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Why Does the World Bank Say it Cares About Climate Change, But Continue to Aggressively Push Coal?

By Stephen Lacey

"Why Does the World Bank Say it Cares About Climate Change, But Continue to Aggressively Push Coal?"

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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.”

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17 Responses to Why Does the World Bank Say it Cares About Climate Change, But Continue to Aggressively Push Coal?

  1. Mike Roddy says:

    Bankers care about money, and statements about everything else- global warming, helping the poor, etc- are just PR. this is just one of the more obvious examples.

    They need to be held accountable here. The argument that less developed countries first need to “catch up” with the West was always a bad one, and now it’s sounding a little ridiculous.

    • Mulga Mumblebrain says:

      ‘Greenwash’ pure and simple. And note, too, that the Western powers, despite crumbling into a sewer of inequality and debt, simply refuse to allow the growing non-Western powers any further influence at these organs of the ‘Washington Consensus’.

  2. AKP says:

    Did Kammen say why he left the World Bank? Was it because of actions like this?

  3. S. says:

    Well, let me tell you a story… First, I highly recommend the online classes offered by the World Bank Institute. They are expensive, but they present excellent tools, frameworks and contacts on several subjects.

    That said, during a recent lesson on climate finance, part of the lessons made reference to the WB vision of keeping development under a 550pm CO2 atmpospheric concentration threshold. For me, this was very revealing. Infuriating, but now I understand their reasoning.

    Please note that the mission of the WB institution is to sell loans, not save the world. It would be foolish to expect the bricolage to care.

  4. Merrelyn Emery says:

    Saying it cares about climate change is just the cover story. The World Bank is just another of the global elites, the 1% in today’s language, who push economic rationalism (Reaganism, Thatcherism) onto whoever they touch.

    Some of the stories from the Asia – Pacific area are horrific – people disposessed of their land and their traditional diets and forced to work in factories and eat processed food. And then the jobs go, leaving them with exactly nothing – all in the name of “it’s good for you”, ME

    • Mulga Mumblebrain says:

      The philosophy of Ayn Rand, pure egotism and utter contempt for others, in action. Until you comprehend that the psychological bases of all Rightwing ideologies are fear and hatred of the Other, and morbid fear of death, then you will never understand them.

  5. Leif says:

    I was just sent a petition by the League of Conservation Voters if they should endorse Obama? Yes or No

    My reply:

    I refuse to answer that question as phrased. “Yes” and “No” do not apply. Should you endorse Obama in the long run. Most likely. On the other hand- Should you endorse the “Present” Obama? Clearly to me the answer is “No. Will you accept that the richest corporations in the world are there largely because they are being subsidized by the commons. Is that anyway to run an economy? A business model that allows “profit” from pollution? (and paper pushing?) In fact the HIGHEST return on investment out there!. ~40 to 1 on lobbyists alone!! If that is not in-your-face class warfare I do not know what is. And the Democrats are beholden to the same capitalistic driver, only a bit less corruption? (Since both are selling out the future of humanity for a profit the distinction looks fuzzy IMO.) The ultimate “company store” that we all must contribute to.

    Take the profits out of pollution – and then move on. Put Green Energy into the hands of the people to the maximum degree possible, in the form of distributed power and let the price of power float with the cost of all bureaucracies and government. Even the military to be eventually incorporated into the price of power. (After all, our current military is mostly used to enforce and ensure energy supplies, is it not?) Storm damage, sea walls, universal health care, education, science research, space travel, you name it. No deficit, ( GOP should like that part), all cash on the barrel head or “Gold”paper. And price energy accordingly. All ultimately payed for by the sun. Passing through the hands of the masses before reaching the profiteers. Want to burn 50/gph of Saudi oil in your bimbo yacht fine, pay $20 a gallon, I do not care. If I can get Solar Power to the market @ $1.00/kW with free taxes, health care, education, etc., and NO Tin Hat GOP it would be worth it. Throw in a sustainable future for humanity, just icing on the cake! We must give sufficient attention to the true value the sun provides us and what the “killing” of the life support systems we all require means to future generations. Just keep the profits out of pollution! We can squabble over the rest. Give “Humanity,” physically as well as spiritually, a seat at the table.

    Leif Knutsen

  6. John Tucker says:

    “unemployment levels at 46%”

    I dont know if we have the moral high ground here to criticize them.

    A nuclear plant would probably be a much better option but I dont see that on the table. Renewables on that scale would require substantial back up in NG and are still intermittent. I dont even know if they are rated high enough to be an option there.

    It very easy to criticize.

    “At 14,700 Mt, Kosovo possesses the world’s fifth-largest proven reserves of lignite. The lignite is distributed across the Kosovo, Dukagjin and Drenica Basins, although mining has so far been restricted to the Kosovo Basin.” ( http://www.kosovo-mining.org/kosovoweb/en/mining/minerals.html )

    This is probably their only option. I would be pushing for some kind of carbon capture instead of bashing the Would Bank. Especially if their existing emissions are not scrubbed, that would be a toxic nightmare.

    • Mulga Mumblebrain says:

      There is no ‘carbon capture’ let alone different types. Retreating into phantasy is not helpful. Kosovo is a NATO protectorate run by a Mafia inserted into power by the West to rubber-stamp the establishment of the giant US Base Bondsteel. Perhaps the KLA thugs who rule Kosovo could recycle some of their profits from drug, sex and human organ trafficking in renewables.

  7. Paul Magnus says:

    “Trade Minister Craig Emerson has accused Greenpeace of living in “fantasy land” …..

    http://www.abc.net.au/news/2012-03-06/greenpeace-defends-leaked-coal-minining-campaign/3871028

    ….and flirting with the risk of a global recession after details of the environmental group’s plans to fight coal mining were leaked to the media.”

    The arguments are empty. No one immediately counters with – well aren’t building more coal plants going to lead to huge repercussions in the VERY near future including a least to worry about trecession!

    The fact is we are starting to spiral down to a depression now that extreme weather events have ramped up.

    Eastern Auz has just got flooded out again and the guy isn’t making the connection AND the journalist aren’t picking up on this and were just letting it ride.

    • ozajh says:

      “Eastern Auz has just got flooded out again and the guy isn’t making the connection”

      ROTFLMAO

      C’mon guys, you’ve got to leave the rubbish arguments to the denialsphere. I live in Eastern Australia, and LACK of water is the overriding problem on a long-term basis.

      If increased CO2 levels leads to increased flood events, that’s going to be treated by the entire Australian community as a feature, not a bug.

      • Merrelyn Emery says:

        Yes, we are drowning here at the moment with more extreme wheather to come tomorrow but you are quite right about the long terms prospects. If anybody thought the last 10-15 year drougth was funny, get prepared for the next one.

        The problem is that with climate destabilization, nobody has the faintest idea of what comes next. I have never seen seen such chaotic wheather maps ever before in my whole life.

        The BOM is doing its best but now history is no basis for predicting the future. The only positive thing I can see about the current floods is that hopefully, they will replenish the great artesian basin that provides water for the Australian interior.

        It is inevitable that drought will return with a vengeance, and the basin won’t save the cities, but it may sustain the interior – for while, ME

        • Mulga Mumblebrain says:

          Absolutely correct Merrelyn, and, at the same time, the authorities and the MSM have dropped all reference to anthropogenic climate destabilisation, while the Dunning-Kruger rabble of denialists are gifted total domination of the MSM blogs by Rightwing ‘moderators’. Naughty old La Nina got the blame for a while, last year, along with hysterical denunciations of the mere idea that ‘global warming’ could have a role, but now even she is verboten. A world in which disasters happen mysteriously, with no explanation-pre-Enlightenment days, a New Dark Age, are upon us.

    • Paul Magnus says:

      Natural Disasters In 2011 Made For Costliest Year Ever
      http://www.huffingtonpost.com
      UNITED NATIONS (AP) — The economic cost of disasters in 2011 was the highest in history — costing at least $380 billion, mainly due to earthquakes in Japan and New Zealand, a U.N. envoy said Monday. Margareta Wahlstrom, the secretary-general’s special representative for disaster risk re..
      the economics of disasters is becoming a major threat to a number of countries,” Wahlstrom said.

      She said every plan to improve development in a country must include measures to deal with the impact of climate change and natural disasters.

    • Mulga Mumblebrain says:

      Emerson is hard Right, and what is called, risibly, an ‘economic rationalist’ (translating from the gibberish a market fundamentalist)here. He is either, in my opinion, a secret climate destabilisation denialist, or simply doesn’t care that burning this coal will destroy civilization. Either way he is typical of the type who comprise almost all of our ruling elites.