Stop US Financing for Massive Coal Plant in South Africa

Stop US Financing for Massive Coal Plant in South Africa

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Friends of the Earth fights back against proposal to use U.S. tax dollars to fund dirty coal in South Africa

Urgent: Ex-Im Bank could vote on this project today, April 14, 2011. Please call and urge them to vote no.

Coal plant in South Africa For more than 25 years, Friends of the Earth has been a leader in the fight to make international development finance more ecologically sustainable. We’ve fought for tougher environmental and social standards and worked to reform key international financial institutions in order to preserve and protect our natural environment. Now, we face a new challenge as the U.S. Export-Import Bank (Ex-Im) steps up its ongoing fossil fuel binge.

Ex-Im, the United States’ export credit agency, aims to increase exports of U.S. goods and services internationally, primarily in developing countries. Congress has directed Ex-Im to adopt a 10 percent financing target for environmentally beneficial exports, specifically for renewable energy and energy efficient end-use technologies. However, from 2003 to mid-2010, renewable energy constituted just 0.23 percent of total Ex-Im-financed exports, magnitudes short of the congressional requirement. 

On the heels of Ex-Im financing of a massive coal plant in India, Ex-Im is now considering financing  the construction of a huge 4800 MW coal-fired power plant – called Kusile – in  South Africa. Widely opposed by South African civil society, it would increase global pollution, displace and sicken the local population, be especially harmful for South Africa’s poor, and worsen the climate crisis. The Obama administration has promised to increase access to renewable energy in the developing world, but if this financing is approved, it will help lock South Africa into dependence on dirty coal for decades to come.

Kusile is a project of South Africa’s state-owned power utility, Eskom. Defying South African and worldwide civil society opposition in 2010, the World Bank loaned Eskom more than $3 billion to build the similarly masive Medupi coal plant

Environmental and Health Impacts

Spewing out 36.8 millions tons of carbon dioxide equivalent emissions annually, the proposed Kusile coal plant would be one of the world’s largest single sources of global warming. According to Eskom’s own Environmental Impact Assessment, it would increase South African energy sector emissions by 12.8 percent and the country’s total contribution to climate change by 9.7 percent. The Kusile coal plant would require more than 17 metric tons of coal annually, leading to an increase in the number of environmentally damaging coal mines. It would correspondingly consume more than 1 billion gallons of water every year, causing further degradation of the local water supply.

Kusile would also pose serious health risks for local communities. The plant would emit sulphur dioxide and nitrogen oxide at a rate that exceeds South African safety standards, polluting the air and leading to diseases such as asthma and emphysema. The plant would also require approximately 2,470 acres of land to accommodate its above-ground, toxic coal ash dump. Coal ash, the byproduct of burning coal, contains heavy metals and toxics such as arsenic, uranium and mercury, which can cause cancer as well as neurological and developmental disorders.

Socioeconomic Impacts

The poor of South Africa will reap little benefit from the Kusile coal plant. In fact, it is likely to increase enery poverty. Currently, South Africa’s poor consume less than five percent of grid connected power, in contrast to the 38 largest corporations that consume 40 percent. Eskom continues to honor apartheid-era “special pricing agreements.”[1] These deals give some of the world’s cheapest electricity to a number of large export-oriented metals and mining multinational corporations. This cheap electricity is subsidized by increased rates for South African citizens. Because of these special pricing deals, the poor often end up paying far more per kilowatt for their electricity than the multinational corporations. Less than 50 percent of the economic wealth created by this project will stay in South Africa, since more than half of the project’s financing will be spent on imported equipment and the hiring of foreign specialists.

More Information

Final appeal to South African civil society leaders to US ambassador to South Africa to stop US Export-Import Bank financing of Kusile.

Physicians for Social Responsibility urges the US Export-Import Bank to reject funding for the Kusile coal plant.

Letter from Dr. Paul Epstein of the Center for Health and the Global Environment at Harvard Medical School to the Export-Import Bank urging them to incorporate the true cost of coal when considering the financing of Kusile.

More about Friends of the Earth’s efforts to reform international financial institutions like Exim.

Letter to the Export-Import Bank from South African and international groups opposing the Kusile coal plant. 

Fact sheet on Kusile from our allies at Sierra Club.

Environmental Impact Report (EIR) critique from our partners at Pacific Environment, Sierra Club, and groundWork/Friends of the Earth South Africa.

The un-cited facts in this article come from the EIR critique mentioned above, and Eskom’s own Environmental Impact Statement.

[1] Statement from SA and Africa Civil Society on Eskom’s $3.75 billion World Bank Loan. /sites/default/files/African-civil-society-statement-World-Bank-Eskom-loan.pdf