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Obama Caught Between Green Ideology And Realpolitik

The Obama administration, caught in an awkward bind between its own ambitions on climate change and Africa’s pressing energy needs, is facing the first test of its new guidelines discouraging coal-fired power projects in developing nations.

This week, the World Bank will vote on a $3.75 billion loan to South Africa, most of it to help build the world’s seventh-largest coal plant. The bank’s own experts concede that the giant plant will “produce large quantities of carbon dioxide that will contribute to global climate change.”

But the bank’s largest shareholder — the United States — has enacted guidelines to push for “no or low carbon” ways of meeting the energy needs of developing nations that rely on international financial institutions.

Construction of the plant is well under way, so it is too late for the steps advocated in the Obama administration’s guidelines to ensure that coal is a last resort. Treasury Department officials have declined to say how the United States will vote when the loan is before the bank’s board on Thursday, with one describing the decision as “challenging.”

South African officials contend that the plant is desperately needed to help the country’s economy, the largest on the continent, and those of six neighboring nations generate growth and combat poverty. The loan is the first South Africa has sought from the World Bank since apartheid ended in 1994.

Officials here also note that the project includes $745 million for wind and solar power and efficiency measures, in addition to $3 billion for the coal plant. Without the loan, South Africa would have to turn to commercial markets to finance the rest of the coal plant’s cost, a step that Public Enterprises Minister Barbara Hogan said would be “punitively expensive” and would probably delay the plant’s completion.

“We run the most sophisticated economy in Africa,” she said. “We supply 60 percent of southern Africa’s energy. If we’re not able to come to the table, the consequences are huge. This is big. And renewable energy cannot provide us with that scale.”

The fate of the loan matters to a group of developing countries that will continue to rely on coal in the coming years, even as researchers rush to devise cleaner, more commercially feasible alternatives, said Jairam Ramesh, India’s environment minister. He said officials from India, China, Brazil and South Africa would meet this month in Cape Town to coordinate their positions on just such climate change issues.

“For the next five to seven years, we must not stop the use of present coal technologies, even as we work on developing new clean technologies,” Mr. Ramesh said. In 2008, during President George W. Bush’s administration, the International Finance Corporation and the Asian Development Bank provided $850 million to help finance an Indian coal-fired plant in Gujarat State.

International public financial institutions, supported by the world’s richest nations, have invested $37 billion to help finance 88 coal plants over the past 15 years, many in Asia, according to a 2009 report by the Environmental Defense Fund. The plants’ annual carbon dioxide emissions equal three-quarters of those from coal-fired power in the European Union, the report said.

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