Coal Is Not in Decline; It Is Thriving in the South

By Krizna Gomez*

 

It may seem that the world is finally appreciating the threat of climate change, as many countries which have traditionally been reliant on coal, the highest greenhouse gas emitter, are now imposing strict policies to limit their coal use.

But that is only for a fraction of the world.

Yes, the Obama administration has released its Clean Power Plan that will likely cause the retirement of many coal plants and the prevention of new construction in the US. Yes, the European Union has pledged to reduce its emissions by 40% from 1990 levels. And yes, Germany has been at the forefront of transitioning to renewables, transforming the North Sea into a massive farm of giant wind turbines that resemble white elephants.

Wind turbines in the North Sea. Photo by: eLKayPics / Lutz Koch.

Wind turbines in the North Sea. Photo by: eLKayPics / Lutz Koch.

But when I painted this picture to an indigenous leader in the region of La Guajira in Colombia, where the trucks of Latin America’s largest open pit coal mine zip past indigenous reserves like clockwork, this idea of a world moving away from coal was strange if not laughable.

Prakash Javadekar, the Environment Minister of India, has said in July this year that cuts in greenhouse gas emissions are “more for developed countries”. India, China and Indonesia alone are jointly using 71% of newly mined coal globally. India, the second biggest consumer of coal after China, is planning to double its coal output by 2020; the state-run Coal India, which claims to be the largest public coal company in the world, grew its output by 32 million tons for 2014/2015—its biggest volume rise in its four-decade existence. In Southern Africa, six countries are looking to build coal-fired plants. Africa’s largest economy, Nigeria, is reviving its coal industry and Kenya, the biggest economy in East Africa, is now opening a coal-fired power plant for the first time in its history. Pakistan, the Philippines and Vietnam are also increasing their coal use.

The coal industry may be in a slump, with prices falling from $120 a ton in 2010 to $60 today, but the Global South is banding together to keep it alive. South Africa will be providing coal to Kenya and technical assistance to Nigeria. Chinaremains one of the biggest financiers of coal projects around the world. The New Development Bank by BRICS (Brazil, Russia, India, China and South Africa) is expected to serve as a “brick wall” to the domino effect against coal financing, coming to the rescue of stranded coal projects. The China-led Asian Infrastructure Investment Bank, meant to rival Western-dominated multilateral banks like the World Bank, may do the same.

Young coal miners in South Africa. 1/Jan/1988. UN Photo/P Mugabane. http://www.unmultimedia.org/photo/

Young coal miners in South Africa. 1/Jan/1988. UN Photo/P Mugabane. http://www.unmultimedia.org/photo/

However, the Global North is just as culpable in what has been happening in the South.

Between 2003-2013, 34 OECD countries, including 21 from the EU, gave $12.8 billion worth of export credits to coal plants. France, which is currently hosting the global climate change negotiations, and Germany lead these EU countries. In 2012, France and the United States also provided a $1.1 billion guarantee for South Africa’s Kusile power plant, which will be the fourth largest coal-fired plant in the world. The United States may also be closing coal plants, but it is planning to export the coal it can no longer use. This is not merely inconsistent policy—it is rank hypocrisy.

A closer look at the World Bank’s new restrictive policy on coal financing also reveals that it is basically tailored for continued funding in the Global South. The prohibition states that funding will be allowed in “rare circumstances” when there are “no feasible alternatives.” It is obvious that this exception is most likely to apply in the Global South, where coal is often the main source of energy and where renewables are still in their infancy. Rather than create greater incentives for investment in clean energy, the World Bank has been accelerating its aid for developing more than 16 GW of coal power projects in Indonesia despite this new policy.

The claim that coal is intended to power development in the Global South does not take into account the real cost of coal. The royalties paid by coal companies to these governments are not calculated based on all the human rights, health and climate change costs that they cause. Indeed, no independent study that calculates all such costs with regard to coal exists, so any claim that coal royalties or economic benefits offset these costs is pure speculation. The Global South must rethink its renewed hunger for an energy source that is, for many good reasons, being shunned by the rest of the world.

The Global North also needs to make its foreign investment consistent with its claimed concern for climate change. Even if it might perfectly keep to their emissions cap at home, somebody else’s charts would be skyrocketing often as a direct consequence. Climate change does not respect borders. If developed countries do understand that, then they cannot only regulate what they do at home but also what they cause abroad.

See Dejusticia’s recent report on the human rights impacts of coal in the Global South at www.coalinthesouth.org.

 

* Krizna Gomez is a researcher at the Center for the Study of Law, Justice, and Society (Dejusticia)