African Development Bank defends lending to support coal power over ‘expensive’ solar, wind

To every single African country, the biggest impediment to economic growth is energy - Donald Kaberuka

THE African Development Bank’s president is defending his decision to continue financing power plants that use coal, despite pressure from environmental groups and United Nations officials to shift more funds toward cleaner energy.

Donald Kaberuka, who is due to step down in May as head of the lender, said the region doesn’t “have the luxury” of ruling out polluting fuels in favour of more costly renewables such as wind and solar.

“It is hypocritical for western governments who have funded their industrialisation using fossil fuels, providing their citizens with enough power, to say to African countries, ‘You cannot develop dams, you cannot develop coal, just rely on these very expensive renewables,’” Kaberuka told journalists in London on Wednesday. “African countries will not listen.”

Lobbying groups have been pushing development banks to scale back on finance for the most polluting forms of energy as greenhouse-gas emissions reach record levels and scientists warn the world is headed for dangerous climate change.

Public finance institutions provided at least $55.7 billion for coal projects from 2007 to 2013, according to the Natural Resources Defense Council, a New York-based environmental group.

Kaberuka said the bank plans to balance its energy lending between fossil fuels and renewable sources, so funds for projects using natural gas would be matched with a renewable development. The AfDB, based in Abidjan, Ivory Coast, is supporting wind power in Kenya, geothermal power in east Africa and a major solar project in Morocco.

Energy lending

The AfDB last year mobilised lending of $1.8 billion for energy related infrastructure, including $350 million for renewables. Excluding a $1 billion loan in May 2014 to revitalise Angola’s energy industry, about 45% of the lending was for renewables last year.

Pressure to scrap coal lending built in October 2013, when Angel Gurria, the secretary general of the Organisation for Economic Cooperation & Development, asked governments around the world to question their support for the fuel. Environmental groups Greenpeace, Oxfam and WWF joined some 33 organisations in May asking for export credit agencies to end their coal investments, part of a broader campaign to prod investors to sell off fossil fuel.

Other development banks responded. The World Bank and European Investment Bank both have put limits on their lending for coal, as have the governments of the UK, Denmark, Finland, Norway and Sweden.

The European Bank for Reconstruction & Development ended its support for coal except under special circumstances in December 2013. That month, President Barack Obama placed similar limits on the US Export-Import Bank.

Kaberuka is unapologetic about his institution’s own backing for coal, noting that Africa produces only 3% of the carbon dioxide emissions blamed for global warming.

“To every single African country, from South Africa to the north, the biggest impediment to economic growth is energy, and we don’t have this kind of luxury of making this kind of choice,” he said. “There is a little bit of hypocrisy in the West at this moment.”

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