Is the South African government serious about climate change?  Ask the World Bank!

14 December 2009 - groundWork, Friends of the Earth, South Africa, a leading environmental group based in South Africa, with the support of Climate Justice Now! South Africa [1] today released a report titled ‘Banking on Climate Destruction: The World Bank and Eskom’ [2] which exposes how the World Bank masquerades as a crusader of climate change while channeling billions of dollars towards fossil fuel projects. 

When all the world leaders are gathering at the United Nations Conference on Climate Change in Copenhagen, Denmark, supposedly to reverse the path of global calamity due to climate change, people in South Africa are opposing a 3.75 billion dollar loan from the World Bank to South African State electricity utility ‘Eskom’ for building two new coal fired mega power plants. Eskom are still negotiating for that to be increased to $5-billion. If approved, the loan would be more than double the Bank's global lending for renewable energy and the largest single loan ever made by the Bank to any African country.  Already this loan has been used to leverage further investment in Eskom’s plans to the tune of $2.5 billion from the Europe via the African Development Bank in November 2009. [3]

In a joint statement by Multilateral Development Banks at Copenhagen, the World Bank Group President Robert B. Zoellick said: ‘Climate change is one of the most complex challenges of our young century.......Changes of this magnitude will require substantial additional finance for adaptation and mitigation, and for intensified research to scale up promising approaches and explore bold ideas.’ However, there is nothing promising or bold about World Bank funded Eskom's power project, as they are based on carbon intensive coal burning. The two new power plants are slated for completion over the next eight years and will expand generating capacity by nearly 150%. According to the World Bank, these mega CO2 emitters are a down payment for a greener future of South Africa but the irony is that these two new plants, Kusile and Medupi, already under construction, will be the third and fourth largest coal based power plants in the world, adding to South Africa’s already skewed CO2 emissions relative to other African countries. [4]

Though the World Bank claims to be deeply involved in climate negotiations and at the forefront of funding sustainable development and addressing climate change, it has approved the Eskom coal power projects in terms of their Development and Climate Change criteria. And one of the reasons behind this deal is that, without increasing its energy supply, South Africa will face economic losses and hardship for the poor.  But the reality is that the bulk of South Africa’s electricity generation is mainly for big industrial users, and not for ordinary citizens as South Africa provides the cheapest power to its industries for its export led development paradigm.

Who pays the costs, including the environmental costs, and who gets the benefits of the Eskom-World Bank deal are thus urgent and contested questions. It is claimed by the Bank that this loan is also to alleviate ‘energy poor’ of South Africa but after using up their 'free basic supply' of 50kW per month poor people end up paying more for a unit of electricity than the residents of rich areas and pay more than three times what industry pays under the current Eskom scheme.

The Bank has included a renewable energy fig leaf in the deal. $ 260 million, less than 7% of the total loan, will be for wind and concentrated solar power. However, there is no convincing evidence that Eskom is leaning towards renewables. At best, Eskom’s plans show renewable accounting for only 2% of generating capacity by 2026. These plans included a 100MW solar tower plant to be developed as a pilot research project. Announced with much fanfare, the project was quietly dropped when the corporation ran into funding difficulties. Eskom is rather more excited by 'clean coal' technologies and says these are already being applied to Medupi and Kusile. For the most part these are simply the latest coal burn technologies given a green spin. Some are mature technologies being applied in South Africa for the first time. Others have yet to be proved internationally.

At the same time as these carbon deals are being negotiated, the South African government is offering to be reduce their greenhouse gas emissions.   This emission offer is not a legally binding offer, and the baseline referred to in this offer is still unclear [5].  Critically, this offer allows for additional coal power plants. During this last week, the South African government has come under fire from the Sudanese government for ‘showing poor commitment to the African continent’ as it has played a divisive role in the broader Africa caucus. [6] The South African government representatives at the negotiations have also stated that the Small Island Developing States must not ‘upset the negotiations’ with their demand for 1.5 degrees calcium maximum increase. [7]  

David Hallows, groundWork Associate and author of the report, is concerned about this dirty energy partnership between South Africa and the World Bank: ‘The World Bank has no place in the midst of a needed energy transition. The success of this transition will depend on what is yet to be determined, but we now have a good sense of what the challenges are and what our new technologies need to do. The answer does not lie in coal but key questions remain regarding just how willing different players of the world are in moving away from fossil fuels and embarking on a renewable path.’

Tristen Taylor, Project Coordinator for the Earthlife Africa’s (Jhb) SECCP [8], said: ‘The South African government must play a more positive role within Africa to ensure that a united agenda is maintained between Africans and the Global South in general.  We cannot believe that a development trajectory based upon exploitation of coal will take the majority of South Africans out of poverty.  Let us use the climate change challenge to secure a better life for all.”

Bobby Peek, Director of groundWork, does not have faith in the World Bank delivering for Africa:  ‘As 80% of all oil projects that the World Bank invested between 1992 and 2003 were for export back to Western Europe, Canada, the U.S., Australia, New Zealand and Japan, the fact that the World Bank has rejected the Extractive Industries Review, and now this investment into coal in South Africa is a clear indication that the World Bank is not truthful in their commitments to climate change.’

End:

For more information:

Bobby Peek, groundWork:
+27-82-4641383
Tristen Taylor, Earthlife Africa (Jhb):
+27-84-2502434
David Hallows, groundWork Associate and Author
+27-83-262 4922   

Footnotes:

[1] CJN!SA has chosen Sasol and Eskom as the focus for collective campaigning to highlight South Africa’s dangerous actions that is fuelling climate change and leading to the destruction of the planet. CJN!SA is an alliance of organisations, communities and individuals in South Africa who are united in promoting just solutions to the impacts of climate change.  Its mandate is set by its partners from social, environmental, labour and community-based movements and it works in close association with partner members in Climate Justice Now! International.  CJN!SA was initiated in early 2009 to address specific issues around the promotion of climate justice in the South African context. It was launched in October 2009 following 7 months of consultations amongst grassroots organisations across South Africa. It believes that any shared vision on addressing the climate crisis must start with challenging the dominant of the development model, exposing false solutions to climate change such as carbon trading, and encouraging positive solutions. The coalition recognises that the threat of climate change integrates old and new struggles, and thus the call for climate justice is the same as struggles for land, water, ecosystems, agrarian and urban reform, food and energy security, and rights for people and nature.

[2] See www.groundwork.org.za/Publications/worldbankeskom09.pdf, the report will be available at the time of the press conference on the above link.

[3] See http://news.bbc.co.uk/2/hi/business/8382723.stm

[4] South Africa has one of the most energy intensive economies in the world and the distinction of being amongst the top global greenhouse gas emitters.  CO2 emissions for 2004 were estimated at 440-million tonnes with Eskom accounting for more than 40% of that. In the year to March 2008, Eskom burnt in excess of 125-million tonnes (mt) of coal and emitted 223.6mt of carbon according to its 2008 Annual Report. The coal and carbon figures have increased with rising production as Eskom has run its plant harder to keep up with demand. Further, Eskom does not report methane emissions – and is reckoned to emit 2,267 tonnes (49,874 CO2e) or close to 60% of national methane emissions. The two new power plants to be built with the help of the World Bank will add to the carbon load and if Eskom continues with business-as-usual, it will emit more than 450mt of carbon dioxide in 2025. That is about twice its current emissions.

[5] For more information see http://www.earthlife.org.za/?p=715 and

[6] groundWork Press Release 8th december 2009

[7] The Star, Friday 11th of December 2009, Johannesburg, South Africa

[8] Sustainable Energy and Climate Change Project