BackWorld Bank loan for Indian coal-fired unit
World Bank loan for Indian coal-fired unit
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Washington: The World Bank approved financing for a $4.2 billion (Rs16,800 crore) coal-fired power plant in India on Tuesday despite calls by environmental groups to wait for further analysis of the costs and environmental impact.
The bank’s board approved $450 million in loans by the International Finance Corp. (IFC), its private sector lending arm, for the Tata Mundra project, a 4,000MW coal plant, which will expand access to electricity in five states in western and northern India.
IFC said the plant would use “super-critical" technology, making it India’s most efficient coal-fired plant. The plant’s volume of carbon emissions is expected to be 40% less than that from existing coal-fired plants in India.
“This is an important project because we believe it will encourage other developing countries to make responsible choices, using best available technologies and applying higher environmental and social standards," said Rashad Kaldany, IFC director for infrastructure.
In a letter to the US representative at the World Bank, Whitney Debevoise, environmental groups argued that the global institution could not effectively fight climate change while also funding big polluters. “The IFC has not demonstrated that this project is an appropriate and cost-effective solution that merits the investment of scarce international funds," the groups said.
IFC said its funding was responding to India’s enormous need for more and affordable electricity, while also supporting new technology that reduced emissions.
“The key is access to power and there are many poor people who still don’t have access to power in India and it is getting them power as inexpensively as possible by using responsible technology," Kaldany said.
He said IFC had conducted a thorough evaluation of the project.
“This is by far the least expensive and to try to do something like either wind or solar would cost huge amounts in terms of subsidies. The question is: where would these subsidies come from?" he said.
“Our analysis shows that unless you have huge subsidies—several billions of dollars—you cannot do alternative technology," he added.
But the environmental groups said coal’s previous cost advantages had largely vanished with rising prices, while fuel and construction costs for “super-critical" coal-fired power plants had risen.
They said research showed there were economically feasible alternatives to coal, including solar thermal power, which would fit the region surrounding the Tata Mundra project.
Citing research by the Washington-based Center for Global Development, the group said Tata Mundra could qualify for $445 million a year in payments under the Kyoto Protocol’s clean development mechanism to recover the cost differences between solar thermal and supercritical coal.
Kaldany said that, where it could, IFC would support renewable energy sources where commercially viable.
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