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September 08, 2011

The World Bank Still Can't Quit Dirty Coal

Coal pile As the New York Times recently reported, coal plants don't come dirtier than the Soviet-era relics currently in operation in Kosovo. Despite the terrible pollution these plants spew, the World Bank has decided the only option for this young country is to lock in more of it - without so much as looking at the alternatives.

The Bank's relapse includes support for a new 600 megawatt coal plant and strip mine along with the rehabilitation of one of the country's highly polluting relics. Located right outside the capital city of Pristina, the coal plant's toxic mercury, soot and smog will affect the lives of half a million people each year (these toxics from American coal plants kill 30,000 people every year).

The move comes just a year after the institution's disastrous $3.75 billion dollar support for one of the world's largest coal plants in South Africa. This Kosovo plan makes clear that, in the absence of an Energy Strategy that explicitly bans lending for new coal plants, the World Bank sees nothing wrong with the damage coal does to local people's health or the environment - not to mention the institution's own reputation. (Click here to see an excellent documentary on Kosovo entitled "Kingdom of Coal")

A Lack of Alternatives?

The World Bank has continually refused to allow its own Chief Renewable Energy and Energy Efficiency expert, Daniel Kammen, to evaluate the country's clean energy options to gauge whether the Kosovo project makes sense given the alternatives at hand. This refusal is damning considering that the Bank's own documents show significant potential for cleaner, and cheaper, alternatives including:

1) Increasing Energy Efficiency (45% of its power is lost every year),
2) Building Wind Power (the country has a feed in tariff for wind which has already spurred plans for 100 megawatts),
3) Building Hydro Power (300 megawatts of hydropower are available at one site alone) and
4) Regional hydro and cross-border wind energy partnerships (neighboring Albania has ample amounts of hydro that can be utilized for pump storage for Kosovo wind power).

A back of the envelope calculation shows that simply bringing losses down to international standards of 10% can produce approximately 300 megawatts of base-load power. Add to that the capacity of the first two options (400 megawatts) and it's clear from the Bank's own data that no new coal plant is needed. When factoring in the feed-in tariffs the country has for both wind and small hydro, the logic and impetus for a new coal plant begins to unravel.

An Expensive Boondoggle

Worse than the flat out refusal to look at alternative options is the fact that the project is likely to be extremely expensive. The World Bank claims the project will cost 5.12 cents/kwh - when carbon pollution costs are added it jumps to 8.9 cents/kwh. We know that new wind projects in the windiest parts of the United States are in the range of 3 - 9 cents/kwh.

This means that Wind is either the same or much cheaper than a new coal plant. With the feed in tariff of ~11 cents/kwh, wind is actually far cheaper than coal (the chart below does NOT factor in the feed in tariff).

Untitled

Despite the fact that this powerplant will be located at the mine (making it cheaper and easier to get at the coal), we know that the price of oil for mining operations alone will drive coal costs upward. In nearby Slovenia, the government is likely to abandon plans to build a similar coal plant (Sostanj) as even a 10 percent rise in the cost of coal would render it unprofitable. Compare that extreme sensitivity to coal price fluctuations on the Benchmark Newcastle index ,where coal prices have increased 200% in the past four years.

Newcastle Coal Prices

The Way Forward

The dubious economics of this project aside, the World Bank is choosing a project that we know will have tremendously negative impacts for the residents of Pristina and the young nation of Kosovo. Worse, the Bank's documents suggest that it is not even supporting the best available control technologies for deadly pollutants.

For example, the technologies at this plant will only achieve near 70% reductions in the dangerous sulfur dioxide and nitrogen oxide pollutants. We know the best technologies achieve reductions up to 90% or greater. With half a million people living right next door, it's hard to believe a development institution could justify not employing the best pollution control technology available.

The real reason the Bank is even considering this ghastly project is pressure from the United States. This is quite ironic considering the commendable position the U.S. Treasury has taken by demanding the Bank "materially raise the bar for coal projects", examine alternative energy projects early enough to influence investment decisions, and consider banning coal investments all together.

There's absolutely no excuse for a failure to undertake a major evaluation of domestic and regional energy efficiency and alternatives at a time when Kosovo has requested EU membership, and the Union wishes to decrease, not grow, coal-fired electricity. 

More importantly, there's no reason to saddle the people of a young nation with highly polluting and increasingly expensive and outdated energy. The Bank may be closing its eyes to the alternatives and in the process reinforcing its own addiction to coal, but as the South African coal debacle recently proved, the black stain left by projects like this simply won't go away.

-- Co-written by Sierra Club Beyond Coal Campaign Director Mary Anne Hitt and Justin Guay of the Sierra Club International Program.

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