The World Bank yesterday approved a $3.75 billion loan to South African public utility Eskom to fund what will become the world’s seventh-largest coal plant—a move that has frustrated many who have pushed for the development bank to start taking greenhouse gas emissions into account in its funding decisions.
The US abstained from the vote, along with Norway, Great Britain, the Netherlands, and Italy. The US treasury actually proposed guidelines for multilateral development bank lending several months ago that would encourage lending to favor low-carbon energy sources. This move, however, clearly does not adhere to those guidelines. The US said in a statement that it would not actively oppose the loan, citing the country’s “pressing energy needs,” but said the bank should in the future not support coal-fired projects “without a plan to ensure there is no net increase in carbon emissions.”
Peter Goldmark, director of Environmental Defense Fund’s climate and air program, called the decision “a missed opportunity” to move away from fossil-fuel generated energy and instead push the country toward cleaner sources. Plenty of environmental and anti-poverty groups who have been pushing the bank to improve in this area expressed outrage at yesterday’s decision.
The decision highlights ongoing tensions surrounding the World Bank and other multilateral development banks and their continued funding of dirty energy projects. Despite the fact that climate changed caused by the build up of greenhouse gases will hurt those in the developing world the most, the banks tend to pay little or no attention to the carbon footprint of energy projects in funding decisions. The World Bank and other multilateral development banks and export credit agencies have directed $37 billion to the construction or expansion of 88 coal-fired power plants since 1994, according to an Environmental Defense Fund study released last year. Another $60 billion from private funders and local governments has also been provided to dirty power projects. It is estimated that those 88 plants will spit 791 million tons of carbon dioxide into the atmosphere every year.