"Why Does the World Bank Say it Cares About Climate Change, But Continue to Aggressively Push Coal?"
Kosovo, once host to a brutal ethnic war, is now the epicenter of a different kind of conflict — over the energy future of the impoverished country.
The resolution of this conflict has enormous implications not just for Kosovo, but for other developing countries as well.
At issue is a proposed 600-MW coal plant that would be financed through the World Bank. The plant, which was first proposed more than a decade ago, has become ground zero for environmental groups working to stop the international build-out of coal plants in less-developed countries.
The World Bank plan is to take one of Kosovo’s old, extremely dirty coal plants offline and replace it with a new one. While the new plant would be more modern and less toxic than what is in place today, it would still burn lignite — the lowest-quality and most carbon-intensive form of coal.
In recent years, the World Bank has taken a firm stance on addressing climate change, calling mitigation efforts necessary to “avoid the unmanageable.” And USAID, an international development agency within the U.S. State Department also pushing the Kosovo coal project, recently rolled out a new aggressive climate development strategy, calling climate change “one of the greatest global challenges of our generation.”
So why do these organizations continue to push coal projects like the one in Kosovo?
The current conflict comes on the heels of a $3.75 billion World Bank loan for a 4,800 MW coal plant in South Africa that opponents said would benefit mining companies and smelters, not the energy poor. That loan caused an uproar among local activists and international environmental groups, which lampooned the Bank for turning its back on its stated climate objectives.
“This project in Kosovo is a huge boondoggle,” says Justin Guay, who works on the Sierra Club’s international climate team. “It will require the country to take on a massive amount of debt, while also putting it into a severe carbon debt as it looks to integrate with the European Union.”
The European Union has set targets for 20% emission reductions by 2020.
The Sierra Club is one of the leading groups working to kill the project and encourage the World Bank to invest in needed grid upgrades, renewable energy, and energy efficiency projects in Kosovo rather than new coal.
Last October, former EPA official Bruce Buckheit wrote a report commissioned by the Sierra Club that questioned the need for new lignite coal generation in the country. He concluded that the project would not properly match electricity demand and would thus cost far more than advertised by the World Bank:
Importantly, the predicted cost of electricity is based on the assumption that all four surviving Kosovo units will operate 85 per cent of the time. There is insufficient demand, especially in off-peak periods, in Kosovo to support this level of operation. The overall system load factor in 2006 was 46 percent. If one assumes that Kosovo B operates as the base load unit, the capacity factor for the new Kosovo C units at current overall demand would be 20 percent; not 85 percent, thus tripling the cost of generation for this plant.
In his analysis, Buckheit raised concerns about the lack of official analysis on the cost competitiveness and environmental benefits of demand response, efficiency and renewable energy.
A new report co-written by former World Bank Clean Energy Czar Daniel Kammen did just that. Kammen, who recently left the World Bank to go back to teaching at the University of California, Berkeley, worked with two colleagues to model different energy integration strategies in Kosovo. They found that building a new coal plant would be more expensive and would offer far fewer jobs than a focus on renewable energy:
The business as usual path, dominated by an expanded use of low-quality coal, is not the least-cost energy option for Kosovo given the social cost of thermal generation. The coal dominant energy path also burdens future generations with an energy mix that is neither environmentally sustainable nor is it a path that maximizes job creation.
A low-carbon path exists for Kosovo that integrates aggressive energy efficiency deployment, use of both large and small-scale hydropower, solar, biomass and extensive use of wind energy while reducing human and ecological damage. This path whilst delivering 38% of the energy demand through renewable resources can also provide almost 30% more jobs than a business as usual path and it does so at an estimated cost savings of 50% relative to a base-case scenario that includes a new coal power plant.
With unemployment levels at 46% and grid losses representing 33% of generation, the authors conclude that building another centralized coal-fired power plant won’t improve the employment picture and won’t help meet the country’s energy challenges.
Speaking to Climate Progress about the report, Kammen expressed concern for the carbon debt that building a new lignite coal facility would place on Kosovo. For example, he estimates that a carbon price would increase the cost of coal-fired electricity in the country by as much as 400%.
“Kosovo intends to join the EU. So it’s not a place where it makes sense to build a new fossil plant and create this very large coal legacy,” says Kammen. “In a grid today that has incredibly high losses, better investments would be for modernizing the grid, deploying new meters, and helping invest in more diverse renewables.”
The World Bank argues that the project will clean up the air in Kosovo. Compared to the very old plant that any new facility would replace, air quality would certainly improve. But a build-out of new coal would extend the carbon burden of a country that already gets 98% of its electricity from coal.
As a former official at the World Bank, Kammen says he understands some of the internal resistance to taking an entirely new approach, particularly for such an economically-depressed country.
“To make the clean energy equation work, it’s going to take a lot of effort. You can see why there’s hesitation. Everyone who talks about the project does so not with a huge desire to build a new coal plant, but in the complicated context of energy access,” he says.
But the Sierra Club’s Justin Guay says its time to square these two objectives — fighting climate change and increasing energy access — so they are compatible.
“The Kosovo project runs counter to the stated climate goals of development organizations. There’s all this bureaucratic inertia and no one wants to stick their neck out to stop this thing.”