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Is Opposing Coal Plant in South Africa Pushing Green Too Far?

| Monday April 12th, 2010 | 1 Comment

Cooling Towers rising above Soweto, South Africa

By David Abraham

The World Bank voted on Thursday to extend a $3.75 billion loan to Eskom, the South African energy producer, to construct a new coal power plant.  But the decision was not an easy one.  A number of American and British politicians, as well as some environmental groups, objected to the deal, saying that it was  inappropriate for the international body to fund a non-green project.

At the risk of sounding politically incorrect, I find the objections absurd for two reasons. The first is that there is a double standard being applied to emerging economies.  We have the luxury to live in countries with 100% reliable electricity–most of it produced from sources not entirely friendly to the environment.  What bothers me is the arrogance that the West applies to the developing world when considering clean energy production.  Let’s figure out a way to make wind and solar viable in our countries first before dictating unreasonable standards to others.

My second qualm is that consistent sources of power are absolutely critical to the development of emerging markets.  I was privileged to experience first hand “load shedding” (the government euphemism for rolling blackouts) that plagued South Africa back in 2008, and which continues today.  It took more than three hours to travel 20km within Johannesburg, because traffic signals were out of order.  Food in the refrigerator was ruined because power was cut.  But the biggest problem was that the major mines–the backbone of the South African economy–were shuttered until they could be guaranteed enough power to operate safely.  Without a reliable grid, it is impossible to create a vibrant economy that will provide people with jobs, income, or food.  In my opinion, this is far worse than the construction of a coal fired plant.  It is unfortunate that the myopic views of the environmentalist community are trumping a pragmatic response to the alleviation of severe poverty.

You can read a genuine rejection of the project based on concerns regarding corruption within the South African government on the AllAfrica website.

David Abraham is an MBA candidate at the Robert H. Smith School of Business at the University of Maryland.  He is a founder of the Emerging Markets Association at Smith which seeks to build a greater understanding of free-market opportunities in frontier markets.


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