South Africa Requests a Loan to Help Fund Massive Power Plant

By Chris Brancato

This week, the World Bank will vote on a $3.75 billion loan for South Africa to meet energy needs and to help build the world’s seventh largest coal-fueled power plant, but the Obama administration has found themselves in an uncomfortable bind due to their opposition to coal-fired power projects and carbon wastes.

The bank’s largest shareholder is the U.S. and it is attempting to stick to a policy of “no or low carbon” emissions, reports Celia W. Dugger of the New York Times. With the construction of the plant already in progress, the Obama administration may have to make an exception to their rule. The treasury department has already declined to state how the U.S. will end up voting on the loan, simply describing the situation as “challenging.”

But South Africa is saying that loss of the loan and power plant would be detrimental to their economy and avoidance of poverty. It also would mark the first time that South Africa has requested a loan from the World Bank since 1994 during the apartheid. $745 million of the loan would be granted for wind and solar power and efficiency measures, with $3 billion going directly towards the coal plant.

Public Enterprises Minister Barbara Hogan has said that the project would supply “60 percent of South Africa’s energy” and that the offer holds a high level of importance to all of Southern Africa.

Yet, other countries that find themselves in similar situations in regards to large-scale coal reliance also do not intend to set rid of these resources. “For the next five to seven years, we must not stop the use of present coal technologies, even as we work on developing new clean technologies,” said Jairam Ramesh, India’s environment minister.

International public financial institutions, supported by the world’s richest nations, have invested $37 billion to help finance 88 coal plants over the past 15 years, many in Asia, according to a 2009 report by the Environmental Defense Fund. The plants’ annual carbon dioxide emissions equal three-quarters of those from coal-fired power in the European Union, the report said.
To harp on the significance of this transaction, environmentalists have also said that people in South Africa, especially the millions of poor farmers, have more to lose from warm temperatures and the droughts than people in any other part of the world.

After all the disputing, the World Bank still feels like this loan would be environmentally conscious, defending their contributions such as the “100-megawatt solar project.” They also noted that South Africa had agreed to drop their greenhouse gas emissions 34 percent by 2020.