Construction of one of the world’s biggest coal-fired power stations, the Medupi plant in South Africa, is to be continued following a meeting of the World Bank last week (9 April) at which the Bank's two major donors, Britain and the USA, abstained from a vote on a loan of $3.7 billion for the project.
The UK government had been considering blocking the aid project after coming under intense pressure from green groups in the run-up to the UK national elections, but despite the risk of offending green supporters in the event it declined to do so.
The Medupi plant will exhaust 25 million tonnes of carbon dioxide a year into the atmosphere, but it will also provide reliable electricity for millions of people and thousands of businesses plagued by regular power cuts.
Britain, the Bank’s biggest donor and one of its five major shareholders effectively had the casting vote on the loan because the US, the other main donor, had said it would abstain. Despite generating half its own electricity from coal, the US has adopted new guidelines that include a strong assumption against approving World Bank loans for coal plants in developing countries.
Green groups had pressed hard for the UK government to vote against the loan, arguing that South Africa should invest instead in renewable energy from wind turbines and solar panels. These sources cost more than twice as much per unit of electricity compared with coal, which South Africa has in abundance. The World Bank said that it had studied the less-polluting alternatives and none could provide enough capacity in time to avoid widespread power cuts
Greenpeace, Friends of the Earth and Christian Aid argue that the risk to the world’s climate from the plant’s emissions outweighs the benefits of the secure electricity it would supply.
Ruth Davis, the chief policy adviser for Greenpeace, said: “Britain could have stopped the loan if it had wanted to but it took the easy way out. Abstaining at this late stage is effectively allowing it to go ahead. The plant will be a major source of greenhouse gas emissions, paid for partly with aid money intended for the world’s poor". A spokesman for the Department for International Development said: "The project raises several sensitive and potentially controversial issues which it has not been possible to resolve before this period began." Obiageli K. Ezekwesili, World Bank Vice President for the Africa Region, said: “Without an increased energy supply, South Africans will face hardship for the poor and limited economic growth.
The loan includes $3.05 billion for the coal plant, $260 million for 200 MW of wind and solar projects and $485 million for energy efficiency measures, including a new rail line to transport coal by train rather than road.
Pravin Gordhan, the South African Finance Minister, last week accused green groups which opposed the loan of trying to impose their environmental priorities on a country lacking the secure electricity that is taken for granted in the developed world.
But it would reduce the risk of power cuts, which have caused billions of pounds of damage to South Africa’s economy in the past two years. The national grid came close to collapsing in 2008 and the South African Government was forced to impose rolling blackouts.
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