Paris - South Africa’s Thabametsi project has been listed as one of the “Dirty Dozen projects”, twelve fossil fuel projects worldwide environmental groups say exemplify the massive volumes of public finances still flowing to fossil fuel projects, which are driving climate change.
The list comes as world leaders and global financial institutions gathered on Tuesday for the One Planet Summit in Paris, organised by President Emmanuel Macron and the French government.
On the fringes of the conference, civil society groups came together under the Big Shift Global campaign to highlight the massive finance gap remaining to shift away from fossil fuels towards clean energy, in line with the aim of the Paris Agreement on climate change to limit warming to below 1.5°C.
The conference will celebrate the second anniversary of the historic agreement.
The talk at the summit is all about money and delegates held intricate discussions on the finance needed to implement real measures to slow down the process of climate change, including finance for renewable projects and divestment from coal.
Funding for fossil fuel projects
The Big Shift explained that the twelve dirty projects provide a stark contrast to the twelve “transformational” areas for investment the World Bank Group and other public finance institutions intend to highlight at the One Planet Summit.
“Scaling up climate finance is an urgent global priority, and the Dirty Dozen projects underscore the other side to this story: public finance is too often going in the wrong direction,” the Big Shift said in a statement at the conference.
Research, it said, showed that in total the multilateral development banks and the public finance institutions of G20 countries provide almost four times more finance to fossil fuels than to cleaner energy in an average year.
Thabametsi worse than Medupi and Kusile
Number four on the Dirty Dozen list is the proposed Thabametsi project, a planned 630MW coal-fired power plant near Lephalale in Limpopo. It is being developed by the Thabametsi Power Company, a special purpose vehicle owned by Marubeni and South Korean energy utility KEPCO.
Thabametsi has indicated that it plans to secure finance from 12 lenders, including the Public Investment Corporation, the Development Bank of Southern Africa (DBSA), the Industrial Development Corporation, and other corporate South African banks.
The plant is expected to be operational in 2021 and is planned to cost $2bn (R27.2bn).
Planning documents show R1.118bn is proposed to come from the DBSA. In reaction to criticism, the DBSA has previously highlighted its extensive funding of renewable projects in South Africa, including assets in the successful independent power producers renewable energy programme.
Environmental groups which have studied the project's impact assessment said the plant's emissions - 8.2 million tons of CO2 equivalent per year - are worse than existing and older Eskom plants. This would make it one of the highest emitting plants, emitting 60% more than Medupi or Kusile.
"If any financial institutions should not be supporting projects that threaten catastrophic climate change, it is the development banks," said Robyn Hugo, programme head, Pollution & Climate Change at the Centre for Environmental Rights.
She said despite this, the projects documented in Dirty Dozen show that banks such as the World Bank, the DBSA and others are gambling with the planet’s future.
“The financing of projects such as the Thabametsi coal-fired power plant, using some of the worst coal-burning technology in terms of GHG emissions and pollution, does not deserve to be considered, and should be dropped immediately,” she said.
“With cheaper, cleaner options available, considering such a project is nothing short of reckless."
Due to its long lifespan, the plant would mean either that South Africa will not meet its climate change obligations, or that the power plant will close early, becoming a "stranded asset" the environmental groups warned.
The “Dirty Dozen projects” are not necessarily the worst or biggest fossil fuel projects benefiting from public finance, but they are examples of the kinds of activity that communities and concerned citizens across the world want public finance institutions to stop supporting with taxpayer money, the environmental groups concluded.* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER