World Bank split over controversial "clean coal" investment

In what could prove a precursor to future rows over climate funding for developing countries the UK and US have reportedly threatened to withhold support for a World Bank loan intended to help South Africa build a new coal-fired power station.

Around $3bn of the proposed $3.75bn loan to South African utility company Eskom would be used to fund the construction of the 4,800MW Medupi "clean coal" plant and accompanying carbon storage facilities. The rest of the funding is expected to be spent on renewable and energy efficiency projects.

The Medupi project, which will be based in the country's northern Limpopo region, is deemed critical to help ease the country's chronic power shortages, which have in the past resulted in rolling power cuts that have undermined the growth of Southern Africa's largest economy.

However, despite the plans to use relatively efficient technologies, Reuters reported that the UK and US are poised to oppose the loan on the grounds it will make it harder for South Africa to deliver emission cuts.

Their opposition to the funding proposal, which is still expected to be approved on April 6 by the World Bank, was prompted by guidance issued by the US Treasury to multi-national bodies in December.

The guidelines, which infuriated developing countries such as China and India, directed US representatives at international institutions to encourage the employment of "no or low carbon" energy options over coal-based alternatives.

As a result, a US Treasury official told Reuters that the country was reviewing the Eskom proposal and would develop a position "consistent with administration policy and with facts surrounding the project".

But Obiageli Ezekwesili, the World Bank's vice president for Africa, told the news agency that securing the country's energy supply through new coal plants was essential to the economic health of the wider continent.

"There is no viable alternative to safeguard Africa's energy security at this particular time," she said. "This is a transitional investment that they are making toward a green economy and that should count for something."

US and UK opposition to the proposals are bound to attract accusations of hypocrisy given both are pursuing clean coal and carbon capture and storage (CCS) projects domestically.