in South Africa
yesterday, defying international protests and sharp criticism from the
Obama administration that the project would fuel climate change.

proposed Medupi station, operated by South Africa's state-owned Eskom
company, was fiercely opposed by an international coalition of
grassroots, church and environmental activists who said it would hurt
the environment and do little to help end poverty. As planned, it would
put out 25m tonnes of carbon dioxide a year and would prevent South
Africa making good on a promise to try to curb future emissions.

bank said it had acted to help South Africa escape a crippling power
shortage. "Without an increased energy supply, South Africans will face
hardship for the poor and limited economic growth," said Obiageli
Ezekwesili, the World Bank's vice president for Africa.

But the
bank's approval for the Medupi station, though expected, was
overshadowed by dissatisfaction from American and European donors, as
well as a groundswell of protests.

America, Britain, the
Netherlands, Italy and Norway registered their opposition to the loan
by abstaining from the vote, the traditional method of dissent on the
board which operates by consensus.

In a statement, the US
treasury department said the loan was incompatible with the bank's
stated commitment to promoting low carbon economic development.

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," it said.Britain, registering its abstention, noted the controversy surrounding the plant. "

project raises several sensitive and potentially controversial issues
which it has not been possible to resolve before this period began." a
statement from Dfid said.

However, a World Bank official said the
strong wording of such statements did not carry over to the Board's
discussions of the loan. "It was not an easy decision," he said.
"Everybody recognised the concerns about climate change, but this was a
balancing act."

The vote by the World Bank had been widely seen
as a test of the Obama administration's commitment to new guidelines
put forward barely three months to shift aid to the developing world
away from coal and fossil fuels to less polluting energy sources.

administration had come under strong pressure from Democratic leaders
in Congress as well as environmental organisations to try to block the

Environmental organisations said its decision to abstain fell short.

am not going to give them points for abstaining. This was totally the
easy way out," said Karen Ornstein of Friends of the Earth. "If the US
were to follow its own clean coal guidance for multilateral development
banks it would have had to vote no on this loan."

Michael Stulman
of Africa Action said the entire project was misguided, and would do
little to help poor South Africans. "This is one of those stereotypical
development disaster stories," he said.

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