U.S. abstains as World Bank backs coal project that lawmakers criticized

The World Bank on Thursday approved a $3.75 billion loan to help build a massive coal-fired power plant in South Africa – a project that several Capitol Hill lawmakers have criticized due to its greenhouse gas emissions.

The U.S. abstained from the vote by the bank’s board of directors to provide South Africa’s state-owned utility Eskom with funding for the 4,800 megawatt plant. Britain and the Netherlands also abstained, according to press reports.

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Sens. John Kerry (D-Mass.), Patrick Leahy (D-Vt.) and Rep. Barney Frank (D-Mass.) questioned the project in a letter last month to World Bank President Robert Zoellick. The three lawmakers are the chairmen of the Foreign Relations Committee, the foreign operations panel of the Appropriations Committee, and the House Financial Services Committee, respectively.

The Treasury Department, in a statement Thursday, said the U.S. decision to abstain from the vote stemmed from its conflicted views about the project. The abstention “reflects concerns about the climate impact of the project and its incompatibility with the World Bank's commitment to be a leader in climate change mitigation and adaptation,” Treasury said.

“At the same time, the United States recognizes South Africa's pressing energy needs and the lack of near-term feasible low-carbon alternatives,” Treasury added.

The World Bank defended the loan – which it called the first major “lending engagement” to South Africa since the fall of apartheid – as a way to benefit the poor by creating jobs and expanding access to electricity.

“Without an increased energy supply, South Africans will face hardship for the poor and limited economic growth,” said Obiageli K. Ezekwesili, World Bank Vice President for the Africa Region, in a statement. “Access to energy is essential for fighting poverty and catalyzing growth, both in South Africa and the wider sub-region.”

According to the bank, the loan includes $260 million for a 100 megawatt wind project and a 100 megawatt solar project, and $485 million for “low-carbon energy efficiency components,” such as a railway to transport coal as a way to lessen emissions associated with the power plant.

Environmental groups attacked the loan decision.

“Giving the go-ahead to the Medupi coal plant, which will release massive amounts of greenhouse gases for decades, without a clear South African plan to level off and then decrease emissions amounts to a step backward when the world is moving forward to a clean energy future,” said Peter Goldmark, director of Environmental Defense Fund’s climate and air program, in a statement.

The group said the coal plant will be the world’s seventh-largest.

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