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Climate change

Why the World Bank Should Not Fund Eskom

Should the World Bank grant a $3.75 billion (R29 bn) loan to Eskom? No.

GET INVOLVED

1) If you represent an organisation, endorse the statement below and email endorsement to: bobby@groundwork.org.za

2) If you are a US citizen, go to here

3) If you are a government official ask your Executive Director at the World Bank to vote no to the WB-Eskom loan on the 30th of March; Download letter to Executive Directors Letter to WB Executive Directors.

4) If you are a non-US citizen, please go here

REASONS

We South African and African organisations which for years have advocated social and environmental justice here and abroad, oppose Eskom’s proposed Bank loan – and indeed its new construction programme more generally – for several reasons.

1) A bad project, contributing to energy poverty and environmental destruction. This particular project is fatally flawed, on grounds that Eskom’s strategy is:

·         based primarily on large coal-fired stations (followed by nuclear) and as many as 40 new coal mines, which will add to South Africa’s already extremely high carbon intensity, as well as the air pollution and degradation of scarce water resources;

·         designed to continue supplying the world’s cheapest electricity mainly to large energy-intensive industries, including steel and aluminium, whose corporations are headquartered abroad (hence contributing to the profits outflow on South Africa’s balance of payments);

·         to be mainly paid for by unaffordable tariff increases imposed on ordinary South Africans, while the beneficiaries – the largest industrial consumers – are exempt from price rises because of multi-decade special purchase agreements offered to them during apartheid and in the 1990’s; and as a result,

·         unable to alleviate ‘energy poverty’, but instead entrenches suffering by imposing ‘cost recovery’ on people who cannot afford it, with Eskom already admitting a ‘typical township household’ will face a 2009-2012 monthly price rise from R360 ($48) to R1000 ($130).

2) Inappropriate financing. We therefore oppose all funding, foreign and local, for Eskom’s coal/nuclear expansion plans. Were Eskom to engage in a reasonable energy policy based on demand management, with supply shifting to renewable, and the expansion of Free Basic Electricity beyond the current tokenism as well as connections to urban shackdwellers and the rural poor, that would be worthy of support. As for green energy investments that are not import-intensive, local financing would be more appropriate than a World Bank loan – and is readily available, including through state debt and halting subidised electricity contracts to multinationals. The financial danger of a World Bank loan is that the SA currency will crash (as it has five times since 1996), hence making repayment much more expensive (since the loans are not repaid in rand but in dollars), hence adding to the extreme cost burden poor South Africans will face.

3) Eskom’s special responsibility to Africa. We must not forget that South Africa consumes more than its fair share of Africa’s environmental space for development (more than 40% of CO2 emissions from just 6% of Africans), mainly because of Eskom, Sasol and other large corporations which emit the vast bulk of greenhouse gases. The World Bank loan will sink Eskom – and South Africa – into not only financial debt to the West, but much deeper ‘Climate Debt’ to Africa. African civil society unites with SA critics of Eskom’s irresponsible climate-denialist projects.

4) The World Bank’s special responsibility. Specifically, we oppose World Bank funding for Eskom and call on all governments with Bank voting power to oppose the proposed loan on March 24, when the Board meets. The World Bank has still not offered reparations for its 1951-67 apartheid-empowering loans to Eskom, for which only white people received electricity (but the entire society repaid the loans). Further, the Bank has consistently promoted privatisation and/or commercialisation of state utilities and cost-recovery (resulting in disconnections), which together prevent access to electricity by poor South Africans. We call on the Bank’s member governments and directors to endorse the recommendations of the 2004 World Bank Extractive Industries Review. The Review found that, aside from climate damage, the Bank’s fossil fuel projects had neither the intention nor the effect of alleviating poverty and called for them to be phased out.

5. The US government’s special responsibility. We especially call on the US Treasury – which has opposed Bank coal financing in line with a recent ‘Guidance Note’ – to veto the proposed loan, and to also halt US government subsidies to the coal industry so as to avoid the legitimate charge against Washington of hypocrisy. We are delighted about three processes internal to the US, which are a model for our own work in South Africa: Sierra Club legal action has prevented new coal-fired plants from being built; courageous activists in West Virginia are engaged in direct action to halt ‘mountaintop coal removals’; and the US Environmental Protection Agency adopted December 2009 provisions to implement its ‘endangerment finding’ that carbon from coal is a pollutant and must be directly regulated. What must be avoided is the US imposing responsibility for carbon cuts on the South, but without providing funding or technology support for renewable energies as part of the ‘Climate Debt’ that the US owes for taking up so much environmental space. World Bank Executive Directors representing the South have responded to the US Guidance Note making several of these points, and they oppose the use of the Bank as an instrument of US power. This is a fair point, and a long-standing grievance we all share, given Washington’s extremely destructive role at the Bank and in the world economy. Nevertheless, the dissident Executive Directors’ response supports further Bank funding for fossil energy and specifically coal-fired power stations, justifying coal as necessary for poverty alleviation and economic growth in developing countries. In reality, economic growth has been accompanied by growing inequality in South Africa and many other countries that suffer ‘resource curse’. The poor are mostly left worse off than before. Even where their income improves by conventional measures, the gains are lost to services cost recovery (and disconnections), to health costs imposed by pollution, to the loss of nonrenewable resources, to water/land theft associated with coal-fired power, and to the increased cost of access to amenities previously provided as public goods. In addition, it is common cause that the poor are most vulnerable to climate change. In many countries, they are already feeling the costs in intensified droughts and floods and in the loss of land through coastal erosion.

6) Towards the transformation of energy, production and financing. We see renewable energy, not coal-fired power stations, as the optimal development path for Southern economies, creating more jobs, building local manufacturing capacity, and avoiding the environmental mistakes of Northern countries. As in South Africa, most World Bank coal power projects are designed to supply industry, not people. They do not necessarily increase per capita access to energy. The industries in turn are mostly geared for export in line with the World Bank’s promotion of export oriented production. The goods are then consumed primarily in developed countries. Further, many industries are established with foreign direct investments. In the process, much of the heavy industry in developed countries has relocated to developing countries in search of cheaper energy and cheaper labour. Yet because their headquarters are in London, Melbourne, New York, Toronto, Zurich and other offshore sites, a substantial portion of profits is returned to rich countries, exacerbating the poor countries’ balance of payments deficit. Because South Africa’s payments deficit is so extreme, due to the outflow of profits and dividends to foreign corporations which benefit from the world’s cheapest electricity, The Economist magazine judged the country as the world’s riskiest emerging market (24 February 2009).

7) The demand side management alternative. Instead of expanding its coal/nuclear facilities, Eskom should engage in serious demand side management, beginning by phasing out electricity to smelters that have little linkage with the South African economy and that are capital- rather than jobs-intensive. Concrete plans should be made for a ‘just transition’, so as to provide alternative, well-paid ‘green jobs’ – e.g. in subsidised thermal-solar geysers for every house – to those workers who are employed at the smelters. At the same time, the special purchase agreements should be disclosed to the public and opened for renegotiation. The freed up energy should be redistributed to provide for a much larger ‘lifeline’ supply of universal Free Basic Electricity – with a rising block tariff to encourage conservation to improve spinning margins which will buy time for a switch into renewable energy technologies. By not expanding its coal/nuclear facilities and instead redistributing the electricity capacity it has, and by simultaneously switching to renewable sources, Eskom can survive this crisis. But it can only do so if it is not in the clutches of the world’s leading financier of climate destruction, the World Bank.

GET INVOLVED

1) If you represent an organisation, endorse the above statement and email endorsement to: bobby@groundwork.org.za

2) If you are a US citizen, go to here

3) If you are a government official ask your Executive Director at the World Bank to vote no to the WB-Eskom loan on the 30th of March; Download letter to Executive Directors Letter to WB Executive Directors.

4) If you are a non-US citizen, please go here:

MORE INFORMATION
World Bank Fact Sheet on the Loan
Reponse to World Bank Panel Report and Fact Sheet

SIGNATORIES TO THE ‘NO COAL LOAN’ CAMPAIGN AGAINST THE WORLD BANK AND ESKOM

March 1 endorsement list

South Africa:
* 350.org South Africa
* Alternative Information Development Centre
* Anti Privatization Forum
* Austerville Clinic Committee
* Benchmarks Foundation
* Bluff Ridge Conservancy
* Boitshoko Home Based Care
* Buhlebuyeza
* Ceasefire Campaign
* Centre for Civil Society Environmental Justice Project
* Citizens United for Renewable Energy and Sustainability
* Clairwood Ratepayers Association
* Diakonia
* Displaced Rates Payers Association
* DUCT Howick
* Durban Airport Farmers Association
* Earthlife Africa Ethekwini
* Earthlife Africa, Johannesburg
* Eastern Cape Environmental Network
* Ecumenical Service for Socio-Economic Transformation
* Ecumenical Women’s Prayer in Action
* Environmental Monitoring Group
* Esigodini Environmental Group
* Federation for a Sustainable Environment
* General Industries Workers Union of SA
* Greater Edendale Environmental Network
* groundWork
* Inner City Resource Centre
* Isipingo Environmental Committee
* Isipingo Ratepayers AssociationJoint Action Committee of Isipingo
* Kathorus Concerned Residents
* KwaZulu-Natal Subsistence Forum
* Merebank Clinic Committee
* Merebank Residents Association
* Noordhoek Environmental Action Group
* Off the Ground
* Pelindaba Working Group
* Phulhumani CO OP
* Pietermaritzburg Association for Christian Social Awareness
* Renewable Energy Centre
* Silverglen Civic Association
* Siyathuthuka Group
* Socialist Group
* South African Chemical Workers Union (Gauteng)
* South African Council of Churches (Gauteng)
* South African Council of Churches
* Southern African Faith Communities’ Environment Institute
* South Durban Community Environmental Alliance
* Southern Cape Land Committee
* Soweto Concerned Residents
* Soweto Electricity Crisis Committee
* Springs Eco Friends
* Sustainable Energy and Climate Change ProjectTreasure Beach Environmental Forum
* Timberwatch
* Trust for Community Outreach and Education
* Tsogang Youth Group
* Umphilo waManzi
* Vaal Environmental Justice Alliance
* Vezani Disable Support Group
* Well Worn Theatre
* Wentworth Development Forum
* Wildlife and Environmental Society of South Africa (Gauteng)
* Workers World Media Production
* WWF SA
* Youth Agriculture Ambassadors

Africa outside South Africa:
* Ghana: Friends of the Earth Ghana
* Kenya: Kenya Debt Relief and Development Network
* Kenya: Pan African Climate Justice Alliance
* Malawi: Citizens for Justice
* Mozambique: Justice Ambiental
* Namibia: Earthlife Africa
* Nigeria: Environmental Rights Action
* Sierra Leone: Friends of the Earth, Sierra Leone
* Swaziland: Yonge Nawe
* Tanzania: Lawyers Environmental Action Team
* Togo: Les Amis de la Terre
* Tunisia: Association Tunisienne Pour la Nature et l’Environnement
* Jeunes Volontaires pour l’Environnement – International (17 countries across Africa)
* Africa Youth Initiative on Climate Change

International:
* International  Focus on the Global South
* International     Third World Network
* Europe    CEE Bankwatch Network (Central and Eastern Europe)
* Europe    ECA-Watch Europe
* Australia     Jubilee Australia
* Australia    Friends of the Earth Australia
* Bangladesh    Equity and Justice Working Group
* Bangladesh    Solidarity Workshop
* Belgium    11.11.11, Coalition of the Flemish North-South Movement
* Bosnia-Herzegowina    Society for Threatened Peoples International
* Bulgaria    Bulgaria For the Earth!
* Bulgaria    Centre for Environmental Information and Education
* Canada    Canadians for Action on Climate Change
* Canada    Halifax Initiative Coalition
* Czech Republic    Centre for Transport and Energy
* Czech Republic    Hnuti DUHA
* Denmark    NOAH, Friends of the Earth, Denmark
* Estonia    Estonian Green Movement
* France    Les Amis de la Terre/Friends of the Earth France
* France    Pres.Noe21
* Georgia    Green Alternative
* Germany     GegenStroemung – CounterCurrent
* Germany    INFOE – the Institute for Ecology and Action Anthropology
* Germany    Urgewald
* Hungary    National Society of Conservationists – Friends of the Earth Hungary
* India    National Forum of Forest People and Forest Workers
* India    Community Environmental Monitoring – A Project of The Other Media
* India    Corporate Accountability Desk of The Other Media
* India    Foundation for Dialogues on Indigenous culture and environment
* (DICE Foundation)
* India    India People’s Science Campaign
* India    Indian Social Action Forum
* India    Nityanand Jayaraman
* Ireland    Debt and Development Coalition Ireland
* Italy    Campagna per la riforma della Banca mondiale
* Latvia    Latvian Green Movement
* Lebanon    IndyACT – The League of Independent Activists
* Lithuania    Atgaja
* Macedonia    Eco-sense
* Malaysia    Consumers Association of Penang
* Malaysia    Friends of the Earth Malaysia
* Mauritius    FOE Mauritius
* Mexico    Fundar, Centro de Análisis e Investigación, A.C.
* Namibia    Earthlife Africa
* Poland    Polish Green Network
* Russia    Sakhalin Environmental Watch
* Slovak Republic    Friends of the Earth – Center for Environmental Public Advocacy
* Spain    Observatori del Deute en la Globalització
* Switzerland    Berne Declaration
* The Phillipines    Alliance of indigenous women’s organizations in the Cordillera
* The Philippines     NGO Forum on Asia Development Bank
* The Netherlands    Both Ends
* Ukraine    National Ecological Centre of Ukraine
* United Kingdom    Bretton Woods Project
* United Kingdom    ClientEarth
* United Kingdom    World Development Movement
* United States    Africa Action
* United States    California Communities Against Toxics
* United States    Climate SOS
* United States    Columban Center for Advocacy and Outreach
* United States    Concerned Residents of Portland, NY + People Like Us
* United States    Crude Accountability
* United States     Friends of the Earth, US
* United States    Bank Information Center
* United States    Foreign Policy in Focus
* United  States    Gender Action
* United States    Green Delaware
* United States    Global Anti Incinerator Alliance
* United States    Global Exchange
* United States    International Accountability Project
* United States    International Forum on Globalization
* United States    JPIC Missionary Oblates
* United  States    Jubilee USA Network
* United States    Oil Change International
* United States    Maryknoll Office for Global Concerns
* United States    Massachusetts Coalition for Healthy Communities
* United States    National Wildlife Federation
* United States    New Rules for Global Finance
* United States    Rainforest Action Network
* United States    Pacific Environment
* United States    Seed Systems
* United States    Sierra Club
* United States    Sustainable Energy and Economy Network
* United States    Valley Watch, Inc.
* United States    West Papua Advocacy Team
* Uruguay    REDES (Red de Ecología Social)

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