Jake Schmidt, International Climate Policy Director, Washington, DC
Unfortunately
the Asian Development Bank (ADB) agreed to fund a new coal-fired power
plant, using scarce public resources to invest in more climate
pollution.
While the Board of the ADB approved the $900 million Jamshoro
Coal-Fired Power Plant in Pakistan, the Board vote came with a huge
amount controversy including the first no vote of the U.S. on a coal
power plant, no votes of other countries, and votes of disapproval from a
growing list of countries. The
project was the first test of the commitments from important countries
to end public funding of coal projects overseas, except in very rare
circumstances. So will this be the “Medupi Project” of the ADB – the
last coal power plant funded by this institution – given the divisive
nature of the project amongst its major investors?
The ADB has been a major funder of coal power plants – funding over $1.69 billion since 2007 (see figure*). It hasn’t been the worst
amongst the development banks or direct government funding, but it
hasn’t been the best. So will this be the turning point for the ADB or
is this a sign that they will still bring forward new coal-fired power
plants. Let’s hope this is the “Medupi Project” of the ADB. The
similarities of these two projects are eerie.
In 2010, the
international development banks agreed to invest almost $4 billion in a
massive coal-fired power plant in South Africa – the Medupi Project. The
project became extremely controversial and led to the World Bank staff
essentially cringing at any new coal-fired power plant that was brought
before them. In fact, the World Bank president was reported to have
directed the staff to put in place a de facto ban on new coal-fired power plant projects
in order to avoid that level of controversy in the future. The scar
tissue from that project was deep and lasting. So even without a policy
that limited coal financing, the World Bank Group staff didn’t
proactively propose coal plants as they had done in the past and been
poised to do before Medupi. The World Bank later formalized a policy to restrict coal projects to “rare circumstances”.
The
Pakistan project generated even more resistance amongst many of the key
shareholders. Despite serious reservations with the Medupi project, the
U.S., U.K., and Netherlands abstained.
The Pakistan project generated a no vote from key shareholders – the
U.S., Finland, Denmark, Netherlands, Norway, and Sweden – and
abstentions from others – Austria, Germany, Luxembourg, Switzerland,
Turkey, and the U.K. This is the first time that the U.S. voted no on a
coal project at a development bank and showed some signs of strong
disappointment from a growing number of countries. [Note: An abstention
is a sign that a country isn’t thrilled with a project, but it is weaker
signal than a no vote as it doesn’t put the full weight of those
governments behind its opposition.]
Whether the Jamshoro
coal-fired power plant project in Pakistan will leave the same deep and
lasting scars as the Medupi project are uncertain at this stage. Some
recent quotes from staff at ADB are a bit 18th century in terms of their
framing and perspective on energy (see the quotes in these two pieces
ClimateWire pieces here and here).
So will the U.S. and Europeans countries push for a reform of the
energy sector lending at the ADB? Will Germany, Japan and South Korea
finally join the group voting no on public financing for coal projects
that are driving climate change?
Let’s hope the Pakistan project
becomes a “Medupi moment” that ensures that this is the last coal power
plant that the ADB approves.
http://theenergycollective.com/nrdcswitchboard/316151/pakistan-coal-power-plant-get-public-funding-will-be-last-coal-plant-funded-a
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