US Ex-Im Bank Finances Huge Coal Plant in South Africa

The Board of Directors of the U.S. Export-Import Bank (Ex-Im Bank) on Thursday voted to approve $805 million in subsidized financing for one of the world’s largest coal-fired power plants – the 4,800 megawatts (MW) Kusile project, in South Africa.

South African and international civil society organizations and U.S. medical experts strongly oppose Ex-Im Bank financing of Kusile as a heavily polluting project that will harm the health and well-being of South Africans. The project reflects an increasing trend at the agency to focus U.S. exports on fossil fuels at the expense of renewable energy alternatives.

The area where Kusile would be built already exceeds permitted ambient levels of hazardous air pollutants that create soot & smog. These and other pollutants that result from coal combustion can cause harm to respiratory, cardiovascular, and nervous systems, leading to heart disease, cancer, stroke, and chronic lower respiratory diseases, according to Physicians for Social Responsibility.

The externalized costs created by such pollution should have been incorporated – but were not – into Ex-Im Bank’s decision, according to experts at Harvard Medical School. 

"Ex-Im Bank Directors’ decision to support Kusile was made despite their full knowledge of the unacceptable damage the project will cause," said Sunita Dubey, U.S. Representative of Groundwork South Africa, a civil society organization opposing Kusile. "They have completely disregarded the impact on people’s health and livelihoods."

On April 13, South African civil society leaders made a final appeal to the US Ambassador to South Africa to intervene to stop Ex-Im Bank’s financing from going forward.

On top of the heavy pollution poor communities will bear, the Kusile project will not bring energy access to South Africa’s poor, and does not even include electrification lines for them. What’s worse, Apartheid-era "special pricing agreements" give large industrial users, which consume the lion’s share of South Africa’s electricity, guaranteed rates that are among the lowest in the world.

This will force the every-day consumer to bear the weight of these rate increases-on top of the billions of dollars borrowed for the total project cost to build Kusile.

"It becomes a question of who benefits and who pays the price. In this case the poor pay the price and large corporations reap the benefit," said Sunita Dubey.

The massive Kusile coal fired power plant will spew 30.5 million tons of C02 annually–increasing South African energy sector emissions by 12.8% and the country’s total contribution to climate change by 9%. Ironically, Durban, South Africa will be the site of global climate talks later this year.

"Ex-Im Bank’s decision places US climate change negotiators in a very tough position," said Erich Pica, President, Friends of the Earth U.S. "How can they convince the world they care about climate change this December when earlier the same year they subsidized one of the world’s largest sources of climate pollution? This undermines their credibility."

Kusile will emit more greenhouse gasses annually than any project in Ex-Im Bank’s history, and 50% more than all greenhouse gas-emitting projects financed by Ex-Im Bank in 2010.

"Ex-Im Bank has a Carbon Policy that doesn’t curb carbon and an energy portfolio that remains over 90% fossil fuel based," said Doug Norlen, Policy Director, Pacific Environment.

Civil society advocates also decried the cost of job creation associated with Kusile. It is rumored that Ex-Im Bank’s $805 million loan for Kusile will support a mere 100 jobs over 5 years. That works out to about $1.6 million per job per year.

U.S. civil society advocates are particularly dismayed as this financing also undermines the opportunity to position the U.S. as a leader in renewable energy and energy efficiency technologies. The U.S. Congress has mandated the agency to extend 10% of its annual financing to renewable energy, which it routinely fails to even come close.

"Ex-Im Bank is missing an enormous opportunity to position the U.S. as a leader in clean technology markets worldwide," stated Justin Guay, Sierra Club International Climate Program Representative.

"Instead, we are chaining our economy to a 19th century technology while countries worldwide are busy transitioning to the 21st century. We are putting off the inevitable and it is hurting our economic recovery, job creation, and our global environment."

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