Niranjali Amerasinghe Center for International Environmental Law World Bank: What Role for Coal April 13, 2011

“Over 75% of the global increase in energy use from is expected to be met through fossil fuels, especially coal, and an estimated 77% of the power stations required to meet demand are yet to be built.” World Economic Forum, Global Risks 2011.

 Coal projects have numerous environmental and social costs that need to be fully accounted (see Eskom Case Study).  Without accounting for all associated costs, an effective evaluation of viable alternatives is impossible.  The Energy Strategy must provide for full cost accounting for coal and other energy projects.

 Recent studies examining costs of coal - Harvard Coal Study estimates that total quantifiable costs in the US could be roughly 345 billion dollars ).  A life-cycle analysis is needed (mining, processing, transportation, combustion, and storage).  Release of toxics and heavy metals, particulate matter, greenhouse gases etc., resulting in water and soil contamination, and air pollution.  Implications for health: toxicity; heavy metal poisoning; respiratory illnesses, black lung disease, low birth weight etc.

 3.75 billion dollar loan to Eskom, South Africa, 3.04 billion dollars allocated to the 4800 MW Medupi Coal Plant – among the largest in the world.  Inspection Panel Claim.  CIEL Report “Fossilized Thinking” examines treatment of externalities in the context of Bank OP Main externalities:  Transboundary Impacts  Water-related Impacts  Air Quality Concerns  Concludes that the Economic Analysis for Eskom failed to fully consider negative externalities.

 Cost Benefit Analysis: Show that benefits are equal to or outweigh costs, and that the benefits are equal to or greater than the alternatives.  Section 8 essentially calls for consideration of externalities, which involves identifying impacts in the EIA and assigning monetary values where possible in the Economic Analysis.  This is very difficult, but guidance exists…

 Must identify impacts and quantify (where possible).  E.g. Transboundary impacts

From: Limpopo River Awareness Kit

 If mitigation strategies are expected, the impacts of those strategies must be analyzed.  Sulfur scrubbing technology – additional 6 mil cubic meters of water/year, additional waste, reduced efficiency.  Opportunity Costs need careful consideration.  Water Scarcity - With sulfur abatement technology, Medupi will need 12 mil cubic meters of water/year.  Current Mokolo Dam already fully allocated and Mokolo-Crocodile Augmentation Project still may not provide enough water. Reallocation?

 Costs absent mitigation scenarios should be quantified (if resources are constrained).  Sulfur Dioxide emissions in an air pollution hot zone.  Sulfur scrubbing technology – may not be in place?  If energy access is a goal and built into cost- benefit scenarios, access must be demonstrably guaranteed.  Calculating net CO 2 emissions; 30 mil tons gross emissions v mil tons net emissions  Necessarily assumes energy access to those who currently use wood burning stoves etc., but is this guaranteed?

 The Eskom Case Study shows that inadequate consideration of externalities in a cost benefit analyses leads to seriously under-valued costs.  The Energy Strategy must ensure that full cost accounting is required for all projects – note consistency with other Bank policies.  If energy access is a stated benefit, project documents must show how this is guaranteed and how it will be implemented.

Niranjali Amerasinghe;