World Bank and Thar coal project By Ashfak Bokhari

THE World Bank’s decision to drop its plan for providing technical assistance to the Thar coal project worth $20-25 million is being interpreted by many as its reluctance to finance coal-fired plants in Pakistan.

Although the bank has made no such indication, nor conveyed any such intentions to the government, the fact remains that in recent months it has been under fire from several quarters including the developed countries for spending billions of dollars on ‘polluter’ projects in developing countries.

Coal is still the cheapest fuel in the world and affordable to the poor but the coal-based energy projects are being discouraged for they release vast amounts of gas emissions into the atmosphere. While scrapping the plan, the World Bank made no mention of pollution the Thar project may cause as the reason for withdrawal of its funds. Instead, it said, these financial resources can more effectively be used to address the energy shortfalls in the near-term in an environmentally sustainable manner such as extension of the Tarbela Hydropower Project.

The bank has been working on $650 million project for containing losses in the natural gas transmission system and increasing power production from Tarbela Dam. Besides, since the Thar project is still at a preliminary stage, and the stage of appraisal has not yet come, the World Bank says it has opted to divert resources towards other crucial projects.

The World Bank, perhaps, has become cautious after facing worldwide condemnation for extending a $3.75 billion loan to South Africa in April to build one of the world's largest coal plants. The decision drew sharp criticism even from the Obama administration. An international coalition of grassroots, church and environmental activists launched a massive protest against the controversial loan, saying it would hurt the environment by putting out 25 million tonnes of carbon dioxide a year.

In Pakistan, the World Bank’s decision not to finance the Thar coal project apparently for environmental reasons is not convincing enough because the country’s industry does not contribute much to carbon emissions and its carbon footprint is one of the lowest. So, not much harm to the ecology could be expected from the Thar coal project on completion.

Engro Energy, which has leased a block at Thar, wants the government to convince the World Bank in this respect because Pakistan happens to be one of the least polluters.

Meanwhile, Dr Samar Mubarakmand, a nuclear scientist who earned fame for his instrumental role in 1998 nuclear tests, is working on a project for generating electricity through gasification of Thar coal reserves. It will be ready by next year and if implemented successfully it will eliminate the problem of pollution by converting Thar coal into clean energy. The Thar coal reserves of 175.5 billion tons, discovered in 1992, have a potential to generate 5,000 MW for at least 800 years, according to Dr Samar.

It is interesting to note a contradiction in the World Bank’s policy in dealing with coal-based projects. It says that the world must reduce its dependence on fossil fuels, but, at the same time, it is funding several giant coal-burning plants that will each emit millions of tonnes of carbon dioxide a year for the next 40 to 50 years. But more interesting is the double-standards practised by the US in this matter. It opposes loans for coal-fired plants, as in case of the South African project, by abstaining from voting on the proposal in the WB board. The abstention allows the loan to be approved while also allowing the US to go on record in opposition to it.

It abstained from voting on a $2.81 billion loan from the African Development Bank for the same power plant last November. During Copenhagen summit, the US advocated development of no or low-carbon energy sources in developing countries. That the US opposes coal-fired power is something difficult to believe because it has 600 coal-fired plants within the country which provide more than half of its energy supply. Another 60 coal-fired plants are at various stages of planning. The US refuses to accept limits to its domestic greenhouse gas emissions, though it did agree, for the first time, to modest cuts in Copenhagen.

In a communication, China and India warned the WB president Robert Zoellick in Copenhagen that the US should not be allowed to flex its muscle unilaterally as the bank's largest donor. They argued that the bank's core mandate is poverty alleviation and economic growth and climate change should only be addressed when it impinges on those efforts; and coal is still crucial to increasing access to electricity and thus those poverty and development efforts.

Not every country can take the same path toward a clean energy transition. But the question critics raise is that does investing in plants fired by coal – which releases more carbon dioxide emissions per unit of energy produced than any other fossil fuel – really best serve people in South Africa and other countries receiving bank funding? South Africa's finance minister says, it does. He argues in a Washington Post op-ed: “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 WB’s, World Development Report-2009 advises against, “locking the world into high-carbon infrastructure” but makes no mention of the bank’s plans to support coal power plants in India, South Africa, Botswana and other developing countries. Last year the WB and its partner, Asian Development Bank, approved $850 million in loans to finance a coal-fired plant in Gujarat, western India, which a US lobby group says would be one of the biggest new sources of greenhouse gases on earth, emitting 26.7million tonnes of CO2 a year for the next 50 years.

Source: http://www.dawn.com/wps/wcm/connect/dawn-content-library/dawn/in-paper-magazine/economic-and-business/world-bank-and-thar-coal-project-460