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Entries tagged "power plant"

The Tata Mundra Coal Plant: A Test for Presidents Obama and Kim

September 12, 2013 ·

The Tata Mundra coal plant in India (Joe Athialy/Flickr)In June 2013, President Barack Obama announced that he was “calling for an end to public financing for new coal plants overseas.” Within weeks of this announcement, World Bank President Jim Kim announced the Bank would phase out its support for most forms of coal. However, what World Bank President Kim and President Obama left unsaid was how both presidents would treat current public financing of coal-fired power plants, particularly plants that are violating the policies set by the World Bank. 

President Kim may soon have to tackle just this issue.  A case in point is the Tata Mundra coal-fired power plant in India. The International Finance Corporation (IFC), the World Bank’s private sector lending arm, in 2008 provided $500 million in financing to back this massive coal-fired power plant in Tunda-Vandh village near Mundra, a town in the Indian state of Gujarat. The complex of five 800-megawatt supercritical boiler plants was supposed to cost $4.14 billion to build and be owned and operated by Coastal Gujarat Power Limited, a special purpose vehicle owned by India’s largest private multinational corporation, the Tata Group.

The IFC isn’t the only powerful public international financial agency backing the Mundra power project:  The Asian Development Bank, The Japan Bank for International Cooperation (JBIC), and the Korea Export Insurance Corporation are also involved.

The project now faces a whopping 270% in annual debt, and its CEO has stated the project is financially unviable unless electricity tariffs are drastically raised, effectively passing on the costs of Tata’s poor planning and misleading calculations to the Indian people. This negates one of the primary justifications the IFC presented in financing this project: that it would bring cheap electricity for the energy-deprived and energize the local economy.

Furthermore, the project also faces mounting debt which must be paid back in dollars, not rupees, at a time when the Indian rupee is dropping in value.

This power plant is burning about 13 million tons of coal a year, emitting nearly 40 million tons of CO2.  It also generates tons of toxic fly ash and other toxic byproducts and radioactive elements due to coal combustion. This Tata Mundra plant, plus two others nearby, burn a total of 30 million tons of coal per year and emit about 88 million tons of CO2 annually—more than the combined total annual emissions of Bangladesh (a nation of 150 million people), Nepal, Sri Lanka, Bhutan and the Maldives.

The Mundra plant is situated on the Gulf of Kutch, with ready access to ports and coal that is being imported from Indonesia and Australia. What once was a region with abundant fish, farms, and pastoralists is now a region contaminated by pollution, with tens of thousands of fisher-folk and pastoralists losing their livelihoods.

In June 2011, community groups asked the IFC’s Compliance Advisor Ombudsman (CAO) to investigate environmental and social violations of the contract Tata signed with the IFC. The CAO  full audit report and the IFC management’s response are expected this week. A report produced by an independent fact-finding team found numerous violations of IFC policies.

So now the question becomes: Does the IFC remedy the Tata Mundra violations, or simply cancel its support for the project, given President Kim’s and President Obama’s stated opposition to public financing of coal-fired power overseas? To do otherwise is to allow Tata to not only violate IFC policies, but to mislead its investors and then pass on the costs of its boondoggle to the very people whose poverty the company is theoretically alleviating.

What the Tata Mundra case should make clear to President Kim and others around the world is: Coal is a bad investment—for the poorest, for those consuming the power, for the Bank, and more broadly, for all of us. As a recent study of a dozen of 2012's wildest weather events found, man-made greenhouse gas emissions from coal burners like Tata’s are increasing the likelihood of about half of the wild weather events we lived through in 2012, including Superstorm Sandy; estimates suggest Sandy alone cost $68 billion.

We can’t afford to keep subsidizing these boondoggles. We can and must use public funds to invest in clean, renewable energy alternatives, with a primary focus on energy for the poorest.

Winning the Fight Against Coal Financing

July 18, 2013 ·

Child in India Tries to Get Water from Flyash-Polluted RiverWhen President Obama made his climate speech at Georgetown University in which he urged an end to almost all public financing of coal, Jim Vallette, former research director of the Sustainable Energy & Economy Network at IPS, dropped me an e-mail and we reflected on how many years it had taken us to get to this point.

The first visit I made to a World Bank-financed coal mine in India in 1996 is still etched in my mind. Traveling for miles by train, bus and then taxi to get to the site, I saw first-hand what our "poverty alleviation" funds were doing. It was a moonscape, black, grey, with nauseating smoke billowing out of perpetual fires, deep underground. A child covered in flyash, was standing next to a black river, desperately trying to get a drink of clean water.

I later learned the wells had all run dry; the coal plant had used it all for its cooling towers. And the river was black with flyash, dumped by the World Bank-financed Talcher coal burner directly into the Nandira River. The only way this child could get a drink of water was to try to dig a hole in the sandy riverbed and hope that would filter out the pollutants.

I came back to Washington in 1996, and Jim and I got fired up to fight the public financing of coal, much of it being done in the name of poverty alleviation and sustainable development.

When we released a series of reports examining public financing of fossil fuels, starting with the World Bank, then on to the EBRD, then, in 1999 on OPIC and Ex-Im, we didn't know when these banks we had set our sites on would finally be forced out of coal. But we knew it had to come.

That day came on June 25, when we finally heard the following words uttered by President Obama:

"Today, I'm calling for an end of public financing for new coal plants overseas unless they deploy carbon-capture technologies, or there's no other viable way for the poorest countries to generate electricity. And I urge other countries to join this effort."

Were these words to be believed? On July 16, the World Bank approved a new energy strategy which would effectively phase out the Bank's institutional support for coal. The paper "affirms that the World Bank Group will 'only in rare circumstances' provide financial support for new greenfield coal power generation projects, such as 'meeting basic energy needs in countries with no feasible alternatives.'"

Then, on July 18, we got the following news: The US Export-Import Bank had rejected a coal plant in Vietnam. It was the first rejection of a coal burner since Obama's climate speech of several weeks ago. 

This day came too late for that child and others in that community in India, who were forced to drink poisoned water. And I'm not pleased with the caveats Obama placed on his pledge. Nor am I pleased with the possibility that the World Bank, Ex-Im Bank and others may simply switch from coal to gas, especially if that gas is derived from “fracking,” which can be worse for our already unstable climate than coal.

But hopefully, this is the dawn of a new day, when public financing of coal mines and power plants around the world is no longer acceptable. It's not enough, of course, but after 16 years of persistent pressure from IPS and other groups, our government seems to finally be listening.