WASHINGTON — The World Bank on Tuesday approved financing for
a $4.2 billion coal-fired power plant in India despite calls by environmental
groups to delay the decision until further analysis of costs and environmental
impact were done.
The World Bank board approved $450 million in loans by the
International Finance Corp. (IFC) for the Tata Mundra project, a 4,000 megawatt
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 percent less than the average carbon intensity of
existing coal-fired plants in India.
The first of the power plant’s 800-megawatt units is expected
to be commissioned in mid-2011, with other units launching at intervals of four
months each.
"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,"
Rashad Kaldany, IFC director for infrastructure, said.
In a letter to the United States representative at the World
Bank, Whitney Debevoise, environmental groups argued that the global institution
could not effectively fight climate change while also funding big coal
polluters.
IFC said its funding was responding to India’s enormous need
for more and affordable electricity, while also backing proven 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 told
Reuters.
The environmental groups argue that the Mundra region where
the plant will be located has huge solar potential, while coal for the project
would need to be imported from Indonesia and other countries at rapidly rising
costs.
They added that coal’s previous cost advantages have largely
vanished with rising prices, while fuel and construction costs for
"super-critical" coal-fired power plants have escalated.
The groups include the Environmental Defense Fund, Friends of
the Earth US, National Wildlife Federation, Bretton Woods Project and the
International Accountability Project.
Kaldany said IFC had conducted a thorough evaluation of the
project and concluded that a coal plant was by far the least expensive option at
this stage to meet India’s 160,000 MW power needs over the next decade.
He said IFC analysis also looked at alternatives to coal
including wind technology, which would have meant an investment of about $24
billion.
"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?" Kaldany said.
"Our analysis shows that unless you have huge subsidies – several billions of
dollars – you cannot do alternative technology," he added.
