Go for coal (updated) - by Richard... Friday, April 09, 2010

Go for coal (updated) - by Richard... Friday, April 09, 2010

The World Bank has approved the $3.75 billion loan for Eskom's 4.8GW coal-fired electricity plant in South Africa, despite the abstentions of British, US and the Dutch representatives.

Some 125 environmental groups had written to the World Bank demanding rejection of the loan. Local groups also put the British government on the spot, challenging the Labour government on its "green" credentials, calling for it to vote against the loan.

When the decision was announced, there was no immediate word as to how the UK did actually vote, but a later report stated that the UK abstained. Offering a bland statement, an official spokesman for DFID said, by way of explanation: "The project raises several sensitive and potentially controversial issues which it has not been possible to resolve before this period began."

The US Treasury said it abstained due to "concerns about the climate impact of the project and its incompatibility with the World Bank's commitment to be a leader in climate change mitigation and adaptation." 

A Dutch Foreign Ministry spokesman said it had advised its representative to abstain, citing concerns that Eskom was not doing enough to develop alternatives to coal. "The Netherlands believes Eskom is doing relatively too little to develop alternatives to coal, so we don't think this is a good proposal," a ministry spokesman said.

There is some early reaction but we will wait to see how the greenies react en masse – they are going to hate it, not least because this will be one of the biggest coal-fired plants in the world.

Costing about £11 billion for the complete development, the first of the 800 MW units (of six) is scheduled to be on-line for the first quarter of 2012. When fully operational, in 2015, it will be burning 14.6 million tons of coal per year, with an expected life of 40-50 years. And the South Africans have ruled out any prospect of carbon capture.

You can see why the greenies are so upset. The plant will add potentially 1.5 billion tons of carbon dioxide to the atmosphere over term - about three times the total UK annual emissions from power stations, motor vehicles and homes. It effectively makes a nonsense of our attempts to cut our emissions, especially when India is planning six of these units, dwarfing any UK reductions.

Strangely though, although The Guardian covered the loan issue on 1 April, and The Times on Tuesday, there seems to be no UK media reaction so far, despite - or perhaps because of - the embarrassment quotient to the UK government.

One suspects that this is another gem that is going to be lost in the torrent of election coverage. It would never do for the British media to offer real news on issues of substance.

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Not the Foreign Office - by Richard... Thursday, April 08, 2010

Via Witterings from Witney we learn that David Cameron's goal is to "put fire into people's bellies, steel into their backbones and joy into people's souls."

He was, apparently, speaking this morning at the launch of the Conservative plans for a "non-military national citizenship service".

Our response has the same initials as the Foreign Office, but most decidedly does not use the same words. Does this man actually listen to what he is saying? 

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The beginning of the end? - by Richard...

Those who know far better than I have suggested that when the spread between German and Greek bonds reached 450, we would be at crisis point.

According to The Times, that point has been reached and exceeded, when it widened by more than 40 basis points to 456 basis points (bps) today. The two-year Greek government bond yield surged more than 100 bps to almost 8 percent.

The further surge in bond yields, we are told, prompted a leading rating agency to urge Greek policymakers to appeal to the European Union and IMF for cash.

For the rank amateur like myself, this is a foreign language. And no amount of quick studying or pontificating is going to make me into an expert. But the translation seems to boil down to two simple words ... like "belly up".

Quite what the effects of a collapse of the Greek financial system might be – when, rather than if it happens - but they must surely be profound, and not limited to the eurozone. The UK has considerable exposure here, and cannot help but be caught in the fallout.

In and amongst the flood of electioneering, it would be useful to have one or other politician spell out, in simple terms, our level of risk, the likely outcome of current developments, the range of implications for the British economy, and the measures that could or should be taken to mitigate the risk.

That, probably, is too much to ask – but it strikes me that is is far more important than the current political preoccupations.

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