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September 10, 2013

U.S. Taxpayer Dollars Funded Indian Coal Scam

Last week, new details of a coal industry scam emerged when India’s Comptroller and Auditor General denounced the Environment Ministry for showing favoritism toward Reliance Energy, a private company owned by Anil Ambani, one of the world's richest men. It just so happens the project that prompted this scorn was financed by none other than the US. Export Import (Ex-Im) Bank. That means that our hard-earned tax dollars are propping up a coal scam involving India’s richest tycoons. Thankfully President Obama ended the Ex-Im Bank’s coal spree with a ban on overseas coal-plant finance. But the harmful effects of past projects continue to haunt our Indian friends.

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The Sierra Club meets with locals affected by the Sasan coal plant - Flickr

The Sierra Club first uncovered this story in 2011 when we visited Sasan, Reliance Energy's 4,000-MW coal plant in Singrauli, India. Then, we were told by an employee of Coal India Limited, a state-owned corporation and the world's largest coal company, that Reliance Energy obtained the land for Sasan from the government without the proper paperwork. Since then, a corruption scandal has erupted across India over the government essentially giving away land to private coal companies, cheating the public out of critical revenue, and destroying local communities and critical habitat in the process. Now we've learned that Sasan was allowed to move forward without the required forest protections, in yet another giveaway to private interests.

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Coal ash pond in Singrauli, India - Flickr

The devastating effects Sasan has had on local communities are impossible to quantify. When Sierra Club staff visited the project, we met a village with a school and running water that was going to be forcibly relocated to make room for a toxic coal-ash storage pond. We spoke with a local resident whose friend protested the plant and disappeared. We learned of a smokestack collapse that killed 30 workers, which was swept under the rug.

It's bad enough that Reliance Energy has trampled on the rights and health of local communities while the Indian government at times looked the other way, and at times actively supported the destruction, but Reliance Energy also did so with the help of the U.S. government and Americans’ tax dollars. In 2010, the U.S. Export-Import Bank (Ex-Im) approved more than $900 million in financing for Sasan, despite warnings from activists in both the U.S. and India that the project would devastate local communities, endanger public health, and destroy the environment. The revelations that have come out since then have exceeded our worst fears.

But the tide might be turning. While new details emerge in the widening corruption scandal around Sasan and India's coal sector in general, the U.S. government is taking steps that could help prevent funds going toward similar projects in the future. In June, President Obama announced an end to financing for overseas coal projects with public funds -- our tax dollars -- as part of his Climate Action Plan.

The plan could mean an end to Ex-Im's fossil fuel binge, which has seen more than $1.5 billion dollars in financing funnel toward massive, dirty coal projects in India and South Africa, despite clear violations of local laws and regulations. And we've already seen progress. In July, Ex-Im rejected a 1,200-MW coal plant in Vietnam, and just last week, the Nordic countries pledged to join Obama’s drive to end financing for overseas coal. Ex-Im and its Chairman Fred Hochberg now have an opportunity to show leadership by implementing President Obama’s Climate Action Plan, as export credit agencies (ECAs) across the globe face increased pressure to end coal financing. And ECAs aren’t alone. International financial institutions are running away from coal, with the World Bank and European Investment Bank eliminating coal funding in their new energy strategies. We’ve long said that coal is a bad investment that hurts communities and endangers public health, and while it’s too late for Sasan and the people of Singrauli, the biggest financiers are finally catching on.

--Nicole Ghio, Sierra Club International Climate Program Representative

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