In 2009, President Barack Obama called for an end to global subsidies for fossil fuel, but little progress has been made. In South Africa, the home to this year’s international climate negotiations, coal power continues to be subsidized by the international community. In 2010, the World Bank gave a $3.75 billion loan to South Africa’s Eskom utility to build one of the world’s largest coal-fired power plants — the 4.8 gigawatt Medupi coal plant. In May, the U.S. Export-Import Bank approved a $805 million loan for the 4.8 gigawatt Kusile coal project. The Sierra Club explains how these coal plants actually make life worse for South Africa’s working families:
This enormous plant was financed despite the fact that it will be built in an area that already exceeds dangerous levels of air pollution.
Perhaps the most troublesome aspect of these projects is the tremendous financial burden they pose to average South Africans. Large industrial users, who will secure the majority of the supply, have locked in Apartheid-era sweet heart deals that ensure the lowest electricity prices in the world, meaning the state-owned utility Eskom has no choice but to recoup the investment from average ratepayers.
In order to pay for Kusile, Eskom will seek an additional 25% rate increase on top of electricity prices that have already gone up 137% (mostly to finance Medupi). These skyrocketing rates are forcing poor households off the grid while doing nothing to provide electricity access to the 25% of South Africans who aren’t connected to the grid at all.
South Africa is the biggest carbon polluter in the entire continent of Africa, fueled by massive coal reserves. The dirty power has not led to broad prosperity, however. The nation has terrible income inequality, with a Gini index of 67 percent. The international subsidies for these mega-coal plants are only making the situation worse.
Sadly, these deadly investments are ignored by energy reporters, who instead follow the lead of fossil-funded politicians to explore the “scandals” of much smaller investments in clean energy projects.