09 April 2010

More on the World Bank South Africa Coal Plant Decision

According to Reuters, the US, UK and the Netherlands all abstained from lending their support for the new power plant. Hand any of these countries explicitly opposed the decision, it would not have gone forward. So an abstention in the context of no other opposition works out as a "yes" vote in practice. Reuters notes:

The opposition to the Eskom loan has raised eyebrows among observers who note that Britain and the United States are allowing development of coal-powered plants in their own countries even as they raise concerns about those in poorer countries.

The South African plant is using the same so-called clean coal technology used in the United States and other developing countries to lower carbon emissions.

The Environmental Defense Fund called the bank's decision a setback.

"This was a missed opportunity for the U.S. and the World Bank to move away from a traditional focus on fossil-fueled growth and toward a new model of low-carbon economic development," said Peter Goldmark, director of the Environmental Defense Fund's climate and air program.
In contrast the Center for American Progress, a US NGO calling fro strong action on climate change, celebrated the tough stand taken by the United States:
It is further encouraging that the U.S. vote is consistent with the Treasury Department’s recently released guidelines for multilateral development banks’ financial support of coal-fired power plants
In contrast to this strange spin, the Obama Administration saw the decision as being contrary top their own guidelines, according to Reuters:

The U.S. Treasury said the project was inconsistent with U.S. guidelines issued in December by the Obama administration on coal-related lending by development banks.

It said the project was also incompatible with the World Bank's strategy to help countries pursue economic growth and poverty reduction in ways that are environmentally friendly.

Mix together development, poverty, economics, energy access and what you'll get is a whole lot of contortions and inconsistencies on climate policy.

Any guesses as to what happens when the next big coal plant comes before the World Bank? The answer should be obvious.

15 comments:

MIKE MCHENRY said...

The object lesson here is that coal fired plants will be built for the foreseeable future. I know Roger you oppose geo-engineering but the choices are narrowing. Politicians are doing what they do best. They're making believe they are doing something about emissions.

Mark B. said...

What do the darkeys need electricity for - don't they burn cow poop or something? If things keep going like this, pretty soon they'll want hot and cold running water too.

This is part and parcel of the Euro-American leftist/environmentalist program - let the brown-skinned hordes live in mud huts and pick lice off each other's heads while we fly off to another conference.

Geckko said...

Poor countries are indeed going to be the most vulnerable to Climate Change. Policies, enforced by rich nations that is.

eric144 said...

From today's Guardian

"By 2012 the company would have 80m carbon credits that it does not need, and was given for free. If sold, the company stands to make £1bn in windfall profits, says Sandbag. A tidy profit for doing, well not much, made by a company led by Mittal, who also happens to be Europe's richest man."

http://www.guardian.co.uk/environment/blog/2010/apr/09/arcelormittal-anish-kapoor-orbit


The obscenity of billionaires like George Soros, John Heinz Kerry and Lakshmi Mittal attempting to stand in the way of some of the the poorest in the world stepping off the bottom rung, while raking in huge carbon profits, sums up the corporate global warming scam for me .

Near here, slums have been demolished. It means so much more than the obvious benefits. It means less noise, less crime, less violence, less intimidation and so forth. South Africa is a hell hole for many. Without cheap power, it won't improve.



.

Frontiers of Faith and Science said...

The Africans now have an opportunity. They had best not blow it, like so many other opportunities given to that tragic part of the world.

Abdul Abulbul Amir said...

"The Environmental Defense Fund called the bank's decision a setback."

Right. Obama says high cost, unreliable wind and solar are good enough for the US. Therefore those high cost technologies should be good enough for poor countries. That way they can stay poor and we can feel so good giving them free advice.

mike roddy said...

I agree that CAP's hailing an abstention was odd, and said so on their blog.

It wasn't clear where you stand on this. Do you think the US and Britain should have voted no?

mike roddy said...

From rereading the original post, it appears that you support the loan, on the grounds that poor countries can afford only the cheapest energy (and also afford to accept pollution externalities).

Your point that the US can't very well build coal plants and lecture others to not do so is reasonable. However, this works both ways: If the US implicitly supports coal in South Africa by an abstention, than we can't credibly oppose it here in the US. Other countries and trade competitors (such as India) are building coal plants as fast as they can.

Won't accepting coal plant construction abroad logically lead to doing the same in the US? Remember, few plants are being built in the US these days, largely due to local opposition and lender skittishness over future carbon costs.

Do you want to encourage these hurdles against coal, or go ahead and let current hard costs drive all of these decisions?

Roger Pielke, Jr. said...

-7,8-mike roddy

Thanks for your comments.

I don't think that the question: "How should the US and UK have voted?" even makes any sense.

There is simply no choice in their vote. They cannot vote NO for reasons of international politics, and they cannot vote YES, for reasons of domestic politics. It does not matter what I or you or anyone else thinks about this.

The fact of the matter is that coal plants will be built (mainly in developing countries as you note, but perhaps also in the US, UK and through Europe) until there are cost competitive alternative sources of energy at scale. And let me hastily add that appreciably increasing the costs of coal energy (e.g., via a tax or other pricing mechanism) is not going to happen.

Add that all together and where does that leave us?

This is an argument I present in some detail in The Climate Fix, and the South Africa coal plant decision is a perfect example of these dynamics.

DeWitt said...

-9-Roger,

"Add that all together and where does that leave us?"

It leaves us where we've always been: adapt to change as it happens. Exploring scenarios of the future is useful, but before the IPCC SRES, we usually called those explorations 'science fiction'.

mike roddy said...

I appreciate your detailed response, Roger, and your analysis of political considerations rang true.

It's time for our leaders to lead, in my opinion. We've known what was needed since at least IPCC III, and all of the data since then has increased the urgency. Unfortunately, it's as if this report and IPCC IV never happened, since it's been business as usual in terms of global emissions increases.

You may be right that a carbon tax on coal and gas will not arrive soon enough or be large enough to change the economics of power generation in the US. So why not remove subsidies and tax breaks, and charge for externalities? If coal companies paid for mercury and SOx pollution, and natural gas companies for aquifer destruction- and also paid their fair share of income taxes- the market would change overnight.

We would then find out where we stand. Most people don't like coal power, and would support these market oriented and quite fair government policy changes, providing political cover. We could expect the fossil lobby to roar like a lion, but maybe- just maybe- our leadership would stand up to them. And maybe you and I could have a point of agreement.

MIKE MCHENRY said...

Mike #11
It is not logical to say charge coal companies for the way utilities burn their coal. The technology to burn coal cleanly exists. There is a lot talk about aquifer pollution by new shale natural gas extraction. However proof that it does pollute does not exist. What subsidies and tax breaks are you talking about? The gov't hauls in a load of taxes, royalties and leases from energy companies. It has been shown time and again that people like to say they are environmentally friendly but don't wish to pay for it. Just look at recycling rates where the only cost is effort.

mike roddy said...

Mike #11, the best current coal technology only reduces toxic pollution, and does nothing about CO2. There is no clean coal, and will not be.

For background about the subsidies, check out the Taxpayers for Common Sense website, or find the study (I don't have the reference, sorry) quantifying them at $42 billion annually. Peabody paid $1 million in income taxes in a recent year. Other subsidies include those for medical care and habitat destruction, as in MTR.

Check out a documentary called Gasland, about aquifer pollution from fracting; it's free on
UTube. Destruction of water supplies is widespread and dangerous. Roger lives in Colorado, he should know. The gas companies enacted specialy EPA exemptions during the Bush era. This is a distortion of market forces, too.

Harrywr2 said...

Roger Pielke, Jr. said... 9

" The fact of the matter is that coal plants will be built (mainly in developing countries as you note, but perhaps also in the US, UK and through Europe) until there are cost competitive alternative sources of energy at scale. "

The number of places where coal is a cost effective energy option is extremely limited.
Add a 2 to 3 cent per ton rail transportation cost and coal doesn't even make economic sense in South Carolina.

South Africa is one of those places.

The Europeans import more then 40% of their coal. China imports coal. India imports coal.
South Africa actually burning it's own coal will put enormous pressure Global Coal prices as it's one of the few remaining coal exporters.

MIKE MCHENRY said...

CO2 isn't pollution. Almost carbon contained in fossil fuels was once in the atmosphere. If you take more taxes from corp you're taking money from shareholders, pension funds, mutual funds, etc. In other words most US citizens. Nothing you mentioned in the last paragraph is from peer review literature.

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