One by one international financiers are pledging to end coal energy finance but the Africa Development Bank (ADB) remains a holdout and continues to fund projects on the world’s most electricity-poor continent.
In April HSBC said it would no longer fund coal-fired power plants, joining its international peers including the World Bank and International Monetary Fund in rejecting fossil fuel-based electricity.
It was coal, however, that underpinned the industrial revolution that changed the West from an agrarian backwater to the technological master of the world for the past three centuries. In recent decades emerging markets such as China have also embraced coal to power the factories that transformed it, and other Asian economies, into industrial powerhouses.
The UAE, along with other Arabian Gulf nations, is also to introduce coal to its energy mix; The 2,400 megawatt Hassyan clean coal power station in Saih Shuaib, Dubai is nearing completion at a cost of around $3.4 billion.
From its headquarters in Abidjan on the Ivory Coast the ADB is one of Africa’s major investors with loan capital of around $32bn. For its part the bank wants coal to be part of Africa’s electrical future. The ABD’s president confirmed that coal would be included in future energy funding options.
“Africa must develop its energy sector with what it has,” said Akinwumi Adesina. “Endowed with many different energy sources – both renewable and conventional – Africa needs a balanced energy mix.”
ADB figures show the continent has the lowest electrification rate in the world, with consumption per capita estimated at 613 kilowatt hours per person per year, barely enough to run a refrigerator. Europe, meanwhile, consumes 6,500 kWh per person a year, and in the US it’s even higher at 13,000 kWh.
Africa’s energy provision is dire. Nigeria, the most populated country on the continent with 150 million people, routinely struggles to distribute 5,000MW a day – less than half the 12,500MW Abu Dhabi can produce for its relatively tiny population of 1.1 million.
Nigeria can in fact produce an extra 2,000MW a day, but cannot distribute it because it lacks the transmission infrastructure to get it to customers.
Africa loses up to 4 per cent of its annual gross domestic product from energy bottlenecks and inefficiencies the ADB says. More than a century after the light bulb was invented, 645 million of its people still have no electricity.
The global coal industry, battered as it has been by bad press such as images of smog-blankets over Chinese cities, is naturally happy to have a few friends left. Most institutions including the World Bank now only back renewables such as wind and solar and no longer support coal. This puts the ADB at odds with most of its global financial peers.
“This natural resource should be seen as critical to the continent’s development,” says Benjamin Sporton, chief executive of the World Coal Association. “The fuel currently provides 41 per cent of the world’s electricity.”
Environmental concerns can be addressed with new technologies that remove sulphur, nitrogen oxides and particulate matter, the nasty stuff that earned coal such a bad reputation. The Hassyan project in Dubai will incorporate this technology in its design.
“These improvements to the efficiency of coal-fired power plants can significantly reduce CO2 emissions by up to 35 per cent compared to older technology,” Mr Sporton says.