World Bank's tough talk on climate is 'just a mirage' in Mongolia's Gobi desert

Published by MAC on 2012-12-17
Source: Statement, Mother Jones

New report shows World Bank tough talk on climate is just a mirage in Mongolia's Gobi desert

Sierra Club press release

13 December 2012

Ulaanbaatar, Mongolia -- Just one week after its grim warning during the UN climate talks in Doha that the world is on a path towards a four degree-rise in global temperatures, the World Bank is set to approve financing for yet another coal plant.

The plant will power a giant mining complex in Mongolia's South Gobi desert, fuelling climate change and violating the Bank's own policies, argues a new analysis from advocacy groups (1).

The groups reviewed the environmental and social impact assessment (2) prepared by mining conglomerate Rio Tinto for its US$13.2 billion Oyu Tolgoi copper and gold mine and associated facilities, including a 750 megawatt thermal coal power station.

Rio Tinto's assessment was submitted to the World Bank Group and the European Bank for Reconstruction and Development (EBRD) in order to be considered for project finance (3).

The groups found that Rio Tinto's assessment contravenes World Bank guidelines for approving coal power projects because it does not include an assessment of the power plant or the cumulative impacts of the project over its full life cycle.

The assessment also fails to provide any meaningful consideration for low-carbon alternatives or support for renewable energy projects, and fails to adequately account for CO2 emissions, all issues that the institution requires an expert panel to consider for each and every coal plant they consider financing (4).

Justin Guay of the Sierra Club explains, "The World Bank's climate credibility is on the line. Fast tracking this project, without following existing coal screening policies, just doesn't jive with Dr. Kim's statement that climate change is ‘tilted against many of the world's poorest regions and likely to undermine development efforts and goals'."

The groups also contend that Rio Tinto's analysis does not adequately assess the impacts of the project on the arid region's already scarce water supply and its threat to the traditional way of life for the nomadic herders who have lived in the region for centuries. The project necessitates the use of fossil and deep water aquifers, yet the Rio Tinto's assessment offers no effective proof that this will not impact the herders or their livestock.

According to Sukhgerel Dugersuren, Executive Director of the Mongolian NGO Oyu Tolgoi Watch, "Rio Tinto's blatant disregard for the people who call the Gobi Desert home and the water resources they depend on for their survival should be a clear signal to international financial institutions that the project cannot receive funding in its current design."

Based on the review's findings, the groups are requesting that the World Bank and EBRD delay consideration of the Oyu Tolgoi project until Rio Tinto demonstrates that there are enough water resources in the Gobi for the lifetime of the project and takes concrete measures to mitigate its environmental and social impacts, and the World Bank convenes an expert panel to consider low-carbon alternatives.

"Before considering this project any further, the World Bank and EBRD need to go back to the drawing board and commission an independent, robust and transparent review of the environmental and social impact assessment that genuinely evaluates the impact on scare water resources and the coal projects' compliance with bank policies.

"They must also create concrete plans for alleviating the mine's impacts on local people and their livelihoods," added Sukhgerel. A decision on the project by the World Bank is expected at the end of January, and the EBRD will consider the project in February. The U.S. Export-Import Bank, Export Development Canada and the Australian Export Finance and Insurance Corporation are also considering financing the project.

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Notes for editors:

1. The ESIA review was conducted by the Accountability Council (US), Bank Information Center (US), CEE Bankwatch Network (regional), London Mining Network (UK), OT watch (Mongolia), Sierra Club (US) and urgewald (Germany)

2. The full review of the Environmental and Social Impact Assessment is available at http://www.bicusa.org/proxy/Document.103001.aspx. An Environmental and Social Impact Assessment conducted by Oyu Tolgoi LLC, the Rio Tinto subsidiary that manages the mine, was released in August 2012, as required by the World Bank Group and the EBRD for projects with significant adverse social and environmental impacts, after eight months of delay.

3. The World Bank's International Finance Corporation and Multilateral Investment Guarantee Agency are slated to provide US$900 million in loans and up to US$1 billion in political risk insurance respectively, while the amount that the EBRD is considering is still unknown.

4. The full analysis of the World Bank policy violations associated with the coal plant is available at http://action.sierraclub.org/site/DocServer/Tolgoi_assessment_Final.pdf?docID=11801.

For more information, please contact:
Sukhgerel Dugersuren, Executive Director, OT Watch, +976 99 185 828
Jelson Garcia, Bank Information Center, +1 202 624 0622
Richard Harkinson, London Mining Network, +44 7563 238179
Nicole Ghio, Sierra Club, +1 202 675 6270

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The World Bank's climate hypocrisy

Last week, the bank said 4C of global warming 'simply must not be allowed to occur'. This month, it is considering whether to provide financing for a new coal-fired power plant in Mongolia

By Kate Sheppard

Mother Jones

14 December 2012

It's enough to give you whiplash. Last month, the World Bank put out a devastating new report on why 4 degrees Celsius of global warming "simply must not be allowed to occur." This month, the Bank is considering whether to provide financing for a new coal-fired power plant in Mongolia.

The World Bank Group's private funding arm, International Finance Corporation, is considering support for the Oyu Tolgoi copper and gold mine project in the South Gobi Desert, a project that also includes a 750 megawatt coal plant. Mining giant Rio Tinto is behind the venture, which is expected to cost $13.2 billion.

The power plant would be used to run the mining and processing operations at what has been billed as the "world's biggest new source of copper." As NPR has reported, mining is booming in Mongolia. This plant would only intensify that trend.

The Sierra Club, Mongolia-based Oyu Tolgoi Watch, the Bank Information Center, and several other groups blasted the bank in a release on Thursday, arguing that it needs to conduct a more thorough assessment of impacts and alternatives. They argue that the bank should delay consideration until that is completed.

The groups argue that, if this funding is approved, the World Bank would be violating its own criteria for screening coal projects with regard to their climate impacts. It would also violate IFC's performance standards on environmental and social sustainability, they argue.

While the groups cite concerns about access to water supplies and local nomadic herders, the climate concern is probably the biggest. The environmental impact assessment conducted for the coal plant doesn't seem to include any figures on how much carbon dioxide it would emit annually.

The World Bank has been criticized before for continuing to fund coal plants. The World Resources Institute issued a report a few weeks ago about coal plants that are currently proposed or under construction, and it notes that the World Bank "has actually increased lending for fossil fuel projects and coal plants in recent years."

That includes $5.3 billion in funding for 29 new or expanding coal plants, as reporter Dave Levitan pointed out. And just last year, the bank's own internal inspector criticized it for not adequately evaluating carbon emissions before granting a $3.75 billion loan for a coal plant in South Africa.

I asked World Bank and IFC for comment on Oyu Tolgoi, but a spokesperson IFC said it would not be able to respond by press time. I'll update when and if they do.

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World Bank Says Poor People Need Coal

By Kate Sheppard

Mother Jones

18 Decdember 2012

Last week, I reported on environmental groupscalling foul on the World Bank for even considering a proposal to finance a new coal-fired power plant in Mongolia. Funding the Oyu Tolgoi copper and gold mine project, which also includes a 750 megawatt coal plant, was out of line with the Bank's stated concern that the world is heading to devastating and irreversible climate consequences.

Rio Tinto has asked the World Bank Group's private funding arm, International Finance Corporation, for part of the money needed to start construction on the project. IFC was not able to comment at press time, but did send a lengthy email response on Tuesday. Basically they argue that poor nations need energy, that the World Bank is increasingly shifting its focus toward renewables, and that renewable energy can't meet all of Mongolia's needs.

I'll post the full response, from IFC communications officer Josef Skoldeberg, and let you evaluate for yourself:

The world must tackle the problem of climate change more aggressively. But this will be achieved by energy transitions by the largest consumers of coal, not by foreclosing on energy options that mean access to basic electricity for the world's poorest people. This isnot the terrain on which the battle against climate change will be won.

The problem with coal emissions rests squarely in the most highly industrialized nations. If you took all the developing countries in the world and added up all their emissions together, it still would be one-third of the emissions of the United States, European Union, and China combined - just one-third.

Increasingly, the World Bank Group only invests in coal in very rare circumstances - when poor countries have no other realistic options to rapidly ramp up renewable energy alternatives and power is needed for basic energy needs for hospitals, industry and factories, and to light schools, heat homes and cook meals. We have moved away from funding coal and have moved toward the funding of renewable energy. The Bank Group doubled lending for renewable energy in the last five years.

IFC has shifted its investments in the power-generation business from 70% of investments in fossil fuel-based energy to 70% of investments in renewable energy, with a new focus on off-grid and remote applications, access to energy and infrastructure. In 2011, IFC invested in Newcom, a Mongolian company that is building the country's largest wind power project. IFC invested in Newcom because it believes that there are good opportunities to expand the use of renewable energy in Mongolia.

However, like other countries around the world, renewable energy cannot meet all of Mongolia's immediate energy needs alone and the country's other local resources, including coal, will likely need to play a role in its future energy mix. IFC is currently considering financing the Oyu Tolgoi copper mining project in Mongolia.

The Oyu Tolgoi mine is expected to bring significant benefits to the people of Mongolia, such as much needed jobs, government revenues and infrastructure. IFC is fully adhering to its environmental and social guidelines as they evaluate the project. To meet Mongolian requirements that the project be powered by domestic energy sources, Oyu Tolgoi is evaluating the option of a coal fired power plant for sourcing the relative large amounts of reliable power that the mine will need for continuous around the clock operation from within Mongolia.

The argument that we shouldn't be "foreclosing on energy options that mean access to basic electricity for the world's poorest people" is not directly relevant here. This coal plant is being built to power a mine and refining operations, not homes.

Secondly, I find the argument that climate change is not the fault of developing countries a bit disingenuous. Of course it's true, but the issue is that those countries are working toward industrialization. And right now major multinational financial institutions are supporting their efforts by building in dirty energy, rather than helping them skip over those old technologies. It wasn't all that long ago that China and India were "just" developing nations. Now we're all wringing our hands about their major contributions to global warming.

It's interesting, however, that the IFC and World Bank seem to care enough about the issue to put out a lengthy and thoughtful statement. That in and of itself seems to indicate to me that they're concerned about opinions on their funding decisions as they relate to climate change.