Eskom Wants Carbon Offset Credit For New Coal Plant

Eskom Holdings Ltd. is studying whether the 4,800-megawatt Medupi Power Station is eligible for carbon credits under the Kyoto Protocol's Clean Development Mechanism. Eskom recently received approval of a $3.75 billion World Bank loan to build the world's fourth-largest coal-fired power plant. The plant will be South Africa's first power station in more than 15 years and the first to use supercritical boiler technology, which allows the plant to operate more efficiently.

Most NGOs oppose the plant and oppose the carbon credit proposal. The fight surrounding the Medupi loan was one of the most vicious in recent World Bank history. They insist Eskom should not be allowed to receive both World Bank aid and carbon credits to build a plant that will emit 25 million tons of carbon dioxide into the atmosphere annually. Environmental groups insisted the bank had an obligation to stop using limited public resources to fuel coal projects, particularly as the institution sought a greater role in relieving the impacts of climate change. The World Bank maintained that its top obligation was reducing poverty and enhancing energy access -- even if that sometimes means funding fossil fuel. Developing countries sided with South Africa, while industrialized nations engaged in a protracted debate over reconciling their governments' calls to solve climate change with funding a new coal plant. The United States and three other countries abstained as other World Bank board members approved the loan.

The Center-South Africa supports the plant and the proposal. Supercritical boilers are the best technology available for coal. We would, however, prefer that nuclear power plants would be built with the loan money and carbon offsets would be allowed for the nuclear plant substitute.

If Eskom ultimately wins CDM approval, it could generate millions of dollars for avoiding greenhouse gas emissions by using more efficient technology. South Africa has no choice, nothwithstanding nuclear power plants, which are expensieve to build, but to build new generating capacity and to rely on their most abundant and affordable energy source: coal.

The Medupi power plant will be the first in Africa to use cleaner super-critical technology, making it one of the most efficient large-scale power plants on the continent. As Eskom looks for additional financing for its critical energy program, the CDM could be one of options it considers. As the first power station in Africa to use cleaner "supercritical" technology, the Medupi plant will reduce emissions by 5 percent. It will also be fitted for carbon capture and storage (CCS) technology if and when it becomes available, though CCS is not a practical option.

According to the World Bank, $3.05 billion of the total loan will go toward completing the Medupi coal plant. Another $260 million will go toward piloting a utility-scale 100-megawatt wind power project in Sere and a 100-megawatt concentrated solar plant with storage in Upington. South Africa, meanwhile, vowed to use $1.25 billion of a larger World Bank loan package to reduce emissions at power plants. (The New York Times, 6/2/2010)