CIEL Report Critiques World Bank Energy Policy: Bank Failed to Consider Environmental Costs

The Center for International Environmental Law (CIEL) today announced the release of a new report, “Fossilized Thinking: The World Bank, Eskom and the Real Costs of Coal-Based Power Projects,” which examines the economics underlying the Bank's $3 billion loan to support a massive new coal-fired plant in South Africa.

Online PR News – 21-March-2011 – – WASHINGTON, DC. March 21, 2011—The Center for International Environmental Law (CIEL),, a leading non-profit that uses international law to defend the right to a healthy planet, today announced the release of a new report, “Fossilized Thinking: The World Bank, Eskom and the Real Costs of Coal-Based Power Projects.”

The report examines the economics underlying the Bank's $3 billion loan to support a massive new coal-fired plant in South Africa. Specifically, the report evaluates whether the Bank adequately considered the impacts the 4,800 MW Eskom Project will have on human health and the environment and the likely economic costs of these impacts. The Bank's operational policies require that these "externalities" be taken into account to determine whether a project's long-term economic benefits outweigh its costs.

CIEL's analysis reveals that, at least in this case, the Bank failed to adequately address and quantify important negative environmental effects, such as water scarcity and quality, air quality, and transboundary impacts. Nor did the Bank fully address the public health impacts associated with the environmental consequences of coal-based power.

“This project highlights a broader problem in World Bank funding,” explained Steve Porter, Climate Program Director at CIEL. “Because all of the costs have not been accounted for, coal projects like Eskom have been unfairly favored, which means that there has never been a real consideration of alternatives, such as wind, solar and other alternative energy sources.”

The World Bank is now in the midst of an Energy Strategy Review process. CIEL's report calls on The World Bank to use the lessons from the Eskom project experience. A review of the Eskom project by the Bank's Inspection Panel, also now underway, should shed greater light on the social and environmental impacts of the project, but the Inspection Panel is unlikely to issue its report before the conclusion of the Energy Strategy Review.

“The World Bank needs to move beyond the fossilized thinking that drives investment in coal,” said report co-author Niranjali Amerasinghe. “The new Energy Strategy should embrace a more sustainable future.”

About the Eskom Project

The total loan amount for the World Bank's Eskom Project is $3.75 billion, including:
o $3.04 billion for the 4,800 MW Medupi coal-fired power station;
o $440 million for a railway to transport coal to a second coal plant;
o $260 million for two renewable energy projects totaling 200 MW; and
o $10 million for financing fees.

Renewable energy comprises less than 7% of the loan amount and 4% of total project capacity but features prominently in Bank materials describing the project.

Eskom, South Africa's power utility, is building the Medupi station near Lephalale, Limpopo province, less than 30 miles from South Africa's border with Botswana. It will draw water from tributaries of the Limpopo River, which South Africa shares with Botswana, Zimbabwe and Mozambique. The CIEL report concludes that the Bank's assessment largely ignored potential transboundary impacts from the project.

When completed, Eskom's Medupi station will be one of the two largest coal-fired power plants in Africa and among the largest coal-fired power plants in the world.

About CIEL
Founded in 1989, the Center for International Environmental Law (CIEL),, is committed to strengthening and using international law and institutions to protect the environment, promote human health, and ensure a just and sustainable society. With offices in Washington, DC and Geneva, CIEL's staff of international attorneys work in the areas of human rights and the environment, climate change, law and communities, chemicals, trade and the environment, international environmental governance, biodiversity and wildlife and international financial institutions by providing legal counsel and advocacy, policy research and capacity building. CIEL also directs a joint research and teaching program with The American University's Washington College of Law, focused on international and comparative environmental law, as well as offering internships and fellowships to educate the next generation of international environmental advocates.

Contact Information
Steven Porter
1350 Connecticut Avenue NW, Suite 1100
Washington DC, 20036

814 323-4623