All fired up over coal

The first of the Millennium Development Goals set by the United Nations and endorsed by its global membership is to eradicate poverty and hunger, but the energy to drive the economy that creates the jobs that earns the money to buy the food and all that flows from there needs to be as cheap as possible. The answer in South Africa is coal; cheap but dirty.

South Africa's case illustrates the dilemma but also, possibly, offers a solution. The country is facing an electricity crisis and the parastatal electricity provider, Eskom, plans to boost prices by more than 76 percent and borrow $3.75 billion from the World Bank to build Medupi, a new coal-fired plant, leading civil society organizations and labour unions to react with anger and dismay.

Unions claim the loan will have economic consequences to the detriment of the poor; civil society worries that the world's fourth biggest power station will expand the country's already considerable carbon footprint - South Africa is one of the world's biggest greenhouse gas emitters.

Finance minister Pravin Gordhan argued in a comment piece in The Washington Post defending the loan that "to sustain the growth rates we need to create jobs, we have no choice but to build new generating capacity - relying on what, for now, remains our most abundant and affordable energy source: coal".

The proposed loan has far wider ramifications. The New York Times newspaper billed it as the US's first test case of "its new guidelines discouraging coal-fired power projects in developing nations". The US is the World Bank's biggest shareholder and all eyes are on how it will vote when the proposal comes before the Bank board on 8 April.

The 4,800 Megawatt Medupi plant will be "a significant source of carbon emissions", noted US Congressmen John Kerry, Patrick Leahy and Barney Frank in a letter expressing their concern over the loan to Eskom, addressed to World Bank president Robert Zoellick. The bank has stated that the Medupi plant will use clean coal technology, leaving a smaller carbon footprint.

At the centre of the debate is whether governments should pursue a development agenda of accelerating growth rates to reduce poverty, at the environmental cost of using energy that is less green, undermining the climate change agenda.

Balancing the agenda

It is about balance. "Billions of people in developing countries are experiencing unprecedented economic opportunities for the first time, thanks in part to new access to electricity," said the US Congressmen's letter.

We don't want coal mines to shut down tomorrow - our people will lose jobs. We support renewable energy, but we want our members to be part of it - we want them to be trained for the transition when that happens

"But we cannot ignore the reality that our planet is hurtling towards potentially catastrophic climate change ... We cannot sustainably reduce energy poverty without also addressing climate change."

Gordhan said, "If there were any other way to meet our power needs as quickly or as affordably as our present circumstances demand, or on the required scale, we would obviously prefer technologies - wind, solar, hydropower, nuclear - that leave little or no carbon footprint, but we do not have that luxury if we are to meet our obligations both to our own people and to our broader region, whose economic prospects are closely tied to our own."

South Africa generates more than 60 percent of all the electricity produced in sub-Saharan Africa. "Tight supplies are not just a problem for us. Our neighbours - Botswana, Lesotho, Namibia, Swaziland and Zimbabwe - all rely on Eskom for their electricity," Gordhan pointed out.

"They face the same growth constraints that we do. Their factories and businesses, hospitals and schools, and their ability to provide basic services, all depend on Eskom-generated power."

Mike Kantey, a sustainable development expert who heads the Coalition Against Nuclear Energy, a local lobby group, acknowledged that the coal-fired plant was the "cheapest pragmatic short-term solution to the problem".

South Africa's power infrastructure is aging, as an electrification programme and economic growth has pushed up demand. In 2008, the country was hit by widespread planned and unplanned power cuts, or "load shedding", which cost the economy millions of dollars and people were retrenched.

But will it help the poor?

Yet the National Union of Mineworkers (NUM) - like many South Africans - wonders whether the new plant really will make electricity cheaper. NUM spokesman Lesiba Seshoka does not think so. "The cost of electricity has gone up - we are worried about its impact on food and other essential services," he said.

The debate also highlights the deeper dilemma in which NUM finds itself, and the links between energy that is less green and livelihoods. More than 20,000 of its members are employed in the coal mining sector.

"We don't want coal mines to shut down tomorrow - our people will lose jobs. We support renewable energy, but we want our members to be part of it - we want them to be trained for the transition when that happens." NUM will discuss its organization's role in the transition at a policy conference in May.

In addition to the loan, the National Energy Regulator of South Africa (NERSA) recently gave Eskom the go-ahead to hike prices over a three-year period to fund its current operating costs and an ambitious expansion programme. According to the World Bank's website, "Eskom provides free basic electricity to 27 percent of its customer households."

NUM's umbrella organization, the Congress of South African Trade Unions (COSATU), intends to oppose the hike. Unemployment in South Africa is about 24 percent, according to Statistics South Africa (Stats SA), but independent estimates put it as high as 40 percent. COSATU has estimated that the global recession took at least 900,000 jobs out of the economy in 2009.

The World Bank maintains that the new power plant will benefit poor households because the government plans to electrify the remaining 19 percent of unconnected rural households by 2014.

The loan with its green credentials in a way also offers a solution to the larger dilemma that confronts developing countries. Medupi will use cleaner coal technology and part of the loan will used to build two renewable energy plants - a wind-powered project, and the biggest grid-connected solar thermal project in any developing country.

jk/he/oa