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CARMA Watch: Red Light for The World Bank Group on Coal-Fired Power

CGD’s CARMA website (Carbon Monitoring for Action) uses information on planned construction of power plants to project increases in carbon emissions during the coming decade. In India, for example, CARMA projects that new facilities will increase CO2 emissions by about 150%, and much of the increase will come from enormous coal-fired plants. CARMA’s ranking of Indian power plants on their future emissions shows that Tata Power Corporation’s planned Mundra plant in Gujarat will rank third nationally, with projected annual CO2 emissions of 27.8 million tons when it is fully operational. Mundra will be bigger than Georgia’s Scherer plant, the largest emitter in the US, which annually spews about 25 million tons of CO2 into the atmosphere.

Such plans confound the rhetoric at the UN’s December climate change conference in Bali, Indonesia, where Secretary General Ban Ki-Moon declared a planetary emergency: “The situation is so desperately serious that any delay could push us past the tipping point, beyond which the ecological, financial and human costs would increase dramatically.” The science supports the Secretary General’s assertion. In a December address to the American Geophysical Union, James Hansen, Director of NASA’s Goddard Institute for Space Studies, summarized recent findings and suggested that the critical tipping point may be at an atmospheric CO2 concentration around 350 parts per million volume (ppm). The news is doubly alarming because we are already beyond this limit: The current atmospheric CO2 concentration is around 386 ppm, and rising fast.

Since India remains poor, perhaps the concern about the Mundra power plant is misplaced? After all, in 1997 the Kyoto Protocol specified binding emissions limits only for rich countries, leaving poor countries free to overcome poverty without worrying about such matters. At the time, the prevailing view held that rich countries had caused the climate problem and rich countries would have to solve it. Unfortunately, that view has now been rendered obsolete by the rapid growth of developing-country emissions. In a recent paper, Kevin Ummel and I show that emissions growth from developing countries would have propelled the atmospheric concentration to 350 ppm by 2025, even if the rich countries had never emitted a ton of CO2. The stark reality is that uncontrolled emissions from either the North or the South will be enough to sink us.

So the crisis is clear, the UN Secretary General has spoken, and the UN agencies have responded with full commitment to promoting zero-emissions power production, right? Wrong. Part of the financing for India’s giant Mundra plant will come from the World Bank Group’s International Finance Corporation, if the IFC’s Board approves the project. What’s more, according to the IFC’s environmental and social review summary for the project, “Due to [Mundra's] high energy efficiency of supercritical technology, the Clean Development Mechanism (CDM) Executive Board meeting (under UNFCCC’s Kyoto Protocol) of September 2007 approved the eligibility of supercritical coal-fired plants for carbon credit in developing countries, and the company is exploring an opportunity for the Project to be registered under CDM.”*

To the “untutored reader,” this must seem crazy. Just as the UN Secretary General declares an international emergency created by carbon emissions, a UN-affiliated agency (the IFC) announces that it will use scarce development-lending resources to help finance an enormous coal-fired plant in India. At the same time, another UN-affiliated group (the CDM Executive Board) announces that the plant is actually eligible to provide carbon credits for rich-country power plants that are emitting more CO2 than their Kyoto permits allow.

What possible rationale could there be for this seeming contradiction between UN rhetoric and UN practice? In fact, it simply reflects the now-obsolete thinking behind the Kyoto Protocol. Tata’s Mundra plant qualifies for IFC funding and CDM eligibility because carbon emissions would be even greater if Tata installed the same power generation capacity in several smaller, lower-efficiency coal-fired plants without supercritical combustion technology. And Tata is free to do so because, as Kyoto specifies, India is under no obligation to control carbon emissions. So the international community, via the IFC and CDM, is subsidizing Tata to pollute less than it would otherwise. Instead of supporting critical zero-emissions energy investments, scarce international resources are sweetening a private-sector project that will emit over 700 million tons of CO2 during its operating life. And the Tata case is by no means unique, either in India or the developing world more generally. I will return to this in my next blog, with a look at a huge coal-fired facility in Botswana that may get financial backing from the World Bank Group.

This obsolete approach has to be shelved because coal-fired power in any form is extremely dirty and we’ve run out of time. The only hope for coal is elimination of emissions via carbon capture and storage (CCS), and this technology remains unproven at large scale. There is no chance — let me repeat this: zero chance — of holding global carbon emissions within safe limits if the UN continues subsidizing coal-fired power expansion on a massive scale without CCS. Our only chance at this point lies in immediately hiking the price of carbon, lowering the price of zero-emissions energy technologies (including CCS, if it proves feasible), and subsidizing the rapid adoption of these technologies by India and other developing countries.

There are plentiful opportunities for clean power investment, as the World Bank Group itself has noted in a report just released by its Energy Sector Management Assistance Program (ESMAP). Even with a much larger budget to support zero-emissions power expansion in developing countries, the World Bank Group could find ample project opportunities. And the same reasoning applies to clean-power opportunities for Clean Development Mechanism support.

This fatally-dangerous schizophrenia has to end. The UN cannot declare that carbon emissions are creating a planetary emergency and identify myriad clean-power options, while UN-affiliated institutions such as the World Bank Group and the Clean Development Mechanism continue to subsidize coal-fired power generation without CCS. The message for these agencies (as well as other multilateral and bilateral lending institutions) is clear: Stop this practice, now. Build your future on expanding clean power as rapidly as possible, or you won’t have a future.

*The IFC estimates Mundra’s future emissions at 24 million tons, lower than CARMA’s estimate of 27.8 million tons. Obviously, the difference is inconsequential for this discussion. Either way, Mundra will rank with the largest coal-fired carbon-emitters in the world.

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